Gary Moore and Marc William Simpson
Using various proxies for the firms' return on equity (ROE) and retention ratios (b) the authors calculate 36 sustainable growth rates, on a rolling basis, for a comprehensive set…
Abstract
Purpose
Using various proxies for the firms' return on equity (ROE) and retention ratios (b) the authors calculate 36 sustainable growth rates, on a rolling basis, for a comprehensive set of firms over a 52-year period. The authors then assess the ability of these different sustainable growth rates to predict the actual, out-of-sample, five-year growth rates of the firms' earnings.
Design/methodology/approach
The authors compare the forecast to determine which method of estimating ROE and b produce the lowest mean-squared-errors and then determine the estimation method that works best for firms with different characteristics and for firms in different industries.
Findings
Overall, using the median ROE of all firms in the market and the 5-year average of the specific firm's retention ratio produces the lowest, statistically significant, forecast errors. Variations are documented based on firm characteristics, including dividend payout, level of ROE and industry.
Practical implications
The findings can guide practitioners in using the best earnings forecasting method.
Originality/value
Financial textbooks seem universally to suggest that one method of estimating the growth rate of a firm's earnings is to calculate the “sustainable growth rate” by multiplying the firm's ROE by the firm's b. At the same time, multiple methods of proxying for both ROE and b have been suggested; therefore, it is an interesting and useful empirical question, which, heretofore, has not been addressed in the literature, as to which estimation of the sustainable growth rate best approximates the actual future growth of the firm's earnings. The findings can guide practitioners in using the best earnings forecasting method.
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Anthony Dewayne Holder, Alexey Petkevich and Gary Moore
The purpose of this paper is to investigate if Bowman’s Paradox (negative association between risk and return) is caused by managerial myopia. It also attempts to disentangle…
Abstract
Purpose
The purpose of this paper is to investigate if Bowman’s Paradox (negative association between risk and return) is caused by managerial myopia. It also attempts to disentangle whether results are more consistent with one or more potential explanations.
Design/methodology/approach
The paper uses univariate statistics and OLS regressions. Empirically examines the relationship between four risk and return proxies, across a wide ranging time period and utilizing a number of model specifications. Results hold after using three-way clustered errors and using a more robust rolling five year, fixed regression methodology measure.
Findings
Confirms the existence of the Paradox. Also documents that the association between risk and return is positive in “winner” firms and negative in “loser” firms. Upon further analysis, the earlier negative risk-return relationship is found to entirely be due to the volatility of the (short term) income statement component of the performance terms. Results imply that executives of winner (loser) firms are less (more) likely to manage earnings or engage in other value destroying activities.
Research limitations/implications
The study is confined by the typical archival study limitations; including potential endogeneity, selection biases and generalizability of the results.
Practical implications
Anecdotal evidence indicates that the business community makes extensive use of these performance measures. These performance measures are also pervasive in academic research. Given the importance of controlling for both managerial and firm performance, a good performance proxy is quintessential.
Originality/value
Although over 30 years have passed since Bowman (1980) first observed the negative correlation, to date, no consensus explanation exists. Findings suggest that Bowman’s Paradox, is potentially a manifestation of managerial myopia. Thus, this result contributes to several existing research streams.
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The long‐term goal for integrated information management at the Johns Hopkins Medical Institutions is the creation of a knowledge management environment—a network of databases…
Abstract
The long‐term goal for integrated information management at the Johns Hopkins Medical Institutions is the creation of a knowledge management environment—a network of databases that an individual would tap as one would one's own memory. An important library component in this emerging environment is WELMED, a general purpose bibliographic database management system that permits the library to distribute its databases and related services to its users through common, customizable interfaces. The characteristics and components of the WELMED system are detailed.
This paper aims to analyze thoroughly all of the sources of research used to develop the money laundering (ML) and terrorist financing (TF) low-risk rating, a rating attained by…
Abstract
Purpose
This paper aims to analyze thoroughly all of the sources of research used to develop the money laundering (ML) and terrorist financing (TF) low-risk rating, a rating attained by Norway according to the Basel Institute of Governance, and determine the reasons why Norway is one of only two countries in the world according to the 2012 report, with the other being Estonia, to gain an overall low-risk ML and TF rating.
Design/methodology/approach
The differences between the USA and Norway which has obtained a low-risk ranking, were compared and contrasted.
Findings
Beginning with the Basel Institute Rating index as a legitimate source for use in assessing anti-money-laundering (AML)/TF risk, and the amount of documentation used in the index’s methodology, it has been proven that the low-risk rating Norway has received is well deserved, and that the US rating of medium risk is also deserved for the time the report was published. Achieving a low-risk rating is not as ambiguous as recently thought and neither is its application on a global scale.
Originality/value
The paper identifies practical areas of improvement and concerns in addressing the overall issue of ML and terrorist financing.
