Volume 31 CONTENTS Fall 2005
#1 - Inferring Promotion and Tenure Research Hurdles: What the Data Say
Mark D. Griffiths and Drew B. Winters
Colleges and universities look to the major research institutions for leadership in setting research standards especially on the issue of the quality and quantity of research for tenure and promotion. However, one can question whether the quality and quantity research hurdles at major research institutions are appropriate at other institutions. We document the occurrence of top journal publications by authors from different levels of institutions to determine the historical rates for clearing different publication hurdles. We find that the top 50 finance departments dominate the top four finance journals and show that an attainable hurdle for publications in these journals for faculty in the top 50 departments is unlikely to be achievable in departments ranked outside the top 100 finance departments.
#2 - Directional Accuracy of Self-Efficacy and Student Performance in a Senior-Level Finance Course
Kam C. Chan, Peter P. Lung and Connie Shum
We examine the relationship between students’ self-efficacy ability and their performance in a senior-level portfolio management course. Our results suggest that directional accuracy of self-efficacy explains student performance in the course as well as in the course examination. Specifically, optimistic students, i.e., students whose predicted scores are higher than the actual examination score, perform poorer in the examination and the course. On the contrary, pessimistic students perform better than expected in the examination and the course. The results are consistent with the findings in a study on accounting students.
#3 - Case Studies of Ethical Companies to Emulate: Effects on Ethical Perceptions of Finance Students
Julie A. B. Cagle
A pre- and post-test methodology is used to assess the effect of using cases on finance students’ ethical perceptions. Students researched and developed their own case studies of ethical companies to emulate. While the results indicate the case study experience does not change students’ ethical standards, it does favorably influence their views of business ethics. Given the concern that the business curriculum may lead students to conclude that career success in business requires unethical decisions and behavior [Kumar, et al., 1991], case studies of ethical companies to emulate may be an important pedagogical tool.
#4 - Conducting Performance Attribution Analysis in the Classroom Using Real Market Data
Eric Girard, Anthony Pondillo and Richard Proctor
We demonstrate how Performance Attribution Analysis (PAA, hereafter) can be integrated into an existing portfolio simulation exercise that most students in an investments or portfolio analysis course already participate in. Using the STOCK-TRAKPortfolio Simulation, we walk the reader through the entire PAA process. We first discuss the development of an appropriate benchmark portfolio. Then, we illustrate how to use STOCK-TRAK® account statements to calculate weights and returns for each asset class. We also show how the Morningstar X-Ray function can be used to calculate the sector weights. We provide a template that concisely contains both the inputs and outputs required to conduct a performance attribution analysis. We show how to interpret the PAA results using a portfolio built by students. Finally, we extend our framework to a multi-period Performance Attribution Analysis.
#5 - Improving Pro Forma Analysis through Better Terminal Value Estimates
Tom Arnold, David North and Roy A. Wiggins, III
Basic pro forma analysis often estimates the terminal value input using a simple growing perpetuity assumption. While this assumption is easy to implement, it potentially creates an upward bias in some inputs leading to lower firm or project value outputs. The purpose of this paper is to demonstrate a more accurate way to estimate the terminal value input. Further, by allowing for multiple sales growth rates and by not restricting other input variables to necessarily grow at these same rates, a more accurate, flexible, compact, and thorough analysis is possible.
#6 - Bell Financial Software, Inc.
Steven R. Kursh
The dance had gone on for over a year and David Bell, the principal owner of Bell Financial Software, Inc., was getting frustrated. Bell Financial Software, Inc., had just completed a record year in revenue and profits, and he wondered how much longer it would take Roberts Professional Publishing to make the decision to buy his company or walk away after an extended period of due diligence and frequent negotiations. It simply wasn't possible, he thought, for them to do any more due diligence on his company. They had already studied the company's financial records, spoken with clients and vendors, and extensively reviewed the software.