Unit roots and infrequent large shocks: new international evidence on output

The nature and magnitude of the economic shocks that have affected the per capita GDP of 16 OECD countries are analyzed over a long period using the outlier method. Strong proof of infrequent large permanent and transitory shocks were found, essentially resulting from the two major wars in the twentieth century, the recession in the 1920s, the Great Depression, among others. We also examine the nature of the output trend by combining different tests of non-stationarity on different GDP series corrected by the outliers detected. It is shown that the per capita GDP series cannot reject the unit root hypothesis in 13 of the 16 countries examined. No conclusion could be drawn for the other countries because the test results were contradictory.     

A note on modelling economic growth determinants in the Dominican Republic

The article models economic growth determinants in the Dominican Republic. The exercise considers a panel of 25 candidate explanatory variables observed during the last three decades of the twentieth century. The time series are selected on the basis of economic theory and previous findings in the cross-country empirical growth literature. The modelling reveals that the annual growth rate of real gross domestic product per capita is, on average, inversely associated to a proxy for market distortions, and positively related to government expenditure, economic growth in the United States of America, and an index of globalization comprising international trade and migration variables.     

Financial Crisis, Fiscal Policy, and the 1995 GDP Contraction in Mexico

In 1995 Mexico experienced its largest contraction of gross domestic product (GDP) since the early twentieth century. I propose a simple mechanism to partially account for the contraction: the effects of changes in fiscal policy. The contraction of GDP was preceded by a financial crisis. The government responded by raising taxes and reducing spending. Using a model with taxation and government consumption, and the business cycle accounting methodology, I measure the impact of fiscal policy. Fiscal policy accounts for 20.7% of the fall in output.     

ACCOUNTING PRACTICE AND BUSINESS FINANCE: SOME CASE STUDIES FROM THE IRON AND COAL INDUSTRY 1865—1914

The use of secret reserves by British companies, both to manipulate the content of published reports and to influence investor perceptions of corporate progress during the late nineteenth and early twentieth century, has been an important focus of historical enquiry. By way of contrast, relatively little attention has been devoted to the possible exploitation of fixed asset accounting practices to achieve similar financial reporting objectives. It is the aim of the present paper to help to redress this imbalance. The principal basis for the study is the archival records of four major iron and coal companies. Identified features of prudent financial policy include: a determination to restrict distributions and the level of activity to what the company could comfortably afford; and a reluctance to use loan finance. The selection of accounting practices was subordinated to the pursuit of these, and related, policy objectives. The identified use of prudent financial policies may be contrasted with Briefs (1976, p. 184) conclusion that nineteenth century companies consistently over-estimated profitability, with a consequential stimulation of business investment and economic growth.     

Reputation and commercialism: Did accounting have a golden age? The US audit profession 1929–1990

This paper argues that maintaining the CPA’s reputation, along with a collegial professional environment, were the central goals of the American audit profession through most of the twentieth century. Matthews (2017) and Lee (1995) contend that economic self-interest has always been the profession’s goal. This paper, based on extensive study of primary sources largely unused by accounting historians, argues that the existing record is not consistent with an economic self-interest thesis. Magali Larson argued in The Rise of Professionalism that professionals tend to pursue social status and collegiality over profit seeking. Auditors worked to maintain the quiet, collegial profession that enhanced their self-image as professionals, not businessmen. But this proved to be unsustainable as the American economy expanded and a market-based ethic pervaded American culture and government in the last third of the twentieth century.     

Commonwealth Convergence Toward a Narrower Scope of Auditor Liability to Third Parties for Negligent Misstatements

There have been fundamental shifts in the legal liabilities of auditors in the twentieth century. The article analyses myriad cases. It reveals that case rulings in the later decades moderated previous decisions that had resulted in an expansion of the scope of auditor liability. It shows that there has been a convergence in approach within Commonwealth nations in respect of auditor liability for negligent misstatements. Numerous factors are identified that explain, first the expansion of auditor liability in the early to middle decades of the twentieth century, and also its subsequent reversal in latter decades. The article concludes by arguing that the current positions not likely to remain. The decisions of the courts are shown to be the products of continual struggle to balance the respective rights and interests of auditors, investors (both current and prospective) and the wider community.     

