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A private practice physician's career, as with many other professionals and entrepreneurs, is focused on growing their practice and serving their patients. Considering when and how they will inevitably exit [...]

We consider the problem of choosing, from a set of N potential stock-keeping units (SKUs) in a retail category, K SKUs to be carried at each store to maximize revenue or profit. Assortments can vary by store, subject to a maximum number of different assortments. We view a SKU as a set of attribute levels and also model possible substitutions when a customer's first choice is not in the assortment. We apply maximum likelihood estimation to sales history of the SKUs currently carried by the retailer to estimate the demand for attribute levels and substitution probabilities, and from this, the demand for any potential SKU, including those not currently carried by the retailer. We specify several alternative heuristics for choosing SKUs to be carried in an assortment. We apply this approach to optimize assortments for three real examples: snack cakes, tires, and automotive appearance chemicals. A portion of our recommendations for tires and appearance chemicals were implemented and produced sales increases of 5.8% and 3.6%, respectively, which are significant improvements relative to typical retailer annual comparable store revenue increases. We also forecast sales shares of 1, 11, and 25 new SKUs for the snack cake, tire, and automotive appearance chemical applications, respectively, with mean absolute percentage errors (MAPEs) of 16.2%, 19.1%, and 28.7%, which compares favorably to the 30.7% MAPE for chain sales of two new SKUs reported by Fader and Hardie (1996). Keywords: assortment planning; retailer operations; statistics; estimation History: Received June 16, 2009; accepted November 13, 2013, by Yossi Aviv, operations management. Published online in Articles in Advance July 10, 2014., 1. Introduction A retailer's assortment is the set of products they carry in each store at each point in time. Retailers periodically revise the assortment for each category, deleting some [...]

We study the cross-sectional breadth-return relation by assuming that investors subject to market sentiment hold a biased belief in the aggregate. With a dynamic multiasset model, we predict that the breadth-return relationship can be either positive or negative depending on the relative strength of two offsetting forces--disagreement and sentiment. We find evidence consistent with our predictions. The breadth-return relationship is positive when the sentiment effect is small. However, the relationship becomes negative when (i) the time-series variation of market-wide sentiment is high and (ii) the cross-sectional dispersion of firm-specific exposure to market-wide sentiment variation is large. Our unified framework reconciles a few seemingly inconsistent empirical studies in this literature and explains puzzling cross-sectional return patterns observed during the Internet bubble and the subprime crisis periods. Key words: investor sentiment; disagreement; breadth of ownership; cross-sectional stock returns History: Received January 26, 2011; accepted July 13, 2012, by Brad Barber, finance. Published online in Articles in Advance January 15, 2013., 1. Introduction What can we learn about the future returns of a stock when we observe many investors buying in and out of it? Chen et al. (2002) argued that [...]

Consumers may make inefficient investment decisions in holding their own-company stocks because of several biases documented by the literature of behavioral economics, such as company stock bias, home bias, and [...]

The existing academic literature on financialization points to multiple instances in which firms attempt to demonstrate the vitality of their stock-market position in ways which ultimately prove to be self-harming. I demonstrate, in the first instance as a matter of immanent logic, that these actions are linked to the interplay of contradictory tendencies in the microfoundations of financialization. Under conditions of financialization, firms create additional sources of credit to capitalize their productive activities by driving their stock price into greater increases than the market average, thereby generating capital gains. Yet, the more it becomes public knowledge that the financing tricks used to inflate the stock price provide no productive benefit to the firm, the more it would seem to create incentives for fund managers to hold portfolios that replicate the stock market as a whole. In this way, they will minimize their exposure to financial misrepresentation. Such a stance undermines financialized business models, but it does in any case conform to fund managers' basic theoretical training, which revolves around the logical demonstration that an individual stock cannot systematically out-perform the market average. I review the available empirical studies of fund manager decision-making to show that they find against the existence of a simple performativity loop operating between finance theory and fund manager behaviour. However, on many points the empirical evidence does confirm the theoretically derived conclusion concerning the potentially contradictory microfoundations of financialization. Fund managers often do act in a way which is consistent with finance theory's core claim that an indextracking strategy represents the only equilibrium portfolio, even if this is only rarely as a result of the direct performativity of the theory. Keywords: financialization; microfoundations; fund managers; the capital asset pricing model; index-tracking; performativity.

The effect of managerial ownership on corporate performance is studied with the use of three-stage-least method and simultaneous equation model. Findings of the study showed that better firm performance under a diffused ownership structure may prompt management to hold more stocks, while management with mid-range stockholdings has a positive effect on firm performance but not vice versa.

A new model for incomplete contracting and ownership is presented. The conventional modeling approach is restrictive because it argues that renegotiation of incomplete contracts always results in ex post efficiency. The effects of integration and nonintegration are also analyzed.

Challenges in management decision making on safety stock policies, when lead times follows gamma distribution, are examined.

The problems of agency theory related to security valuation are normally discussed in the context of 'owner-managers' and 'outside shareholders', and/or equity-holders and debt-holders. In this paper we discuss agency problems that emerge when there is only one shareholder (and no debt), but where the shareholder is a trust with separate income and capital beneficiaries. Trust ownership of this sort is not uncommon. The agency problems emerge as the two classes of beneficiaries have claims on cash flows that occur at different times, with income beneficiaries having claims until 'capital' is transferred to the capital beneficiaries. The agency problems that are discussed are dividends, risk shifting, capital structure, cost capitalisation, and investment policy. In all cases agency problems arise, and in some respects the agency problems are more pervasive than in the more 'orthodox' settings., 1. Introduction Agency explanations are given for a wide range of phenomena that are of interest to economists and accountants. These include explanations relating to organizational design (the 'rules of [...]

