supply chain information in analyst reports on publicly traded companies abstract analyst reports are an important source of secondary data on companies for understanding a company s performance in the recent past and for getting guidance on its future performance we therefore analyzed the text of 1028 equity analyst reports of 145 fortune 500 global companies not including services sectors like it or banking published between 2009 and 2011 for supply chain related information we found that nearly three fifths of these reports contained supply chain information pertaining to inbound process or outbound aspects of the supply chain of the company at the report level there are significant industry effects for supply chain related content in analyst reports on the other hand aggregating information at the company level it appears that analysts focus on a particular supply chain aspect for a company as well as its sector furthermore logistic regression analysis suggests a link between the supply chain information provided when this is positive in orientation and the buy sell hold recommendation of the analyst regarding the company s stock

analysts interim earnings forecasts evidence on the forecasting process existing empirical evidence indicates that analyst forecasts of corporate earnings do not meet the strict rationality standards prescribed by econometric tests of the rational expectations hypothesis 1 in this paper we address the question of whether the expectation formation process underlying analyst forecasts is adaptive or whether these forecasts are influenced by noninformational factors such as incentives arising from the market for their forecasts o brien 1988 lin and mcnichols 1993 francis and philbrick 1993 and dugar and nathan 1992 and interaction between judgmental and or statistical forecasting methods bunn and wright 1991 fan 1990 and hoerl and kennard 1970 the rejection of rational expectations gives rise to two views of the forecasting process of analysts the first based on an informational argument is that the forecasting process is adaptive marcet and sargent

information and efficiency goal arrival in soccer betting an efficient market incorporates news into prices immediately and fully tests for efficiency in financial markets have been undermined by information leakage we test for efficiency in sports betting markets real world markets where news breaks remarkably cleanly applying a novel identification to high frequency data we investigate the reaction of prices to goals scored on the cusp of half time this strategy allows us to separate the market s response to major news a goal from its reaction to the continual flow of minor game time news on our evidence prices update swiftly and fully

permanent and transitory movements in labor income an explanation for excess smoothness in consumption many have argued that if labor income is difference stationary the permanent income hypothesis predicts that consumption should be relatively volatile in u s aggregate data labor income is well characterized as having a unit root however consumption turns out to be relatively smooth this anomaly is known as deaton s paradox i resolve deaton s paradox by providing decompositions of labor income into permanent and transitory components these preserve the univariate dynamic properties of labor income however when agents distinguish permanent and transitory movements in their labor income as the rational expectations hypothesis asserts they should the permanent income hypothesis correctly predicts the observed smoothness in consumption

analyst forecasting errors and their implications for security analysis a comparison of 66 100 consensus estimates of wall street analysts with reported earnings for a large sample of nyse amex and otc companies demonstrates that their forecasts differ significantly from actual reported earnings a minority of estimates fall within a range around reported earnings considered acceptable to many professional investors the error rates are not meaningfully affected by the business cycle or industry groupings the average error also appears to be increasing over time these findings question the use of finely calibrated earnings forecasts that are integral to the most common valuation models and indirectly question the valuation methods themselves

the forecast accuracy of individual analysts evidence of systematic optimism and pessimism o brien 1990 examines the annual earnings forecast accuracy of individual analysts reporting to the institutional brokers estimate system ibes of lynch jones and ryan during july 1975 september 1982 using a regression model which adjusts for average firm and year effects o brien finds no evidence of differential forecast accuracy comparing individual analysts earnings forecasts to median consensus forecasts during 1983 86 we also find no statistically significant evidence of differential analyst forecast accuracy our result however does not mean that one analyst s forecasts are much like another s we find that analysts are persistently optimistic or pessimistic relative to consensus forecasts we examine this persistent behavior and its effect on measures of forecast accuracy over a sample

union influence in post socialist europe we examine enterprise level union influence in post socialist countries we hypothesise that calculative hrm is more strongly associated with low levels of union influence than collaborative hrm using the uk as a benchmark we find that calculative hrm is indeed more damaging to union influence than collaborative although to a much lesser extent than in the uk we find that union influence corresponds to enterprise union density and is most apparent when the business cycle is unfavourable we explain our findings by reference to east european members continued attachment to unionism for non bargaining reasons

foreign investment in the presence of an informal sector in the context of a segmented economy in which the urban unemployed subsist in informalsector activities earl grinols has recently questioned conventional wisdom whereby foreign investment with repatriated earnings is necessarily immiserizing for the host country in this paper we extend grinols s analysis and place it in a broader context permitting richer conceptions of informal sector activities our principal finding is that the original insight is surprisingly robust once heckscher ohlin samuelson factor intensities are suitably modified and interpreted our models may also have independent interest for other work on the informal sector

