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Leveraged and inverse ETFs (hereafter leveraged ETFs) have received much press coverage of late due to issues with their performance. Managers and the media have focused investors' attention on the impact of compounding, when the funds are held for more than one day. The aim of this paper is to lay out a framework for assessing the performance of leveraged ETFs.

The authors propose a simple way to disentangle the effect of compounding and that of the management of the fund and the trading premiums/discounts, all of which affect investors' bottom line. The former is influenced by the effectiveness and the costs of the manager's (synthetic) replication strategy and the use of leverage. The latter reflects liquidity and the efficiency of the market.

The paper finds that tracking errors were not caused by the effects of compounding alone. Depending on the fund, the impact of management factors can outweigh the impact of compounding, and substantial premiums/discounts caused by reduced liquidity during the financial crisis further distorted performance.

The authors propose a framework for practitioners to evaluate the performance of leveraged ETFs. This framework highlights a very topical issue, that of the impact of synthetic replication, which all leveraged ETFs use. Financial regulators such as the SEC and the Financial Stability Board have all taken issue with synthetically replicated ETFs. In leveraged ETFs, this issue is masked by the effects of compounding. The framework the authors propose allows investors to disentangle the two effects.

The purpose of this paper is to explore the impact of national culture on leverage speed of adjustment (SOA) across countries.

We use a partial adjustment model to estimate the impact of national culture (assessed using Hofstede's six cultural dimensions) on leverage SOA.

We find that culture does significantly affect the degree to which firms deviate from target debt level and the speed of adjustment (SOA) of leverage. High power distance, individualism and masculinity are associated with a slower SOA, while high long-term orientation, uncertainty avoidance and indulgence result in a faster SOA. Additionally, cultural characteristics affect leverage SOA differently when firms are underlevered versus overlevered and when firms have small versus large deviations from the target level of debt. We suggest that these effects can be explained by agency motives.

The results of the study are based on available information for firms from 53 countries.

This study is, to the best of our knowledge, the first to examine the impact of national cultural traits on leverage SOA in international settings.

In this paper, the authors examine the association between conditional conservatism and deviations of the first digits of financial statement items from what are expected by Benford's Law.

This research uses data of companies listed on the London Stock Exchange. The authors measure deviations of first digits from Benford's Law following Amiram et al. (2015) and firm-year conditional conservatism following previous studies (Basu, 1997; Khan and Watts, 2009; García Lara et al., 2016). The authors use multiple regressions to provide evidence for their hypothesis.

The results show that conditional conservatism is positively associated with deviations from Benford's Law. The findings are robust across different measures of deviations and conditional conservatism. Also, the authors find that the relationship between deviations from Benford's Law and conditional conservatism is more pronounced for firms with debt issuance, and for leveraged firms facing financial distress. Next, the authors’ analyses confirm previous evidence by showing that the first digits of financial statement items of UK listed companies conform to Benford's Law at the firm-specific level and the market level, and deviations of income statements are larger than those of balance sheets and cash flow statements.

The research makes significant contributions to the literature. First, this is the first study that provides empirical evidence suggesting that conditional conservatism may be a source of deviations from Benford’s Law. Second, the authors provide evidence confirming previous US findings (e.g. Amiram et al., 2015) showing that the distributions of first digits of financial statement items of UK listed companies also conform to Benford's Law.

The authors’ findings have implications for auditors. Auditors should be aware of “false positive” for material misstatements when using Benford's Law as a risk assessment procedure. While both conditional conservatism and earnings management are related to deviations from Benford's Law, conservatism-related biases could indicate less audit risks.

The authors provide new and original evidence suggesting that conditional conservatism is related to deviations from Benford's Law.

This study aims to present a model and analysis of automotive body outer cover panels (OCPs) assembly systems to predict assembly variation. In the automotive industry, the OCPs assembly process directly influences the quality of the automobile body appearance. However, suitable models to describe variation propagation of OCPs assembly systems remain unknown.

An adaptive state space model for OCPs assembly systems is introduced to accurately express variation propagation, including variation accumulation and transition, where two compliant deviations make impacts on key product characteristics (KPCs) of OCP, and the impacts are accumulated from welding process to threaded connection process. Another new source of variation from threaded connection is included in this model. To quantify the influence of variation from threaded connection on variation propagation, the threaded connection sensitivity matrix is introduced to build up a linear relationship between deviation from threaded connection and output deviation in KPCs. This matrix is solved by homogeneous coordinate transformation. The final deviation of KPCs will be transferred to ensure gaps and flushes between two OCPs, and the transition matrix is considered as a unit matrix to build up the transition relationship between different states.

A practical case on the left side body structure is described, where simulation result of variation propagation reveals the basic rule of variation propagation and the significant effect of variation from threaded connection on variation propagation of OCPs assembly system.

The model can be used to predict assembly variation or potential dimension problems at a preliminary assembly phase. The calculated results of assembly variation guide designers or technicians on tolerance allocation, fixture layout design and process planning.