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Gary W. Moore and Edward D. White III
Cost growth in Department of Defense (DoD) weapon systems continues to be a scrutinized area of concern. One way to minimize unexpected cost growth is to derive better and more…
Abstract
Cost growth in Department of Defense (DoD) weapon systems continues to be a scrutinized area of concern. One way to minimize unexpected cost growth is to derive better and more realistic cost estimates. In this vein, cost estimators have many analytical tools to ply. Previous research has demonstrated the use of a two-step logistic and multiple regression methodology to aid in this endeavor. We investigate and expand this methodology to cost growth in procurement dollar accounts for the Engineering and Manufacturing Development phase of DoD acquisition. We develop and present two salient statistical models for cost estimators to at least consider if not use in mitigating cost growth for existing and future government acquisition programs.
Gary S. Moore and Sue L. Visscher
This study examines the effect of inflation on stock returns in the context of the policy reaction function theory. This theory contends that the nature and extent of the…
Abstract
This study examines the effect of inflation on stock returns in the context of the policy reaction function theory. This theory contends that the nature and extent of the government’s policy reaction to inflation will depend upon the current level of economic activity. A contractionary policy, which will depress stock returns, is more likely when the economy is a ta business cycle peak than at a trough. Therefore, the effect of inflation on stock returns varies with the stage of the business cycle. In order to test this theory, monthly consumer price indices, capacity utilization indices, and stock returns were examined. The results of using the returns of both a market index and a sample of individual companies between 1962 and 1988 support the theory.
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L. Gary Moore, Willie E. Hopkins and Shirley A. Hopkins
Members of the Original Equipment Manufacturer Group (OMEG) at National Semiconductor Corporation (NSC) were used to help answer the question of whether empowerment programs…
Abstract
Members of the Original Equipment Manufacturer Group (OMEG) at National Semiconductor Corporation (NSC) were used to help answer the question of whether empowerment programs, independent of quality improvement programs such as total quality management (TQM), create customer satisfaction. Results of a customer satisfaction survey, administered to a sample of NSC customers prior to implementing an empowerment program and then again one year into the program, provided affirmative support for our research question. Finally, a conceptual model suggesting a process by which empowerment programs create customer satisfaction is proposed to provide direction for future research.
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Gemma Edgar and Frances Lockie
The purpose of this paper is to focus on compacts and their effectiveness in ensuring that non‐government organisations (NGOs) are able to remain independent, critical checks on…
Abstract
Purpose
The purpose of this paper is to focus on compacts and their effectiveness in ensuring that non‐government organisations (NGOs) are able to remain independent, critical checks on government.
Design/methodology/approach
The experiences of the English Compact and the Working Together for NSW agreement, created in the Australian state of New South Wales (NSW). The analysis of Working Together relies upon interviews conducted with key informants involved in its negotiation. Using these cases the effectiveness of compacts in supporting NGOs, particularly in their role as advocates is examined.
Findings
The paper finds that, despite the similarities between the English Compact and Working Together, the NSW government has not produced similar supporting structures or mechanisms and that no champion exists to drive it within government. As a result, awareness of Working Together is low in both the NSW government and among NGOs, and, unlike the English Compact, it has had little effect on the ability of NGOs to advocate independently. As such, it is suggested that compacts do not offer long‐term solutions to the difficulties in the relationship between governments and NGOs. This is because their efficacy is reliant upon the support of government.
Research limitations/implications
The list of interviewees is by no means exhaustive. Despite numerous attempts, the authors were unable to obtain interviews from a number of figures approached from middle‐level departments within the NSW state government.
Originality/value
The interviews are original and new to the literature on compacts. This interview material is especially useful as little literature exists that analyses the Working Together for NSW agreement.
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Architectural design process is subject to ambiguities surrounding not only definition of the procedures and the flow of the process, but also the nature of the information to be…
Abstract
Architectural design process is subject to ambiguities surrounding not only definition of the procedures and the flow of the process, but also the nature of the information to be analyzed. This state of affairs is generally thought to require creative thinking for solving both different aspects of the problem, and integration of the parts of the solution. Creativity is mainly explained on the basis of novelty, utility and surprise. But it is not considered to be a unitary concept.
The underlying structure of the design process has been introduced by the present study in relation to the levels of the decision making concerning the process. In addition a multidimensional view of architectural design has been provided as part of creative design-solving process, based on a multi-sensory perception of architecture, human needs, designer's theoretical orientation for creativity, and incremental steps of creative problem-solving activity. The major realms of inquiry as part of the incremental steps of problem solving have been identified with reference to the study areas in professional degree programs in architecture. The model of architectural design process introduced is expected to help the problem solver interlink different parts of the solution established through creative design problem solving procedures.
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Julia M. Rholes and Jean Kellough
On 13 July 1974, President Nixon signed a proclamation declaring the week of 20 July National Space Week, in honor of man's landing on the moon on 20 July 1969. Although the lunar…
Abstract
On 13 July 1974, President Nixon signed a proclamation declaring the week of 20 July National Space Week, in honor of man's landing on the moon on 20 July 1969. Although the lunar landing was certainly the emotional high point for the American space program, interest in space remains quite high, as evidenced by the tremendous popularity of films and books on the subject. The intention of this article is to provide readers with a guide to materials that serve to focus attention on space exploration, not only during Space Week, but throughout the year.