Thesis (M.A.) -- University of Texas at Arlington, 2008.

Formal art education equips students with skills to produce artworks. A formal art education may increase the opportunity for employment, however, art-related employment is very limited. Art graduates would be better equipped to market and manage art establishments or their own careers if art education were to be supplemented with basic business skills. Artists who wish to earn unsupplemented incomes from their art should undertake to acquire business acumen. This includes being presentable to the market place in attitude and appearance. It also includes aptitude in art, marketing and management. Role models and non-models of success and failure in business should also be observed. Art graduates should adopt applicable tried and tested business methods. Good marketing is a mix of business activities which identifies and creates consumer needs and wants. Marketing activities involve research, planning, packaging, pricing, promoting and distributing products and services to the public to create exchanges that satisfy individual and organisational objectives. Art products include artworks, frames, art books and art materials. Art-related services include the undertaking of commissions, consulting, teaching, free parking, convenient shopping hours, acceptance of mail or telephone orders, exhibitions, ease of contact, approval facilities, wrapping, delivery, installations (picture hanging), quotations, discounts, credit facilities, guarantees, trade-ins, adjustments and restorations. Good management is a mix of business activities which enables a venture to meet the challenges of supply and demand. There is a blueprint for management competence. The three dimensions of organisational competence are collaboration, commitment and creativity. Self-marketing and management is an expression of an artist's most creative being. It is that which can ensure and sustain recognition and income. Artists, like other competent organisations and entrepreneurs from the private sector, should operate with efficient manufacturing, marketing, management and finance departments. They are also equally important and therefore demand equal attention. Artistic skill together with business acumen should equip the artist to successfully compete in the market place. There are no short-cuts to becoming an artist but there are short-cuts to becoming a known and financially stable artist. Understanding marketing and management could mean the difference between waiting in poverty and frustration for a "lucky break" (which may only happen after an artists's death) and taking control. Success should be perpetuated through continuous effort.

The main purpose of this thesis is to investigate the viability of sculpture as a potential alternative investment. This goal is achieved through partly assessing the market quality of the auction market for sculptures and partly by studying their long-run diversification potential. The assessment of the sculpture market quality, together with the long-run co-movement analysis are objectives met through conducting four individual studies. In Paper I, I find that auction house art experts' relative estimate range positively affects realized prices. The effect is robust across the mid- low- and high-end segments of the international sculpture market. Interpreting the art experts' price estimate range as a proxy for the prevailing divergence of investor opinion in the art market, the findings are consistent with the disagreement model of Miller (1977). This evidence is contradictory to the predictions of the general auction model in Milgrom (1982) and does not lend support to the interpretation of the price estimate range as a proxy only for uncertainty. Moreover, the study gives insight into the price determinants of sculpture using a unique large dataset of over 65,000 sculpture sales at international auctions. Paper II is the first study to find evidence of a home bias in prices of art sold at international art auctions. All else equal, art prices are higher when they are auctioned in the home country of the artist compared to outside of the artist's home country. Moreover, the home bias in prices is more pronounced in the low-end sculpture market segment than in the high-end segment, indicating that familiarity can be a potential explanation of the bias. Furthermore, the home bias is found to be partly related to patriotism. The findings indicate that the home bias in prices increases as the relative level of patriotism rises in the home country of the artist, and that patriotism is a more persistent source of the home bias in art prices than familiarity. Paper III examines the absolute and time-varying weak-form market efficiency of the international sculpture auction market. The results indicate that the sculpture market efficiency varies over time lending support to the Adaptive Markets Hypothesis. Moreover, I find that the times of peaking relative market inefficiency coincide with distress in the wider economy and financial markets. Additionally, I find evidence that auction house art experts' pre-sale estimate accuracy Granger causes developments in time-varying market efficiency, highlighting the importance of art experts. Paper IV analyzes the dynamic relationship between the international sculpture market and the traditional financial investments during the period 1985-2013. Three international sculpture price indices are constructed to proxy for the general sculpture market price movements along with the low- and high-end segments of the international sculpture market. The results show that price development in the sculpture market does not move together with government bond prices in the long run. When it comes to equity markets, I find significant cointegrated dynamics between sculpture indices and the world equity markets. On the other hand, there is no such relationship when the S&P 500 is considered. Furthermore, cointegration is detected when analyzing the sculpture markets with the world GDP per capita. Granger-causality tests reveal that sculpture prices, in general, are Granger-caused by GDP per capita. Moreover, the Granger-causality tests indicate that sculpture price developments follow the world equity price movements, but not those of the S&P 500.