Commentary on “A review of research on the negative accounting relationship between risk and return: Bowman's paradox by M.N. Nickel and M.C. Rodriguez”

The February 2002 issue of Omega contains an article by M.N. Nickel and M.C. Rodriguez which reviews and evaluates research dealing with that is called the “Bowman Paradox” in the literature of strategic management. Using accounting reports from business firms this paradox arises from the persistent showing that risk and return are negatively related – i.e., high risk is associated with low return and low risk associated with high return. The present commentary describes an article in a literature not covered by Nickel and Rodriguez which (a) extends the Bowman Paradox to mutual fund reports based on market data and (b) resolves the outstanding problems noted by Nickel and Rodriguez as needing further research.