The Seidman College of Business Working Papers are preliminary results of research by Seidman faculty and may undergo further revision before final publication or presentation. The papers have not been subjected to a refereed review process. Some of the papers have been presented at professional meetings and may also appear in the proceedings for those meetings.
Copyright remains with the author(s). Reproduction (including reposting to other electronic bulletin boards) may not be done without the written consent of the authors.
Online vs. In-Class: Comparison Based on Grades
Author(s): Vijay Gondhalekar, Robert Barnett, Susan Edwards
Last Revised: July 2005
The study forms two portfolios, online and in-class, consisting of ninety matched undergraduate classes offered at a university. It compares the performance of students by slicing these portfolios based on various student and instructor characteristics. The enrollment in the two portfolios is 1,958 and 2,073 respectively. The study finds that students in the online portfolio get lower grades compared to those in the in-class portfolio. This difference is significant for student with the following characteristics: female, white, residing close to campus, and recipients of financial aid. Irrespective of student characteristics and their performance, significantly lower proportion of students in the online portfolio compared to those in the in-class portfolio go on to take the subsequent higher level course (relative to their portfolio course). Subject to this major caveat, the grade performance of students in the two portfolios is similar in the subsequent course.
Short-Sellers, Put Options and the Monday Effect: Another Look
Vijay Gondhalekar and John R. Wingender, Jr.
Last Revised: July 2005
This study examines the hypothesis that the weekend effect was created by risk-averse bearish investors using short-sells. According to Chen and Singal, these investors terminated their risky position over the weekend increasing returns on Friday and decreasing returns on Monday. However, according to this argument, with the advent of listed put options bearish investors no longer needed to close their positions over the weekend as the put options strategy provided a less risky alternative. Thus, for large-firm securities that have listed options, the weekend effect disappears.
We argue against the hypothesis that put options are less risky than short-selling. We support our theoretical arguments with a simulation study that indicates that a put option strategy is much riskier than a short-selling strategy. Consistent with the risk-return tradeoff, the simulation indicates that a put option strategy produces a much higher average return than does a short-selling strategy. Thus, we argue against the implication that bearish investors using a put option strategy would be less inclined to close their position over the weekend. Our empirical analysis investigating the impact of the put option listing on a security level leads us to conclude that some other factor must be responsible for the elimination of the weekend effect for large-firm securities.
Technology and Marketing Alliances, 1996 - 2003
Ram Subramanian and Vijay Gondhalekar
Last Revised: July 2005
This study examines the differences between marketing and technology alliances during the period that spans the recent rise and fall in technology stocks (1996-2003). The sample size for the two groups is 91 and 109 respectively. We find that although the abnormal returns at the announcement, based on the Fama-French model, are on average positive in technology alliances and zero in marketing alliances, the difference is not significant. Furthermore, irrespective of the type of alliance, the average dollar gain to the alliance partners (taken separately or together) is reliably zero. Firms in the two groups are similar in size, growth prospects, life cycle stage, and profitability. Cross-sectionally, in both the types of alliances, the higher the market-to-book asset ratio of firms the less favorable is the stock market response to the announcement. In technology alliances the market favors less profitable but financially secure firms, while it favors focus retaining firms in marketing alliances. Lastly, the larger alliance partner exhibits better bargaining power in technology alliances than in marketing alliances.
New Product Advantage Through Sustained Collaboration
Author(s): Zeynep Emden, Cornelia Droge and Roger J. Calantone
Last Revised: October 2005
Communication, flexibility, and cooperation are posited to be three key collaboration process dimensions that lead to new product advantage. We also argue that proper disposition of the firm towards co-development building trust are essential. The findings suggest that flexibility is the key to creating superior products through collaboration. Goodwill trust, competence trust, and commitment have direct and indirect positive influences on collaborative process dimensions.
How Changes in Expected Inflation Affect Gold Prices
Author: Laurence E. Blose
Last revised: September 2005
How do interest rates and gold prices react to changes in expected inflation? This paper uses surprises in the consumer price index as a measure of changes in inflation expectations. It shows that surprises in the CPI affect interest rates but do not affect gold prices. The paper concludes that speculation strategies based on changes of expectations regarding inflation can be successful in the bond markets but not the gold markets. Further, investors cannot determine market inflation expectations by examining the spot price of gold.
