Business Commons^™

Exit Strategies, Steven D. Dolvin

All Chapters

Unfortunately, picking the next winning stock is only half the battle. Many investments have strong gains, but end up losing because investors fail to exit their holdings at the right time. Trailing stop orders are one way to help mitigate this issue. (See article here, Yahoo Finance.)

History Lesson: Momentum, Steven D. Dolvin

All Chapters

We often talk about buying low and selling high, but many individual investors often do the opposite. Particularly in retail accounts and 401(k) plans, investors are often "late to the party," waiting until the market hits a high to reenter. This behavioral bias results in momentum that may drive the market higher, but how long is the key question. Further, investors would be better suited taking a more disciplined periodic investment approach. With the market just hitting a high, this issue is currently at play. (See article here, WSJ.)

Death Cross For Gold, Steven D. Dolvin

All Chapters

For technical traders, a death cross is definitely a sell sign. A death cross occurs when a shorter term moving average (such as the 50 day) crosses a longer term moving average (such as the 200 day) to the downside. Gold recently experienced such an event. However, fundamental traders are often at odds with this belief. (See article here, Yahoo Finance.)

If You Don't Want To Be An Engineer...., Steven D. Dolvin

All Chapters

Recent surveys suggest that engineers (chemical, mechanical, etc.) are the highest earning undergraduate majors -- most in the $60-65K range. Finance is the next highest, at $57,600. So, it seems you have made a good investment by selecting finance as your major. (See article here, Fox Business / Business News Daily.)

Q&A Platforms Evaluated Using Butler University Q&A Intelligence Index, Trent Ritzenthaler, Richard Fetter, Ginger Lippert

Scholarship and Professional Work - Business

A new study using the Butler University Q&A Intelligence Index measures how various mobile Q&A platforms deliver quality, accurate answers in a timely manner to a broad variety of questions. Based on the results of our analysis, ChaCha led all Q&A platforms on mobile devices.

Results of the study are based upon review of a large set of responses from each of the major Q&A platforms, coupled with a comparison of disparate Q&A platforms that serve answers in different ways. Our methodology included the creation of a new metric, termed the Butler University Q&A Intelligence Index, which measures the likelihood …

Bond Portfolio Duration, Steven D. Dolvin

All Chapters

Duration is a measure of the effective maturity of a bond or bond portfolio. A higher duration is indicative of higher price risk, particularly in response to changing rates. Thus, if interest rates rise and bond prices fall, a bond with a higher duration will experience a sharper drop in price. Given the relatively low level of interest rates in the current market, bond investors have moved to lower duration portfolios, as protection against expected increases in rates. (See article here, Wall Street Journal.)

Increased Leverage = Less Risk?, Steven D. Dolvin

All Chapters

All else equal, the use of leverage increases investment risk. But, can it ever have the opposite effect? Investors using the so-called risk parity trade believe the answer is yes. Under this approach, a portfolio is built using equity and debt, but the debt is purchased using leverage. The strategy is based on two key points: (1) equity is more volatile than debt and (2) debt returns are negatively correlated to equity returns. Thus, with leverage, the debt returns are in effect more volatile. When combined, the negative correlation creates a less risky portfolio as the equity and debt returns …

R-Squared And Fund Selection, Steven D. Dolvin

All Chapters

R-squared is the correlation (i.e., r) of a fund to its benchmark index multiplied by itself (i.e., squared). R-squared measures how closely a fund tracks its respective index. A recent article (see here, Wall Street Journal) suggests that investors should search for actively managed funds with low R-squareds, as this suggests the manager is truly trying to add value by concentrating on specific sectors of the benchmark universe. However, doing so increases systematic risk. So, there is a tradeoff.

Circuit Breakers In Response To Flash Crash, Steven D. Dolvin

All Chapters

Following the "Flash Crash," the exchanges implemented single stock circuit breakers (in addition to the market-wide constraints that already existed). These new circuit breakers are already under review, with planned changes set to go into effect in April. See article here, Bloomberg.

Are Hedge Funds Worth It?, Steven D. Dolvin

All Chapters

Hedge funds typically charge high fees for their services -- generally a 2% yearly management fee plus 20% of profits. When this is factored in, most investors would be better off choosing a low cost ETF. See article here, The Economist.

Snow Futures?, Steven D. Dolvin

All Chapters

Futures contracts are typically viewed as speculative investments; however, much of the activity in such contracts is the result of hedging. For example, insurance companies use weather derivatives to hedge exposure to natural disasters, while farmers and food producers would transact in agricultural futures. The most recent addition to such categories is snow futures. See article here, CME Group.

Take It Back: Dynamic Consumer Goals In Retail Customer Service Transactions, Courtney Droms

Scholarship and Professional Work - Business

Product returns and exchanges are an important part of a consumer’s postpurchase decision-making process and have economic and psychological consequences. Based primarily on a participant observation research, a conceptual model is developed that portrays two distinct process paths that occur during return transactions. The analysis incorporates previous research regarding goal-directed behavior and role and script theories in understanding the complexity of a return transaction. Consumers are identified as having both economic and social goals, and the change catalysts promoting shifts in goal focus as well as the interplay between these goals are represented in the model.

