C. Terry Grant

Equity fund size and growth: Implications for performance and selection

Should individuals choose the largest or smallest equity funds for investment? This study explores the relationship of equity fund size to performance. Historical returns of large funds are found to be superior to their smaller peers. Yesterdays best performing funds tend to become todays largest funds as individuals invest heavily in response to the communications about the funds past success. But the findings suggest that, once large, equity funds do not outperform their peers. Especially for funds in aggressive growth objectives, the advantages of being small appear to outweigh the disadvantages. For individual investors with aggressive growth objectives, a strategy of investing in smaller funds may thus be wealth maximizing.

Barriers to professional entry: how effective is the 150-hour rule?

Abstract Policy debates about the 150-hour rule have taken place without information regarding the marginal impacts that education has on CPA exam success. We find that education is a relatively weak input. An increase from the traditional undergraduate requirement of 128 credit hours to 150 hours is equivalent to a four-percentile increment in a candidates mathematics aptitude. Among inputs that might be more direct substitutes, we observe that the “extra” 22 hours is offset by two-thirds of a review course on one exam section. Our results explain why several states have recently adopted the 120/150 rule, which removes the 150-hour constraint from the exam. Since the CPA exam will be soon changing to address a broader range of competencies, the results of this study also provide a baseline for policy makers to assess the impact of educational requirements on future entry.

Survival Strategies in an Era of Government Downsizing: Evidence from the Ogden Air Logistics Center

Abstract Due to the post-cold war environment, beginning in the late 1980s U.S. military missions shifted from the ability to support a full-scale war scenario against Warsaw pact nations to the ability to support regional conflicts. This new environment left the U.S. military with significant excess maintenance capacity. The Defense Business Operations Fund (DBOF was renamed working capital fund in 1995) was initiated by the Department of Defense to provide incentives for military services to embrace market-like efficiencies. This study examines the efficiency and effectiveness of a major United States Air Force aircraft repair depot, the Ogden Air Logistics Center. Efficiency and effectiveness data are collected and compared for the six-year period surrounding adoption of marketlike business practices. The results indicate dramatic efficiency improvements as profitability and efficiency of asset use increase sharply in the three years after adoption of the DBOF initiatives. The data also suggest that maintenance effectiveness at Ogden did not decline as a result of the initiatives.