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Article
Publication date: 7 September 2015

Stephen Lee and Giacomo Morri

The purpose of this paper is to analyse the performance of UK property funds using the dual sources of active management, Active Share and tracking error, to distinguish…

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Abstract

Purpose

The purpose of this paper is to analyse the performance of UK property funds using the dual sources of active management, Active Share and tracking error, to distinguish between the types of active management styles used by funds.

Design/methodology/approach

The authors use data on 38 UK real estate funds and classify them into five active management categories using the dual sources of active management, Active Share and tracking error. Then, the authors compare their return performance against Active Share, tracking error, fund size and leverage. Therefore the paper is able to answer two of the fundamental questions of investment: does active management add value and what form of active management, stock selection or factor risk, is better at adding value to the fund?

Findings

There are three main conclusions. First, the approach of Cremers and Petajisto (2009) and Petajisto (2010) is able to classify real estate funds in the UK on their management activity into categories that makes intuitive sense and seem stable over time. Second, balanced funds show relatively low Active Shares and particularly low tracking errors, due to the benefits of property-type diversification. In contrast, specialists funds display higher Active Shares and both low and high tracking errors depending on their stock-picking approach; diversified or concentrated. Third, an analysis over different time periods confirmed that funds in the sample essentially remained in the same categories within the sample period, even during markedly different market return periods. This implies that investors need to constantly monitor changes in the market and switch between fund management styles, if at all possible.

Research limitations/implications

The analysis was only based on 38 funds with complete data over the sample period and the relationship between fees and active management was not examined, even though ultimately investors are concerned with returns after management fee. It would be instructive therefore if the number of funds and time period was expanded to see if the results are robust and to see whether management fees outweigh the benefits of active manager.

Practical implications

The findings should enable investors to make a more informed investment decisions in the future.

Originality/value

To the best of the author’s knowledge this is the first paper to apply the dual sources of active management, Active Share and tracking error, in the UK real estate market.

Details

Journal of Property Investment & Finance, vol. 33 no. 6
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 26 June 2019

Javeria Farooqi, Surendranath Jory and Thanh Ngo

This paper aims to examine the association between the types of mutual funds, i.e. active versus passive, and the level of earnings manipulation in companies that comprise…

Abstract

Purpose

This paper aims to examine the association between the types of mutual funds, i.e. active versus passive, and the level of earnings manipulation in companies that comprise their stock portfolios.

Design/methodology/approach

The authors use Cremers and Petajisto’s (2009) classification of mutual funds by active share and tracking error volatility to differentiate between active and passive mutual funds. To assess the extent of earnings quality at portfolio companies, the authors measure accruals earnings management and real earnings management.

Findings

The authors find that the portfolio firms held by active fund managers exhibit lower levels of earnings manipulation. The inverse relationship between earnings management and fund holdings is more pronounced at higher levels of active share selection among concentrated active fund managers.

Practical implications

The degree to which earnings management influences mutual funds’ investment behavior has significant implications for the stability of the US stock market. Based on the findings that earnings management at portfolio companies serves as a potential instrument to guide funds’ investment decisions, future research would examine how these investment preferences exert price pressure (if any) on the stock of the portfolio companies. It would also help to ascertain whether the investment preferences of fund managers with respect to earnings management help to render the stock market more or less efficient.

Originality/value

This paper contributes to the understanding of how actively managed funds perform stock selection. Earnings manipulation leads to negative earnings quality that would inhibit stock performance over time. Active fund managers, who dynamically manage their exposures to systematic and stock-specific risks (in their attempt to outperform their benchmark index), target firms that manage earnings less to form part of their investment portfolios.

Details

Review of Accounting and Finance, vol. 19 no. 1
Type: Research Article
ISSN: 1475-7702

Keywords

Article
Publication date: 13 February 2017

Ummu Kolsome Farouk

The purpose of this paper is to study the relationship between management’s commitment and effective occupational safety and health committees (OSHCs), which are a form of…

2143

Abstract

Purpose

The purpose of this paper is to study the relationship between management’s commitment and effective occupational safety and health committees (OSHCs), which are a form of representative employee involvement in Malaysia.

Design/methodology/approach

Using data from a survey of 231 manufacturing companies in Malaysia, the study empirically examines both passive and active management commitment and its relationships with the perceived effectiveness of OSHCs.

