Auditor conservatism and voluntary disclosure: Evidence from the Year 2000 systems issue

This study further examines the phenomenon of conservative auditor behaviour by considering the level of voluntary disclosure of Year 2000 remediation information in company annual reports. Previous studies have provided evidence of conservative auditor behaviour by examining the link between Big 6 auditor choice and accruals (Francis and Krishnan 1999; Becker et al ., 1998; Defond and Subramanyam 1998). Protecting their reputation capital increases Big 6 auditor incentives to act conservatively to avoid litigation risk. We propose and find that Big 6 auditor clients disclose more Year 2000 remediation information than non–Big 6 auditor clients.     

Pre-Harvest Price Expectations for Corn: The Information Content of USDA Reports and New Crop Futures

This article examines the puzzle of why futures prices continue to react to USDA crop reports despite the fact that reports appear to be no longer "newsworthy," that is, provide no better production estimates than private forecasts. The information value of reports is measured in terms of their influence on rational agents' harvest-time corn price expectations, which are uncovered using a Hamilton-type modeling approach. Results show that reports are still "newsworthy," as they would contribute to agents' price expectations if released a day early. Thus futures price reactions, which closely reflect price expectations, are rational and consistent with efficient markets hypothesis.     

“Horses for courses”: A stakeholder approach to the evaluation of GDSSs

Evaluation of the performance of GDSSs has been dominated by an experimental and laboratory based approach. Other writers have argued for evaluation to be based in the “real-world” of decision making teams. The evaluation criteria have tended to ignore many of the issues that would be paramount for some of the stakeholders in the evaluation process. This article seeks to explore the criteria that might be used by a wide variety of stakeholders, including developers, facilitators, clients, key actors, vendors, as well as academics. By drawing together the criteria associated with all of the stakeholders we discover a broader, and possibly more thorough, framework for evaluation. The evaluation of any particular GDSS in relation to other GDSSs can then be seen in the context of contingent weighting applied to each of the criteria where each GDSS is able to be seen in its best light and in relation to its declared aims. This article argues for a more eclectic and contingent approach to the evaluation of GDSSs which will encourage their future development to be clearer about purpose and the boundaries of their use.     

Vacancies and Rent Dispersion in a Stochastic Search Model with Generalized Tenant Demand

I model imperfect information, derive a downward sloping market demand curve, and explain vacancies in a partial equilibrium model of a rental housing market. Tenants can be completely described by an exogenous demand curve, perhaps arising from differences in income, preferred location, or tastes, and view vacant units based on a stochastic arrival of rental information. Free entry of these landlords induces excess rental housing capacity (equilibrium vacancies). I determine the equilibrium distribution of rents for vacant units, show that this rent distribution may be discontinuous, and explore the equilibrium vacancy rate to changes in exogenous parameters. The resulting characterization of equilibrium distributions of rents may be amenable to econometric modeling exploring the relationship between market rents and vacancies.     

Consistency of UK Pension Fund Investment Performance

Transition matrix techniques are used to relate the past and present performance of pension fund portfolios. In particular, funds are ranked to study the tendency of portfolios to remain in the same quartile of the ranking as they were in the previous period. For raw returns, funds in both of the top quartiles are found to be more likely to remain in the same quartile than would be expected by chance. This result can be taken as limited evidence for the consistency of performance. Similar systemic effects are observed on a risk-adjusted basis. There appears to be clear evidence that some fund managers can offer a degree of consistent good performance.     

Sudden change in a model of small firm growth

A catastrophe theory model of small firm growth allows for an abrupt change in small firm size. The model permits only smooth changes in the endogenous independent variables, turnover and profitability, yet allows sudden changes in the level of assets, the size variable. But not all growth paths suggested by the mathematics are likely to be met in the real world. Nevertheless, there are feasible phases of steady growth as well as feasible phases during which jumps occur.     

Exchange rates, tax-subsidy schemes, and the revenue from foreign trade in a centrally planned economy

Conclusions It has been argued that while in the traditional analysis of the classic CPE the exchange rate has only an accounting function, inappropriate methods of national income accounting can lead to changes in the exchange rate generating changes in the real economy, provided that trade in unbalanced in foreign currency prices. This thesis was explored by examining the way the profits from foreign trade were calculated by the Ministry of Foreign Trade, and then transferred to the state budget. It was shown that the correct measure of the state's increased command over domestic resources from engaging in foreign trade, derived from the implicit taxes on that sector, was the ministry's profits on its domestic operations, the first term in (2). However, evidence was presented which suggested that its profits on foreign currency account measured in domestic currency, the second term in (2), were also passed over to the state budget. This implies that transferred profits from foreign trade will overstate the underlying command over resources when there is a balance of payments surplus, and understate them when there is a deficit. The consequence of this is that the domestic economy faces a series of erratic, though small, inflationary and deflationary impulses, regardless of changes in the exchange rate.The theoretical role of the preisausleich system was explored in some detail and it was argued that, although the system has been designed to insulate the domestic economy from external disturbances, there were clear reasons why it had come to play a major part in revenue raising. Specifically, it is administratively convenient to tax resources at their point of entry into or exit from the economy; the taxation of foreign trade widens the tax base and reduces the visibility of the tax system. But, of course, this grafting onto the preisausgleich of a second major function of revenue raising does lead to the development of a further channel through which external disturbances can pass into the domestic economy. That is external disturbances impact on the domestic economy not only through the production and welfare effects of changing exports and imports, and through whatever tenuous links are allowed between foreign and domestic prices, but also insofar as those disturbances affect the ministry's profits from foreign trade. In short, foreign economic disturbances show up in variations in the position of the non-inflationary government budget constraint. To that extent the second function of the preisausgleich impairs its ability to perform its original insulation function. In a minor way, the successful non-inflationary performance of the insulation function has always required adjustments in the government budget constraint. But the growth in the importance of foreign trade taxation has magnified the importance of this phenomenon, and led to a trade-off between the two functions.University of Bath. Initial research for this paper was carried out under ESRC grant HRP 7417/1.     

The productivity of private and social farms: Multilateral Malmquist indices for Slovene dairying enterprises

Applying programming techniques to farm-level panel data for four cooperative and 12 private dairy farms in the Yugoslav Republic of Slovenia gives estimates of technical efficiency, scale efficiency, and technical progress. These are used to construct multilateral Malmquist indices of total factor productivity (TFP). For the cooperatives, TFP growth has been slow and is attributable to technical progress. For the private farms, technical progress was also slow, but TFP growth was faster due to improved efficiency. Scale inefficiency explains the poorer absolute performance of the private farms, indicating the need for land reform as well as technological change.     

Implications of variant efficiency measures for policy evaluations in UK higher education

Policy goals in UK higher education encourage the publicly funded universities to become more-specialised and larger in size without compromising output quality. Efficiency gains are expected to flow from this increased specialisation in accordance with universities’ comparative research and teaching strengths. Mergers to reap further gains from economies of scale are also being actively encouraged. Given this scenario, the paper investigates whether best-practice efficiency measurement based on data envelopment analysis (DEA) provides empirical support for the current policy goals. It also assesses whether such support is dependent on the specific type of efficiency measure used in the DEA modelling. This assessment finds that a selection of (nine) commonly used, variant efficiency measures generally support the current policy goals. The paper also uses the principal-agent framework to explore the issues involved in using computed DEA-based efficiency scores for policy evaluations and possible funding guidance in UK higher education. This highlights empirically how policy-makers and universities can have very different preferences about which efficiency measure is to be used for policy evaluations and possible funding guidance.