TECHNICAL EFFICIENCY IN PRODUCTION IN A DEVELOPING COUNTRY: AN EMPIRICAL EXAMINATION OF THE BRAZILIAN PLASTICS AND STEEL INDUSTRIES

This paper estimates firm specific indexes of technical efficiencyfor the Brazilian plastics and steel industries. Two differentindexes are employed for the empirical estimates—the Farrellindex and an index developed from a linear programming approximationof a nonstochastic frontier production function specified inthe Cobb-Douglas functional form. Evidence of substantial relativetechnical inefficiency is revealed. In both industries onlya very small proportion of all the observed firms were producingamounts of output greater than 80 percent of that technicallypossible on the estimated frontier. Relative efficiency of thefirms in the two industries was not seen to be significantlyrelated to ownership (foreign or government), but tests didsuggest a tendency for larger firms, possessing larger marketshares, to be closer to the frontier than smaller firms.     

Attestation research opportunities: 1987

Abstract. A brief review of some precursors of modern auditing scholarship and changes in the current environment and their implication is provided with the intent to stimulate future research in auditing. After distinguishing between the attestation and checking functions, the paper offers some research questions which may be considered by auditing researchers in the future.     

Tiebreaker: Certification and Multiple Credit Ratings

This paper explores the economic role credit rating agencies play in the corporate bond market. We consider three existing theories about multiple ratings: information production, rating shopping, and regulatory certification. Using differences in rating composition, default prediction, and credit spread changes, our evidence only supports regulatory certification. Marginal, additional credit ratings are more likely to occur because of, and seem to matter primarily for, regulatory purposes. They do not seem to provide significant additional information related to credit quality.     

The Value of Investment Banking Relationships: Evidence from the Collapse of Lehman Brothers

We examine the long‐standing question of whether firms derive value from investment bank relationships by studying how the Lehman collapse affected industrial firms that received underwriting, advisory, analyst, and market‐making services from Lehman. Equity underwriting clients experienced an abnormal return of around ?5%, on average, in the 7 days surrounding Lehman's bankruptcy, amounting to $23 billion in aggregate risk‐adjusted losses. Losses were especially severe for companies that had stronger and broader security underwriting relationships with Lehman or were smaller, younger, and more financially constrained. Other client groups were not adversely affected.     

Répercussions de la Pension Protection Act de 2006 sur la valeur boursière

Les auteurs étudient les répercussions de la Pension Protection Act de 2006 (PPA 2006) sur la valeur boursière des actions. La PPA 2006 contient deux dispositions principales : 1) les entreprises doivent assurer la capitalisation intégrale de leur régime de retraite en sept ans (alors qu’une période de trente ans leur était auparavant accordée pour capitaliser 90 pour cent de leur passif au titre du régime) et 2) elles peuvent se prévaloir d’une déduction fiscale à l’égard des cotisations à concurrence de 150 pour cent du passif au titre du régime (alors que le plafond de la déduction était antérieurement de 100 pour cent). Une fois contrôlés l’incidence de la norme SFAS 158, les possibilités de croissance, le coût du financement externe et les autres informations publiées au cours de la période d’échantillonnage, les auteurs examinent les rendements anormaux des entreprises ayant un régime de retraite, à proximité des dates marquantes du processus législatif ayant menéà l’adoption de la PPA 2006. Premièrement, ils observent un rendement anormal moyen négatif de – 4,20 pour la période au cours de laquelle la PPA 2006 a fait l’objet d’un premier vote au Congrès. La capitalisation boursière de l’entreprise moyenne (médiane) de l’échantillon a enregistré un déclin de 310 millions de dollars (60 millions de dollars). Deuxièmement, les auteurs constatent que les répercussions sur la valeur boursière sont plus négatives dans le cas des entreprises présentant des passifs non capitalisés plus importants au titre du régime et devant faire face à des dépenses en immobilisations plus substantielles, alors que les entreprises dont les taux d’imposition marginaux sont plus élevés enregistrent des répercussions positives. Troisièmement, les auteurs ne relèvent aucun élément permettant d’affirmer que les répercussions sur la valeur boursière varient selon les différentes catégories de risque définies par la PPA 2006. Enfin, ils recensent un nombre appréciable de cas de blocage du régime au cours de la période soumise à l’étude. Les résultats sont plus marqués encore lorsque ces entreprises sont retirées de l’échantillon.     

The Demise of Investment Banking Partnerships: Theory and Evidence

In 1970 the New York Stock Exchange relaxed rules that prohibited the public incorporation of member firms. Investment banking concerns went public in waves, with Goldman Sachs the last of the bulge bracket banks to float. We explain the pattern of investment bank flotations. We argue that partnerships foster the formation of human capital and we use technological advances that undermine the role of human capital to explain the partnership's going‐public decision. We support our theory using a new data set of investment bank partnership statistics.     

Can Audit Partners Predict Subordinates' Ability to Detect Errors?

This study examines audit partners' predictions of the ability of managers and seniors to detect financial statement errors. If partners are unable to predict the ability of their subordinates to detect errors, audit effectiveness may be affected. Audit partners are asked to predict which members of the audit team (managers or seniors) are able to detect specific types of errors. These predictions are then compared to errors detected by managers and seniors that are seeded in working papers. The results show that partners (1) exhibit significant overconfidence in the ability of subordinates to detect errors, (2) are more accurate in predicting managers' performance than seniors, (3) are more accurate at predicting subordinates' ability to detect mechanical (simple) errors than conceptual (complex) errors, and (4) are not better at predicting subordinates' ability to detect more frequent and more important errors than less frequent and less important errors.