Findings

Respondents to the survey, who were members of OSHCs, felt that both passive and active management commitments had significant, positive relationships with OSHCs’ perceived effectiveness, with active management commitment having a stronger relationship with the dependent variable – the effectiveness of OSHCs. All three variables were perceived to be at the medium level, with active management commitment recording the lowest mean value.

Research limitations/implications

The research is limited by the fact that it is cross-sectional. However, this allows its findings to be placed in the context of past research, underpinned by Malaysia’s manufacturing sector and legislative framework.

Practical implications

This paper provides suggestions for how the perceived effectiveness of OSHCs can be improved in the Malaysian context.

Originality/value

This study conceptualises management’s commitment in terms of passive and active commitment, given the context of the current legislative framework, and it addresses the relationships between both types of management commitment and the effectiveness of OSHCs, in the heretofore-unexamined Malaysian manufacturing context.

Details

Employee Relations, vol. 39 no. 2
Type: Research Article
ISSN: 0142-5455

Keywords

Book part
Publication date: 26 February 2016

Desmond Pace, Jana Hili and Simon Grima

In the build-up of an investment decision, the existence of both active and passive investment vehicles triggers a puzzle for investors. Indeed the confrontation between…

Abstract

Purpose

In the build-up of an investment decision, the existence of both active and passive investment vehicles triggers a puzzle for investors. Indeed the confrontation between active and index replication equity funds in terms of risk-adjusted performance and alpha generation has been a bone of contention since the inception of these investment structures. Accordingly, the objective of this chapter is to distinctly underscore whether an investor should be concerned in choosing between active and diverse passive investment structures.

Methodology/approach

The survivorship bias-free dataset consists of 776 equity funds which are domiciled either in America or Europe, and are likewise exposed to the equity markets of the same regions. In addition to geographical segmentation, equity funds are also categorised by structure and management type, specifically actively managed mutual funds, index mutual funds and passive exchange traded funds (‘ETFs’). This classification leads to the analysis of monthly net asset values (‘NAV’) of 12 distinct equally weighted portfolios, with a time horizon ranging from January 2004 to December 2014. Accordingly, the risk-adjusted performance of the equally weighted equity funds’ portfolios is examined by the application of mainstream single-factor and multi-factor asset pricing models namely Capital Asset Pricing Model (Fama, 1968; Fama & Macbeth, 1973; Lintner, 1965; Mossin, 1966; Sharpe, 1964; Treynor, 1961), Fama French Three-Factor (1993) and Carhart Four-Factor (1997).

Findings

Solely examination of monthly NAVs for a 10-year horizon suggests that active management is equivalent to index replication in terms of risk-adjusted returns. This prompts investors to be neutral gross of fees, yet when considering all transaction costs it is a distinct story. The relatively heftier fees charged by active management, predominantly initial fees, appear to revoke any outperformance in excess of the market portfolio, ensuing in a Fool’s Errand Hypothesis. Moreover, both active and index mutual funds’ performance may indeed be lower if financial advisors or distributors of equity funds charge additional fees over and above the fund houses’ expense ratios, putting the latter investment vehicles at a significant handicap vis-à-vis passive low-cost ETFs. This chapter urges investors to concentrate on expense ratios and other transaction costs rather than solely past returns, by accessing the cheapest available vehicle for each investment objective. Put simply, the general investor should retreat from portfolio management and instead access the market portfolio using low-cost index replication structures via an execution-only approach.

Originality/value

The battle among actively managed and index replication equity funds in terms of risk-adjusted performance and alpha generation has been a grey area since the inception of mutual funds. The interest in the subject constantly lightens up as fresh instruments infiltrate financial markets. Indeed the mutual fund puzzle (Gruber, 1996) together with the enhanced growth of ETFs has again rejuvenated the active versus passive debate, making it worth a detailed analysis especially for the benefit of investors who confront a dilemma in choosing between the two management styles.

Details

Contemporary Issues in Bank Financial Management
Type: Book
ISBN: 978-1-78635-000-8

Keywords

Article
Publication date: 11 March 2014

Eddy W.T. Lau

The purpose of this paper is to explore the drivers of change in product evolution and to examine the relationship between company performance and active management of the…

Abstract

Purpose

The purpose of this paper is to explore the drivers of change in product evolution and to examine the relationship between company performance and active management of the driving forces behind product changes.

Design/methodology/approach

An exploratory and qualitative research approach was adopted to explore the drivers of change and the definition of active management of forces. In the second stage, an analytical and quantitative research approach was adopted to examine the relationship between company performance and active management measures. A questionnaire survey was used in both stages to collect data.

