It is well documented that firms that are neglected by analysts and large institutions provide superior investment performance. This paper studies whether that effect is caused by…
Abstract
It is well documented that firms that are neglected by analysts and large institutions provide superior investment performance. This paper studies whether that effect is caused by an upward bias in analyst earnings forecasts. The idea is that the more popular firms are the ones with the greatest earnings estimation bias. It was found that after controlling for earnings estimation bias the neglect effect was considerably weakened. However, it was also found that there was no relation between analyst following and earnings estimation bias.
Details
Keywords
Richard J. Dowen and Thomas Mann
Under rule 12b‐1, mutual funds are allowed to charge a fee of up to 100 basis points per year to cover marketing and distribution costs. Under NASD rules, a fund may charge a…
Abstract
Under rule 12b‐1, mutual funds are allowed to charge a fee of up to 100 basis points per year to cover marketing and distribution costs. Under NASD rules, a fund may charge a 12b‐1 fee of up to 25 basis points per year and still advertise itself as a no load fund. This fee is used to make the funds charging it more visible to the investing public. The question explored here is very simple; are the investors in no load funds well served by investing in those funds that charge this fee? It is shown here that the no load funds charging 12b‐1 fees do not perform as well as the funds that do not charge the fee but that they experience greater cash inflows.
Details
Keywords
According to the capital asset pricing model, a stock’s required rate of return is determined by systematic risk, otherwise known as beta. Usually betas are estimated using…
Abstract
According to the capital asset pricing model, a stock’s required rate of return is determined by systematic risk, otherwise known as beta. Usually betas are estimated using historic data. It is shown here that future betas have a stronger relationship to analysts’ long‐term growth forecast than to historic betas.
Details
Keywords
Joshua Doane, Judy A. Lane and Michael J. Pisani
Volume 25 celebrates the 25th year of publication for the American Journal of Business (AJB). Launched by eight MAC schools of business in March 1986, the Journal has featured…
Abstract
Volume 25 celebrates the 25th year of publication for the American Journal of Business (AJB). Launched by eight MAC schools of business in March 1986, the Journal has featured more than 700 authors who have contributed more than 330 research articles at the intersection of theory and practice. From accounting to marketing, management to finance, the Journal prominently covers the breadth of the business disciplines as a general business outlet intended for both practitioners and academics. As the Journal reaches out beyond the MAC in sponsorship, authorship, and readership, we assess the Journal’s first quarter century of impact.
Details
Keywords
Richard J. Dowen and Thomas L. Mann
It is a fairly common practice for the CEOs of onecorporation to serve on the Board of Directors of another corporation. The question addressed here is the effect that the…
Abstract
It is a fairly common practice for the CEOs of onecorporation to serve on the Board of Directors of another corporation. The question addressed here is the effect that the presence of outside CEOs on the Board of Directors has on the compensation of the firm’s CEO. There are two alternative views that emerge from the literature. One view is that CEOs are selected to serve as directors because they will back management, including proposals for increased compensation. The other possibility is that a CEO knows the techniques that another CEO may use to obtain increased compensation and will thus serve as a better watch dog than a non‐CEO. Using a sample of the Fortune 1000, we find that for non regulated firms there is a negative relationship between the proportion of outside CEOs serving on the board and three different measures of CEO compensation after controlling for firm performance in four different ways.
In 1934 the Milk Marketing Board came into being, and with it the “Milk in Schools Scheme.” and all its promises to provide millions of school children with milk “approved” by…
Abstract
In 1934 the Milk Marketing Board came into being, and with it the “Milk in Schools Scheme.” and all its promises to provide millions of school children with milk “approved” by County Medical Officers. Much effort has been made on school milk in this county. Often it is found that the milk “approved” does not reach the schools, but other milk does, which has not been covered by the arrangements made by the county council with the Ministry of Agriculture's veterinary staff. This is usually discovered when a school sample is found tuberculous, and arising from the subsequent enquiry. The steps taken as practised in this county are: (a) The proposed producer and supplier is visited, and his methods and cows inspected. (b) A sample of the “bulk” milk is procured for cleanliness and disease tests (the test for tubercle bacilli takes six weeks—this is unfortunate, but it is the best our laboratories can do). (c) The supply to the school is “approved” and the veterinary surgeon of the Ministry is requested to clinically inspect the herd quarterly—(no authority exists to tuberculin test cows without permission of the owners). Visits to schools are made frequently and samples of milk are tested from time to time. Those schools situated in convenient areas in the county receive “pasteurised” milk, which, incidentally, does not always satisfy the requirements of law, despite the cry often heard that pasteurisation is the cure for all unsatisfactory milk. The supplier has to be relied upon to deliver the “approved” milk—if he does not, the control instigated is somewhat lost, except the milk he is actually delivering is tested about once in three months. As there are some 250 schools taking milk this work is considerable. What control is operative in other counties I cannot say, but it is felt that the control of milk supplied to children leaves very much to be desired. As previously stated, steps ought to be taken to direct, wherever possible, “tuberculin tested” milk into the schools. At present this milk is largely wasted. Suppliers to schools, in the main, are not desirous of the business, and decline it whenever