optimistic behavior when a decision bias is costly an experimental test the existence of optimism when biased decisions are costly is investigated experimentally subjects make an informed guess about an exogenously determined event the outside temperature a couple of days later payments in the control group depend only on how close the guess was to the realized temperature while payments in the treatment group also depend positively on realized temperature the data show the treatment group subjects to guess higher temperatures that is higher payments compared with the control group results thus indicate that there is optimism also when a decision bias is costly jel c91 d81 d84

enlarging the varieties of capitalism the emergence of dependent market economies in east central europe this article enlarges the existing literature on the varieties of capitalism by identifying a third basic variety that does not resemble the liberal market economy or coordinated market economy types the dependent market economy dme type as it is named by the authors is characterized by the importance of foreign capital for the socioeconomic setup and is located in postsocialist central europe since the collapse of state socialism in the late 1980s the czech republic hungary poland and the slovak republic have introduced a rather successful model of capitalism when compared with other postsocialist states this article identifies the key elements of the dme model and discusses their interplay dme s have comparative advantages in the assembly and production of relatively complex and durable consumer goods these comparative advantages are based on institutional complementarities between skilled but cheap labor the transfer of technological innovations within transnational enterprises and the provision of capital via foreign direct investment

unifying underreaction anomalies this paper asks whether momentum and postevent drift are manifestations of the same underlying mechanism or are separate phenomena we find that both effects can be attributed to persistence in returns following news that affects expected earnings or earnings growth holding these quantities fixed there is no momentum effect nor is there postevent drift for our sample of events which includes seasoned equity offerings repurchases equity financed mergers and dividend initiations and omissions the implication is that return continuation follows fundamental news in general and in aggregate this explains momentum

reading the tea leaves model uncertainty robust forecasts and the autocorrelation of analysts forecast errors abstract we put forward a model in which analysts are uncertain about a firm s earnings process faced with the possibility of using a misspecified model analysts issue forecasts that are robust to model misspecification we estimate that this mechanism explains approximately 60 of the autocorrelation in analysts forecast errors the remainder stems from the cross sectional variation in mean forecast errors and in analysts estimation errors of the persistence of earnings growth shocks consistent with our model we find that analysts learn about some features of the earnings process but not others and this learning reduces but does not eliminate the autocorrelation of forecast errors as firms age other potential explanations for the autocorrelation of analyst forecast errors are rejected our model of robust forecasting applies not only to analysts forecasts but also to all model based forecasts

optimal tariffs for trade in monopolistically competitive commodities abstract the welfare implications of international trade are examined for an economy which contains a monopolistically competitive industry and imports products directly competitive with this industry necessary and sufficient conditions for such trade to increase welfare are found and optimal import tariffs are derived and analysed

the possibility of welfare gains with capital inflows in a small tariff ridden economy capital inflows with full repatriation give rise to welfare improvement possibilities in a small tariff distorted economy when imperfect competition and increasing returns are allowed for in one sector of a two sector model this is in contrast to the brecher alejandro proposition that capital inflows with full repatriation are necessarily immiserizing for a small tariff ridden economy we find that welfare gains chances are greater a the higher the expenditure share of the capital intensive differentiated good b the lower the substitutability between brands and c the lower the share of tariff revenue in national income

corporate takeover bids methods of payment and bidding firms stock returns this study explores the role of the method of payment in explaining common stock returns of bidding firms at the announcement of takeover bids the results reveal significant differences in the abnormal returns between common stock exchanges and cash offers the results are independent of the type of takeover bid i e merger or tender offer and of bid outcomes these findings supported by analysis of nonconvertible bonds are attributed mainly to signalling effects and imply that the inconclusive evidence of earlier studies on takeovers may be due to their failure to control for the method of payment recent studies on corporate takeovers provide inconclusive results on the valuation effects of acquisitions on the common stock of bidding firms 1 substantial differences are reported between the studies that analyze acquisitions initiated as tender offers and those that confine their samples to merger proposals the existence of mixed empirical findings for the bidding firms makes it difficult to interpret existing evidence and to draw conclusions about the managers acquisition motivations nevertheless the reason for the substantial difference between empirical findings on mergers and tender offers still remains an unresolved issue it is observed however that mergers are usually common stock exchange offers whereas tender offers are usually cash offers given that different methods of financing a project have different signalling implications myers and majluf 39 the differential stock returns of bidders in mergers and tender offers may be due to the method of acquisition financing

a reexamination of analysts earnings forecasts for takeover targets abstract we examine analysts earnings forecasts for a sample of takeover targets and document that the announcement month forecasts are systematically revised upward supporting the hypothesis that a takeover announcement conveys favorable information about the target firm in addition we find that abnormal forecast revisions of future stand alone earnings are significantly greater for targets with low tobin s q ratios relative to targets with high q ratios lending further support to the information hypothesis finally we provide evidence that managerial resistance to the takeover does not destroy value our results are in direct contrast to pound 1988

