Earnings Management: Do Firms Play “Follow the Leader”?

In this study we examine whether the reported performance of one firm affects the discretionary reporting behavior of another firm. We do this by identifying the leader within each industry, defined as the first large announcing firm. We find that the discretionary performance of followers (those firms announcing after the leader) relates positively to the leader's reported performance. Specifically, when the leader misses analysts’ expectations, followers report lower discretionary accruals, have fewer income‐decreasing special items, and are less likely to meet analysts’ expectations. In contrast, when leaders report good news, followers report higher discretionary accruals and are more likely to meet expectations (although we do not find evidence of a positive association between leaders’ good news and followers’ income‐decreasing special items). Overall, the results are consistent with managers of followers perceiving that earnings news of the leader will affect investors’ and others’ performance expectations for their firms.     

“Sent to Coventry?”

This paper reports on an employment training project undertaken in Coventry with partial funding from the European Social Fund. It involved community organisations, the community education section of the local authority and the university. The approach to training was developed in tandem with community capacity building aims. The partnership achieved a measure of trust, mutual accountability and open decision-making. The two-year project employed a part-time researcher whose role embraced active participation in project processes. There are lessons to be drawn for urban regeneration, whether strengthening local economies, attacking social exclusion or capacity building for people and their communities.     

Discussion of “Were Information Intermediaries Sensitive to the Financial Statement‐Based Leading Indicators of Bank Distress Prior to the Financial Crisis?”

I discuss Desai, Rajgopal, and Yu ( 2016 ) with the goal of helping readers think carefully about which implications of the study are likely to generalize to future economic downturns and which are likely to be specific to the facts and circumstances of the recent financial crisis, given that the crisis was driven by the expectation and then the realization of a single market variable, national house price depreciation.     

Discussion of “Does the Identity of Engagement Partner Matter? An Analysis of Audit Partner Reporting Decisions”

The authors of this provocative study apply commonly used audit quality surrogate measures to a large and unique set of financial and other data on statutory audits of small private companies in Sweden. The paper has received unparalleled attention by the financial press and the PCAOB for its presumed support for regulatory intervention in standards for U.S. public company audits. In this Discussant Comment, I review the paper's content, analyze its predictive validity, and discuss its multiple implications plus, following Conference instructions, I provide constructive suggestions for improvements. Based on predictive validity analysis, I conclude that engagement partner assignment strategy is an important and acknowledged omitted variable that affects the study's internal validity via both the independent variable (partner's prior performance measure) and the dependent variable (borrower's cost of debt capital). The omission also affects construct validities and, if audit firms are applying a plausible assignment strategy, then interpretation of the study's main results would be reversed. Finally, the lack of a standards intervention noted by the authors and the extreme size and other differences between audits of Swedish private companies and U.S. public companies impair external validity and generalization to the U.S. intervention. As to improvements, I suggest that the authors (i) ask Swedish lenders to validate their presumed use of partner performance ratings in determining a borrower's interest rate, and (ii) ask Swedish Big 4 audit firms to provide a few internal partner performance ratings for comparison with the external performance measures used in the study. This two‐pronged, multimethod approach might confirm or deny critical assumptions underlying the present study and may substantively inform standards setters, evidence‐based standards, and fellow researchers about the validity of commonly applied surrogates for audit quality and the study's stated conclusion.     

Discussion of “Are Related Party Transactions Red Flags?”

Kohlbeck and Mayhew ( 2017 ) create a new data set featuring two types of related party transactions. They use empirical‐archival methods to investigate the effect of such transactions on the likelihood of restatements and on audit fees. Their findings suggest that related party transactions related to directors, officers and major shareholders are associated with poor “tone at the top” and that this leads management to negotiate for lower‐quality audits to minimize monitoring costs. To offer avenues for future research, we focus our discussion on three aspects of their paper related to causality, definitions of variables, and generalizability to non‐U.S. jurisdictions.     

HOW REVOLUTIONARY IS THE “NERICA REVOLUTION”? EVIDENCE FROM UGANDA

A new high‐yielding upland rice variety known as New Rice for Africa (NERICA) has been widely recognized as a promising technology for addressing the food shortage in sub‐Saharan Africa. However, there has been no on‐farm yield data to support this optimism. The present study attempts to assess the actual and potential yield of NERICA in Uganda where it has been introduced recently. We found that NERICA's yield is higher (2.5 tons) for farmers who had rice‐growing experience than those who had no previous experience (1.7 tons). These findings strongly indicate that strengthening training, extension, and other supporting systems is the key to the success of the “NERICA revolution” in this country.     

EXPLORING THE IMPACT OF FOREIGN AID ON CORRUPTION: HAS THE “ANTI‐CORRUPTION MOVEMENT” BEEN EFFECTIVE?

Though many studies have referred to an “anti‐corruption movement” beginning in the 1990s by major international organizations, none has empirically tested its effectiveness on corruption. The data show that from 1997 onward, the impact of multilateral aid is strongly and robustly associated with lower corruption levels, while bilateral aid is shown to be an insignificant determinant. An increase in any official development assistance (ODA) pre‐1997 is associated with higher levels of corruption or has no impact at all. Using panel data from 1986 to 2006, this study reveals a more nuanced relationship between ODA and corruption than previous studies and demonstrates that when disaggregating the time periods, there are sensitive temporal effects of ODA's effect on corruption overlooked by earlier studies, and provides initial evidence of the effectiveness of the international organization anti‐corruption movement in the developing world.     

