Faculty AI Research

A recently published meta-analysis of the impact of strategic planning on financial performance omitted a major study of corporate planning practice in Fortune 500 manufacturing firms. This article briefly reviews that study in light of the results of the meta-analysis. Additional analysis examines performance and firm survival over a longer time period than in the original work. The overall conclusion is that a small but positive relationship between strategic planning and performance exists, and persists.

Presents data about which dimensions led to greater optimism with more fundamentalism. Three dimensions of explanatory style; Differences among the fundamentalists, moderates and liberals; Factors responsible for greater optimism among fundamentalists.

We address the Joint Replenishment Problem (JRP) where, in the presence of joint setup costs, dynamic lot sizing schedules need to be determined for m items over a planning horizon of N periods, with general time-varying cost and demand parameters. We develop a new, so-called, partitioning heuristic for this problem, which partitions the complete horizon of N periods into several relatively small intervals, specifies an associated joint replenishment problem for each of these, and solves them via a new, efficient branch-and-bound method.

Most models of multilevel production and distribution systems assume unlimited production capacity at each site. When capacity limits are introduced, an ineffective policy may lead to increasingly large order backlogs: The stability of the system becomes an issue. In this paper, we examine the stability of a multi-echelon system in which each node has limited production capacity and operates under a base-stock policy.

In this study we compare the value relevance of accounting measures for U.S. and German firms matched on industry and firm size, and evaluate the incremental informativeness of earnings adjusted on the basis of a formula proposed by analysts.

The mean-variance model for portfolio selection requires estimates of many parameters. This paper investigates the effect of errors in parameter estimates on the results of mean-variance analysis. Using a small amount of historical data to estimate parameters exposes the model to estimation errors. However, using a long time horizon to estimate parameters increases the possibility of nonstationarity in the parameters. This paper investigates the tradeoff between estimation error and stationarity. A simulation study shows that the effects of estimation error can be surprisingly large.

We find support for a negative relation between conditional expected monthly return and conditional variance of monthly return, using a GARCH-M model modified by allowing (1) seasonal patterns in volatility, (2) positive and negative innovations to returns having different impacts on conditional volatility, and (3) nominal interest rates to predict conditional variance. Using the modified GARCH-M model, we also show that monthly conditional volatility may not be as persistent as was thought.

Why do some new ventures succeed while others fail? What is the essence of entrepreneurship? Who is most likely to become a successful entrepreneur and why? How do entrepreneurs make decisions? What market, regulatory, and organizational environments foster the most successful entrepreneurial activities? Entrepreneurship research is plagued by these and other fundamental unanswered questions, for which there does not exist a cohesive explanatory, predictive, or normative theory.

By a filtered Monte Carlo estimator we mean one whose constituent parts—summands or integral increments—are conditioned on an increasing family of σ-fields. Unbiased estimators of this type are suggested by compensator identities. Replacing a point-process integrator with its intensity gives rise to one class of examples; exploiting Levy's formula gives rise to another.

Investigates the explanatory style of religious groups representing fundamentalist, moderate and liberal views. Reason for the optimism of fundamentalist individuals; Causes of the optimism differences among fundamentalists, moderates and liberals; Impact of religious hope on individuals.

In the standard analysis of overlapping generations economies with gifts from children to parents, each generation takes the actions of other generations as given. The resulting equilibrium is dynamically inefficient. In reality, however, parents realize that children will respond to higher parental saving by reducing gifts. For a broad class of gift economies, this implicit tax on saving pushes the equilibrium to dynamic efficiency.

Money managers select weights of managed portfolios to enhance their reputation in the spot market for their services, inevitably using their actions to signal their quality. We develop a two-asset signalling model of money managers. A unique screening equilibrium and (under certain parameter configurations) a host of pooling equilibria survive the Cho-Kreps Intuitive Criterion. In all the equilibria managers behave more aggressively than they would in the absence of the signalling motive, exaggerating their position in the risky asset.

In this paper we develop a model for a capacitated production/distribution network of general (but acyclic) topology with a general bill of materials, as considered in MRP (Material Requirement Planning) or DRP (Distribution Requirement Planning) systems. This model assumes stationary, deterministic demand rates and a standard stationary cost structure; it is a generalization of the uncapacitated model treated in the seminal papers of Maxwell and Muckstadt (1985) and Roundy (1986).

This research proposes that negotiators consider each other's payoffs in their evaluation of potential settlements beyond the level necessary to maintain the bargaining relationship. We further hypothesize that the way in which negotiators weight their opponents' payoffs, relative to their own, is a function of characteristics of the relationship and of the bargainers' personalities. Specifically, we consider liking of the other party, payoff expectations, satisfaction with past settlements, the likelihood of future negotiations, egocentricity, and power orientation.

This paper examines the attributes that consumers use when making product similarity judgments and their effect on similarity scaling. Previous research suggests that concrete brands are judged using dichotomous features while more abstract product categories are judged using continuous dimensions. This, in turn, suggests that the appropriateness of spatial scaling increases relative to tree scaling as one moves from brands to product categories. The results of two studies support an increase in the fit of spaces relative to trees from brands to categories.

Given a parametric family of regenerative processes on a common probability space, we investigate when the derivatives (with respect to the parameter) are regenerative. We primarily consider sequences satisfying explicit, Lipschitz recursions, such as the waiting times in many queueing systems, and show that derivatives regenerate together with the original sequence under reasonable monotonicity or continuity assumptions. The inputs to our recursions are i.i.d. or, more generally, governed by a Harris-ergodic Markov chain. For i.i.d.