unemployment and foreign capital the relative opportunity costs of domestic labour and welfare the consequences of increased foreign capital for an economy with unemployment are analyzed under different assumptions that influence the relative oportunity costs of domestic labor the investigation suggests that the implications of the literature on the welfare effect of increased foreign capital are misleading the paper shows that welfare gains result from increased foreign capital if the opportunity costs of labor are sufficiently low relative to the wages earned by laborers employed by new foreign capital a number of cases where this occurs are presented the findings of the paper suggest that cases where increased foreign capital must be welfare harming represent extreme parameterizations in the set of possibilities copyright 1991 by the london school of economics and political science

biased forecasts or biased earnings the role of reported earnings in explaining apparent bias and over underreaction in analysts earnings forecasts the extensive literature that investigates whether analysts earnings forecasts are biased and or inefficient has produced conflicting evidence and no definitive answers to either question this paper shows how two relatively small but statistically influential asymmetries in the tail and the middle of distributions of analysts forecast errors can exaggerate or obscure evidence consistent with analyst bias and inefficiency leading to inconsistent inferences we identify an empirical link between firms recognition of unexpected accruals and the presence of the two asymmetries in distributions of forecast errors that suggests that firm reporting choices play an important role in determining analysts forecast errors r 2003 elsevier b v all rights reserved

do sell side stock analysts exhibit escalation of commitment this paper presents evidence that when an analyst makes an out of consensus forecast of a company s quarterly earnings that turns out to be incorrect she escalates her commitment to maintaining an out of consensus view on the company relative to an analyst who was close to the consensus the out of consensus analyst adjusts her forecasts for the current fiscal year s earnings less in the direction of the quarterly earnings surprise on average this type of updating behavior reduces forecasting accuracy so it does not seem to reflect superior private information further empirical results suggest that analysts do not have financial incentives to stand by extreme stock calls in the face of contradictory evidence managerial and financial market implications are discussed

welfare consequence of capital inflow for a small tariff protected economy abstract capital inflow is generally immiserizing when the capital intensive import competing sector is tariff protected and profits are repatriated in full in this paper we construct a model with increasing returns embedded in a monopolistically competitive market to show that capital inflow might lead to higher factor income and interestingly enough growth of import competing sector might lead to still higher imports thus two distinct possible channels are identified through which welfare might improve

why new issues and high accrual firms underperform the role of analysts credulity we find that analysts forecast errors are predicted by past accounting accruals adjustments to cash flows to obtain reported earnings among both equity issuers and nonissuers analysts are more optimistic for the subsequent four years for issuers reporting higher issue year accruals the predictive power is greater for discretionary accruals than nondiscretionary accruals and is independent of the presence of an underwriting affiliation predicted forecast errors from accruals significantly explain the long term underperformance of new issuers the predictability of forecast errors among nonissuers suggests that analysts credulity about accruals management more generally contributes to market inefficiency copyright 2002 oxford university press

return predictability following large price changes and information releases abstract we examine return behavior following large price change events unconditional post event abnormal returns are found to be unimportant as we condition on other criteria related to the quality of information like volume and public announcements the abnormal returns become large the type of news provides further refinement if the news relates to earnings or analyst recommendations then the 20 day abnormal returns become much larger ranging from 3 to 4 for positive events and about 2 25 for negative events finally an out of sample trading strategy confirms investor under reaction and generates significant abnormal annualized returns of the order of 12 18

transition and enterprise restructuring the role of budget constraints and bankruptcy costs the focus of analysis is on the impact of financial leverage as a measure of bankruptcy costs on enterprise restructuring based on budget constraints in the economy data of bulgarian manufacturing firms allow comparison of firm behavior under soft and hard budget constraints as distinguished by the inception of a currency board in 1997 controlling for change in sales firm size and type of ownership statistically significant relationship between financial leverage and firm restructuring through labor adjustments is found to exist under hard budget constraints only

evidence on the role of cash flow for investment abstract recent work in macroeconomics argues that imperfections in capital markets may lead to business cycle fluctuations by propagating relatively modest shocks evidence for such a mechanism also known as the financial accelerator consists largely of firm level studies showing that cash flow is an important predictor of investment but this evidence is often viewed with skepticism because cash flow is also a good indicator of investment opportunities in this paper we develop a framework for estimating the extent to which the predictive power of cash flow can be attributed to its role as a fundamental versus its role in alleviating credit frictions for firms with access to commercial paper and bond markets we find that the perfect capital markets model of investment can fully account for the role of cash flow for firms with only limited access to capital markets as indicated by lack of participation in public debt markets however investment appears to be excessively sensitive to fluctuations in cash flow these results thus clarify the role of cash flow in investment equations and provide support for the existence of a financial accelerator

