Precautionary Saving and Endogenous Labor Supply with and without Intertemporal Expected Utility

We analyze precautionary saving behavior in a framework with labor and nonlabor income risks, an endogenous supply of labor, and a representation of preferences that disentangles attitudes toward risk, attitudes toward intertemporal substitution, and ordinal preferences for consumption and leisure. This preference structure allows us to disentangle and to describe in an intuitive way the different forces that determine precautionary saving “in the small” and “in the large.”     

TESTING FOR INVERSE HOMOTHETICITY: A NONPARAMETRIC APPROACH

The efficiency of a decision-making unit can be estimated relative to the direct output possibility set or the indirect (cost-constrained) output possibility set. For the direct and indirect output sets we show that the ratio of two Farrell (radial) efficiency measures equals the ratio of two Zieschang (non-radial) efficiency measures if and only if the production technology is inverse-homothetic. A consequence of inverse homotheticity is that the input and output expansion paths are linear.     

CONSEQUENCES OF MINIMUM WAGE INDEXING

During the 1980s, the minimum wage fell relative to prices and average wages in the U.S. economy. If the minimum to average wage ratio had been constant at the level maintained through the 1970s, the minimum wage would have been $5.51 in 1993. If the 1993 minimum wage had increased to $5.51, payments to minimum wage workers would have increased by an estimated $20.3 billion, and the number of people earning that wage would have risen from 2.0 million to 14.7 million. Elasticity estimates generated from other studies indicate that employment would have fallen 240,000 (4.4%) among 16–19 year olds and 349,000 (3.0%) among 20–24 year olds. Wage payments to minimum wage workers would have substantially increased, but the effect on family income distribution would have been small. Many minimum wage workers are children living with parents or adults in a family with other earners. Consequently, 75% of minimum wage workers account for less than half of their family's income.     

Venture Capitalist Certification in Initial Public Offerings

This paper provides support for the certification role of venture capitalists in initial public offerings. Consistent with the certification hypothesis, a comparison of venture capital backed IPOs with a control sample of nonventure capital backed IPOs from 1983 through 1987 matched as closely as possible by industry and offering size indicates that venture capital backing results in significantly lower initial returns and gross spreads. In effect, the presence of venture capitalists in the issuing firms serves to lower the total costs of going public and to maximize the net proceeds to the offering firm. In addition, we document that venture capitalists retain a significant portion of their holdings in the firm after the IPO.     

JIT Adoption: The Effects of LIFO Reserves and Financial Reporting and Tax Incentives*

Using matched samples of JIT adopters and nonadopters, we examine the association of JIT adoption with firms' financial reporting and tax incentives, earnings‐management histories, and LIFO reserve levels. We find evidence that adoption decisions are influenced by the interaction of firms' LIFO reserves with their income smoothing, debt covenant, and tax incentives. We also find that adoption is less likely for firms historically engaging in high degrees of earnings management, particularly when such firms have no substantial LIFO reserves. Our study extends earlier research demonstrating a relation between inventory valuation method and year‐end inventory transactions, and documents a relation between earnings‐management incentives and a fundamental supply‐chain design choice.     

TEMPORAL ADDITIVITY: A PROBLEM IN ACCOUNTING MEASUREMENT

The currently accepted set of accounting principles and practices have been formulated such that the length of the accounting period, a non-economic variable, has been incorporated into the accounting system as an independent variable. Accounting reports are, therefore, temporally non-additive - they will not add up over time. Interim reporting has become increasingly important in recent times. Interim reports for any period other than one year cannot articulate with the annual report unless temporal additivity is required of generally accepted accounting principles. L'ensemble des principes et des pratiques comptables généralement admis a été formulé de telle facon que la durée de la période, une variable non économique, scit intiroduite dans le système comptable en tant que variable indépendante. Les rapports comptables sont donc non additifs: ils ne se totaliserunt pas dans le temps. Les rapports comptables établis dans une période provisoire - c'est-à-dire dans une période inférieure à 12 mois - ont récement pris une importance considérable. Ils peuvent ainsi difficilement constituer un ensemble flexible compatible avec le rapport annuel, à moins que cette additivité temporelle respecte les principes comptables généralement admis. Die gegenwätigen Grundsätze und Prinzipien ordnungsmässiger Rechnungslegung sind so formuliert, dass die Dauer der Rechnungsperiode - eine nicht-ökonomische Variable - als unabhängige Variable in das Rechnungssytem aufgenommen worden ist. Rechnungsberichte sind deshalb zeitlich nicht-additiv. Vorläufige Berichterstattung ist in letzter Zeit von grGsserer Bedeutung geworden. Vorläufige Berichte für Rechnungsperioden, ausser für die Dauer ekes Jahres, können mit dem Jahresbericht nicht harmonisieren. falls nicht die zeitliche Additivität von den gegenwärtigen Rechnungsprinzipien verlangt wird.