Decomposing Value Globally

Independent Institutional Investors and Equity Returns

This article investigates relationship between firm size and technical change. The relationship between firm size and technical change has long been a pre-occupation in the literature, preceding the flurry of macroeconomic studies which followed the discovery of the residual factor by Solow, Dennison and others. Although this concern goes back at least to the writings of Marx, it was Schumpeter who first emphasized the relationship between firm size and technical change. For some years the assertion of Schumpeter's was widely accepted. But then a number of detailed empirical studies were undertaken resting on 1950s data. These began to suggest that beyond a certain size inventive activity rose less than proportionately with bigness. By contrast, Rothwell and Zegveld assembled a variety of country studies, some of which suggest that small and medium sized firms are relatively invention-and innovation-intensive in some sectors and in some countries. The purpose of this paper is to argue, by illustration with a single sector, computer-aided design (CAD), that the above-mentioned studies reach their varying conclusions in a largely static framework. Thus, whilst there is always a tendency towards concentration in capitalism, the relationship between firm size and technical change is a dynamic one, ensuring that static generalisations at any single point of time are not very helpful. The article is divided into Sections by Section III describes the market structure in the CAD sector and analyse how this has changed over the past decade. Section IV analyses the nature of the barriers to entry in this sector and illustrate how these are typical of other emerging software-intensive microelectronic-based sectors. Finally, section V is a return discussion on the relationship between firm size and inventive activity.

The tax burden indicator is one of the criteria for tax risk assessment used by tax authorities for making the decision to conduct an on-site tax audit. The dynamics of the tax burden indicator is considered to be a catalyst for the development of positive or negative tax relations between the taxpayer and the tax authority. It is very important to understand the relationship between the tax burden indicator and the firm's size in order to form an objective approach to tax control of micro, small and medium-sized businesses in different industries. The purpose of the research is to define a relationship between the level of tax burden and the firm's size in the Russian timber industry. The hypothesis of the research is that the tax burden increases as the size of the firm grows in the timber industry in Russia. Firms belonging to the categories of micro and small businesses were selected randomly, taking into account the priority characteristics of the firm's size by the average number of employees. The tax burden was calculated using the official methodology of the Federal Tax Service of Russia. The calculation of the tax burden level was performed for each respondent. The average values of tax burden indicators were also calculated by industry and for each category of business activity. We found that the average level of the tax burden increases when the size of businesses increases generally for all branches of the timber industry. At the same time, the researched characteristics of the firm's size (revenue and average number of employees) have a significant impact on changes in the level of the tax burden both in general and individually in such branches of the timber industry as logging, woodworking and furniture production. The tax burden level in the above-mentioned industries increases as the firm's size increases. In the pulp and paper industry, the tax burden level increases as from micro firms to small firms, but the tax burden level decreases as firms continue to grow from small to medium-sized ones.

Recent reports in the press highlight concerns by regulators over the disclosure practices of companies in the Healthcare and Biotechnology industry. I examine whether companies in the Healthcare and Biotechnology industry have poorer disclosure practices than companies in other industries by examining whether companies in this industry are more likely to receive a query from ASX. The effect of industry and other firm-specific factors on the likelihood of receiving a query is examined using a matched-firm design over a recent sample period (financial year 2003). Regression results show there is no evidence that biotech firms receive more price queries or queries in general (comprising price queries, appendix 4C queries and other queries), which is consistent with Hsu (2005) and inconsistent with Neagle and Tsykin (2001). There is evidence however that biotech firms receive more appendix 4C queries though this suggests that the queries received by biotech companies are related to the going concern problem which may not necessarily be indicative of poor disclosure practices. Loss firms and firms that are not audited by a big four audit firm are found to be more likely to receive queries, while the direction of earnings change, size of earnings change and firm size are insignificantly related to the likelihood of receiving a query.

There have been numerous empirical studies investigating the relationship between firm size and inventive activity' since Schumpeter first argued that the large-scale enterprise .. has come to be the most powerful engine of [economic] progress.. . [24, 106]. The important policy issue is whether large firm size is associated with greater innovative output, but measuring innovative output is very difficult. Consequently, many empirical studies have focused on the relationship between firm size and some measure of innovative inputs, and argue that inferences can be made concerning innovative output and firm size as long as the production of innovations is characterized by nondecreasing returns to scale.2 Fisher and Temin [4] contend that the empirical tests relating innovative inputs and firm size are inappropriate, for even if the production of innovation is characterized by increasing returns to scale, a positive and increasing relationship between R&D employment and firm size is neither necessary nor sufficient for there to be an increasing and positive relationship between innovative output and firm size.3 The Fisher and Temin results are controversial. In review articles on innovation and monopoly power, Markham [16] states he does not accept the conclusions of Fisher and Temin, while Kamien and Schwartz [10] mention Fisher and Temin but discuss the empirical literature without further reference to their

