Kent Hickman

Life Cycle Investing, Holding Periods, and Risk

This article examines the relative performance of bills, bonds, and stocks over various holding periods. Using a resampling technique that accounts for the cross–sectional correlation between security classes, the authors find that the risk of underperformance for a strategy of investing in higher risk classes of investments is minimal over long holding periods, while the rewards are substantial.

Estimating the value of victory: English football

Professional English football combines publicly traded ownership shares with an active and observable wagering market. This article utilizes the information from these markets, presenting a model that may be used to estimate the impact of matches on club values. Such information is potentially useful as clubs assess the values of players and coaches based on their anticipated contributions to team performance. The article also illustrates the modelling of ‘binomial events,’ such as win/lose, hire/do not hire or approval/disapproval, and how market-determined price responses illuminate expectations.

Incorporating Research Design and Estimation Tools in the Finance Curriculum

Abstract To test for the effectiveness of instruction in research design and estimation in business curricula, a classroom exercise was developed that required students to estimate sales revenue for a small business. The exercise was administered to (a) marketing research students and (b) intermediate corporate finance students. By using a revenue estimation tool called the Buying Power Index, the marketing research students estimated revenue significantly better than the intermediate corporate finance students did. The findings indicate that additional instruction in research design and estimation would significantly enhance the ability of finance graduates to make value-maximizing decisions.

The modelling of a ‘binomial’ event: A cost-effective pentagon or a market inefficiency?

Abstract This paper models the pricing dynamics of the two-way or ‘binomial’ competition for contract awards often encountered in Pentagon procurement. The case of the

Do outside directors monitor managers? *1: Evidence from tender offer bids

90 billion Advanced Technical Fighter contract is examined, the results of which are consistent with either a cost-effective Pentagon decision or an inefficient stock market.