Bond Fund Performance During Recessions and Expansions: Empirical Evidence from a Small Market

This paper provides the first investigation about bond mutual fund performance during recession and expansion periods separately. Based on multi-factor performance evaluation models, results show that bond funds significantly underperform the market during both phases of the business cycle. Nevertheless, unlike equity funds, bond funds exhibit considerably higher alphas during good economic states than during market downturns. These results, however, seem entirely driven by the global financial crisis subperiod. In contrast, during the recession associated to the Euro sovereign debt crisis, bond funds are able to accomplish neutral performance. This improved performance throughout the debt crisis seems to be related to more conservative investment strategies, which reflect an increase in managers’ risk aversion.

The determinants of international equity investment: Do they differ between institutional and noninstitutional investors?

In this paper we investigate whether the determinants of international equity investment differ between investors with different degrees of sophistication. For this purpose, we analyse and compare the determinants of international equity investment of institutional and noninstitutional investors from 20 OECD countries (US not included) in the period 2001-2009. The results show that there are significant differences in the determinants of international equity investment between institutional and noninstitutional investors. In particular, noninstitutional investors tend to exhibit a more pronounced preference for equities of geographical nearby, contiguous and more transparent countries than institutional investors. The preference for more developed equity markets and the contrarian behaviour are also significantly more pronounced for noninstitutional than for institutional investors. These results support the argument that international equity investment of less sophisticated investors is more affected by information costs and familiarity than that of more sophisticated investors. Moreover, business cycles exert an influence on international equity investment decisions of both institutional and noninstitutional investors.

The determinants of international equity and bond investment

The purpose of this research is fourfold. First, to investigate whether the determinants of international equity investment differ between investors with different degrees of information, experience and sophistication. For this purpose, the determinants of international equity investment of institutional and noninstitutional investors from 20 OECD countries, in the period 2001-2009, were analysed and compared. The results show that there are significant differences in the determinants of international equity investment between institutional and noninstitutional investors. Particularly, noninstitutional investors exhibit a more pronounced preference for equities of geographical nearby, contiguous and more transparent countries than institutional investors, suggesting that the effect of information costs and familiarity on international equity investment is stronger for less informed, experienced and sophisticated investors. Moreover, the preference for more developed equity markets and the contrarian behaviour are more severe for noninstitutional investors. Hence, the heterogeneity of institutional and noninstitutional investors in international equity investment is not negligible and therefore should be taken into account. Second, to investigate whether the determinants of international bond investment differ between investors with different degrees of information, experience and sophistication. For this purpose, the determinants of international bond investment of institutional and noninstitutional investors from 20 OECD countries, in the period 2001-2009, were analysed and compared. The results show that there are few significant differences in the determinants of international bond investment between institutional and noninstitutional investors. Particularly, the preference for bonds of more transparent countries and the return chasing behaviour are more pronounced for noninstitutional investors, whereas the preference for bonds with lower risk diversification potential is more pronounced for institutional investors. Hence, not only the results for international bond investment do not allow to support (or reject) the argument that information costs and familiarity are more important for less informed, experienced and sophisticated investors, but also they are contrary to the idea that financial variables, namely return and risk diversification, are more important for more informed, experienced and sophisticated investors. Third, to investigate whether the determinants of international equity investment differ from the determinants of international bond investment. For this purpose, the determinants of both international equity and bond investment of institutional and noninstitutional investors from 20 OECD countries, in the period 2001-2009, were analysed and compared. The results show that, although the effect of information costs on international equity investment tends to be stronger than on international bond investment, the differences between assets are not usually statistically significant, especially when the influence of financial variables is taken into account. Hence, it is not possible to conclude that international equity investment is much more information intensive than international bond investment, as suggested by Gehrig (1993) and Portes, Rey and Oh (2001), among others. Fourth, to investigate whether the flight to quality phenomenon is also observable in international investment and whether the flight to quality phenomenon is more pronounced for more sophisticated than for less sophisticated investors. For this purpose, a two-factor and three-factor ANOVA models, respectively, were applied to the international equity and bond investment of institutional and noninstitutional investors from 20 OECD countries in the period 2001-2009. The results suggest that the flight to quality phenomenon is also observable in international investment, as a change from business cycle of expansion to recession causes investors to significantly decrease the average weight invested in more risky assets (equities) and increase the average weight invested in less risky assets (bonds). The results also show that the variation on the average weight assigned to each type of asset, due to changes in business cycles, is significantly stronger for institutional investors than for noninstitutional investors, thereby suggesting that the flight to quality phenomenon is more pronounced for more sophisticated than for less sophisticated investors.

