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Article
Publication date: 1 February 1988

Edward M. Miller

Textbooks often portray capital budgeting as a rather mechanical process: Top management decides whether or not to accept a project by requesting an estimate of net…

Abstract

Textbooks often portray capital budgeting as a rather mechanical process: Top management decides whether or not to accept a project by requesting an estimate of net present value from its staff and to see if the number is positive or negative. This paper suggests that the textbook net present value rule is not optimal if the competitive market assumption holds. Better decision rules state minimum acceptable safety margins and may take the form of stating a minimum acceptable profitability ratio.

Details

Managerial Finance, vol. 14 no. 2/3
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 9 May 2008

M. Imtiaz Mazumder, Edward M. Miller and Atsuyuki Naka

The purpose of this paper is to examine the predictability of the US‐based international mutual fund returns by investigating 2,479 daily observations for all categories…

Abstract

Purpose

The purpose of this paper is to examine the predictability of the US‐based international mutual fund returns by investigating 2,479 daily observations for all categories of international equity, bond and hybrid mutual funds. Further, trading strategies are proposed and tested under different scenario including a proposed regulation by the Security and Exchange Commission (SEC).

Design/methodology/approach

The sample is split and the initial sub sample is used to investigate return patterns of international funds and to develop trading rules based on the predictable return patterns. Trading rules are then tested on the holdout sample.

Findings

Empirical results demonstrate statistically significant predictabilities. Various trading strategies show that the returns of both load and no‐load funds are economically significant beating a buy‐and‐hold strategy. Empirical findings are consistent across the fund categories irrespective of sizes and styles. The tested strategies are profitable even with various limits on frequency of trading, minimum holding periods and even under a recent SEC's proposed regulation. Further, possible contracting and regulatory changes are proposed to improve the efficiency in the mutual fund industry.

Originality/value

The results confirm previous findings of statistically and economically significant regularities from trading strategies that involve following the US markets. A test of SEC's proposed regulation documents that short‐term investors may benefit from active trading strategy even if the SEC's rule is implemented.

Details

Journal of Financial Regulation and Compliance, vol. 16 no. 2
Type: Research Article
ISSN: 1358-1988

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Article
Publication date: 26 September 2008

Edward M. Miller, Larry J. Prather and M. Imtiaz Mazumder

The purpose of this paper is to examine asset class cross‐autocorrelations at the macro‐level by exploring the return associations among mutual fund asset classes. The low…

Abstract

Purpose

The purpose of this paper is to examine asset class cross‐autocorrelations at the macro‐level by exploring the return associations among mutual fund asset classes. The low transactions costs of trading mutual funds make this extension important since informed traders can potentially use mutual funds to exploit asset class return cross‐autocorrelations that were not exploitable with individual securities.

Design/methodology/approach

The Granger causality tests and correlation results are employed to ascertain whether significant relationships exist among asset classes. Using a time series of 2,739 daily returns for 641 mutual funds comprising 20 asset classes, trading strategies are developed using the initial sample and evaluated out‐of‐sample on a risk‐adjusted basis.

Findings

Both the cross‐autocorrelations and Granger causality tests suggest that most of the domestic equity asset class returns can predict future global and international equity returns. Further, the trading‐rule portfolios provide a greater return per unit of risk (Sharpe and Treynor ratios) thus dominating all buy‐and‐hold portfolios. Risk‐adjusted excess returns (Jensen's α) of the trading rules are positive and statistically significant at the 1 per cent level. The results of trading strategies also reveal that there are no statistically significant return differences between load and no‐load funds.

Research limitations/implications

Redemption fees seem to be standard practice now, except for money market funds and funds specially designed for market timers. Thus, the trading strategy returns of this paper overestimate actual returns. However, investors may still find the proposed trading strategies beneficial because redemptions fees can be avoided if investors get the opportunities to trade in mutual fund supermarkets. The trading strategies may have implications for other international markets where the sizes and styles of the mutual funds' assets are increasing enormously with a few trading restrictions.

Originality/value

A noteworthy and original contribution of this study is the two‐day Granger causality test. This paper documents that the duration of mutual funds' return predictability extends beyond a one‐day horizon. The duration of daily mutual fund return predictability is believed to be unexplored and should be of considerable relevance to practitioners and regulators.

Details

Managerial Finance, vol. 34 no. 11
Type: Research Article
ISSN: 0307-4358

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Book part
Publication date: 20 March 2007

Alfonso R. Oddo

Health care spending in the U.S. continues to outpace inflation and wage growth, which is likely to keep the burden of rising health care costs in the spotlight. As health…

Abstract

Health care spending in the U.S. continues to outpace inflation and wage growth, which is likely to keep the burden of rising health care costs in the spotlight. As health care costs increase, health insurers face the challenges of providing quality health care at a reasonable cost. Some health care providers and insurers use economic measures such as return on investment to assess the effectiveness of health care. How does one measure the value of health? What are some of the advantages and disadvantages of using economic measures to evaluate health care?

This paper looks health care costs and who pays for them. What portion of health care costs is borne by employers? What portion by employees? Who does or should pay for health care of people who are uninsured? What is the role of insurance? If people do not have health care insurance, does it matter whether the reason they are uninsured is because they cannot afford it or because they choose not to be insured?