Summary. This paper summarises the various findings of studies completed on the benefits of international diversification using real estate stocks. With the increased availability of data and analytical tools, the quantity and variety of work over the past decade have increased dramatically in this area. The first two sections of the paper chronologically review the studies, focusing on how the diversification benefits are analysed: in a mixed-asset portfolio context or a reale-state-only portfolio context. The third section highlights work that uses alternative analyses to the traditional mean-variance framework to examine the international real estate stock as an investment alternative. Almost all of the studies reach the same conclusion: diversification gains are possible but are often reduced if currency risk is included in the analysis.

The observable variables of asset holdings, consumption, and labor income appear to be cointegrated, permitting fluctuations in the consumption-wealth ratio that strongly predict real stock returns and excess returns. Several models of consumer behavior suggest the log consumption-aggregate wealth summarizes probable returns on aggregate wealth.

Canadian chartered banks' stock returns have shown to be sensitive to exchange rate risk, especially between the US and Canadian dollar, from 1988 to 1995. However, this sensitivity is unstable over time and investors have reacted more strongly to portfolio devaluation after losses than to appreciation after gain.

Research using data from the 1990s indicates that the Canadian stock exchange discounts information in announcements of stock repurchases, similar to what occurred in the US during the 1980s. Findings also include mispricing affects completion rates, and price movements affect trade volume.

Issues discussed concern the return performance of common stocks held by individual investors in the United States. Topics addressed include trading overconfidence, trading costs, portfolio management, and investment turnover.

The traditional practice of sorting stocks into groups tends to introduce bias. If enough groups are chosen to sort into, the true asset pricing model has no explanatory power.

US investors tend to strongly believe in the domestic capital assets pricing model when choosing equity holdings. Since the 1940s, the prior degree of belief in pricing models has operated independently of finance theory.

Successful investing in stocks requires careful planning and strategy. For long-term investors, stocks are the wisest choice because they protect against the risks of inflation. Moreover, owning individual stocks can be more tax-efficient on the part of investors. The key is to decide how much money to invest before selecting a particular stock. It is wise to diversify across several industries by taking positions in ten or more companies to control risk. Investments may also be spread among large, medium and small firms., Wall Street can be a scary and confusing place for first-time visitors. Here's what you need to know to relax, have fun, and start making money with equities. If you [...]

Price discrimination that is favorable to active investors can lead to an increase in the market value of the firm for all the stockholders. Large stockholders must be actively involved in the stock sale because they deliver the public good corresponding to the monitoring activity. The added value of having a large investors can be gained back by the sellers via higher bids presented by minor investors who gain from the large investors' monitoring activities.

A study examines the various changes in trading activity involving stock splits and their impact on volatility and the adverse-information aspect of the bid-ask spread. The split factors of a sample of firms listed in the National Assn of Securities Dealers Automation Dealing System-NMS were evaluated. Findings indicate that microstructure biases are not the only factors that impact volatility increase. Other factors which influence the increase include disparities in the trade volume.

A study was conducted to analyze the functions of information technology (IT) in securities trading, trading strategies and IT investment decisions. Several factors influence IT investment decisions, including costs, number of traders and the nature of new information. These decisions, which anticipate trading profits, are supported by IT infrastructures characterized by information systems, technical expertise, systems development tools, databases and standards. Results show how traders react to market imperfections associated with trading costs and delays in information processing. Traders optimize their trading profits by taking into consideration the expected actions of other traders and transaction costs.

This article critiques the returns to bidders theories of Michael C. Jensen, Stewart C. Myers and N.S. Majluf in predicting positive returns. While the Jensen theory is shown to accurately predict significant positive returns, no evidence is found supporting the Myers-Majluf theory.

Share demands or share prices have been found to manifest direct relationship with insider and foreign block ownership, as shown in the analysis of the early phase of the Czech privatization scheme. It was also established that share demand and the share prices that result from it are directly related to past firm profitability, while stock market price is inversely proportional to firm risk. Further, the analysis highlighted the role of individual investors and institutional funds in market transition and the Czech voucher scheme, itself.

The effect of market frictions on the early exercise of equity and index options is investigated. Two types of irrational behavior are identified: Type I, exercise when it is not rational to do so, and Type II, failure to exercise when it is rational. Results show that clientele impact among holders and writers of the different option classes leads to varied call and put option practices.

Investors should be prepared for possible decreases in the values of stocks. Risks can be reduced by choosing well-established companies whose incomes are increasing, relying on companies with healthy balance sheets and dependable sales, avoiding high-priced stocks, investing in undervalued shares, choosing solid companies with at least 12% earnings growth rate and by being on the lookout for possible market crashes., The market has been hitting record heights, punctuated by heart-stopping drops. What should you do now? Take a hard look at your investments, and weigh defensive measures that can protect [...]

A study is conducted to examine a family of dynamic trading strategies that are remarkable for their independence from stochastic process assumptions except for continuity and positivity assumptions. These trading strategies can be applied without forecasts of future volatilities. The study generalizes the Black-Scholes type of replication results to the trading strategies and explains the function of the quadratic variation, 'cumulative volatility,' in these strategies. It also demonstrates the application of the results to portfolio insurance without any definite expiration date. The study provides a method that avoids the 'volatility misspecification risk,' which is useful for models where replication in the ordinary sense is not possible.

American Depository Receipts (ADR) are dollar-denominated receipts for non-US shares that allow foreign investors to trade in international equity markets. ADRs have also been increasingly used by domestic investors to purchase foreign stocks. An analysis of the relationship across time between ADR portfolio returns indicated a lead/lag relationship. The highest lead/lag and therefore the greatest risk was observed in the UK ADR portfolio.