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Paradox or At Least Variance Found: A Comment on "Mean-Variance Approaches to Risk-Return Relationships in Strategy: Paradox Lost"

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  • Philip Bromiley

    (Department of Strategic Management and Organization, Carlson School of Management, 271 19th Avenue South, Minneapolis, Minnesota 55455)

Abstract

In general, the problem is that the computed mean-variance relationship for a period of time cannot be identified in distinction to the effects of shifts in the relationship over time---without additional information or assumptions. Thus, using a mean-variance approach to risk-return relationships means that statements about the nature of the mean-variance association cannot be confirmed in a nontrivial fashion within the empirical system nor generalized to any other time period---including subperiods. (Ruefli 1990) (emphasis in original)

Suggested Citation

  • Philip Bromiley, 1991. "Paradox or At Least Variance Found: A Comment on "Mean-Variance Approaches to Risk-Return Relationships in Strategy: Paradox Lost"," Management Science, INFORMS, vol. 37(9), pages 1206-1210, September.
    • Handle: RePEc:inm:ormnsc:v:37:y:1991:i:9:p:1206-1210
    DOI: 10.1287/mnsc.37.9.1206
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    Cited by:

    1. Nickel, Manuel Núñez & Rodriguez, Manuel Cano, 2002. "A review of research on the negative accounting relationship between risk and return: Bowman's paradox," Omega, Elsevier, vol. 30(1), pages 1-18, February.
    2. Deephouse, David L. & Wiseman, Robert M., 2000. "Comparing alternative explanations for accounting risk-return relations," Journal of Economic Behavior & Organization, Elsevier, vol. 42(4), pages 463-482, August.
    3. Sanjay Sharma & Oliver Nguan, 1999. "The biotechnology industry and strategies of biodiversity conservation: The influence of managerial interpretations and risk propensity," Business Strategy and the Environment, Wiley Blackwell, vol. 8(1), pages 46-61, January.

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