M-Commerce Development In Developing Country: Users’ Perspective, Hongjiang Xu

Scholarship and Professional Work - Business

M-commerce (mobile commerce) is growing increasingly popular, and China has a huge potential to develop m-commerce technology. This study focuses on users' perspectives of m-commerce development in China. The development of m-commerce was measured by the extent of m-commerce businesses adopting business intelligence. A research framework was developed for users' perceptions on m-commerce development, survey questionnaires were used to collect data, and ANOVA was used for data analysis.

A State-Sponsored Approach To Quality Improvement In Nursing Homes: Insights From Providers, Kathleen Abrahamson, Priscilla Arling, Greg Arling

Scholarship and Professional Work - Business

In 2006, the Minnesota Performance-based Incentive Payment Program (PIPP) was launched to fund provider-initiated quality improvement (QI) projects addressing a wide range of persistent quality issues in nursing homes (eg, falls, pain, mobility, psychotropic medication reduction, care transitions). In this article, the authors describe the perceptions of nursing home providers who participated in a PIPP-funded QI project and completed a survey addressing a variety of QI-related concerns. Respondents noted the importance of support from top leadership, reported being challenged by resource constraints, and generally thought that their project positively impacted quality within their facility. These findings highlight the importance of …

Knowledge Sharing And Knowledge Management System Avoidance: The Role Of Knowledge Type And The Social Network In Bypassing An Organizational Knowledge Management System, Susan A. Brown, Alan R. Dennis, Diana Burley, Priscilla Arling

Scholarship and Professional Work - Business

Knowledge sharing is a difficult task for most organizations, and there are many reasons for this. In this article, we propose that the nature of the knowledge shared and an individual's social network influence employees to find more value in person-to-person knowledge sharing, which could lead them to bypass the codified knowledge provided by a knowledge management system (KMS). We surveyed employees of a workman's compensation board in Canada and used social network analysis and hierarchical linear modeling to analyze the data. The results show that knowledge complexity and knowledge teachability increased the likelihood of finding value in person-to-person knowledge …

International Exposure Through Network Relationships: Implications For New Venture Internationalization, Stephanie A. Fernhaber, Dan Li

Scholarship and Professional Work - Business

Drawing on the network literature and attention-based view, we examine the extent to which international exposure from key informal (geographically proximate firms) and formal (alliance partners) network relationships impacts new venture internationalization. Our findings are three-fold. First, international exposure from both types of network relationships positively influence new venture internationalization, and serve as substitutes for each other. Second, the effects differ based on the age of the venture. While older ventures benefit more from international exposure from alliance partners, younger ventures are more influenced by international exposure from geographically proximate firms. Third, our analysis confirms a three-way interactive effect of …

Untangling The Relationship Between New Venture Internationalization And Performance, Stephanie A. Fernhaber

Scholarship and Professional Work - Business

To help untangle the inconsistency in prior performance studies for new venture internationalization, the dynamic capabilities perspective is revisited to consider whether the relationship is more complex than previously assumed. While internationalization requires the reconfiguration of routines and resources, survivability is argued to peak at moderate levels of internationalization where the associated resources and risk is balanced between local and foreign markets. In contrast, sales growth is suggested to peak at either low or high levels of internationalization where a singular market focus and set of capabilities is being exploited. The results confirm that the level of new venture internationalization …

The Stock Market’S Reaction To Accounting Information: The Case Of The Latin American Integrated Market Abstract, Mauricio A. Melgarejo, Eduardo Montiel, Luis Sanz

Scholarship and Professional Work - Business

The purpose of this paper is to explore the stock market’s reaction to quarterly financial statements. We focus our study in two countries that are participating in the Latin American Integrated Market (MILA): Peru and Chile. We find that the cumulative abnormal returns and the absolute value of the cumulative abnormal trading are explained principally by the quarterly earnings surprises around the financial statements release date. We find that these effects are more pronounced in small firms, confirming that due to the lower level of pre disclosure information accounting numbers are the main source of information. Key words: Accounting Information, …

Beating Competitors To International Markets: The Value Of Geographically Balanced Networks For Innovation, Pankaj C. Patel, Stephanie A. Fernhaber, Patricia P. Mcdougall-Covin, Robert P. Van Der Have

Scholarship and Professional Work - Business

Being able to launch new products internationally is critical for technology-based ventures to recoup the high costs of R&D and to exploit their innovations fully. Despite the widely recognized importance of networks within the innovation development process, there appear to be contrasting viewpoints as to whether local or foreign network partners contribute more in the race to internationalize. Drawing on the theoretical underpinnings of comparative advantage, we propose and empirically confirm that ventures pursuing a balance of local and foreign network connections for the development of an innovation are able to bring the product more rapidly into the international marketplace. …

The Sarbanes-Oxley Act, Security Analyst Monitoring Activity, And Firm Value, Sheryl-Ann Stephen, Vincent P. Apilado

Scholarship and Professional Work - Business

In this study we examine the complementary monitoring activity that takes place via the Sarbanes-Oxley Act (SOX) and its effect on security analyst monitoring activity and firm value of large and small public firms. Our findings indicate that security analyst monitoring activity has decreased post-SOX while firm value has increased post-SOX for both large and small firms. We also find that the increase in firm value is more pronounced for the group of small firms. Given these results, we surmise that the complementary monitoring activity provided by SOX is effective enough to have a positive impact on firm value.