Sensor-driven agenda for intelligent home care of the elderly

The exponential increase of home-bound persons who live alone and are in need of continuous monitoring requires new solutions to current problems. Most of these cases present illnesses such as motor or psychological disabilities that deprive of a normal living. Common events such as forgetfulness or falls are quite common and have to be prevented or dealt with. This paper introduces a platform to guide and assist these persons (mostly elderly people) by providing multisensory monitoring and intelligent assistance. The platform operates at three levels. The lower level, denominated ‘‘Data acquisition and processing’’performs the usual tasks of a monitoring system, collecting and processing data from the sensors for the purpose of detecting and tracking humans. The aim is to identify their activities in an intermediate level called ‘‘activity detection’’. The upper level, ‘‘Scheduling and decision-making’’, consists of a scheduler which provides warnings, schedules events in an intelligent manner and serves as an interface to the rest of the platform. The idea is to use mobile and static sensors performing constant monitoring of the user and his/her environment, providing a safe environment and an immediate response to severe problems. A case study on elderly fall detection in a nursery home bedroom demonstrates the usefulness of the proposal.

Reducing fuel consumption through modular vehicle architectures

By identifying energy waste streams in vehicles fuel consumption and introducing the concept of lean driving systems, a technological gap for reducing fuel consumption was identified. This paper proposes a solution to overcome this gap, through a modular vehicle architecture aligned with driving patterns. It does not address detailed technological solutions; instead it models the potential effects in fuel consumption through a modular concept of a vehicle and quantifies their dependence on vehicle design parameters (manifesting as the vehicle mass) and user behavior parameters (driving patterns manifesting as the use of a modular car in lighter and heavier mode, in urban and highway cycles). Modularity has been functionally applied in automotive industry as manufacture and assembly management strategies; here it is thought as a product development strategy for flexibility in use, driven by environmental concerns and enabled by social behaviors. The authors argue this concept is a step forward in combining technological solutions and social behavior, of which eco-driving is a vivid example, and potentially evolutionary to a lean, more sustainable, driving culture.

On the discovery of business processes orchestration patterns

COORDINSPECTOR is a Software Tool aiming at extracting the coordination layer of a software system. Such a reverse engineering process provides a clear view of the actually invoked services as well as the logic behind such invocations. The analysis process is based on program slicing techniques and the generation of, System Dependence Graphs and Coordination Dependence Graphs. The tool analyzes Common Intermediate Language (CIL), the native language of the Microsoft .Net Framework, thus making suitable for processing systems developed in any .Net Framework compilable language. COORDINSPECTOR generates graphical representations of the coordination layer together with business process orchestrations specified in WSBPEL 2.0

The perceived potential of business social networking sites

Business social networking is a facilitator of several business activities, such as market studies, communication with clients, and identification of business partners. This paper traduces the results of a study undertaken with the purpose of getting to know how the potential of networking is perceived in the promotion of business by participants of the LinkedIn network, and presents two main contributions: (1) to disseminate within the business community which is the relevance given to social networking; and (2) which are the social networks best suitable to the promotion of business, to support the definition of strategies and approaches accordingly. The results confirm that LinkedIn is the most suitable network to answer the needs of those that look for professional contacts and for the promotion of business, while innovation is the most recognized factor in the promotion of business through social networking. This study contributes to a better understanding of the potential of different business social networking sites, to support organizations and professionals to align their strategies with the perceived potential of each network.

