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An Informed Public Can Prevent Crashes Sandro Andrade MARKET BUBBLES like the one that preceded the recent housing collapse could be mitigated or even prevented if governments and regulatory bodies shared information with the public about factors that deter- mine an asset's value. This is the finding of research by Timothy Burch and Sandro Andrade of the University of Miami School of Business Administration in Florida, and Jiangze Bian of the University of International Business and Economics in Beijing, China. The group examined China's stock market during a six-month period in 2007 when stock prices nearly tripled and trading activ- ity nearly quadrupled. They found that stocks with the most analyst cov- erage had significantly smaller bubbles than those with no analyst coverage. For example, stocks with 20 analysts reporting on them had bubbles that were more than 60 percent smaller than stocks with no analyst coverage. "Our research shows that making relevant information about an asset readily available reduces disagree- ment, which in turn makes bubbles less severe," says Burch. The researchers suggest that to limit bubbles in the stock market, government agencies could col- lect and disseminate information Timothy Burch and even subsidize analyst research where needed. To reduce the odds and severity of real estate market bubbles, governments and regulatory agencies could disseminate information about transactions, appraisals, rental yields, vacancies, demographic/migration trends, prospective changes in zoning laws, and real-property borrowing statistics. "This could be achieved by creating a 'Kelley Blue Book' for real estateā€”a centralized, well-promoted Web site where everyone could go before making real estate decisions," says Andrade. "Analyst Coverage, Information, and Bubbles" is forthcoming in the Journal of Financial and Qualita- tive Analysis. well as what they valued most in their personal and professional lives. The report found that one predictor of success for CIOs was their level of engagement with their leadership teams. The more CIOs are seen as equals to other C-suite executives, the better they can sell the leadership on expensive, but often necessary, investments in technology. The report also found that these CIOs were all self- described lifelong learners and displayed high emo- tional intelligence. They each possessed an "integrative mind," which led them to connect the dots of a prob- lem; they built cross-functional teams and drew on the "collective intelligence of the enterprise." And they all recommended strategies that focused on the needs of their organizations' customers. "The Renaissance CIO Project: The Invisible Factors of Extraordinary Success" by James Spitze and Judith Lee was published in the Winter 2012 issue of the California Management Review. Purchase it online at BizEd November/December 2012 49

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