A BARGAINING THEORY OF INEFFICIENT REDISTRIBUTION POLICIES*

When two policies are available to achieve the same goal why is the relatively inefficient one often observed? We address this question in the context of policies used to redistribute income towards special interest groups (SIGs) where in the first stage the constraints on policy instruments are chosen and in the second the government bargains with SIGs over the level of the available policies. Restrictions on the use of efficient policies and the use of inefficient ones reduce the surplus over which SIGs and governments can bargain but it also improves the government's bargaining position thus increasing its share of the surplus. The positive effect for the government dominates under plausible conditions. Inefficient policies are the equilibrium outcome under alternative policy selection mechanisms, e.g., election of policymakers and bargaining between SIGs and the government. The model also explains the coexistence of transfer policies. Moreover, we show why a weak government is more likely to choose the inefficient transfer and discuss how this result may be tested.     

Eco-efficiency approach for global warming in the context of Kyoto Mechanism

This study discusses an approach to measuring and improving the economic and ecological efficiency of Kyoto Mechanism projects. The approach consists of Global Warming Eco-Efficiency (GWEE), Clean Development Mechanism (CDM) & Joint Implementation (JI) Environmental-Efficiency (EE) and CDM & JI Economic-Productivity (EP). The GWEE indicator is based on the ratio of the value added of a system to its global warming influence in order to measure the eco-efficiency of a product in terms of the global warming issue. In addition, CDM & JI EE and CDM & JI EP are proposed to measure the environmental and economic performances of CDM and JI projects, respectively. While EE is defined as the ratio of the Certified Emission Reductions (CER) obtained from a CDM project or Emission Reduction Unit (ERU) from a JI project to total global warming influence relevant to the CDM or JI implemented, EP is defined as the ratio of the total of CER profit (and ERU profit) and the sales revenue to the costs of the CDM (and JI) implemented. Then, the feasibility of these indicators is examined through a case study for the power generations in the field of alternative energy.     

The information content of disaggregated accounting profitability: operating activities versus financing activities

This paper reports three empirical findings on the differential information content of the components of accounting profitability. First, the paper finds that the shareholder profitability driven by operating activities has a stronger association with annual stock returns than the shareholder profitability driven by financing activities. The finding provides empirical support for the FASB Financial Statement Presentation project, and the project suggests disaggregating accounting profitability into operating and financing activities. Second, the paper finds that the sustainable portion of operating profitability has a stronger association with annual stock returns than the unsustainable portion. This finding contributes to the literature by extending the two popular methods of breaking down operating profitability (DuPont analysis and operating liability leverage) into sustainable versus unsustainable operating income. Penman (Financial statement analysis and security valuation. McGraw-Hill, New York, NY, 2010) suggests disaggregating operating income into sustainable versus unsustainable operating income. Finally, the paper identifies the conditional persistence in Amir et al. (Rev Acc Stud 16:302–327, 2011) as one of the empirical attributes that affects the valuation usefulness of disaggregated accounting profitability. The conditional persistence measures the marginal contribution of disaggregated profitability to the persistence of aggregate profitability. This paper reports that the disaggregation is more useful in firms with significant differences in the conditional persistence of disaggregated components than in other firms. Test results are robust to controls for cross-sectional and time-series dependence in error terms.     

Factors influencing suppliers’ participation in private electronic markets

This study is intended to identify factors, which influence suppliers’ participation in the private electronic market (PEM). The results of this study show that many suppliers do not recognize the potential benefits that PEM could offer and they do not believe their off-line relationships with a buyer could be transferred to on-line. Thus, buyers need to convince their suppliers that PEM is not just a price based marketplace but instead a business model where mutual benefits can be achieved based on existing trust relationships between a buyer and limited number of qualified suppliers.     

Job satisfaction and employee perception of the learning environment in the health care management industry

This study examines the relationship between job satisfaction and perception of the learning environment of administrative employees and differences in job satisfaction in terms of age, education, ethnicity, gender, location, marital status, position classification, and years of service. A total of 261 administrative employees of a national health care management organization participated in the survey. Major findings of this study revealed significant differences in some subcategories of job satisfaction and perceptions of learning environment in the respondents' ethnicity, age, and office location. Significant relationships were also found between job satisfaction, the perceived learning environment, and facets of the learning environment.     

Interest Rates,Local Housing Markets and House Price Over‐reactions

Understanding the effects of interest rates on city‐specific house price to household income ratios is important for managing local housing markets. In particular, there is concern that keeping interest rates at sufficiently low levels can distort the relationship between local house prices and fundamentals. We use house price to income ratios across capital cities in Australia to investigate this issue and show that there is a national interest rate ‘transition’ point below which housing dynamics can become unstable. This result lends support to the presence of a duration‐dependent threshold effect (hitherto mainly explored in theoretical models).     

Effect of analysts’ earnings pressure on marketing spending and stock market performance

Despite the clearly visible effects of analysts’ pressures on C-level executives in the popular press, there is limited evidence on their effects on marketing spending decisions. This study asks two questions. First, how do analysts’ pressures affect firms’ short-term marketing spending decisions? Based on a sample of 2706 firms during 1987–2009 compiled from Institutional Brokers Earning System, COMPUSTAT, and CRSP databases we find that firms cut marketing spending. Second, more importantly, we ask if firms which remained more committed in the past to marketing spending under analysts’ pressures have higher longer-term stock market performance. We find that the stock market performance of firms more committed to marketing spending under past periods of analysts’ pressures is higher. The findings are replicated for R&D spending and are robust across measures, controls, and methodologies. Consideration of two industry-based moderators, R&D spending and revenue growth, and one firm-based moderator, whether the firm is among the industry’s top four market share or other lower share firms, reveals that the findings are stronger for high R&D and growth industries and lower market share firms. One key implication is that top executives respond to analysts’ pressures by cutting marketing spending in the short term; however, if they can resist these pressures, longer-term stock market performance is higher.     

It is not about what you read,but how you read it: the effects of sequencing rational and emotional messages on corporate and product brand attitudes

The study aims to examine the effects of message sequencing on attitudinal responses, namely on the effects of rational to emotional and emotional to rational message sequences on consumer attitudes toward the corporate and product brand. A between-subjects experiment was conducted using a stratified random sample. Participants were exposed to advertisements that communicate marketing messages either in a rational to emotional sequence or in an emotional to rational sequence for a product advertised by an organization. All attitudinal responses to the corporate and product brand were collected through a questionnaire that was given at the end of the experiment. The findings suggest advertisements that communicate marketing messages in an emotional to rational sequence produced more favorable attitudes toward the product brand among consumers as compared to advertisements that communicate in a rational to emotional sequence. However, no significant differences were found on consumer attitudes toward the corporate brand. These results remain true regardless of gender.     

Auditor reputation and earnings management: International evidence from the banking industry

We examine the relation between auditor reputation and earnings management in banks using a sample of banks from 29 countries. In particular, we examine the implications of two aspects of auditor reputation, auditor type and auditor industry specialization, for earnings management in banks. We find that both auditor type and auditor industry specialization moderate benchmark-beating (loss-avoidance and just-meeting-or-beating prior year’s earnings) behavior in banks. In addition, we find that once auditor type and auditor industry specialization are included in the same tests, only auditor industry specialization has a significant impact on constraining benchmark-beating behavior. In separate tests related to income-increasing abnormal loan loss provisions, we find that both auditor type and auditor expertise constrain income-increasing earnings management. Again, in joint tests, only auditor industry expertise has a significant impact on constraining income-increasing earnings management.