Optimal compensation for potential fatality

Cordes and Weisbrod have recently demonstrated that the requirement that the government actually compensate individuals adversely affected by public projects is likely to have serious resource allocation implications. We examine a rudimentary model of government discretionary behaviour subject to a compensation requirement in the presence of physical risks. Risk assessments are endogenous and asymmetrically held — features enabling analysis of the trade- offs between compensation and protection or information available to the government, and of the structure of compensation which motivates it to do what is objectively best for the individual. We show that, paradoxically, greater government discretion seems more likely to ensure the latter.     

Ethical issues in the selection interview

This article evaluates various aspects of the selection interview in terms of the major principles of business ethics. It looks at both interviewer and interviewee behavior and examines the ethical questions that arise around five key themes: Preparation for the interview; Openness, disclosure and the invasion of privacy; Honesty and impression management; Power relationships in the interview; The use of interview information in decision making. It is argued that clear guidelines for ethical behavior in the interview are needed and would actually serve to increase the effectiveness of the method. Various topics that require empirical investigation are identified, and some parallels drawn with research on other assessment methods.Clive Fletcher is Professor of Psychology at Goldsmiths' College, University of London. He completed his Ph.D., then spent seven years as a psychologist in the British Civil Service, before taking up an academic post. His research interests focus on assessment centres, performance management and the selection interview     

Naturalised epistemology and economics

The relevance to economics of naturalised epistemology (alsoknown as the naturalistic turn) from philosophy of science hasrecently been argued by economic methodologists, especiallyby D. Wade Hands (Reflection Without Rules: Economic Methodologyand Contemporary Science Theory, Cambridge, Cambridge UniversityPress, 2001). This concept is held by Hands to constitute partof the ‘new economic methodology’ that consistsof the ‘interpenetration of economics and science theory’.Contrary to Hands's case, naturalised epistemology is shownhere not to represent a qualitatively new concept, to possesslittle coherent meaning, and to be incapable of charting aninnovative way forward for economics. Although there are moreissues concerning naturalism bearing on economics than are notedby Hands, three specific limitations of naturalised epistemologyare discussed. These and other limitations are related to theeconomics examples Hands proposes suggesting the usefulnessof naturalised epistemology for economics.     

Does strategy pay?

Empirical research on the relation between strategy and performance is rarely conclusive. This paper reviews a number of such studies, and suggests that while the links between planning or market share and performance have been fairly clearly established for certain circumstances or time periods, the results for diversity or merger are much more equivocal. Further, it suggests that even ‘established’ results are of little help to strategists, and that the unanswered questions relating to empirical studies must continue to limit their usefulness for strategic planning.     

Time series analysis of residuals from the St. Louis model

The residuals of the equations of the St. Louis model are analyzed individually and in pairs, using time series techniques in an attempt to discover mis-specifications in the model, in the form of incorrect lags or missing variables. The relationships discovered are,checked both inside and outside the sample. A variety of mis-specifications are apparent, and a much improved specification should be possible. The assumption made in the model that money supply is exogenous does not agree with the data.     

Estimation risk and auditor conservatism

Estimation risk occurs when individuals form beliefs about parameters that are unknown. We examine how auditors respond to the estimation risk that arises when they form beliefs about the likelihood of client bankruptcy. We argue that auditors are likely to become more conservative when facing higher estimation risk because they are risk-averse. We find that estimation risk is of first-order importance in explaining auditor behavior. In particular, auditors are more likely to issue going-concern opinions, are more likely to resign, and charge higher audit fees when the standard errors surrounding the point estimates of bankruptcy are larger. To our knowledge, this is the first study to quantify estimation risk using the variance-covariance matrix of coefficient estimates taken from a statistical prediction model.     

The Situations of Urban Inquiry: Thinking Problematically about the City

In the context of debates about the epistemological and ontological coherence of concepts of critical urban studies, we argue that urban concepts should be conceptualized problematically. We do so by aligning Michel Foucault's genealogical work on problematization with John Dewey's pragmatist understanding of problem formation and responsiveness. This approach brings into view the degree to which debates about urban futures are shaped by a variety of critical perspectives that extend beyond the academy and activism. We elaborate this argument through examples of global urban policy formation and practices of neighbourhood change. Approaching urban concepts problematically suggests a move away from the idea of critique as a form of scholastic correction towards an appreciation of the contested fields of practice in and through which critical understandings of urban problems emerge.     

The effect of SOX on small auditor exits and audit quality

We find that over six hundred auditors with fewer than 100 SEC clients exit the market following SOX. Compared to the non-exiting auditors, the exiting auditors are lower quality, where quality is gauged by: (1) avoidance of AICPA peer reviews and failure to comply with PCAOB rules, and (2) severity of the peer review and inspection reports. In addition, clients of exiting auditors receive higher quality auditing from successor auditors, as captured by a greater likelihood of receiving going concern opinions. Our results suggest that the PCAOB inspections improve audit quality by incentivizing low quality auditors to exit the market.