Who Are Informed? The Evidence from Institutional Trades

Political Risk, Economic Risk and Financial Risk

The Cross-Section of Equity Returns in Emerging Markets

Evidence from the U.K. on Auditor's Judgment in the Risks of Material Misstatement: Determinants and Consequences

Article history: Received January 10, 2013 Received in revised format 10 April 2013 Accepted 12 May 2013 Available online May 14 2013 This paper investigates the effects of debt, firm size and liquidity on internal resources as well as investment expenses on 140 selected firms listed on Tehran Stock Exchange over the period of 2006-2010. The survey has performed based on panel data analysis and the proposed model uses Husman model chooses random effect as well as fixed effect to analyze the data. The results indicate that there was a positive relationship between firms’ debt and sensitivity of investment-cash flow. There are also some positive and meaningful relationship between firms’ size and liquidity on one side and sensitivity of investment-cash flow. © 2013 Growing Science Ltd. All rights reserved.

This study focused its attention to the link among firm size and CEO compensation of firms listed at the NSE. Previous researchers have identified firm’s characteristics that influence the firm’s ability to perform. The identified characteristics include firm size, age, reputation and legitimacy. A firm’s characteristics could be described through reference to resources the firm owns and by the organization’s objectives. Previous researches examined the factors influencing CEO compensation revealed a lack of consensus to the explanation of increases in CEO’S compensation. While most of the studies confirm linkages between organizational performance and CEO compensation, they measured organizational performance using financial indicators of performance, this study investigates the link between firm size and CEOs compensation. The study’s population constituted 40 firms listed at the NSE. A mixed design was adopted in the study. Primary data was gathered to capture the opinion of board members on firm size characteristics that determine levels of CEO’S compensation using semi structured questionnaire. Secondary sources of data were used to gather information on financial performance from the financial statement of the listed organizations for 2016-2017 financial periods. Descriptive statistics, correlations, linear, multiple and stepwise regression were applied in analyzing and interpreting the data that was collected. The research revealed that there was significant and positive relationship between firm size and CEOs compensation. The findings of this study are of benefit to board members of organizations in identifying the performance measures that are important to consider when making decisions on CEO remuneration.

The shape of the volatility smirk has significant cross-sectional predictive power for future equity returns. Stocks exhibiting the steepest smirks in their traded options underperform stocks with the least pronounced volatility smirks in their options by 10.9% per year on a risk-adjusted basis. This predictability persists for at least 6 months, and firms with the steepest volatility smirks are those experiencing the worst earnings shocks in the following quarter. The results are consistent with the notion that informed traders with negative news prefer to trade out-of-the-money put options, and that the equity market is slow in incorporating the information embedded in volatility smirks.

Recent research has noted that the change in the shape of the yield curve can serve as a proxy for economic activity and contains economic information not present in other explanatory variables. This article extends previous research by examining the combined effect of changes in the shape of the yield curve (yield pattern) and term spread on ex ante equity returns. We find specific yield patterns do affect future equity returns, that changes in the expected long rate is a significant factor, and that, when conditioned on the change in yield curve, the term spread is time variant and significant in specific yield pattern environments and insignificant in others. Specifically, we find that average ex ante equity returns are significant and positive when the yield pattern shows signs of the expected long rate declining. In addition, we find the efficacy of the conditional term spread to predict future equity returns increased after 1980. Our results are consistent with the Expectation Theory of interest rat...

A large body of empirical evidence suggests that beliefs systematically deviate from perfect rationality. Much of the evidence implies that economic agents tend to form forecasts that are excessively influenced by recent changes. We present a parsimonious quasi-rational model that we call natural expectations, which falls between rational expectations and (naïve) intuitive expectations. (Intuitive expectations are formed by running growth regressions with a limited number of right-hand-side variables, and this leads to excessively extrapolative beliefs in certain classes of environments). Natural expectations overstate the long-run persistence of economic shocks. In other words, agents with natural expectations turn out to form beliefs that don't sufficiently account for the fact that good times (or bad times) won't last forever. We embed natural expectations in a simple dynamic macroeconomic model and compare the simulated properties of the model to the available empirical evidence. The model's predictions match many patterns observed in macroeconomic and financial time series, such as high volatility of asset prices, predictable up-and-down cycles in equity returns, and a negative relationship between current consumption growth and future equity returns.

We study nearly 7,000 retirement accounts during the April 1994–August 1998 period. Several interesting patterns emerge. Most asset allocations are extreme (either 100 percent or zero percent in equities) and there is inertia in asset allocations. Equity allocations are higher for males, married investors, and for investors with higher earnings and more seniority on the job; equity allocations are lower for older investors. There is very limited portfolio reshuffling, in sharp contrast to discount brokerage accounts. Daily changes in equity allocations correlate only weakly with same-day equity returns and do not correlate with future equity returns.