possible. County councils are also active through their agricultural and advisory departments. Very useful work had been done in this direction, but such activity is non‐statutory, and the Dairy Instructors may only visit farms when help is requested. The scope of this work has been enhanced by the inclusion in the war agricultural departments of a milk production section. Thus a further staff has been created, which possesses new sampling officers to sample milk, after it has been sold and received at the collecting depots throughout the country. This staff, which at the moment is declared to be for war time only, probably supersede numerically all the peace time milk administrators. The reasons for setting up the war time staff is to prevent losses of milk due to bad production, and to increase production. It is obvious that if the peace time arrangements could be consolidated, and a bold administration proceeded with, to compel the producers and others to comply with the law on the subject, there would be no need for a new body, which probably will remain after peace comes. What is needed, and this has been the case for many years, is a real drive for clean, disease‐free milk. The position as outlined in this lengthy statement is not due to the present emergency. The muddle has been in operation throughout all the past. What is required, in my opinion, is modification of the legislation whereby all the administrative control of milk, other than marketing (which the Milk Marketing Board can manage), is brought under the control of a central authority. If county councils are to continue in the post‐war period I am of the opinion that this body should be that central authority. One department, possessing the necessary classes of full‐time officers, including a section for educational and advisory work, could effectively and uniformly administer the law, which would result in the clean, safe milk which England craves for. I think it would be too much to hope for, whereby the Ministry of Agriculture's veterinary staffs might be included once more on the county council staff. On second thoughts, it may be well that they remain where they are, provided the staffs are adequate to cover at regular intervals all the herds, with powers to tuberculin test, as well as to clinically examine, when necessary. It has never yet been made a penal offence to dispose of cows which react to the tuberculin test, consequently a producer may, and does, pass tuberculous cows on through the open market to other producers. Surely the sale of such animals should be prevented as a first step to stop the spread of infection, and some means found of gradually eliminating them by destruction. An arrangement could be made whereby the county council staff may work in close co‐operation with the Ministry's veterinary surgeons, mainly by indicating where tuberculous infection exists as a result of milk sampling. The Animal Health Divisions of the Ministry are established throughout the country, each serving a small group of counties with veterinary staffs housed in each county. Such a new beginning would obviate the necessity of “putting the cart before the horse,” which is really the trend of things as seen in the establishment of the National Milk Testing Scheme. This scheme will show that large quantities of milk has a poor keeping quality, because of the lack of inadequate inforcement of the law. I say get the law administered in the first place. I cannot close without touching on the subject of marketing. For years milk producers have not been paid enough for their product. I used to think that better payment would almost solve the dirty milk problem, because this would enable the farmer to pay a wage which would attract the labour of more suitably educated persons who would thereby respond to modern methods. Milking cows properly is not the job for the village idiot: it is highly skilled work. However, judging by the small number of producers who have taken advantage of the Designated scheme, whereby they receive extra payment, doubts arise as to whether better prices would of necessity improve the nature of production. It must be remembered that the law has required milk producers to provide a clean milk, but, because for one reason and another this has not been done, the legislature, by the introduction of the Designated Orders, recognised clean and dirty milk, extra payment being arranged to induce the production of clean milk to those who had hitherto not carried out their legal obligations. All milk should be of one grade, conforming to a bacteriological standard of purity, and eventually all cows should pass periodically the tuberculin test. It is very necessary, however, to pay producers a fair price, and enforcement of the law would thereby become easier. You will never have a pure milk supply by the continuance of a policy of tinkering and patching. The whole set‐up needs altering, and vested interests prevented from barring the way to progress. There are other diseases besides tuberculosis which need dealing with in the interests of agriculture generally, but it seems that tuberculosis is the one which is the most capable of transmitting serious disease to man, with the exception of contagious abortion. The recently introduced plan whereby, for the payment of a premium by the dairy farmer, a periodic clinical inspection of his cattle is undertaken is good as far as it goes, but it is only tinkering about with the few herds which to date have adopted the scheme. Already official samples of milk from such herds have been noted to be tuberculous. In view of the large sum of money which is apparently available, but which in one way or another is being largely wasted, why not embark upon a bold scheme of disease eradication by compulsory methods, instead of the Ministry of Agriculture and Fisheries scheme of “attestation,” which again is voluntary.
John Banko, Scott Beyer and Richard Dowen
The purpose of this paper is to examine market concentration, economies of scale, economies of scope, and the relative size of a particular fund, within a fund family, as…
Abstract
Purpose
The purpose of this paper is to examine market concentration, economies of scale, economies of scope, and the relative size of a particular fund, within a fund family, as determinants of mutual‐fund expense ratio. This examination is focused at the asset‐manager level and is based on the Morningstar equity and fixed‐income style classifications.