Findings

Contrary to the traditional product evolutionary cycle, influential bodies (e.g. NGOs and media) are found to be another force that drives product evolution, in addition to managerial creativity, market factors and government mediation. Except for government mediation, the active management of all these forces is found to be associated with company performance.

Research limitations/implications

The research was conducted in the real estate industry of Hong Kong. The particular nature of the industry would have a bearing on the outcome of the research. Extending the research to other industries is highly recommended.

Practical implications

The research leads to a number of management practices that define the active management of product change driving forces. The implementation of these practices may have a positive impact on improving company performance, especially in brand recognition.

Originality/value

This is the first empirical test of a new product evolutionary cycle that incorporates influential bodies as one of the driving forces. The approach to correlate company performance with active management of forces is also a pioneer one that gives useful insight on why some firms can maintain leadership in the market in terms of brand recognition.

Details

Journal of Product & Brand Management, vol. 23 no. 1
Type: Research Article
ISSN: 1061-0421

Keywords

Article
Publication date: 6 July 2012

Roland Füss, Johannes Richt and Matthias Thomas

The purpose of this paper is to examine the sources of direct real estate portfolio returns and their relative performance against Investment Property Databank (IPD…

Abstract

Purpose

The purpose of this paper is to examine the sources of direct real estate portfolio returns and their relative performance against Investment Property Databank (IPD) benchmark returns. Active property management consists of the concepts of property transaction execution and operational management, which can be classified as the main drivers of excess return sources.

Design/methodology/approach

Using a sample of three different portfolios managed by two institutional investors, the paper is able to estimate the relevant factors of active property management on annual excess returns for commercial and residential property sectors via a panel regression technique.

Findings

Empirical evidence shows that property‐specific effects exhibit significant sources of excess returns, but property management cannot be identified as their main driver. Furthermore, the sources of excess returns do not differ significantly across sectors; when controlled for property age and size, it is found that their influence is rather limited.

Practical implications

Information about the drivers of excess returns and their variations among property types may lead to superior investment decisions during portfolio rebalancing, and thus promote more efficient capital allocation. Information about return factors, i.e. about property and operational management, can substantially improve property selection and market timing in the asset allocation process. Hence, investors basing their property investment strategies on the impact of selected return factors could enhance the risk‐adjusted performance of their property portfolios.

Originality/value

This paper aims to contribute to the existing literature by identifying and quantifying the excess return sources of a given property portfolio over a predefined benchmark. Due to the lack of property‐related data, there is only limited research on the sources of direct property returns, such as property characteristics or active property management. The authors explore three main questions in this paper. First, they examine sources of excess returns over a benchmark index for several property sectors. Second, they analyze whether the drivers of excess returns vary significantly across these sectors. Third, they determine to what extent excess property returns are influenced by the “economic age” and “rentable area” of a building.

Details

Journal of Property Investment & Finance, vol. 30 no. 4
Type: Research Article
ISSN: 1463-578X

Keywords

Article
Publication date: 8 February 2016

Angela Shin-yih Chen, Yu-hsiang Hou and I-heng Wu

– This paper aims to explore the relationships between emotional intelligence (EI), conflict management styles and job performance in a Chinese cultural context.

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Abstract

Purpose

This paper aims to explore the relationships between emotional intelligence (EI), conflict management styles and job performance in a Chinese cultural context.

Design/methodology/approach

The present paper uses a cross-sectional research design. Paper-based questionnaires were distributed to employees working in the R & D department of a science and technology institute in Taiwan. In total, 300 questionnaires were distributed and 248 valid questionnaires were analyzed, with a return rate of 81.4 per cent.

Findings

The results show that EI has a positive impact on job performance. Furthermore, agreeable conflict style positively moderated between EI and job performance, whereas active conflict style has negative moderating effect.

Research limitations/implications

Due to the research design, sample and data collection method, the research results may lack representativeness. Therefore, researchers are encouraged to use a different approach in the future.

Practical implications

Organizations should strengthen employees’ EI and conflict management abilities to improve job performance. Organizations can apply the results of this study in accordance with their policy on recruitment, selection and training.

Originality/value

Organizations should strengthen employees’ EI and conflict management abilities to improve job performance. Organizations can apply the results of this study in accordance with their policies on recruitment, selection and training.

