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The top 1% of U.S. households accounts for nearly 40% of the nation's wealth, and this market is growing seven times faster than the population as a whole. This market [...]

The article presents updates on research related to business in the U.S. as of May 1998. In the field of marketing research, researchers Vicki Morwitz, Joel Stekel and Alok Gupta examined the role of consumers' purchase intentions in predicting subsequent sales. They found that consumers are not reliable predictors of their own purchasing behavior and that purchase-intention surveys are more effective in predicting sales of existing products. In the field of finance, researcher Craig Dunbar revealed the disadvantage of stock splits. The study revealed that stock splits generate poor returns in the succeeding years.

WITH THE DEATH of the University of Chicago's Merton H. Miller, the world has lost a giant of corporate finance. Professor Miller, 77, died June 3 of lymphoma. A 1990 [...]

Dun Gifford Jr. is a Boston-based freelance writer. As the bank crisis filters down to U.S. units, investment-grade lending suffers. As the three lead bankers for Starwood Hotels & Resorts [...]

The article details a new study of the effects of public comments made by leaders of the largest merging companies in the first half of 1997 in the U.S. Splitting the mergers into successful and unsuccessful groups based on their three-month stock-price performance, Robert G. Reiss, president of the consulting firm Reissource in New York City, then identified the similarities among the statements made by senior managers for those mergers that were successful and for those that were not. The study found that executives involved in successful mergers kept their comments strategically broad. It also found that the leaders of the merged companies with stock-price increases talked less about shareholder value and more about the impact the deal would have on customers.

The author looks at how international joint ventures are facing the challenge of delegating which tasks should be performed at their headquarters and which ones should be delegated to on-site managers. Research on the issue conducted by Yoram Zeira of Tel Aviv University and William Newburry of New York University's Stern School of Business is discussed. According to Newburry, parent companies are better off leaving the more administrative duties to the on-site managers. The study focuses on areas that fall into a gray area of responsibility between corporate parents and joint ventures, including the creation and implementation of a strategic plan, authority over human resources policy, and control over whether the venture's top management should come from the dominant parent. Differences related to the issue in developed and non-developed countries are analyzed.

The article looks at cross-border stock listings. To understand what foreign companies can expect when they list their shares in the U.S., the article examines a study by Andrew Karolyi and Stephen Foerster that tracked the performance, especially the stock-price behavior, of various companies from Asia, Australia, Canada, and Europe that listed their stock in the U.S. between 1976 and 1992. The study found that on average, during the year before they were listed in the U.S., the foreign companies' stocks rose 22% in their local markets and the year following the listing the stocks declined by 13%. The article also discusses volatility.

The article looks at a study by Professor Stanley Feldman of Bentley College and ICF Kaiser International consultants Peter Soyka and Paul Ameer, which states that when companies take significant steps to enhance their sensitivity to the environment, they see an improvement in their financial condition. The reason, the authors hypothesize, is that investors generally believe that a green company is less apt to cause an environmental mishap or be sued for one. The authors base their conclusions on a study of the stocks of 327 companies in the S&P 500 Index between 1987 and 1994. The model, which contained environmental management and performance variables, found that the best predictors of a company's beta were the changes in debt levels and operating leverage. However, both environmental variables proved to have a slightly positive--but statistically significant--effect.

The article looks at a study by professor Josh Lerner of Harvard Business School, which found that when high-technology start-up companies are backed by substantial federal research-and-development grants, they outperform, in sales and employment growth, similar companies that receive less support from the government. The study also found that Small Business Innovation Research (SBIR)-backed companies grew faster when they were located in zip-code areas where private-venture-capital firms had recently invested in other companies. According to Lerner, the SBIR program may be successful in those areas because it is coming to the aid of businesses overlooked by private sector investors. Lerner hypothesizes that the federal government, by seeking out small businesses neglected by the typical venture capitalist, may be serving the needs of a capital-starved group of young companies.

This article looks at a new way of measuring the financial performance of a company. Overwhelmed by data, many people find only a vague idea of how a company is doing financially. To remedy this, two accounting professors are suggesting that companies try an unusual but apparently effective visual aid: a software program that generates drawings of the human face with facial expressions that are tied to four critical financial ratios. The professors, Richard J. Taffler of the City University Business School in London and Malcolm Smith of the University of South Australia in Sydney, found that participants in their study predicted solvency and bankruptcy more accurately and more quickly when using the software. INSETS: A good face on the numbers.;The changing face of a British company..

This article focuses on research at the Harvard Business School led by Professor Susan Fournier that suggests brand managers need to understand consumers' buying behavior in a new way. Brands, the research indicates, can act as relationship partners for consumers, often helping them to resolve or address important personal issues. Fournier's research has uncovered seven essential attributes of good brand relationships. Together, they make for what she calls overall brand-relationship quality. They include love and passion, self-concept connection, and interdependence. Fournier's working paper is entitled "The Consumer and the Brand: An Understanding Within the Framework of Personal Relationships." INSET: Brands: Love, Hate, and in Between..

A study by Harvard Business School researchers Nitin Nohria and Rakesh Khurana suggests that what chief executive officers do in their new offices is just as important as how they arrived there. The researchers hypothesize that the appointment of a new CEO is a highly symbolic event that greatly affects how employees perceive the company and themselves. Their perception, in turn, affects the strength of their identification with the business, and that identification can either improve or harm company performance. The research study, entitled "Substance and Symbol: The Effects of CEO Turnover on Large Industrial Corporations," with its statistical model, yielded a number of interesting findings. First, it suggested that strategic initiatives undertaken by new CEOs were on average positive for their company's operating profits. Second, strategic initiatives did not explain whether a company would perform significantly better or worse than average.