As leaders, we routinely assess the health of our organizations and businesses. We consider our economic base, market base, and political base. But, how often is our energy base factored into the equation? If mentioned at all, energy is typically reserved for discussions of meditation and spirituality, as if our souls are left behind when we go to work. Yet, energy is the primary base that charges everything in our lives, whether material or spiritual, personal or professional.
Charisma is highly?charged energy. Authentic leaders tap into it naturally. To its original definition of “a divine favor or gift,” the word, charisma, was given a secular meaning as “a quality of things and persons by virtue of which they are specifically set apart from the ordinary, the everyday, the routine” (Word Histories, 1991, pp. 102?103). A charismatic person is thought to exude an aura of grace and healing to which others are magnetically drawn. As blessed creations, each of us has been—you have been — graced with its gift. Charisma is your innate energy base, but like most of us, you probably have not learned to access it.
Previous research finds some evidence that analysts affiliated with equity underwriters issue more optimistic earnings growth forecasts and optimistic recommendations of client stock than unaffiliated analysts. Unfortunately, these studies are unable to discriminate between three competing hypotheses for the apparent optimism. Under the bribery hypothesis, underwriting clients, with the promise of underwriting fees, coax analysts to compromise their objectivity. The execution-related conflict of hypothesis postulates that the investment banks employing analysts who are more bullish on a particular stock are better able to execute the deal, and so the banks pressure their analysts to be bullish in order to enhance their execution ability.
Finally, under the selection bias hypothesis, analysts are objective, but because of the enhanced execution ability, banks with more optimistic analysts are more likely to get selected as underwriters. We test these hypotheses in a previously unexplored setting, namely M&A activities. Depending on whether an analyst is affiliated with the target or the acquirer and whether the analyst report is about the target or the acquirer, the hypotheses predict analyst optimism in some cases and pessimism in other. Therefore, examining the issue of analyst bias in the M&A context allows us to shed light on alternative explanations for the impact of analyst affiliation on the properties of analyst forecasts and recommendations. We fail to find evidence supporting the bribery hypothesis and find limited evidence in favor of the other two.
In finance, agency theory deals with the problems and conflicts arising when a principal–agent relationship exists. The agent is hired by the principal and acts on the principal’s behalf. But how does the principal ensure that the agent always considers the interests of the principal first? What if the agent is working for his or her self-interests and not making the best decision for the principal? Essentially agency theory involves the costs of resolving conflicts between the principals and agents and aligning interests of the two groups.
The mutual fund managers act as agents for the principals, the investors in the mutual fund managed by the particular manager. What investment strategies are the managers following that allow them to be considered great in light of the recent financial crisis? What rules of agency theory are being utilized or are rules being ignored to allow these funds the success they have managed to gain? The research question relates to the mutual fund’s performance. What strategies have the managers followed to allow the fund to have above average performance in severe financial times? What is it about these funds that make them able to “weather the storm?”
