The Cost Efficiency of Real Estate Investment Trusts: An Analysis with a Bayesian Stochastic Frontier Model

Using a stochastic frontier methodology that incorporates Bayesian statistics, this paper analyzes the cost efficiency of real estate investment trusts (REITs) by observing the deviations of the measured costs of individual REITs from a defined efficient cost frontier. Using 1995–1997 data, we extend the previous research in this area and measure REIT efficiency more precisely by isolating random measurement error from the overall deviations from the efficient cost frontier. We calculate the magnitude of each REIT's managerial inefficiency, the industry inefficiency, and returns to scale. In addition, we assess specific characteristics of REITs for their contribution to inefficiency by calculating the odds ratio that a REIT with a specific characteristic is more efficient than a REIT with an alternative characteristic. The results show that, for the years studied, REITs are relatively cost efficient with most REITs facing increasing returns to scale. Additionally, the REIT's use of debt and the REIT's management style significantly affect the cost performance of REITs during the aforementioned time period. Finally, diversification across property types, as measured, does not seem to influence REIT cost efficiency.     

Who produces for whom in the world economy?

Abstract For two decades, the share of trade in inputs, also called vertical trade, has been dramatically increasing. In reallocating trade flows to their original input‐producing industries and countries, this paper suggests a new measure of international trade: ‘value‐added trade’ and makes it possible to answer the question ‘who produces for whom?’ In 2004, 27% of international trade was vertical trade. The industrial and geographic patterns of value‐added trade are very different from those of standard trade. Value‐added trade is relatively less important in regional trade but the difference is not more important for Asia than for America.     

The Asset Approach to Pricing Urban Land: Empirical Evidence

Many papers have attempted to explain Intelmetropolitan variations in the price of housing using multi-equation models of the metropolitan housing market. This paper uses a long-run equilibrium urban asset model to explain such variations. The model builds upon previous models that introduce uncertainty into the dynamic urban model of land conversion. The empirical results strongly support the asset approach to valuing land in urban areas.     

On Choosing Among House Price Index Methodologies

This paper compares housing price indices estimated using three models with several sets of property transaction data. The commonly used hedonic price model suffers from potential specification bias and inefficiency, while the weighted repeat-sales model presents potentially more serious bias and inefficiency problems. A hybrid model combining hedonic and repeat-sales equations avoids most of these sources of bias and inefficiency. This paper evaluates the performance of each type of model using a particularly rich local housing market database. The results, though ambiguous, appear to confirm the problems with the repeat sales model but suggest that systematic differences between repeat-transacting and single-transacting properties lead to bias in the hedonic and hybrid models as well.     

Issues which Impact upon Marketing in the Small Firm

Defining the small firm is somewhat arbitrary as criteria used to classify entities as such include size, number of employees, sales volume, asset size, type of customer, capital requirements and market share. There is, however, general agreement that smallness and newness create specific difficulties for business. Furthermore, there is widespread acceptance of the notion that small firms typically possess certain characteristics, which serve to differentiate them from larger organisations. These characteristics include inherent weaknesses with respect to capitalisation and marketing awareness and practice. Small firms are perceived as vulnerable yet valuable entities, important both economically and socially. High failure rates of small firms are largely attributed to weaknesses in financial management and marketing. Many classical management concepts are unsuitable for application in a small firm context, with research suggesting non-implementation of theoretically based marketing practice is the rule rather than the exception in the small firm. This paper reviews issues pertaining to marketing practice in the small firm. It examines the absence of agreed definitions of "the small firm" and "success" or "failure" of such entities, offers definitions for these terms, acknowledges the importance of small firms to the economy, reviews small firm characteristics, acknowledges inherent weaknesses with regard to finance and marketing in small firms, reviews marketing practice in the context of small firm characteristics, and considers the roles of marketing educators and owner/managers in improving small firm's marketing practice.     

The Violent Rhetoric of Re-engineering: Management Consultancy on the Offensive

Business process re-engineering (BPR) was a leading form of organizational restructuring from the late 1980s until the late 1990s. This paper seeks to contextualize its development and account for its particularly bellicose language by reflecting on its historical antecedents in the west and its contemporary competitors in the east. We suggest that one way of reading BPR is as a form of ‘inverse colonization’ in which US managerial discourse both assimilated and revolted against the growing domination of Japanese thinking and practice. We conclude with some speculative comments on related causes of the rise of violent managerial rhetoric.     

Tradeoffs between sensory attributes and organic labels: the case of orange juice

Researchers have investigated the role of sensory attributes and organic labels on consumers’ preferences and perceptions of food, but few has examined whether sensory attributes are relevant for consumers who prefer organic food and the extent to which sensory attributes influence consumer's marginal willingness to pay for organic food. The objective of this study is to determine how sensory attributes and organic label work together to influence consumer's stated preference and marginal willingness to pay for orange juice. To achieve this, we conducted a blind sensory evaluation of two orange juices followed by a discrete choice experiment to determine the extent to which consumer's stated preference for orange juice labelled as organic is affected by sensory experience preceding the choice experiment. Random parameter logit models and latent class conditional logit models are used to explain stated preference. Results indicate that the effect of sensory attributes on consumer's marginal willingness to pay differed by organic juice and conventional juice.     

Risk Interpretation of the CAPM's Beta: Evidence from a New Research Method

This study tests the validity of using the CAPM beta as a risk control in cross‐sectional accounting and finance research. We recognize that high‐risk stocks should experience either very good or very bad returns more frequently compared to low‐risk stocks, that is, high‐risk stocks should cluster in the tails of the cross‐sectional return distribution. Building on this intuition, we test the risk interpretation of the CAPM's beta by examining if high‐beta stocks are more likely than low‐beta stocks to experience either very high or very low returns. Our empirical results indicate that beta is a strong predictor of large positive and large negative returns, which confirms that beta is a valid empirical risk measure and that researchers should use beta as a risk control in empirical tests. Further, we show that because the relation between beta and returns is U‐shaped, that is, high betas predict both very high and very low returns, linear cross‐sectional regression models, for example, Fama–MacBeth regressions, will fail on average to reject the null hypothesis that beta does not capture risk. This result explains why previous studies find no significant cross‐sectional relation between beta and returns.     

The Relationships of Informal High Performance Work Practices to Job Satisfaction and Workplace Profitability

Recent empirical evidence reveals considerable divergence between management reports and employee reports regarding organizational high performance work practices (HPWPs). This divergence implies that employees may not participate in some HPWPs that are formally present in their organizations, but also, that employees may participate in HPWPs that are not formally present in their organizations. In this study, we examine the implication of the latter case (i.e., employee participation in “informal” HPWPs) for employee‐level and organization‐level outcomes. Our analyses, using data from the Statistics Canada Workplace and Employee Survey, suggest that employee participation in informal HPWPs is associated with enhanced job satisfaction and workplace profitability in a similar way as employee participation in formal HPWPs is associated with these outcomes.