Discussion of “Communicated Values as Informal Controls: Promoting Quality While Undermining Productivity?”

Kachelmeier, Thornock, and Williamson ( 2016 ) investigate experimentally whether an employer's value statement can affect the way employees cognitively represent how they should approach a multi‐attribute task, and therefore performance. Counter‐intuitively, but consistent with their theory, they find that the value statement negatively affects performance for piece‐rate incentivized participants. In my discussion, I elaborate on my comments from the 2013 CAR Conference. Specifically, I discuss contexts where a firm's value statement may have positive effects on performance, and the importance of conducting research investigating how the decisions made by management accountants affect learning.     

The Political Economy of Middle‐Income Traps: Is South Africa in a Long‐Run Growth Trap? The Path to “Bounded Populism”

The current literature on middle‐income traps has been dominated by economists who have relied on economic explanations mainly around stages of development and the structural transformation of economies. But there is an equally vigorous literature from political science which speaks to the political economy of transitions. We look at the dynamics of how economic modernisation triggers structural changes with winners and losers and how this is reflected in the polarisation of the political sphere amongst middle‐income countries. This paper asks the question of whether South Africa is an archetypical example of a country stuck in a trap and how this has affected the policy choices that it has made. South Africa needs to move up the value chain with a viable value proposition, and this requires a very different policy set and human capital plan.     

何谓201条款

按照美国1974年201法,如果国内行业受到由于进口增多而造成的实质性损害或威胁就可以要求国际贸易委员会(ITC)实施补救性措施。ITC负责确认进口增多是否造成了损害。如果委员会得出了肯定性的结论,就会向总统推荐实施紧急性的补救措施。美国总统决定是否实施补救性措施。     

Farmers at the heart of the ‘human capital revolution’? Decomposing the numeracy increase in early modern Europe†

Did the early development of skills and numerical abilities occur primarily in urban centres and among the elite groups of society? This study assesses the human capital of different occupational groups in the early modern period and partially confirms this finding: skilled and professional groups had higher levels of numeracy and literacy than persons in unskilled occupations. However, there was another large group that developed substantial human capital and represented around one‐third of the total population: farmers. By analysing numeracy and literacy evidence from six countries in Europe and Latin America, we argue that farmers contributed significantly to the formation of human capital and, consequently, to modern economic growth.     

“Un-American” or unnecessary? America’s rejection of compulsory government health insurance in the Progressive Era

Between 1915 and 1920, 18 U.S. states considered the introduction of compulsory health insurance. Progressive reformers expected state health insurance to be welfare enhancing for American wage-workers since it would result in lower cost insurance and an extension of coverage to more of the population. The evidence presented in this paper indicates that the absence of broad political support for health insurance legislation in this early period reflects that compulsory insurance would not have improved on what was available and affordable through voluntary arrangements and had the potential to reduce the welfare of wage-earners.     

Love Actually? Dissecting the Marriage–Happiness Relationship

Using theoretical concepts based on identity economics, the present paper empirically tests the idea that adherence to social norms to get married can provide an additional utility gain from marriage. Norms to get married should be stronger among more traditionalist individuals, so they should put more emphasis on the mere fact of getting married and put less emphasis on match quality. In the empirical analysis, we used the East Asian Social Survey to estimate and compare both OLS and instrumental variables results. In line with the theoretical predictions, there seems to be an identity‐based happiness gain from marriage for traditionalist individuals. These findings can be interpreted as evidence for identity‐based utility effects from marriage. The results also show important differences between OLS and instrumental variables results, confirming the importance of addressing endogeneity properly.     

Revenge of the Black Cat--Interpretation of Allan Poe＆#39;s＆quot;Black Cat＆quot;

埃德加？爱伦？坡（1809～1849）,十九世纪美国诗人、小说家和文学评论家,同时爱伦坡也是一位恐怖小说大师。《黑猫》便是坡的代表作品之一。猫是整篇文章的线索,为什么一系列事件的发生与猫有关,到底是什么力量使男主人公最后走向毁灭。整个事件因猫而起,因猫而灭,由此作者发现故事中人物病态心理的产生,自我心灵的恐怖过程和最终走向毁灭的原因都是源于黑猫的复仇。本文通过对爱伦坡恐怖小说的背景的探索,及对原著仔细的分析,从黑猫的复仇的角度来解读《黑猫》。     

Surviving the Famine Unscathed? An Analysis of the Long‐Term Health Effects of the Great Chinese Famine

We study the long‐term health effects of the Chinese Famine of 1959–1961 on five cohorts of individuals exposed to it at different stages of their early lives. Based on a 2011 national survey, we use instrumental variables to estimate the impact of the Famine on various health and lifestyle indicators for the whole sample and for the female and male subsamples separately. We have found some negative effects of Famine exposure: (i) for the whole sample, Famine exposure reduced adult height for two out of five cohorts; (ii) for both the female and the male subsamples, Famine exposure reduced adult height in one cohort; and on the whole the reduction was larger for males. We have also found in the subsample that Famine exposure was associated with (i) a higher risk of having hypertension in one cohort for females; (ii) a higher likelihood of smoking in one male cohort; and (iii) a higher probability of consuming alcohol in one cohort for males. Finally, we have not found a statistically significant association between Famine exposure and the risk of being overweight or underweight, having diabetes or other chronic diseases, having depression.