<P>18 COX FACULTY RESEARCH ew research by Accounting Professor Hemang Desai and co-authors indicates that short sellers were sensitive to the warning signs of bank distress in the banks ?nancials. Though short sellers have been maligned, they provide a service, acting as market disciplinarians. The notion that everybody missed it is just not true, contends Desai. This is not the ?rst time we have had a wave of overvaluation — or that banks have failed. Our evidence suggests that the financial statements did reflect some footprints of the crisis. We ?nd that these indicators are correlated with the short interest in banks, which suggests that the information set of short sellers was correlated with information in banks ?nancials. Short interest is a market- sentiment indicator that tells whether investors think a stocks price is likely to fall. This crisis was primarily a housing or real-estate driven crisis. Home prices were going up, but income levels were not. While the number of subprime loans originated and securitized by banks was increasing dramatically, the quality of the loans was deteriorating, he says. This information was likely observed by the short sellers. The majority of the subprime loans were designed to either default or be re?nanced, Desai explains. The research indicates that short sellers were sensitive to the developments in the housing market and were targeting banks due to their exposure to the housing market. In the study, four types of intermediaries responses to the unraveling situation were analyzed: short-sellers, equity analysts, Standard and Poors credit ratings and auditors. The authors examined the actions of the intermediaries well in advance of the onset of the crisis. Banks ?nancial statements did re?ect (at least partially) the risks that were building up prior to 2008. They ?nd that the indicators from the fourth quarter of 2007 are associated with bank failures over the period 2008-2010. In terms of the actions of the intermediaries, their research indicates that there is a dramatic increase in the level of abnormal short interest from March 2005 to March 2007 and a further increase in March 2008. Thus, short sellers apparently recognized that the banks valuation and performance could not be sustained — well before the crisis unfolded. Short sellers were the ?rst to react, followed by equity analysts. Credit ratings were sluggish in responding to information about bank distress. The trigger point for short sellers to act was the drop in housing prices — the bubble burst. As the banks have become bigger and more complex, the regulators are looking to capital markets to provide discipline and to supplement their own oversight, says Desai. Our evidence suggests that the short sellers potentially provided this discipline. The actions of short sellers have the potential to keep ?rms valuations in check. This is an important role that short sellers play in the economy. Short Sellers Saw the Red Flags Ahead of the Financial Crisis Hemang Desai, Accounting Department Chair and Robert B. Cullum Professor of Accounting N he movie business just made its debut in Americas gross domestic product ?gures, helping growth trend upward. Movie- making is now part of an investment class called intellectual-property products. ITOM Assistant Professor Tom Tan and co-authors contend that understanding how the product development process relates to market success can help studios and ?lmmakers better plan their production process and, in the process, create a better bottom line. The authors observed signi?cant variation in box-of?ce performance and budgets across Hollywood movies in a sample of more than 300 movies released in the United States from January 2005 to December 2009. A small number of movies involve the lions share of revenues and costs. Average U.S. box-of?ce revenues for a movie are $47.78 million, and opening weekend revenues are $13.5 million on average, or 28 percent of total gross revenues. The study focuses on supply-side factors and attempts to link marketing and operations management in the movie industry. Consumers know about the status of movies from a number of websites, says Tan. Information is spread more quickly and publicly, which is quite a difficult challenge to prevent. But studios can focus on better improving their production process so they are on time. They can control this aspect of the process. Owing to its length, post-production can bottleneck the entire production process, according to the research. Based on the average total production time of 633 days, or one year and nine months, and average gross box-office revenues of $48 million, a one-week delay translates to an average $4,880,000 box-office loss. A longer time-to-market may reduce a movies thematic timeliness and possibly result in a shorter selling period, which squeezes box-of?ce revenues. Delays may generate negative publicity about the movie, hurting box-office revenues and becoming self- perpetuating. A shorter time-to-market is a key source of strategic early-entry advantages. Studios should therefore invest more resources in speeding up the post-production and distribution phases. Shaving off production time can add to pro?tability. The authors model that increasing opening weekend by 100 theaters is associated with approximately a 4 percent revenue lift. Reducing distribution time by 16 days is equal to securing an additional 95 theaters during opening weekend. COX FACULTY RESEARCH Movie Businesss Spotlight Moment: Research Aims to Improve Pro?tability Tom Fangyun Tan, Assistant Professor of Information Technology and Operations Management T</p> <UL><LI><a href="http://www.mzines.net/publication/562/pveziwlbh/1/1/">Front-Cover</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/2/2/">Inside-Front-Cover</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/3/3/">Page-3</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/4/4/">Page-4</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/5/5/">Page-5</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/6/6/">Page-6</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/7/7/">Page-7</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/8/8/">Page-8</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/9/9/">Page-9</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/10/10/">Page-10</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/11/11/">Page-11</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/12/12/">Page-12</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/13/13/">Page-13</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/14/14/">Page-14</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/15/15/">Page-15</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/16/16/">Page-16</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/17/17/">Page-17</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/18/18/">Page-18</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/19/19/">Page-19</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/20/20/">Page-20</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/21/21/">Page-21</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/22/22/">Page-22</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/23/23/">Page-23</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/24/24/">Page-24</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/25/25/">Page-25</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/26/26/">Page-26</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/27/27/">Page-27</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/28/28/">Page-28</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/29/29/">Page-29</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/30/30/">Page-30</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/31/31/">Page-31</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/32/32/">Page-32</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/33/33/">Page-33</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/34/34/">Page-34</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/35/35/">Page-35</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/36/36/">Page-36</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/37/37/">Page-37</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/38/38/">Page-38</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/39/39/">Page-39</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/40/40/">Page-40</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/41/41/">Page-41</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/42/42/">Page-42</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/43/43/">Page-43</a></LI> <LI><a href="http://www.mzines.net/publication/562/pveziwlbh/44/44/">Back-Cover</a></LI> <LI><a href="http://www.mzines.net/publications/562/x/sitemap.xml" target="_blank">site map</a></LI> </UL>

 

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