Tiebout Dynamics: A Small-Area Study of the Response to a Central-City / Suburban House-Price Differential
Author(s): John Reifel, Paul Thorsnes
Last Revised: August 2005
Differences in the market value of local public services and taxes capitalize into house prices, creating price differentials across service-district boundaries. Henderson (1985) expects these differentials to generate one or more of several supply responses that over time reduce the price differential. We take advantage of an unusual natural experiment - a 1920s subdivision of relatively high-quality housing split neatly in half by a central-city/suburban boundary - to study the response to the relative decline since the 1960s in the quality of central-city services. House sales since 1949 reveal the expected divergence in house prices in the late 1960s, but, contrary to Henderson's prediction, the boundary price differential persists through the end of the century. Census data and survey results indicate that there has been a "supply response": the high quality houses on the central-city side of the subdivision attract households demographically similar to their suburban counterparts who supplement central-city services through a neighborhood association and send their children mostly to private schools. The house-price differential persists to compensate for the costs of the privately-supplied services.
SAP in a Business School Curriculum: Expanding the Landscape Expands the Teaching Opportunities
Author(s): Lori Koste
Last Revised: December 2006
This paper details efforts within the Seidman College of Business to increase the breadth of teaching opportunities provided by Enterprise Resource Planning (ERP) systems. To support this goal, a new model company was implemented within the SAP environment. This company, Newberry Plastics, is discussed and subsequent teaching opportunities are identified.
The Use of Economic History in Introductory Economics Textbooks
Author(s): Daniel C. Giedeman* and Aaron Lowen
Last Revised: October 2007
Incorporating historical examples into introductory economics courses benefits students by providing them with interesting real-world applications and an understanding of the modern economy’s development over time. We therefore review almost two dozen standard introductory-level economics texts to determine the number, depth and variety of economic history references they employ. The presentations of economic history vary greatly in both depth and coverage across textbooks. We categorize historical references in several ways of potential use to faculty attempting to find substantial historical examples or choose a textbook with a historical perspective: by time period, subject matter and amount of detail provided.
Make-or-Buy Decisions with a Multi-year Time Horizon
Author(s): Parvez R. Sopariwala* and Lori L. Koste
Last Revised: June 2009
Outsourcing continues to grow in importance as organizations seek to compete in the global marketplace. The drive to improve both costs and competitive position has led many organizations to evaluate outsourcing opportunities for both core and non-core activities. These opportunities may be short-term in nature, such as an annual parts contract, or involve a longer, multiple-year contract. These multi-year contracts have a single decision opportunity, yet may have long-term repercussions. Given the potential risks of these sourcing decisions, efforts to further understand the issues are warranted.
Flexibility Hierarchy and the Product-Process Matrix
Author(s): Lori L. Koste* and Manoj K. Malhotra
Recent efforts to further the understanding of manufacturing flexibility have prompted a number of empirical studies. However, the results from these studies have not always been consistent, thereby suggesting the need to revisit a number of previously examined topics with better flexibility measures (Pagell and Krause 1999, Pagell and Krause 2004). This study takes a step in that direction by first examining flexibility with respect to the Product-Process matrix (e.g. Hayes and Wheelwright 1984, Hill 1990, Safizadeh, et al. 1996), whereby flexibility is measured in the form of complex multi-faceted constructs that possess both a dimensional as well as an elemental aspect. These elements address two distinct factors of flexibility – scope and achievability. We develop propositions that recognize this complex nature of flexibility, and posit its relationships with the Product-Process (P-P) matrix. These relationships are tested by analyzing data obtained via a mail survey of 158 manufacturing plants representing a diverse set of industries located throughout the U.S. Results based on Analysis of Variance (ANOVA) reveal that regardless of the industry type, differences exist across process types at both the dimensional and factor level of flexibility. We also found that firms are able to minimize the disruptions associated with any kind of flexible response. In contrast, benefits of flexible response are not dependent upon process choice at all for some dimensions (such as labor flexibility), while other flexibility dimensions show a systematic variation in benefits consistent with process choice. We also empirically verify the flexibility hierarchy, and draw together the prior literature in this area with the objective of providing a more unified view of manufacturing flexibility.