The importance of quality in the consolidation of textile in Minho

The textile industry has a long tradition in Portugal and it is one of the most important sectors, despite the current economic crisis. It has always assumed a prominent role in terms of employment and a relevant position within the Portuguese economy. The lack of quality and the lower prices that other countries offer causes the loss of clients. Quality is a main tool to survive nowadays in the textile sector. To undertake our analysis, we made use of an existing database where 55 firms belonged to the textile industry, namely to the manufacturing sector. A new survey was created based on the original survey and was sent to 5 firms. Besides the survey, we also sent a few questions to the firms in order to retract more information about the actually situation in our country, concerning the textile industry. Several tables, graphs and pie charts were made to help shed light on our findings. This research was conducted in order to determine the importance of quality in the consolidation of textile firms in the north of Portugal. Most firms in our sample feel that quality improvement, business benefits, mobilizing employees’ knowledge and business image were important and that competition is very intense and is mainly by price and not by differentiation of product or service. The quality program has contributed to improve their competitive position and the improvement of their overall performance. The majority of the firms in our sample undertake TQM measures for quality purposes to meet customer expectations and prevent errors. Of all firms surveyed, the quality is certainly very important for its survival.

Comparative analysis between statistical and artificial intelligence models in business failure prediction

A growing number of predicting corporate failure models has emerged since 60s. Economic and social consequences of business failure can be dramatic, thus it is not surprise that the issue has been of growing interest in academic research as well as in business context. The main purpose of this study is to compare the predictive ability of five developed models based on three statistical techniques (Discriminant Analysis, Logit and Probit) and two models based on Artificial Intelligence (Neural Networks and Rough Sets). The five models were employed to a dataset of 420 non-bankrupt firms and 125 bankrupt firms belonging to the textile and clothing industry, over the period 2003–09. Results show that all the models performed well, with an overall correct classification level higher than 90%, and a type II error always less than 2%. The type I error increases as we move away from the year prior to failure. Our models contribute to the discussion of corporate financial distress causes. Moreover it can be used to assist decisions of creditors, investors and auditors. Additionally, this research can be of great contribution to devisers of national economic policies that aim to reduce industrial unemployment.

Integration of Standardized Management Systems: A Dilemma?

Abstract: The growing proliferation of management systems standards (MSSs), and their individualized implementation, is a real problem faced by organizations. On the other hand, MSSs are aimed at improving efficiency and effectiveness of organizational responses in order to satisfy the requirements, needs and expectations of the stakeholders. Each organization has its own identity and this is an issue that cannot be neglected; hence, two possible approaches can be attended. First, continue with the implementation of individualized management systems (MSs); or, integrate the several MSSs versus related MSs into an integrated management system (IMS). Therefore, in this context, organizations are faced with a dilemma, as a result of the increasing proliferation and diversity of MSSs. This paper takes into account the knowledge gained through a case study conducted in the context of a Portuguese company and unveils some of the advantages and disadvantages of integration. A methodology is also proposed and presented to support organizations in developing and structuring the integration process of their individualized MSs, and consequently minimize problems that are generators of inefficiencies, value destruction and loss of competitiveness. The obtained results provide relevant information that can support Top Management decision in solving that dilemma and consequently promote a successful integration, including a better control of business risks associated to MSSs requirements and enhancing sustainable performance, considering the context in which organizations operate.

Comparative Analysis between Statistical and Artificial Intelligence Models in Business Failure Prediction

A growing number of predicting corporate failure models has emerged since 60s. Economic and social consequences of business failure can be dramatic, thus it is not surprise that the issue has been of growing interest in academic research as well as in business context. The main purpose of this study is to compare the predictive ability of five developed models based on three statistical techniques (Discriminant Analysis, Logit and Probit) and two models based on Artificial Intelligence (Neural Networks and Rough Sets). The five models were employed to a dataset of 420 non-bankrupt firms and 125 bankrupt firms belonging to the textile and clothing industry, over the period 2003–09. Results show that all the models performed well, with an overall correct classification level higher than 90%, and a type II error always less than 2%. The type I error increases as we move away from the year prior to failure. Our models contribute to the discussion of corporate financial distress causes. Moreover it can be used to assist decisions of creditors, investors and auditors. Additionally, this research can be of great contribution to devisers of national economic policies that aim to reduce industrial unemployment.