Knowledge that Transforms

Our paper suggests a simple, recursive residuals (out-of-sample) graphical approach to evaluating the predictive power of popular equity premium and stock market time-series forecasting regressions. When applied, we find that dividend ratios should have been known to have no predictive ability even prior to the 1990s, and that any seeming ability even then was driven by only two years, 1973 and 1974. Our paper also documents changes in the time-series processes of the dividends themselves and shows that an increasing persistence of dividend-price ratio is largely responsible for the inability of dividend ratios to predict equity premia. Cochrane's (1997) accounting identity—that dividend ratios have to predict long-run dividend growth or stock returns—empirically holds only over horizons longer than 5–10 years. Over shorter horizons, dividend yields primarily forecast themselves.

The study presented in this paper examines how beliefs about coworkers affect group discussion and performance. Two beliefs are considered: (1) Perceptions of coworker task competence, and (2) achievement motivation. This study investigates whether these perceptions can actually hinder group discussion and performance, and considers the contexts in which these detrimental effects are more or less likely to arise. Results indicate that although perceptions of higher achievement motivation in coworkers lowered performance when task information was partially shared, they raised performance when task information was fully shared. A content analysis of group discussions reveals that the discussion behaviors examined by this study, rather than the more frequently examined bias toward discussing common information, mediated these results.