Do individual investors learn from their mistakes?

Based on recent empirical evidence which suggests that as investors gain experience, their investment performance improves, we hypothesize that the specific mechanism through which experience translates into better investment returns is closely related to learning from investment mistakes. To test our hypotheses, we use an administrative dataset which covers the trading history of 19,487 individual investors. Our results show that underdiversification and the disposition effect do not decline as investors gain experience. However, we find that experience correlates with less portfolio turnover. We conclude that compared to other investment mistakes, it is relatively easy for individuals to identify and avoid costs related to excessive trading activity. When correlating experience with portfolio returns, we find that as investors gain experience, their portfolio returns improve. A comparison of returns before and after accounting for transaction costs reveals that this effect is related to learning from overtrading.     

Do remittances to emerging countries improve their economic development? Understanding the contingent role of culture

We contribute to extant research that has largely focused on foreign direct investment by examining how an under-studied type of financial inflow (remittances) influences the economic development of recipient Emerging Market Countries (EMCs). We do so by explaining how variations in the cultural context of recipient EMCs influence the value-generating effects of remittances. Our study helps us understand why certain nations can use remittances to improve their economic development (whereas others fail to do so) and the role that cultural contingencies play in determining such outcomes. The empirical analysis of 28 EMCs reveals an interesting pattern, showing that masculinity and power distance increase the economic effects of remittances, whereas uncertainty avoidance and individualism decrease such effects.     

What Does Hollywood Think Nonprofit CEOs Do All Day? Screen Depictions of NGO Management

This article explores the cinematic image of chief executive officers (CEOs) of nonprofit organizations in the U.S. Movie CEOs head a broad range of the nongovernmental organizations, including hospitals, colleges, social service agencies, prep schools, labor unions, legal aid, faith-based and youth-serving. They are predominantly white males. Their professional backgrounds include medicine, teaching, union organizing, social activism, clergy, law and environmental activism. Movie audiences see nonprofit CEOs involved in the mundane and inspirational elements of day-to-day management. One of their primary responsibilities consists of overseeing line functions, including fund raising, media relations, managing volunteers and board relations. But, nonprofit managers are also responsible for broader concerns, such as protecting the organization's values and equilibrium. Some movie nonprofit CEOs are shown multitasking and trying to balance competing demands from multiple stakeholders.     

Do transformational CEOs always make the difference? The role of TMT feedback seeking behavior

In the present paper, we raise the question whether CEO transformational leadership invariably makes a difference for team performance and change effectiveness. Since in general, CEOs are surrounded by a team of highly influential top managers, we argue that the effectiveness of CEO transformational leadership is contingent on the feedback seeking behavior of their top management team (TMT). Data from 38 TMTs and their CEOs demonstrated that transformational leadership was positively related to both TMT performance and effectiveness of organizational change, but only when the TMT engaged in low levels of feedback seeking behavior. As predicted, there was no relationship between CEO transformational leadership and performance and change effectiveness for teams exhibiting high levels of feedback seeking behavior. These findings suggest that for high-feedback seeking TMTs, organizational results can be achieved without a transformational CEO.     

Shifting the Goalposts? Analysing Changes to Performance Peer Groups Used to Determine the Remuneration of FTSE 100 CEOs

This paper examines year‐on‐year changes to the composition of performance peer groups used for relative performance evaluation in setting CEO pay in FTSE 100 companies and finds evidence of peer selection bias. The authors find that firms keep their peer groups weak by excluding relatively stronger performing peers. They also show that peer selection bias is less pronounced in firms with higher institutional investor ownership, which suggests that institutional investors might be aware of the risks of peer selection bias. The results suggest that peer group modifications can be viewed, at least in part, as an expression of managerial rent‐seeking.     

Do Parental Transfers Reduce Youths' Incentives to Work?

Abstract. This paper uses data from the National Longitudinal Survey of Youth 1997 to examine the effects that parental transfers from a family have on a youth's labor supply. The results from a fixed‐effects two‐stage least squares estimator suggest that: (i) parental pocket money reduces youths' incentives to work; (ii) parental allowances have a non‐linear effect on hours worked; (iii) the subsample of siblings shows similar patterns that parental transfers have a negative impact on hours worked, although the magnitudes are slightly weaker than the full sample; and (iv) the response to parental transfers varies by age.     