The purpose of this paper is to be the first empirical article to provide necessary standard deviation inputs for adoption in probabilistic prognostications of hotel revenues and expenses, i.e. prognostications that consider risk. Commonly accepted methodologies to develop hotel financial projections resulting in point estimates of upcoming performance have been perceived as egregiously insufficient because they do not consider risk in lodging investments. Previous research has recommended the use of probabilistic methodologies to address this concern, and it has been recommended that analysts use Monte Carlo simulation. This methodology requires the estimation of standard deviations of specific, future hotel revenue and expense items, and this paper provides such inputs based on a large sample of actual, recent data.

This study provides actual standard deviations using a sample of recent hotel profit and loss (P&L) statements for over 3,000 hotels (Over 19,000 P&L statements) to provide analysts with empirically-supported standard deviations that may be applied to Uniform System of Accounts for the Lodging Industry (USALI) hotel revenues and expenses in hotel financial (revenue and expense) prognostications.

Findings are presented for standard deviations based on typical line items as defined in the USALI, and these findings may be used by practitioners as inputs for hotel financial projections. Findings also include that hotel revenue items generally have higher standard deviations than expense items. Findings are presented in detail in the manuscript, including overall findings, as well as findings based on hotel class.

Rather than practitioners adopting standard deviations of hotel revenue and expense line items based on guesswork or judgment, which is the current “state of the art” in hotel financial projections, this paper provides practitioners with actual standard deviations which may be adopted in probabilistic prognostications of hotel revenues and expenses.

This paper may be the first to provide practitioners with actual standard deviations, based on typical USALI line items, for adoption in probabilistic prognostications of hotel revenues and expenses.

During the last two decades, many Marxian economists have brought forth empirical evidence that supposedly supports a version of the “labor theory of value” that Marx rejected, namely the theory that individual commodities’ prices tend to equal their values. However, recent studies have challenged this conclusion. The present paper offers additional evidence and arguments against it. Firstly, the theory in question implies that prices will be higher, ceteris paribus, in industries in which variable capital is a relatively large component of total cost, but regression analysis of U.S. data compels us to reject this hypothesis. Secondly, although sectoral values and prices are very strongly correlated, simulation results indicate that the observed correlations are no higher than the correlations that can be obtained by aggregation, even if the disaggregated values and prices are uncorrelated and extremely far apart. Finally, many studies have found that average price-value deviations are small, but it is shown here that this finding is meaningless, since aggregation of the data tends systematically to reduce measures of average deviation.

One major problem preventing further application and benefits from additive manufacturing (AM) nowadays is that AM build parts always end up with poor geometrical quality. To help improving geometrical quality for AM, this study aims to propose geometrical deviation identification and prediction method for AM, which could be used for identifying the factors, forms and values of geometrical deviation of AM parts.

This paper applied the skin model-based modal decomposition approach to describe the geometrical deviations of AM and decompose them into different defect modes. On that basis, the approach to propose and extend defect modes was developed. Identification and prediction of the geometrical deviations were then carried out with this method. Finally, a case study with cylinders manufactured by fused deposition modeling was introduced. Two coordinate measuring machine (CMM) machines with different measure methods were used to verify the effectiveness of the methods and modes proposed.

The case study results with two different CMM machines are very close, which shows that the method and modes proposed by this paper are very effective. Also, the results indicate that the main geometrical defects are caused by the shrinkage and machine inaccuracy-induced errors which have not been studied enough.

This work could be used for identifying and predicting the forms and values of AM geometrical deviation, which could help realize the improvement of AM part geometrical quality in design phase more purposefully.

Addresses an actual problem of assigning customers to employees in a mail order firm. The management of the firm groups customers based on the first letter of the last name. To make assigning responsibility for handling customer orders easier, management specifies that no letter group can be broken up. In other words, all customers with last names beginning with the same letter must be assigned to the same employee. Management also desires a fair assignment among employees. A perfectly fair assignment entails assigning the same number of customers to every employee. A lower bound on the solution to the problem is established and two approaches to the problem are developed. First, it is formulated as a zero‐one goal programming problem and thus commercially available computer codes can be used to solve it. Second, a heuristic approach which assigns customers to employees based on rules similar to assembly line balancing is developed. The zero‐one goal programming approach yields slightly better results. However, it requires longer computer running time.

This paper aims to describe three exploratory field studies investigating which characteristics add to later time to market and/or low product functionality of newly developed products. The studies are conducted at the level of developments tasks, or work packages. The first and second studies investigate to what extent the unpredictability of the project's outcome is the result of the unpredictability of the completion time of individual work packages, and of the instability of the total network of work packages.

Statistical analysis of the empirical data about the progress of three design projects carried out in the development department of a high‐tech capital equipment manufacturer was used. The third study examines the reasons that members of the product development teams in this firm give for the unpredictability of time and quality of the project's outcome.

The results result indicate the existence of three very different sources of unpredictability: the usual uncertainty about the duration of a design task, the discovery of unexpected new problems in a design task, and the reprioritization of a work package by project leaders due to new problems in other work packages.

Together the three studies provide a detailed account of the operational characteristics of time‐paced product development projects in a particular firm and suggest ways to effectively manage such a project.