Leadership & Organizational Behavior

This paper examines uncovered interest rate parity (UIRP) and the expectations hypotheses of the term structure (EHTS) at both short and long horizons. The statistical evidence against UIRP is mixed and is currency- not horizon-dependent. Economically, the deviations from UIRP are less pronounced than previously documented. The evidence against the EHTS is statistically more uniform, but, economically, actual spreads and theoretical spreads (spreads constructed under the null of the EHTS) do not behave very differently, especially at long horizons.

We investigated two types of metaphors in stock market commentary. Agent metaphors describe price trajectories as volitional actions, whereas object metaphors describe them as movements of inanimate objects. Study 1 examined the consequences of commentators? metaphors for their investor audience. Agent metaphors, compared with object metaphors and non-metaphoric descriptions, caused investors to expect price trend continuance. The remaining studies examined preconditions, the features of a price trend that evoke agent vs. object metaphors.

We integrate the financial architecture into the theory of investment by building on two strands of literature: irreversible investment and debt pricing/capital structure. We extend the real options approach to investment, pioneered by Michael J. Brennan and Eduardo S. Schwartz (1985) and Robert McDonald and Daniel Siegel (1986), to allow for capital structure decisions under strategic debt service. We also draw insights from corporate debt pricing/capital structure literature, which focuses on leverage and security pricing after investment has already been made (Robert C.

Profession- and job-related social events such as mixers are viewed by organizations and individuals as incubators of interpersonal ties, as arenas in which individuals can initiate new and different contacts. Theory and evidence on network dynamics, however, suggests that such outcomes may be unlikely, because past ties constrain future contacts, and because homophily inhibits contact between different types of people. We investigate whether guests at a social mixer "mix" despite these influences.

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Given the cross-sectional and temporal variation in their liquidity, emerging equity markets provide an ideal setting to examine the impact of liquidity on expected returns. Our main liquidity measure is a transformation of the proportion of zero daily firm returns, averaged over the month. We find that it significantly predicts future returns, whereas alternative measures such as turnover do not.

This paper examines the preferences of advice seekers for human information sources. We focus on the case in which advice providers can be people with high or low technical expertise (high in technical knowledge) and/or socially connected (connected to many others). Somewhat contrary to intuition, information sources who are high on social connectivity are shown to be relatively more attractive for more innovative products. Consistent with this, a meta-analysis indicates that the correlation between knowledge and opinion leadership is indeed lower for more innovative products.

Ernst & Young hosted this 2007 roundtable with the goal of providing a better understanding of the challenges and best practices of using valuation analysis to support executive decisions. Panelists included Richard Ruback of the Harvard Business School, Trevor Harris of Morgan Stanley, Aileen Stockburger of Johnson & Johnson, Dino Mauricio of General Electric, Christian Roch of BNP Paribas, Ken Meyers of Siemens Corporation, and Charles Kantor of Lehman Brothers. Jeff Green of Ernst & Young moderated.

Investment decisions frequently require coordination across multiple divisions of a firm. This paper explores a class of capital budgeting mechanisms in which the divisions issue reports regarding the anticipated profitability of proposed projects. To hold the divisions accountable for their reports, the central office ties the project acceptance decision to a system of cost allocations comprised of depreciation and capital charges.