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This study examines the distortive effects of the states’ regulatory climate on the underwriting costs of new equity issues of public utilities. Each state has its own public utility commission (or public service commission) to regulate the natural monopolies of public utilities. The wealth‐maximizing behavior of utilities is constrained by the rate‐making process monitored by the commissions. The policies of a state’s commission collectively establish the ’regulatory climate’ in that state. Using a sample of new equity securities issued, during the period from January 1973 through September 1980, by utilities listed on the New York Stock Exchange and the American Stock Exchange, we investigate the effect of the regulatory climate on underwriting costs. Our findings are that,in general, the direct costs of flotation, namely, underwriting commissions and out‐of‐pocket expenses,are positively related to regulatory climate where as the indirect cost of flotation, namely, underpricing of the new issue, is negatively related to regulatory climate. These results are counter intuitive since they imply that as the regulatory climate becomes more unfavorable the direct costs of flotation increase and the indirect cost of flotation decreases. This is clearly a distortive effect of the regulation and we offer some explanations for it.

Each year since 1983, Fortune magazine has published a survey featuring “America's most admired” corporations. Although the most admired corporations are certainly worthy of some praise and the least admired deserving of criticism, whether these admired companies are worthy of investors' money is less clear. We examine the ex ante and ex post returns of a sample of the most and least admired corporations in the Fortune survey.

Since Jensen and Meckling [1976] first introduced the concept of an agency cost of debt, most research on the agency cost of debt has centered on who bears these costs. Jensen and Meckling's original contention was that if bondholders have rational expectations, then the owner‐manager should bear the agency costs of debt. The alternative to this explanation was first offered by Barnea, Haugen and Senbet [1981] who claimed that because of the effects of agency costs on the supply of debt, these costs would be borne by the bondholders. Roberts and Viscione [1984] extend the analysis of Barnea, Haugen, and Senbet by including costly tax avoidance on personal and corporate levels to show that the agency costs of debt are shared by bondholders and owner‐managers.

The relationship between the amount of executive compensation and the size of the firm has long been a disputed area of economics. Baumol (1959) was among the first to observe that firm size and executive compensation appear to be positively correlated. This view was further supported by the works of McGuire, Chin and Elbing (1962), Ciscel (1974), and Walkling & Long (1984). Other studies (see e.g., Lewellen and Huntsman (1970) have contended that profit maximization is the principal determinant of variations in executive compensation. More recently, a debate has raged in the popular press as to whether executives of the auto industry deserve the largest salaries recently awarded them (see e.g., Fortune 1984).

Jim Collins' Good to Great is but one of many popular press books on management. In his book, Collins discusses the keys to success for today's corporations. Many managers flocked to bookstores to discover what they might be missing in making their organization great. This paper aims to use methodologies more commonly found in the finance literature to validate the results of Collins' study.

This paper uses methodologies more commonly found in finance literature (e.g. event study methodology, Fama‐French three‐factor model with momentum, buy‐and‐hold abnormal returns) to validate the results of Collins' study.

The results show that the Good to Great firms had unexceptional performance when compared to other benchmark lists of firms, on an ex‐ante or ex‐post basis.

From a management perspective, the advice that one might obtain from Good to Great should be carefully examined by managers before they implement it, only to find that great is not really so great.

The paper is original in its methodological design and is valuable to managers who are seeking advice for opportunities that enhance shareholder wealth.

Volume 25 celebrates the 25th year of publication for the American Journal of Business (AJB). Launched by eight MAC schools of business in March 1986, the Journal has featured more than 700 authors who have contributed more than 330 research articles at the intersection of theory and practice. From accounting to marketing, management to finance, the Journal prominently covers the breadth of the business disciplines as a general business outlet intended for both practitioners and academics. As the Journal reaches out beyond the MAC in sponsorship, authorship, and readership, we assess the Journal’s first quarter century of impact.

The pace of new regulation has been quite rapid in the United States during the past fifteen years. Consider the number of major pieces of legislation that have been passed during this time span and you immediately gain insight into this fast‐paced regulatory climate. It has been argued by some that oversight during the 1980s was lax and that regulations were much less enforced than in previous decades. This may be true in certain areas such as antitrust enforcement, but there can be no doubt that the total body of regulation has been expanding continuously.