Selvam (2002) belives that the number one ethical dilemma in the U.S. is how to address the almost 40 million Americans who lack health care coverage. With rising hospital costs, even the hardest-working and most prudent persons are at risk. Many workers do not have health insurance and even if they are covered, they may not get what they need. What are some of the ethical issues facing patients, health care providers and insurers? What role should government have in assuring that all people receive quality health care?

Details

Insurance Ethics for a More Ethical World
Type: Book
ISBN: 978-1-84950-431-7

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Book part
Publication date: 29 August 2018

Paul A. Pautler

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the…

Abstract

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and ideology of the FTC’s leaders, developments in the field of economics, and the tenor of the times. The over-riding current role is to provide well considered, unbiased economic advice regarding antitrust and consumer protection law enforcement cases to the legal staff and the Commission. The second role, which long ago was primary, is to provide reports on investigations of various industries to the public and public officials. This role was more recently called research or “policy R&D”. A third role is to advocate for competition and markets both domestically and internationally. As a practical matter, the provision of economic advice to the FTC and to the legal staff has required that the economists wear “two hats,” helping the legal staff investigate cases and provide evidence to support law enforcement cases while also providing advice to the legal bureaus and to the Commission on which cases to pursue (thus providing “a second set of eyes” to evaluate cases). There is sometimes a tension in those functions because building a case is not the same as evaluating a case. Economists and the Bureau of Economics have provided such services to the FTC for over 100 years proving that a sub-organization can survive while playing roles that sometimes conflict. Such a life is not, however, always easy or fun.

Details

Healthcare Antitrust, Settlements, and the Federal Trade Commission
Type: Book
ISBN: 978-1-78756-599-9

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Book part
Publication date: 17 February 2020

Simon Grima and Eleftherios I. Thalassinos

Abstract

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Financial Derivatives: A Blessing or a Curse?
Type: Book
ISBN: 978-1-78973-245-0

Abstract

Many jurisdictions fine illegal cartels using penalty guidelines that presume an arbitrary 10% overcharge. This article surveys more than 700 published economic studies and judicial decisions that contain 2,041 quantitative estimates of overcharges of hard-core cartels. The primary findings are: (1) the median average long-run overcharge for all types of cartels over all time periods is 23.0%; (2) the mean average is at least 49%; (3) overcharges reached their zenith in 1891–1945 and have trended downward ever since; (4) 6% of the cartel episodes are zero; (5) median overcharges of international-membership cartels are 38% higher than those of domestic cartels; (6) convicted cartels are on average 19% more effective at raising prices as unpunished cartels; (7) bid-rigging conduct displays 25% lower markups than price-fixing cartels; (8) contemporary cartels targeted by class actions have higher overcharges; and (9) when cartels operate at peak effectiveness, price changes are 60–80% higher than the whole episode. Historical penalty guidelines aimed at optimally deterring cartels are likely to be too low.

Details

The Law and Economics of Class Actions
Type: Book
ISBN: 978-1-78350-951-5

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Book part
Publication date: 1 January 2006

Gina L. Miller, Naresh K. Malhotra and Tracey M. King

Abstract

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Review of Marketing Research
Type: Book
ISBN: 978-0-7656-1305-9

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Book part
Publication date: 14 August 2017

Galit Meisler, Eran Vigoda-Gadot and Amos Drory

This chapter builds on previous research that conceptualized organizational politics as an organizational stressor. After reviewing the studies that integrated the…

Abstract

This chapter builds on previous research that conceptualized organizational politics as an organizational stressor. After reviewing the studies that integrated the occupational stress literature with the organizational politics literature, it discusses the negative implications of the use of intimidation and pressure by supervisors, implications that have generally been overlooked. Specifically, the chapter presents a conceptual model positing that the use of intimidation and pressure by supervisors creates stress in their subordinates. This stress, in turn, affects subordinates’ well-being, evident in higher levels of job dissatisfaction, job burnout, and turnover intentions. The stress also reduces the effectiveness of the organization, reflected in a high absenteeism rate, poorer task performance, and a decline in organizational citizenship behavior. The model also maintains that individual differences in emotional intelligence and political skill mitigate the stress experienced by subordinates, resulting from the use of intimidation and pressure by their supervisors. In acknowledging the destructive implications of such behavior in terms of employees’ well-being and the productivity of the organization, the chapter raises doubts about the wisdom of using it, and advises supervisors to rethink its use as a motivational tool. Implications of this chapter, as well as future research directions, are discussed.

Details

Power, Politics, and Political Skill in Job Stress
Type: Book
ISBN: 978-1-78743-066-2

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Book part
Publication date: 14 August 2017

Erin M. Landells and Simon L. Albrecht

Much of the research associated with organizational politics has focused on negative outcomes such as stress, burnout, and turnover intention. Only a limited amount of…

Abstract

Much of the research associated with organizational politics has focused on negative outcomes such as stress, burnout, and turnover intention. Only a limited amount of research has focused on identifying the psychological mechanisms that explain the influence of negative organizational politics on individual and organizational outcomes. In this chapter, we propose a more positive conceptualization of organizational politics and explore potential associations between both positive and negative politics and employee engagement. More specifically, we propose a model showing how the psychological conditions of psychological safety, availability, and meaningfulness explain the relationship between perceptions of positive and negative politics and employee engagement. We conclude by suggesting practical interventions to assist organizations develop a more positive organizational political climate.

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