Likelihood ratios are used in computer simulation to estimate expectations with respect to one law from simultation of another. This importance sampling technique can be implemented with either the likelihood ratio at the end of the simulated time horizon or with a sequence of likelihood ratios at intermediate times. Since a likelihood ratio process is a martingale, the intermediate values are conditional expectations of the final value and their use introduces no bias.

Firms registered outside the United States and listed on a primary U.S. exchange may provide their U.S. shareholders with financial statements prepared under their domestic (non-U.S.) generally accepted accounting principles (GAAP). The Securities and Exchange Commission requires such firms to reconcile their reported earnings and shareholders' equity to U.S. GAAP as part of a Form 20-F filing. These reconciliations provide a set of precise measures of the differences created by alternative accounting practices.

If the score in a squash game is tied late in the game, one player has a choice of how many additional points (from a prespecified set of possibilities) are to be played to determine the winner. This paper constructs a Markov chain model of the situation and solves for the optimal strategy. Expressions for the optimal strategy are obtained with a symbolic algebra computer package. Results are given for both international and American scoring systems. The model and analysis are very suitable for educational purposes.

This paper documents the revaluation practice over a ten-year period from 1981 of a large sample of Australian firms and examines the association between these revaluations and stock market prices and returns. The analysis uses several different approaches in order to obtain a thorough understanding of the reevaluation process in Australia. We include a description of hand-collected data from published financial statements, follow-up interviews with chief financial officers of the sample firms, and association tests between hand-collected accounting data and stock market measures.

This essay reviews the literature on the role of the financial factors in the Depression, and draws some lessons that have more general relevance for the study of the Depression and for macroeconomics. I argue that much of the recent progress that has been made in understanding some of the most important and puzzling aspects of financial-real links in the Depression followed a paradigm shift in economics.

This paper extends the analysis of transactions cost models of vertical integration to multilateral settings. Its main focus is on supply assurance concerns which arise when several downstream firms are competing for inputs in limited supply. Integration reduces supply assurance concerns for an integrating firm but it may increase them for others. Therefore, to explain the scope of any firm, one must consider the overall network of production and distribution relations.

This paper analyzes the role of capital structure in the presence of intrafirm influence activities. The hierarchical structure of large organizations inevitably generates attempts by members to influence the distributive consequences of organizational decisions. In corporations, for example, top management can reallocate or eliminate quasi rents earned by their employees, while at the same time, they must rely on these employees to provide them with information vital to their decision making.

While under some circumstances information sharing in oligopoly may be beneficial, the literature ignores the possibility of strategic information sharing by assuming verifiability of data. I endogenize the incentives for truthful information sharing and prove that if firms have the ability to send misleading information, they will always do so. To overcome this problem I introduce a (costly) mechanism through which the firm will, in its own best interest, reveal the true value of its private information, even though outside verification is impossible.

The sheer number of organizations adopting an innovation can cause a bandwagon pressure, prompting other organizations to adopt this innovation. Institutional bandwagon pressures occur because nonadopters fear appearing different from many adopters. Competitive bandwagon pressures occur because nonadopters fear below-average performance if many competitors profit from adopting.

We consider an inventory system with compound Poisson demands replenished by discrete production of units on a single-server facility. This facility may start a vacation at any production completion epoch; at the completion of a vacation the inventory level is inspected to decide whether or not to resume production. Unit production and vacation times are independent and identically distributed with general distributions.

In this article, I explore the following issue: Can differences in the way firms are organized be explained in terms of the underlying information structures? Alternatively stated, what are the consequences of changes in the nature and precision of performance measures for the optimal firm structure, that is, the optimal number of workers and the resulting workers' contributions to the production process?

Price deviations from basic valuation models based on accounting earnings and book value of owners' equity are used to test the intrinsic value explanation of the price-earnings and price-book value anomalies. Relative price deviations from the implied benchmark prices are used to assign years into high and low deviation groups. Traditional zero investment hedge portfolios are formed in each year, and the returns are compared across high and low deviation years.

We investigate optimal production controls for a tandem two-machine system with an internal buffer and unreliable machines. First, numerical methods are used to generate optimal policies for specific examples. Then, based on diese numerical results, an approximate suboptimal control policy is developed that divides the state space into distinct regions and uses only simple hedging-point policies in each region. Algorithms to obtain hedging points are provided.

Manufacturing and service organizations routinely face the challenge of scheduling jobs, orders, or individual customers in a schedule that optimizes either (i) an aggregate efficiency measure, (ii) a measure of performance balance, or (iii) some combination of these two objectives. We address these questions for single-machine job scheduling systems with fixed or controllable due dates.

In 1991, D. J. Bertsimas and G. van Ryzin introduced and analyzed a model for stochastic and dynamic vehicle routing in which a single, uncapacitated vehicle traveling at a constant velocity in a Euclidian region must service demands whose time of arrival, location and on-site service are stochastic. The objective is to find a policy to service demands over an infinite horizon that minimizes the expected system time (wait plus service) of the demands. This paper extends our analysis in several directions.

We analyze a class of stochastic and dynamic vehicle routing problems in which demands arrive randomly over time and the objective is minimizing waiting time. In our previous analysis ([5] and [6]) on this problem, we needed to assume uniformly distributed demand locations and Poisson arrivals. In this paper, using quite different techniques, we are able to extend our results to the more realistic case where demand locations have an arbitrary distribution and arrivals follow a general renewal process.