What Should Planners Do to Address Unethical Political Pressure?

This paper presents the case study of three planners who risked their jobs to oppose unethical political pressures in Kathmandu Valley, Nepal. It attempts to understand what was done by these planners to address those pressures and what lessons could we learn from their experiences. This research found that in a hostile political environment where unethical political pressure is strong, and voicing is of little help, unique actions of procedural planning (exit, deny-exit-and-expose, and defend), deontological in nature, may have to be adopted. If that is not adequate one should also consider de-communicating or manipulative actions, teleological in approach.     

Do Markets Favor Agents able to Make Accurate Predictions?

Blume and Easley (1992) show that if agents' have the same savings rule, those who maximize the expected logarithm of next period's outcomes will eventually hold all wealth (i.e. are ‘most prosperous’). However, if no agent adopts this rule then the most prosperous are not necessarily those who make the most accurate predictions. Thus, agents who make inaccurate predictions need not be driven out of the market. In this paper, it is shown that, among agents who have the same intertemporal discount factor (and who choose savings endogenously), the most prosperous are those who make accurate predictions. Hence, convergence to rational expectations obtains because agents who make inaccurate predictions are driven out of the market.     

Why do firms decide to stop their share repurchase programs?

We explore the distinguishing characteristics of firms that completed or ended share repurchase programs. Our findings help further understanding of the economic reasons for cancelling such programs. Based on a U.S. sample of 457 completed and 79 non-completed repurchase programs, we find a significant drop in systematic risk around completed buybacks. This suggests a response to deteriorating investment opportunities. In contrast, the systematic risk of non-completers decreases prior to the announcement, followed by an increase that peaks during the event period. This suggests that firms cancel their repurchase intentions when growth options move into the money.     

Do flow principles of operations management apply to computing centres?

By analysing large data-sets on jobs processed in major computing centres, we study how operations management principles apply to these modern day processing plants. We show that Little’s Law on long-term performance averages holds to computing centres, i.e. work-in-progress equals throughput rate multiplied by process lead time. Contrary to traditional manufacturing principles, the law of variation does not hold to computing centres, as the more variation in job lead times the better the throughput and utilisation of the system. We also show that as the utilisation of the system increases lead times and work-in-progress increase, which complies with traditional manufacturing. In comparison with current computing centre operations these results imply that better allocation of jobs could increase throughput and utilisation, while less computing resources are needed, thus increasing the overall efficiency of the centre. From a theoretical point of view, in a system with close to zero set-up times, as in the case of computing centres, the law of variation does not hold. We observe that the more variation in job lead times and resource usage, the higher the throughput of the system.     

The Tradeoffs of Inclusionary Zoning: What Do We Know and What Do We Need to Know?

Inclusionary zoning (IZ), a controversial planning tool for supplying affordable housing, grew significantly during the 2000s' housing boom in the USA. We review the resultant scholarly literature on IZ. Our key reading is that IZ can include both tradeoffs and practical efforts to address them. There is also a need for additional research. More specifically, we find that IZ programs (i) have many components and vary considerably; (ii) can increase affordable housing production and social integration, but there can be a tradeoff between these goals; and (iii) can have slight adverse market effects, but cost-offsets can help mitigate the outcomes. Finally, we discuss the need for more research, particularly in-depth case studies and make suggestions.     

Do We Need Computer Skills to Use a Computer? Evidence from Britain

Abstract. Using cross‐section data from the 1997 Skills Survey of the Employed British Workforce, we examine the labour‐market returns to self‐assessed computer skills in Britain. Many researchers, using information on computer technology use, have concluded that wage differentials between computer users and non‐users might, among others, be due to differences in the embodiment of computer skills. Using unique information on the importance, level of sophistication, and effectiveness of computer technology use, we show that computer skills do not yield significant labour‐market returns for most types of use. Examining the returns to computer skills at different levels of sophistication of use yields estimates suggesting returns to computer skills at the highest level of sophistication of use only.     

Do Interactions between Unemployment Insurance and Sickness Insurance Affect Transitions to Employment?

