Frank A. Klepetko and David A. Krinsky
As part of the process of raising funds in the United States' public equity markets, chief financial officers are invariably confronted with a somewhat arcane part of the…
Abstract
As part of the process of raising funds in the United States' public equity markets, chief financial officers are invariably confronted with a somewhat arcane part of the underwriting mechanism known as the “Green Shoe” option.
David A. Johnston and Michiel R. Leenders
The productivity and quality of working life of operations within afirm with multiple operating units can be improved by the diffusion ofincremental improvements from one unit to…
Abstract
The productivity and quality of working life of operations within a firm with multiple operating units can be improved by the diffusion of incremental improvements from one unit to another. The opportunities and problems experienced by one large multi‐unit firm in diffusing employee innovations between units are examined. It was found that incremental or Minor Technical Improvements (MTIs) do diffuse between units. Improved communication and increased under standing of the innovation process by management may increase the amount of MTI diffusion. The costs and benefits of MTI type innovation and diffusion are explored. Opportunities for more research into the diffusion of MTIs in other multi‐unit firms are discussed.
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The study of nutrition is one of the few areas in which ideas and concepts formulated by scientists and clinicians may have immediate impact, through the media, upon the…
Abstract
The study of nutrition is one of the few areas in which ideas and concepts formulated by scientists and clinicians may have immediate impact, through the media, upon the knowledge, behaviour and habits of the populace. This effect has been evident recently in the gradual rediscovery of the advantages of breast‐feeding, dietary fibre and in the possible problems of overfeeding young infants. The resurgence of interest in the possible importance of thermogenic mechanisms in regulating energy balance may have similar impact in forthcoming years.
I. Introduction The emphasis on the concept of ‘economic man’ for a long period of time has led to important outcomes each of which has serious welfare implications. First, there…
Abstract
I. Introduction The emphasis on the concept of ‘economic man’ for a long period of time has led to important outcomes each of which has serious welfare implications. First, there has been a relentless glorification of the principle of pursuit of self‐interest. It is only now that all the negative spillover effects of our wealth creating and consuming activities are being acknowledged and evaluated. Since most of these costs are costs to society rather than to a particular individual, these costs do not play any role in our production or consumption decisions. As a result, quality of life has not improved as much as the recent rise in per capita real income suggests. Second, for a long time welfare has been treated as a monotonically increasing function of the amounts of goods and services consumed. There has been a total disregard for the fact that at a given point in time an individual can afford only a fraction of the total amount of goods and services available in the society. This explains at least in part why even in the most affluent societies people are no happier today than they were in the past. And third, although the idea of interdependent welfare is not new in economics as evidenced by relative income hypothesis which shows that present consumption and hence welfare is also a function of one's past consumption and consumption of others in the society, economic analysis by and large has been carried out on the assumption of independence. Feelings like envy, jealousy, and avarice are real and powerful and play an important role in the way people perceive their welfare. Just because they cannot be conveniently incorporated in simple analytical model is a poor excuse for neglecting them.
The motivation to manage is a key factor influencing the energy and effort people bring to the job. A review of a training approach outlines action that can be taken.
The attitudes and perceptions of New Zealanders toward current consumerism issues are outlined and compared with four other countries. Many of the opinions expressed are critical…
Abstract
The attitudes and perceptions of New Zealanders toward current consumerism issues are outlined and compared with four other countries. Many of the opinions expressed are critical of the existing practices of business and appear to be common in the other four countries. The theory of consumer product life cycle suggesting the development of national consumer movements was not supported by the data obtained in New Zealand.
Teik-Kheong Tan and Merouane Lakehal-Ayat
The impact of volatility crush can be devastating to an option buyer and results in a substantial capital loss, even with a directionally correct strategy. As a result, most…
Abstract
Purpose
The impact of volatility crush can be devastating to an option buyer and results in a substantial capital loss, even with a directionally correct strategy. As a result, most volatility plays are for option sellers, but the profit they can achieve is limited and the sellers carry unlimited risk. This paper aims to demonstrate the dynamics of implied volatility (IV) as being influenced by effects of persistence, leverage, market sentiment and liquidity. From the exploratory factor analysis (EFA), they extract four constructs and the results from the confirmatory factor analysis (CFA) indicated a good model fit for the constructs.