investment and financial constraints in transition economies micro evidence from poland the czech republic bulgaria and romania we investigate to what extent firm investment in transition countries is sensitive to internal finance we find that firms in bulgaria and romania are less sensitive to internal financing constraints in contrast to firms in poland and the czech republic a likely explanation is that bulgaria and romania experience a stronger persistence of soft budget constraints than the other two more advanced countries

financial analysts forecasts of earnings a better surrogate for market expectations abstract the specification of the market expectation of accounting numbers is a common feature of many empirical studies in accounting and finance givoly and lakonishok 1979 found that financial analysts forecasts have information content this study evaluates the quality of analysts forecasts as surrogates for the market expectation of earnings and compares it with that of prediction models commonly used in research results indicate that prediction errors of analysts are more closely associated with security price movements suggesting that analysts forecasts provide a better surrogate for market expectations than forecasts generated by time series models the study also identifies factors that might contribute to the performance of the financial analysts forecasts the broadness of the information set employed by analysts and to a lesser extent their reliance on information released after the end of the fiscal year appear to be important contributors to their performance

corporate governance and labour management an international comparison preface 1 corporate governance and labour management an international comparison 2 corporate governance and employees in the united states 3 markets and relationships finance governance and labour in the united kingdom 4 corporate governance and employees in germany changing linkages complementarities and tensions 5 corporate governance in germany ownership codetermination and firm performance in a stakeholder economy 6 corporate governance and labour management in the netherlands getting the best of both worlds 7 labour in french corporate governance the missing link 8 corporate governance and employment relations spain in the context of western europe 9 corporate governance and industrial relations in italy 10 corporate governance labour and employment relations in japan the future of the stakeholder model 11 towards a comparative perspective on corporate governance and labour management enterprise coalitions and national trajectories

human resource management and performance in european firms we develop a theoretical framework to examine three hypotheses on the relationship between human resource management hrm practices and organisational performance in european firms the first is that collaborative forms of hrm practice are more strongly associated with superior firm performance than calculative forms the second is that these associations are strongest where national institutional and normative settings support them the third is that employer employee consultative committees and collective payment methods are also associated with superior firm performance the first two propositions are strongly empirically supported as is the third albeit more weakly the implications of the findings for european policy and varieties of capitalism theory are discussed

retracted relationship incentives and the optimistic pessimistic pattern in analysts forecasts we examine whether analysts incentives to maintain good relationships with management contribute to the optimistic pessimistic within period time trend in analysts forecasts in our experiments 81 experienced sell side analysts from two brokerage firms predict earnings based on historical information and management guidance analysts forecasts exhibit an optimistic pessimistic pattern across the two timing conditions early and late in the quarter and the effect is significantly stronger when the analysts have a good relationship with management than when their only incentive is to be accurate debriefing results indicate that analysts are aware of this pattern of forecasts and believe that this benefits their future relationships with management and with brokerage clients the analysts most frequently cite favored conference call participation and information access when describing benefits from maintaining good relationships with management our results suggest the following the optimistic pessimistic pattern in forecasts is in part a conscious response to relationship incentives information access is perceived to be a major benefit of management relationships and recent regulatory changes may have lessened but have not eliminated this conflict of interest source

inefficiency in analysts earnings forecasts systematic misreaction or systematic optimism a rational analysis of analyst behavior predicts that analysts immediately and without bias incorporate information into their forecasts several studies document analysts tendency to systematically underreact to information underreaction is inconsistent with rationality other studies indicate that analysts systematically overreact to new information or that they are systematically optimistic this study discriminates between these three hypotheses by examining the interaction between the nature of information and the type of reaction by analysts the evidence indicates that analysts underreact to negative information but overreact to positive information these results are consistent with systematic optimism in response to information the literature on financial analysts defines the phrase forecast inefficiency to mean forecasts that fail to accurately incorporate new information on a timely basis and or that are biased these forecasts have also been described as irrational or suboptimal prior studies report inefficiency in analysts forecasts finding that they are upwardly biased and inaccurately reflect available information some studies conclude from this that analysts underreact to information other studies conclude that analysts overreact if markets treat analysts forecasts as both rational and statistically optimal then inefficient forecasts could have important implications for the efficiency of pricing in securities markets in this paper we reexamine the apparent tendency of analysts to misinterpret earnings information the intent of this study is to discriminate between three hypotheses 1 that analysts systematically underreact to new earnings information 2 that analysts systematically overreact to new earnings information and 3 that analysts are systematically optimistic in their reactions for hypotheses 1 and 2 the direction of the misinterpretation i e underor overreaction is independent of the nature of the information received in contrast hypothesis 3 predicts that analysts are optimistic in interpreting