Previous research suggests that there are substantial interactions between the unemployment and sickness insurance in Sweden. Moral hazard arises in the interplay between these insurance systems, as by reporting sick an unemployed person can postpone unemployment insurance expiration and sometimes receive considerably higher benefits. I examine whether these interactions affect the transition rate to employment. To do this I use a reform that greatly reduced the incentives to transfer to sickness benefits. Although there is evidence that this reform effectively lowered the incidence of sick reports among the unemployed, I do not find that the reduced sick report rate in turn affected the transition rate to employment.     

Do the Falling Earnings of Immigrants Apply to Self‐employed Immigrants?

It is well known that the earnings of recent cohorts of immigrant men have fallen further behind native‐born men. Using several years of Canadian Census data, this study finds that immigrants have turned to self‐employment at a much faster rate than the native born. In addition, the earnings gap between self‐employed immigrant and native‐born men has not grown with successive cohorts, but rather has followed a cyclical movement: narrowing at the peak, and widening in times of weaker economic activity. However, immigrants choosing self‐employment still face challenges, as their earnings are far below native‐born earnings, and convergence is a lengthy process.     

Mechanisms to Induce Buyer Forecasting: Do Suppliers Always Benefit from Better Forecasting?

In this study, we consider a supplier's contract offerings to a buyer who may obtain improved forecasts for her demand over time. We investigate how the supplier can take advantage of the buyer's better forecasts and what kind of contracts he should offer to the buyer in order to maximize his profits. We model a natural forecast evolution where the buyer can obtain a more accurate forecast closer to the selling season. We assume there is information asymmetry between the buyer and the supplier at all times in that the buyer understands her demand better than the supplier. Three types of contracts that the supplier can offer are considered: (1) one where a contract is offered before the buyer has a chance to obtain improved forecasts, (2) one where a contract is offered after the buyer has obtained improved forecasts, and (3) a contingent (dynamic) contract which offers an initial contract to the buyer before she obtains improved forecasts, followed by a later contract (contingent on the initial contract) offered after improved forecasts have been obtained. We consider two scenarios: (1) where the supplier is certain that the buyer can obtain more accurate forecasts over time, and (2) where the supplier is uncertain about the buyer's forecasting capability (or forecasting cost). In the first scenario, we show that among the three types of contracts, the contingent contract is always the most profitable for the supplier. Furthermore, using the contingent contract, the supplier always benefits from higher accuracy of the buyer's demand forecasts. In the second scenario, we explicitly model the supplier's level of certainty about the buyer's capability of obtaining better forecasts, and explore how the supplier can design contracts to induce the buyer to obtain better forecasts when she is capable.     

Do Business Leaders Have Role‐Model Obligations to Be Good Political Actors?

This article raises an issue about corporate political activity that is different from those typically addressed by business ethicists. It examines the role‐model status and obligations of the business leaders who direct such activity. This approach has two potential benefits. First, since ethicists often appeal to role‐model obligations and many are concerned about corporate political activity, business ethics literature would benefit from expanding the examination of role‐model status and obligations to encompass the business leaders who direct political activity. Second, it will help ethicists determine what we should demand from business leaders who direct such activity. This is important given the U.S. Supreme Court's Citizens United decision in 2010 that guarantees corporations the free‐speech right to make political expenditures in support of political causes. I seek to demonstrate that we should hold business leaders morally accountable for how they direct political activity because of their role‐model status that arises from their greater fame, authority, or power than ordinary persons possess.     

Portfolio Flows to Emerging Capital Markets: Do Corporate Transparency and Public Governance Matter?

This paper focuses on flows to emerging capital markets (ECMs) and examines the importance of corporate transparency and public governance in attracting portfolio flows to ECMs. This paper's empirical investigation centers on the hypothesis that ceteris paribus, ECMs with better quality accounting standards and good governance attract higher levels of portfolio equity and bond flows. To assess the incremental impact of each of these factors, a pooled time series, cross‐sectional model was econometrically tested for 17 ECMS over the 1998–2002 time period. Our empirical analysis demonstrates a positive association between public governance, corporate transparency, and portfolio flows after controlling for other macroeconomic factors. The results suggest that good public governance and high accounting quality are important determinants of portfolio flows to ECMs. Finally, the paper establishes that while portfolio equity flows are significantly attracted to ECMs with strong democratic institutions, there is no significant association between portfolio bond flows and the presence of democratic institutions.