Design/methodology/approach
This section describes the methodology used for conducting the study. This includes the study area, study approach, sources of data, sampling technique and the method of data analysis.
Findings
Although there is extensive literature on methods for estimating IV dynamics during earnings announcement, few researchers have looked at the impact of expected market maker move, IV differential and IV Rank on the IV path after the earnings announcement. One reason for this research gap is because of the recent introduction of weekly options for equities by the Chicago Board of Options Exchange (CBOE) back in late 2010. Even then, the CBOE only released weekly options four individual equities – Bank of America (BAC.N), Apple (AAPL.O), Citigroup (C.N) and US-listed shares of BP (BP.L) (BP.N). The introduction of weekly options provided more trading flexibility and precision timing from shorter durations. This automatically expanded expiration choices, which in turned offered greater access and flexibility from the perspective of trading volatility during earnings announcement. This study has demonstrated the impact of including market sentiment and liquidity into the forecasting model for IV during earnings. This understanding in turn helps traders to formulate strategies that can circumvent the undefined risk associated with trading options strategies such as writing strangles.
Research limitations/implications
The first limitation of the study is that the firms included in the study are relatively large, and the results of the study can therefore not be generalized to medium sized and small firms. The second limitation lies in the current sample size, which in many cases was not enough to be able to draw reliable conclusions on. Scaling the sample size up is only a function of time and effort. This is easily overcome and should not be a limitation in the future. The third limitation concerns the measurement of the variables. Under the assumption of a normal distribution of returns (i.e. stock prices follow a random walk process), which means that the distribution of returns is symmetrical, one can estimate the probabilities of potential gains or losses associated with each amount. This means the standard deviation of securities returns, which is called historical volatility and is usually calculated as a moving average, can be used as a risk indicator. The prices used for the calculations are usually the closing prices, but Parkinson (1980) suggests that the day’s high and low prices would provide a better estimate of real volatility. One can also refine the analysis with high-frequency data. Such data enable the avoidance of the bias stemming from the use of closing (or opening) prices, but they have only been available for a relatively short time. The length of the observation period is another topic that is still under debate. There are no criteria that enable one to conclude that volatility calculated in relation to mean returns over 20 trading days (or one month) and then annualized is any more or less representative than volatility calculated over 130 trading days (or six months) and then annualized, or even than volatility measured directly over 260 trading days (one year). Nonetheless, the guidelines adopted in this study represent the best practices of researchers thus far.
Practical implications
This study has indicated that an earnings announcement can provide a volatility mispricing opportunity to allow an investor to profit from a sudden, sharp drop in IV. More specifically, the methodology developed by Tan and Bing is now well supported both empirically and theoretically in terms of qualifying opportunities that can be profitable because of the volatility crush. Conventionally, the option strategy of shorting strangles carries unlimited theoretical risk; however, the methodology has demonstrated that this risk can be substantially reduced if followed judiciously. This profitable strategy relies on a set of qualifying parameters including liquidity, premium collection, volatility differential, expected market move and market sentiment. Building upon this framework, the understanding of the effects of persistence and leverage resulted in further reducing the risk associated with trading options during earnings announcements. As a guideline, the sentiment and liquidity variables help to qualify a trade and the effects of persistence and leverage help to close the qualified trade.
Social implications
The authors find a positive association between the effects of market sentiment, liquidity, persistence and leverage in the dynamics of IV during earnings announcement. These findings substantiate further the four factors that influence IV dynamics during earnings announcement and conclude that just looking at persistence and leverage alone will not generate profitable trading opportunities.
Originality/value
The impact of volatility crush can be devastating to the option buyer with substantial capital loss, even for a directionally correct strategy. As a result, most volatility plays are for option sellers; however, the profit is limited and the sellers carry unlimited risk. The authors demonstrate the dynamics of IV as being influenced by effects of persistence, leverage, market sentiment and liquidity. From the EFA, they extracted four constructs and the results from the CFA indicated a good model fit for the constructs. Using EFA, CFA and Bayesian analysis, how this model can help investors formulate the right strategy to achieve the best risk/reward mix is demonstrated. Using Bayesian estimation and IV differential to proxy for differences of opinion about term structures in option pricing, the authors find a positive association among the effects of market sentiment, liquidity, persistence and leverage in the dynamics of IV during earnings announcement.
