Audited financial reporting and voluntary disclosure as complements: A test of the Confirmation Hypothesis

We examine the “confirmation” hypothesis that audited financial reporting and disclosure of managers' private information are complements, because independent verification of outcomes disciplines and hence enhances disclosure credibility. Committing to higher audit fees (a measure of financial statement verification) is associated with management forecasts that are more frequent, specific, timely, accurate and informative to investors. Because private information disclosure and audited financial reporting are complements, their economic roles cannot be evaluated separately. Our evidence cautions against drawing inferences exclusively from market reactions around “announcement periods” because audited financial reporting indirectly affects information released at other times and through other channels.     

UK productivity and employment in 1991

Compared to prewar rates, the growth of UK productivity since 1945 has been rapid, but it has been slower than that of comparable countries. How is it likely to evolve over the next 14 years? To answer this the author makes assumptions about the population size, and the social and economic changes that will shape lifestyles in 1991. He examines productivity and employment in the UK, using four scenarios of output and productivity, presented in two versions. The four scenarios range from the continuation of past trends to the achievement of higher targets (eg EEC levels of productivity growth) : each has two starting points, the 1977 level or the average 1973–1975 level of output. The scenarios illustrate the trade off between unemployment, productivity, and growth, and highlight the possibilities facing the country in 1991: low productivity growth and a comparatively poor UK, or European levels of productivity growth and four million unemployed unless considerable changes take place. The results are not necessarily forecasts; they are the arithmetic consequences of given assumptions.     

Technology Collaboration and Foreign Equity Participation: A Theoretical Analysis

Technology transfer to the developing nations has been predominantly characterized by technology collaborations between the multinationals and the local firms of these developing countries. When a multinational offers a new technology to a local firm, the firms may have different perceptions regarding the success rate of the technology in the local conditions. This paper discusses various types of contractual arrangements with equity participation by the multinational, which dominate pure technology collaboration agreements.     

Corporate governance and family firm performance during the Global Financial Crisis

We investigate the impact of corporate governance on accounting and market performance relationships of family firms during the Global Financial Crisis (GFC). We expect the monitoring aspects of corporate governance to complement the long-term orientation of family firms, improving the value relevance of accounting and market performance during times of exogenous financial shocks such as the GFC. We find that the family-firm value is more sensitive to book value than earnings changes. We also find better corporate governance, irrespective of whether it is a family firm or non-family firm, is associated with better accounting and market performance during the GFC.     

PUBLIC INVESTMENT,TAXATION AND TRANSFER OF TECHNOLOGY

A low‐wage developing economy (South) is interested in accessing and attracting superior technology from a high‐wage developed economy (North) with firms having heterogeneous quality of technology. To improve upon the initial market equilibrium, which shows that relatively inefficient technologies will move to the South, the host government invests in infrastructure financed through taxing the foreign firms. We discuss the problem of existence of such a tax‐transfer mechanism within a balanced budget framework. We argue that such a policy can increase tax revenue as well as instigate the transfer of better quality technology. It turns out that this policy is more likely to be successful when the production concerns high‐value, high‐price products in low‐wage economies. Our results improve upon the conventional strategy of a tax break.     

The Australian waterfront: breaking monopoly power

Waterfront unions in Australia, as in other countries, enjoyed considerable monopoly power for many years. But, after a ten-week dispute in 1998, there is a 'new and very different culture' on the Melbourne waterfront where operations now 'rank among the world's best'.     

Resolving the Credibility Problem of an Honest Government: A Case for Foreign Investment Subsidy

We develop a simple model of direct foreign investment where the host country government cannot credibly signal its honest intention such as to stick to the contracted tax rate. The foreign firm has some prior belief regarding the ex post discretionary policies of the local government. Since the investment is completely irreversible, such a belief pattern might not induce the firm to invest in a country which badly needs it. It is shown that the host government can design a subsidy scheme which might attract foreign investment by removing the credibility problem.     

Gains from trade and the size of a country

Who gains more from trade—the small country or the large country? In the standard Ricardo–Mill two-country model the small country reaps all the gains from trade and the large country (the rest of the world) gains nothing. The present paper considers this question of the distribution of gains from trade between the large country and the small country in terms of a multicountry framework. In this altered setting it is shown that the distribution of gains will generally be independent of the size of the country so long as there is universal free trade. With trade restrictions the presumption, if there is any, would rather be in favour of the large country gaining more than the small country.     

Quantity,Quality, and Efficiency for a Partially Super-Additive Cost Function: Connecticut Public Schools Revisited

The dual cost function is partially super-additive when an output quantity bundle of a given quality can be produced at a lower cost by breaking up the output into a number of smaller bundles of the same quality to be produced by several firms instead of the entire bundle being produced by a single firm. In this paper, we build on Maindiratta's concept of size efficiency and propose a nonparametric method using mixed integer programming to measure cost efficiency allowing for partial super-additivity of the cost function. The proposed method is applied to data from Connecticut public school districts for the years 1980–81 through 1983–84.