Design/methodology/approach
All data used in this study come from the July Morningstar Principia database for the years 1997 through 2006. One challenge of working with these data is that Morningstar treats each separate class of a fund as though it were an individual fund. As a result all Morningstar data items are reported for each fund class as though they are data items for a separate fund. The data are modified so that the items for separate classes of a fund are merged into data for a single fund. For example, assets in a fund become the total of the assets in each class of the fund.
Findings
This study contributes to the literature on mutual‐fund managers, and the literature on the structure of mutual funds, by showing that market concentration at the asset‐manager level varies substantially across Morningstar styles, particularly for the fixed‐income funds. The paper shows that increased market concentration is associated with greater expenses for the funds under management, within a given Morningstar‐style box, for both equity funds and for fixed‐income funds. We also show that increased costs are partially offset by economies of scope for the fixed‐income funds.
Originality/value
This paper extends the current literature in several ways. First, it confirms the existence of economies of scale at the fund level within Morningstar style classifications. Second, it documents the existence of varying levels of market concentration within different Morningstar style classifications. Third, the results demonstrate that there is a negative relation between the scope of funds handled across the Morningstar classifications by a particular fund manager and the expense ratio for particular funds. Finally, the results presented in this paper show that the largest funds within a family are associated with the highest expense ratios in the family.
Details
Keywords
Angus Laing, Terry Newholm and Gill Hogg
The internet driven information revolution is frequently cited as one of the key drivers (re‐)shaping contemporary consumption. In particular, the internet has been seen as…
Abstract
Purpose
The internet driven information revolution is frequently cited as one of the key drivers (re‐)shaping contemporary consumption. In particular, the internet has been seen as disrupting established conventions in professional services. Popularly, it has been viewed as a liberating medium, a mechanism by which consumers and citizens have been able to challenge the authority of the professional establishment. Yet for consumers, the internet can equally be viewed as generating new uncertainties and challenges in terms of negotiating a new settlement with professionals and reconfiguring the service encounter. The purpose of this paper is to explore experiences of consumers with the use of internet derived information in respect of complex professional services and the impact of such information utilisation on the format of the service encounter.
Design/methodology/approach
Empirical data is generated through interviews with professionals (n=24) and consumer focus groups (n=10/53).
Findings
The paper argues that the multi‐faceted nature of the internet creates informational “spaces” which present both opportunities and threats to consumers in renegotiating the service encounter. Balancing the paradoxes created by these informational spaces is at the core of the challenge confronting contemporary service consumers. Irrespective of the nature of that space, the effect is to create a driver for change, challenging the established practices of both consumer and professional to reshape the service encounter.
Research limitations/implications
Focus group research does not enable a judgement about the prevalence or distribution of behaviours among consumers. Nevertheless, this paper advances understanding of contemporary consumption practices and provides a new perspective on nature of consumer utilisation of information within the consumption process.
Practical implications
It is inevitable that professionals and service organisations will be required to respond to a complex and rapidly evolving set of consumer behaviours and rethink approaches to the delivery of professional services.
Originality/value
The paper addresses an emergent phenomenon and provides unique insights into the changing dynamics of consumption practices in the contemporary knowledge economy.
Details
Keywords
Bo Bergman, Bengt Klefsjö and Lars Sörqvist
The aim of this paper is to investigate the development of the quality movement in Sweden since the mid-20th century. The authors are convinced that a summary of the Swedish…
Abstract
Purpose
The aim of this paper is to investigate the development of the quality movement in Sweden since the mid-20th century. The authors are convinced that a summary of the Swedish quality journey so far will offer important lessons for further quality improvements in Sweden and elsewhere.
Design/methodology/approach
The authors study how the quality movement has been included in the industrial agenda and how it has been adopted in student curricula and in research. The authors have a focus on how business leaders have learnt, adopted, adapted and innovated with respect to quality development. often in collaboration with academia.
Findings
Although the quality movement has fit well with the Swedish culture and that successful corporate leaders have successfully used the specific cultural characteristics there is still a lot to be learnt with respect to the public sector, where the ideas from the quality movement have problem to overcome institutional barriers.
Research limitations/implications
The study is limited to the Swedish context.
Practical implications
There is a serious need to revitalize the public sector by getting leaders and politicians to understand the need for systematic quality improvement.
Social implications
If future Swedish achievements with respect to healthcare and other social welfare elements are to once again become world-class, the public sector needs to be open-minded and collaborate with the industrial sector and academia to find cost-effective strategies for making quality improvements. However, the private sector must also be alert not to be overtaken by some highly active Asian countries.
Originality/value
Swedish large companies have been very successful in applying quality leadership – however, in the public sector, this has not been the case. Suggestions for improvement are made.