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Cheok San Lam and Eleanor R.E. O'Higgins
The purpose of this paper is to examine the interrelated influences of managers' emotional intelligence, leadership styles and employee outcomes. In particular, this study aims to…
Abstract
Purpose
The purpose of this paper is to examine the interrelated influences of managers' emotional intelligence, leadership styles and employee outcomes. In particular, this study aims to explore the potential mediating effects of managers' transformational leadership style on the relationships between managers' emotional intelligence and employee outcomes of: employee performance, job satisfaction, organisational commitment and job stress.
Design/methodology/approach
The study was conducted in two large organisations in Shanghai, China, on a sample of 323 participants, including both managers and subordinate employees. Emotional intelligence was measured by using the Wong Emotional Intelligence Scale (WEIS), and leadership style, using the Multifactor Leadership Questionnaire (MLQ‐5x Short).
Findings
The results showed that managers' transformational leadership style fully mediates the relationship between managers' emotional intelligence and employee job satisfaction. However, no mediating effect of managers' transformational leadership style is found on the relationship between managers' emotional intelligence and employee performance, organizational commitment and job stress.
Originality/value
The results of this study contribute to current insights about the interrelationships on managers' emotional intelligence, leadership style and employee outcomes, showing that the power of managers' emotional intelligence on job satisfaction must be expressed through a third mediating variable, transformational leadership.
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Gareth Hickman and Antonia Morris
This paper aims to report on the development of a psychometric measure of insight, The Risk Insight Scale. This measure is intended to assess the insight and understanding of…
Abstract
Purpose
This paper aims to report on the development of a psychometric measure of insight, The Risk Insight Scale. This measure is intended to assess the insight and understanding of individuals with intellectual disabilities (ID) who engage in offending and/or risky behaviour. The measure assesses insight in two domains: insight into offending and/or risky behaviours and insight into the need for treatment for offending and/or risky behaviours.
Design/methodology/approach
Forty secure inpatients with ID were assessed using the measure. Preliminary data are presented on inter-rater and test–retest reliability, internal consistency and validity.
Findings
The data demonstrate that the new tool has good internal consistency, good inter-rater reliability and good test–retest reliability.
Research limitations/implications
The psychometric measure must be completed by someone who is familiar with the patient. More data is needed to validate the measure at this stage. Further discussion is provided regarding insight as a construct and its role in risk assessment.
Practical implications
The psychometric measure is both of potential benefit in clinical settings with regard to informing risk assessment and case management and may also serve as an effective tool in intervention outcome evaluation and academic research trials.
Originality/value
The generation of new tool to support and enhance risk assessment, specifically in supplementing assessment of insight in individuals with ID with offending and/or risky behaviour.
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Ming Ming Chiu, Chi Keung Woo, Alice Shiu, Yun Liu and Bonnie X. Luo
A team member might exert little effort and exploit teammates’ work (free riding), which can discourage their efforts. The purpose of this paper is to examine whether free riding…
Abstract
Purpose
A team member might exert little effort and exploit teammates’ work (free riding), which can discourage their efforts. The purpose of this paper is to examine whether free riding devalues team projects and whether an online assessment system for individual scores (OASIS) system can reduce student perceptions of free riding and its harmful effects. OASIS includes: contractual commitment, team discussion, median peer assessment of each member’s contribution, assessment revision opportunities, conditional teacher participation and final appeal.
Design/methodology/approach
University students (238 in India and 60 in Hong Kong) completed pre-and post-surveys.
Findings
Students who valued team projects more than others experienced fewer past free riders, viewed team members as contributing equally, or viewed free riding as harming fair grading. After OASIS, these students reported that only 3 percent of their teammates were free riders, and were less likely to perceive that free riders had harmed them or hindered fair grading. Results did not differ across gender or regions.
Research limitations/implications
These data are correlational rather than longitudinal, and hence cannot determine causality.
Practical implications
The OASIS system requires a computer.
Originality/value
This is the first study to test a system for reducing free riders across countries.