In a recent comment on Haim Falk and James A. Heintz's paper, Edward Blocher and Kung H. Chen re-emphasized the need for validation of the Falk and Heintz (F&H) proposed model and the application of Guttman's scalogram technique for risk analysis of equity securities. The purpose of this paper is to assess empirically the validity of F&H's model. Thus, 459 corporations were graded according to F&H's composite risk measure. This grading was then compared with three market-based risk measures. The market-based risk measures were derived by utilizing Sharpe's capital asset pricing model. The Standard and Poor 400 industrial index served as the basis for calculating the return on all capital assets in the market. In light of the additional effort and resources needed to adjust a traditional market price index for dividends, some researchers have ignored the dividend figures in measuring the market risk. While F&H's model gained substantial support on the company dimension, the usefulness of the industry factor has been found effective only if weak monotonic relationships are acceptable.

The purpose of this article is to demonstrate a technique for scaling industries according to degree of risk. In recent years a considerable amount of research has been performed examining the relationship between financial ratios and company risk. The bulk of this research has concentrated on company factors. In spite of the apparent interest by researchers in the industry element of company risk, research dealing directly with the classification of industries according to risk or other characteristics has been limited. Risk is affected both by the characteristics of the corporation itself and by the fact that the corporation is part of a given industry with characteristics of its own. The authors deal primarily with the second aspect of company risk--the industry factor. More specifically, they develop a ranking of industries according to degree of risk based on particular industry characteristics as reflected in industry financial ratios. Such a ranking has potential value to investors in evaluating opportunities and to researchers in studying the relationships among company and industry risk, and security ranking and performance.

This study examines some economic and organizational changes resulting from the conversion of mutual thrift institutions (MTI) to publicly traded stock charter corporations. We focus on the relation between the initial value of the converted firm and (i) subscription decisions by management and by regular depositors, and (ii) the employment of a prestigious underwriter or auditor. Whereas the proportion of managerial subscriptions displays a convex relation with the firm's initial value, the relation between the regular depositor subscription and the converted firm's value is linear and positive. The status of the underwriter or auditor is unrelated to the value of the converted firm. These findings are attributed to the regulatory setting governing the MTI conversion process, constraints on ownership holdings and the oversight function of the regulator.

Advertising Expenditures, Advertising expenses, Amortization, Almon polynomial model

Relates the efficiency of nonprofit organizations to the composition of their board of trustees. Derivations of technical and allocative efficiency of charities; Background and motivation of the board of trustees; Indications that nonprofit organizations are more efficient if their board of trustees have a larger proportion of outsider trustees.