Financial Aspects of Business Cycles: An Analysis of Balance Sheet Adjustments of U.S. Nonfinancial Enterprises over the Twentieth Century

This paper formulates and tests a model of asset and financing adjustments of nonfinancial enterprises over the twentieth century. Asset adjustments change the expected income and operating risk of firms while financing adjustments change financial risk. To protect debt and equity investors from a conflict of interest problem, an up‐front contract develops an “assignment” rule for managing the firm's balance sheet whereby managers make investment decisions that conform to the risk aversion of stockholders and financing decisions that offset changes in operating risk resulting from investment decisions. Empirical evidence gathered in this paper fails to reject the predictions of the model.     

Scientific management and the pursuit of control in Britain to c.1960

The intellectual content and intentions of scientific management theories, aimed at industrial performance and harmony, were largely absent from British management practice for a great part of the last century. The limited interpretation of scientific management in Britain was characterised by a focus on control, at the heart of which was the use of piecework. Criticisms of piecework surfaced notably in the 1960s, linked to criticisms of scientific management as a whole. This article argues that any failure of piecework was not necessarily a failure of scientific management, given the latter's diluted role in twentieth century British management practice.     

‘Different from What Has Hitherto Appeared on this Subject’: John Clark,Writing Master and Accomptant, 1738

This paper argues the importance, for the study of accounting history, of collecting evidence of accounting's past and of questioning its conventional wisdoms. It is known that Cronhelm (1818) explained in algebraic terms the mathematical relationship between assets, liabilities and capital reported in a balance sheet. It is also known that the balance sheet equation Assets (A) – Liabilities (L) = Capital (C) became a foundation for teaching bookkeeping as the twentieth century progressed. Current knowledge suggests that, during the first half of the twentieth century, this mathematical approach to teaching accounting gained a foothold in the United States based on the writings of Sprague and Hatfield, and also in Continental Europe. This paper reveals that, in the 1730s in England, John Clark cogently demonstrated an algebraically rooted understanding of the inter‐relationship between double entry bookkeeping and the structure of the balance sheet as exemplified by the above equation. The paper proves that journal‐oriented learning was not the exclusive training method employed by bookkeeping instructors during the early eighteenth century and raises the possibility that other teachers of bookkeeping were providing a more thoughtful education for aspiring clerks, bookkeepers, managers and businessmen than has hitherto been thought the case. This study also shows that accounting technologies do not continuously evolve towards their current state of elaboration, and that it is important for researchers to remain aware of plurality in patterns of accounting change and to be willing to embrace the full range of methodological approaches available for studying accounting phenomena.     

From welfare state to entitlement programmes

This paper reviews the record on the development of the welfare state. The Beveridge model though world famous had few imitators and insurance based models were more common. The irony of development was that the United States which had the greatest resistance now has the most severe problem with rising spending. From 1990 onwards there was a phase of reform with three there key variables in play, concern about competitiveness (Germany), the power of recipients of entitlement programmes (US) and concerns about work incentives (UK). The recession has made the problem of containing welfare spending more urgent but the political resistance has increased. The welfare state, the consensus programme for social solidarity of the twentieth century was set to be he focus for political conflict and social division in the 21st century.     

金融体系变革与机构投资者发展研究

有效的金融体系是经济持续增长的重要基础。目前存在两类典型的金融体系：银行主导和市场主导金融体系。金融体系“市场化”是20世纪后期全球金融体系变革的重要趋势之一，而以养老基金为代表的机构投资者是全球金融体系市场化的重要推动力量。随着中国进入一个新的历史时期，传统银行主导金融体系与社会经济变革存在明显不适应，因此，进一步壮大机构投资者规模，加快金融体系市场化进程，建立以机构投资者为基础的市场主导型金融体系，是中国经济可持续增长的重要战略选择。     

Target zones in theory and history: Credibility, efficiency, and policy autonomy

An experiment with an exchange-rate band in Austria-Hungary in the early 20th century provides a rare opportunity to discuss critical aspects of the theory of target zones. Providing a new derivation of the target zone model as a set of nested hypotheses, the inference is drawn that policy credibility and market efficiency were paramount in the success of the Austro-Hungarian experience.     