An appreciation of the legal environment becomes more important with each passing year for anyone involved in corporate finance. A casual glance at the morning newspaper will usually provide a quick reminder of just how much the two areas are interrelated. The current debate in the United States concerning health care legislation may well result in a package that has a tremendous impact on many companies and industries. Tax issues have been in the news recently as well. There have been a number of significant changes in tax regulations during the past decade, including the legislation just passed by the U. S. Congress in 1993. Smoking continues to generate considerable controversy, and one result has been courtroom battles between tobacco companies and local governments over antismoking ordinances. During the last year, the DuPont Corporation has been defending itself in court over charges that one of its products caused substantial damage to farm crops. Guilty or not, the risk and expense from product liability is an enormous problem confronting almost all companies today. Texaco settled a lawsuit with Pennzoil in 1988 for $3 billion in damages stemming from a battle for the control of Getty Oil. Texaco won that battle, but suffered a very serious setback in the courtroom.

This paper aims to explore the phenomenon of molecular gastronomy by conducting empirical research focusing on renowned chefs.

The approach taken is a literature review summarising past culinary innovations then the paper focuses on the origins and evolution of molecular gastronomy, followed by 18 phenomenological interviews with a snowball sample of world class chefs from across Europe.

There is far greater confusion about what molecular gastronomy might be than is implied in previous studies. The term has become wrongly used to describe a possible culinary movement mainly as a result of media influence. Leading chefs, whose new restaurant concepts have become associated with it, reject the term.

With only 20 years of history molecular gastronomy is still a comparatively new phenomenon. This initial research presents a clear picture of its evolution so far and the increasing confusion the use of the term has created. It is still far too early to decide if these are heralding a new gastronomic movement.

Although molecular gastronomy itself may not provide a foundation for a genuine and lasting development of cuisine it is generating fascination with the fundamental science and techniques of cuisine and showy culinary alchemy. As with nouvelle cuisine poor quality copycat chefs could bring into disrepute the reputation and practices of those who are at the vanguard of culinary and restaurant innovation.

This paper is the first widespread primary study, across five countries, into recognised exceptional chefs' understanding of molecular gastronomy. It clarifies that molecular gastronomy was never intended to be the foundation of a culinary movement and identifies four key elements for the development of lasting cuisine movements and trends.

This paper aims to understand and document evaluation criteria used in the new product development (NPD) process of small- and medium-sized enterprises (SMEs) to support the management and control of their NPD projects.

This study combines exploratory and explanatory methodology (case studies) involving five Canadian small and medium enterprises (SMEs) that are successful in NPD. The authors conducted semi-structured interviews with nine selected managers and project managers to explore the process and evaluation criteria used to manage and control NPD projects.

The results highlight that cost, time and quality are key evaluation criteria used by SMEs to make decisions relative to the NPD project's success. Profitability, return on investment, expected sales and customer satisfaction are additional criteria used to evaluate NPD project's success. It has been also found that the SMEs did not consider sustainability issues in the criteria used as their focus are on the needs of stakeholders, mainly customers.

Limitations: The evaluation criteria are extracted from a limited number of SMEs that have successfully carried out NPD projects and may therefore be influenced by some contextual factors. The results cannot be generalized to all SMEs or to all projects, as their characteristics may differ. Implications: This study offers a novel outlook on NPD process in SMEs, by documenting criteria related to constraints in project management. The integration of theory of constraints contributes to increasing theoretical knowledge about the management and control of NPD projects in SMEs. It provides insight into how project managers (and other decision makers) can increase the chances of project success by managing project constraints and criteria.

The evaluation criteria identified in this study can therefore be of use to SMEs managers and project leaders seeking to improve the management and control of their NPD projects. These criteria can help them better manage their limited resources and skills and allocate them to the most promising projects. They can also help them conduct their NPD process more efficiently to achieve the intended objectives, including the desired project profitability targets.

This paper offers new insight and practical implications about evaluation criteria within the stages and activities of the NPD process that needed to be considered by SMEs' managers involved in NPD projects.