London Business School

About: London Business School is a education organization based out in London, England, United Kingdom. It is known for research contribution in the topics: Portfolio & Equity (finance). The organization has 1138 authors who have published 5118 publications receiving 437980 citations. The organization is also known as: LBS.

Something to lose and nothing to gain: The role of stress in the interactive effect of power and stability on risk taking

Abstract: The current investigation explores how power and stability within a social hierarchy interact to affect risk taking. Building on a diverse, interdisciplinary body of research, including work on non-human primates, intergroup status, and childhood social hierarchies, we predicted that the unstable powerful and the stable powerless will be more risk taking than the stable powerful and unstable powerless. Across four studies, the unstable powerful and the stable powerless preferred probabilistic over certain outcomes and engaged in more risky behaviors in an organizational decision-making scenario, a blackjack game, and a balloon-pumping task than did the the stable powerful and the unstable powerless. These effects appeared to be the result of the increased stress that accompanied states of unstable power and stable powerlessness: these states produced more physiological arousal, a direct manipulation of stress led to greater risk taking, and stress tolerance moderated the interaction between power and stab...

The Informational Role of Bond Analysts

Abstract: This study uses a large sample of sell-side bond analysts’ reports to examine the properties of recommendations provided by bond analysts and the impact of these recommendations on bond securities. First, we document that the distribution of bond analysts’ buy, hold, and sell recommendations is skewed positively, but less so than the distribution of equity analysts’ recommendations. The positive skewness in bond analysts’ recommendations is greater for

Longevity Risk, Retirement Savings, and Financial Innovation

Abstract: Over the last couple of decades there have been unprecedented, and to some extent unexpected, increases in life expectancy which have raised important concerns for retirement savings and for the affordability of defined-benefit pension plans We address questions concerning these topics by introducing longevity risk in the standard life-cycle model of consumption and savings decisions We allow individuals to hedge this risk through endogenous saving and retirement decisions and, investigate the extent to which they would benefit from investing in financial assets designed to hedge shocks to survival probabilities We find that, when longevity risk is calibrated to match forward-looking projections the benefits of such investment are substantial This lends support to the idea that such hedging should be pursued by defined-benefit pension plans on behalf of their beneficiaries Finally, we draw implications for optimal security design

Regression-based tests of the market pricing of accounting numbers: The mishkin test and ordinary least squares

Abstract: The test developed in Mishkin [1983] (hereafter, MT) is widely used to test the rational pricing of accounting numbers. However, contrary to the perception in the accounting literature, the exclusion of variables from the MT's forecasting and pricing equations leads to an omitted variables problem that affects inferences about the rational pricing of accounting variables. Only if the omitted variables are rationally priced is their exclusion irrelevant. Failure to recognize this issue leads accounting researchers to employ the MT without appreciating how omitted variables affect the inferences they draw. We demonstrate that when additional explanatory variables are included in the MT, the rational pricing of accruals is not rejected. That is, the accrual anomaly documented in Sloan [1996] vanishes when additional explanatory variables are incorporated into the MT. We also show that in accounting research settings, where samples are large, ordinary least squares (OLS) is equivalent to the MT. As a result, accounting researchers should consider using OLS or be more explicit about the exact advantages of the MT over OLS in their research setting.

Regulatory reform and productivity growth in the UK's public utilities

Abstract: The reforms in the regulation of the UK'nationalised industries over the last decade are examined and the extent to which they have been successful in achieving one of their declared aims – that of increasing the efficiency of the enterprises' operations – is considered. To achieve this the productivity performance of nine of the largest enterprises over the last twenty years was analysed. The results show that the rate of productivity growth has been significantly higher during the 1980s, compared with the preceeding decade. It is concluded that a large part of the observed upturn in productivity is a result of changes in efficiency.