Motivations for space exploration

Possibly the greatest barrier to progress in space exploration is the lack of compelling motivations to justify the necessary investments. Spaceflight, a concept that gained currency in the middle of the twentieth century, may not be well adapted to the twenty-first century without significant modification. This article assesses the traditional motivations for space exploration, documented in a Harvard study carried out over two decades ago, in the light of subsequent developments. It then reports on a recent NASA study of justifications for a renewed Moon program, and concludes with the conjecture that the very meaning of human travel in space needs to be redefined.     

Globalization the next round: Sociological perspectives

The twenty-first century momentum of globalization is markedly different from the twentieth century globalization (a new geography of trade, weaker hegemony, and growing multipolarity) and presents major questions. Is the rise of East Asia, China and India just another episode in the rise and decline of nations, another reshuffling of capitalism, a relocation of accumulation centers without affecting the logics of accumulation? Does it advance, sustain or halt neoliberalism? The rise of Asia is codependent with neoliberal globalization and yet unfolds outside the neoliberal mold. What is the relationship between zones of accumulation and modes of regulation? What are the ramifications for the global inequality? What does sociology contribute to this question?     

A brief history of market efficiency

Every finance professional employs the concept of market efficiency. The theory, evidence and counter-evidence focus on a couple of dozen highly influential articles published during the twentieth century. We summarise the origins of and interlinkages between these contributions to the history of finance.     

Malmquist-type indices in the presence of negative data: An application to bank branches

In this paper we develop an index and an indicator of productivity change that can be used with negative data. For that purpose the range directional model (RDM), a particular case of the directional distance function, is used for computing efficiency in the presence of negative data. We use RDM efficiency measures to arrive at a Malmquist-type index, which can reflect productivity change, and we use RDM inefficiency measures to arrive at a Luenberger productivity indicator, and relate the two. The productivity index and indicator are developed relative to a fixed meta-technology and so they are referred to as a meta-Malmquist index and meta-Luenberger indicator. We also address the fact that VRS technologies are used for computing the productivity index and indicator (a requirement under negative data), which raises issues relating to the interpretability of the index. We illustrate how the meta-Malmquist index can be used, not only for comparing the performance of a unit in two time periods, but also for comparing the performance of two different units at the same or different time periods. The proposed approach is then applied to a sample of bank branches where negative data were involved. The paper shows how the approach yields information from a variety of perspectives on performance which management can use.     

The development of standard costing at SaintGobain, 1920-60: forty years of quarantine?

Standard costing, conceived in the first two decades of the twentieth century in the United States, became widespread in American literature and enterprises between the two World Wars but was not introduced at Saint-Gobain until around 1960. This article investigates the circumstances behind the forty-year period separating the availability of the technique and its application in a significant French company. The time lag required by the French accounting profession to adopt the technique is put forward as the primary, though not the only, cause of this delay.     

Large Investors, Price Manipulation, and Limits to Arbitrage: An Anatomy of Market Corners

Corners were prevalent in the nineteenth and early twentieth century. We first develop a rational expectations model of corners and show that they can arise as the result of rational behavior. Then, using a novel hand-collected data set, we investigate price and trading behavior around several well-known stock market and commodity corners which occurred between 1863 and 1980. We find strong evidence that large investors and corporate insiders possess market power that allows them to manipulate prices. Manipulation leading to a market corner tends to increase market volatility and has an adverse price impact on other assets. We also find that the presence of large investors makes it risky for would-be short sellers to trade against the mispricing. Therefore, regulators and exchanges need to be concerned about ensuring that corners do not take place since they are accompanied by severe price distortions.     

Can Interest‐Bearing Money Circulate? A Small‐Denomination Arkansan Experiment, 1861–63

Legal restrictions theory suggests that dominance of non-interest-bearing currency is possible only because legal impediments prevent financial institutions from offering interest-bearing alternatives. A viable interest-bearing medium must be issued in denominations low enough for day-to-day use, however, and without historical examples of small-denomination interest-bearing issues we cannot properly test whether interest-bearing currency will circulate as legal restrictions theory predicts. Civil War Arkansas offers a rare instance where large quantities of small-denomination interest-bearing money were actually issued, mostly below $5. The results of this Arkansan experiment show that small-denomination interest-bearing issues can indeed function as the primary medium of exchange.