Details

International Journal of Conflict Management, vol. 27 no. 1
Type: Research Article
ISSN: 1044-4068

Keywords

Article
Publication date: 1 March 2013

Praveen K. Das and S.P. Uma Rao

The purpose of this paper is to evaluate the performance of socially responsible funds by closely examining funds' investment styles.

1272

Abstract

Purpose

The purpose of this paper is to evaluate the performance of socially responsible funds by closely examining funds' investment styles.

Design/methodology/approach

The authors apply William Sharpe's method of style analysis to evaluate the performance of 94 US socially responsible mutual funds. By using the fund style as a benchmark, the authors are able to separate the performance attributed to style and selection.

Findings

The authors observe that underperformance of socially responsible funds is more pronounced and common than identified in the previous literature. Proponents of socially responsible investing argue that screening process provides an opportunity to fund managers to identify best companies in terms of future financial performance. The paper finds that active management of mutual funds is an important determinant of their performance in socially responsible investing industry. This paper provides evidence supporting that active management of socially responsible funds add value.

Originality/value

This study will help investors in allocating their portfolios among many of the available SR funds. The result – actively managed SR funds outperform their passive counterparts – will be valuable for those investors who are willing to invest in socially responsible funds but are concerned about the financial performance.

Details

Social Responsibility Journal, vol. 9 no. 1
Type: Research Article
ISSN: 1747-1117

Keywords

Article
Publication date: 1 January 2001

Leslie A. DeChurch and Michelle A. Marks

Intragroup conflict research has shown that task conflict can improve group outcomes, but it has not addressed how groups ensure that the positive aspects of task conflict…

7423

Abstract

Intragroup conflict research has shown that task conflict can improve group outcomes, but it has not addressed how groups ensure that the positive aspects of task conflict are realized. This study examines the influence of group conflict management on group effectiveness, as well as the moderating role of group conflict management on task conflict—group outcome relationships. Results of a field survey of 96 business school project groups indicated that the use of agreeable conflict management in response to task conflict was associated with greater group satisfaction. Results examining group conflict management as a moderator showed that the relationship between task conflict and group performance was positive when conflict was actively managed and negative when it was passively managed. Similarly, task conflict improved group satisfaction when managed with agreeable behavior, and harmed satisfaction when neutral or disagreeable behaviors were used. Results from this work provide an important first look at how group conflict management behaviors directly impact group outcomes and affect task conflict—group outcome relationships.

Details

International Journal of Conflict Management, vol. 12 no. 1
Type: Research Article
ISSN: 1044-4068

Article
Publication date: 8 June 2012

Gareth Edwards, Birgit Schyns, Roger Gill and Malcolm Higgs

The purpose of this paper is to investigate the factor structure of the Multifactor Leadership Questionnaire (MLQ) in a UK context. For a number of years studies have…

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Abstract

Purpose

The purpose of this paper is to investigate the factor structure of the Multifactor Leadership Questionnaire (MLQ) in a UK context. For a number of years studies have failed to reproduce the original MLQ factor structure. A paper published in Leadership & Organization Development Journal by Alban‐Metcalfe and Alimo‐Metcalfe in 2000 suggested that, in the UK context, contextually different views on leadership could be prevalent. This paper therefore reports a UK‐specific factor structure.

Design/methodology/approach

The paper used a dataset from a recent piece of research on leadership by the first and third authors. The sample consisted of 367 managers from 38 UK‐based manufacturing organisations. The research used multiple ratings that consisted of 366 self‐ratings, 315 superior‐ratings, 238 peer‐ratings and 325 subordinate‐ratings and these ratings covered all levels across participating organisations CEO, MD, directors, senior, middle and lower level management.

Findings

The findings uncovered a variant of the MLQ model that comprises active constructive leadership, active management‐by‐exception, and passive avoidant leadership. The findings also lend support to those who suggest that passive management‐by‐exception and laissez‐faire leadership are the same, or a similar, concept and support contingent reward as highly positively correlated with transformational leadership. Particularly interesting is the stand‐alone nature of active management‐by‐exception and which supports claims that there is a different view of leadership in the UK from that held in the USA.

Originality/value

The originality of the paper is based around the understanding of the MLQ in the UK and has produced a model of the full range leadership model that relates to the UK manufacturing context.

Details

Leadership & Organization Development Journal, vol. 33 no. 4
Type: Research Article
ISSN: 0143-7739

Keywords

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