Collusion Proof Transfer Payment Schemes with Multiple Agents

Most of the current studies on transfer pricing under asymmetric information focus on a single principal and a single agent. Under a separating management and ownership assumption, transfer pricing is at minimum a three-person problem involving one principal and two agents. This paper considers a transfer pricing problem with two agents who possess private information and seek to maximize their net cash flows, instead of divisional accounting profits. The objectives of this paper are: (1) to derive a direct-revelation mechanism that induces truth telling and efficient allocation; (2) to study the agents' collusion behaviors under the direct-revelation mechanism. The findings indicate that when agents have the option to quit after contracting, it is optimal for the center to produce less than the first-best output level unless the costs for both divisions are at their lowest levels. The optimal amount of underproduction varies according to the demand condition. In addition, two sets of transfer functions, named as identical and nonidentical functions, are derived to induce truth-telling and yield optimal equilibrium output. The two sets of transfer functions are subject to collusion. However, the functions induce different collusion behaviors among agents, that is, the collusion sets for both functions are not common sets. This property enables us to eliminate any collusion between agents, particularly prior to their observation of private information.     

Audit Services and Fees of Large Accounting Firms

In the audit literature, it was postulated that audit firms are differentiated due to their quality and, thus, the fees charged are a function of quality. We hypothesize that this may lead to audit firm specialization in different amounts of auditing, leading to a differential audit fee structure. This hypothesis is empirically tested by using a very large sample of audit fees paid to then Big Eight auditors. The results are consistent with the hypothesis in that three Big Eight auditors are observed to charge significantly different fees when compared with the other firms.     

On-market share buybacks, exercisable share options and earnings management

Chan et al. (2006b ) suggest that managers might announce a share buyback to manipulate investors’ perceptions and capitalize on the positive price reaction usually associated with the announcement. The incentive to do so is greater when managers have exercisable options. Prior studies document that managers engage in upwards earnings management for opportunistic reasons related to option holdings (Bergstresser and Philippon, 2006). We examine the association between earnings management and exercisable option holdings for buyback firms to investigate if earnings management in the pre‐buyback period is greater for firms with equity incentives to increase share price. Our results, using 138 buybacks over the period 1996–2003, support our prediction. We find that buyback firms with both exercisable options that are in‐the‐money prior to the buyback announcement as well as options that are exercised in the buyback period have higher discretionary current accruals than buyback firms with no exercisable options, unexercised options or with out‐of‐the‐money options. Overall, our results are consistent with buyback firms with exercisable options using earnings management and buyback announcements to maximize option payoffs, and buyback firms without exercisable options signalling undervaluation.     

Cost and effectiveness of physician peer review in reducing medicare overutilization

There has been concern that some physicians within the U.S. Medicare program may be rendering medical attention unecessarily. To help curb this possible overutilization, peer review committees have been formed in certain areas. These committees of practicing physicians examine utilization practices of doctors.The objective of this study is to determine the cost and effectiveness of the peer review process. In order to do this, we compare the costs and benefits resulting from peer review. The benefits are two types. One type is recoverable overpayments, which peer review has established as amounts that were paid for unnecessary medical attention. The other type is the deterrent to physicians against overutilization, due to the presence of peer review.The findings of this study are that each of the benefits of peer review substantially outweigh its costs, and that the benefits due to the deterrent effect of peer review are evident in all review areas considered.     

哥伦比亚大学全球化下的成本计算

美国外交政策争议的核心是硬权力（即诉诸武力）与软权力及公共外交之间的对立，后者即哈佛大学教授约瑟夫·奈伊所说的“利用魅力而非威压手段实现目标的能力”。在商界．这两种力量的对峙也同样明显。不过，软权力在商界赢得了胜利。     

The Role of Transfer Price for Coordination and Control within a Firm

This paper explores the role of transfer prices as coordinating mechanisms within a firm. Three cases (full information; pure adverse selection; adverse selection and moral hazard) are analyzed and compared to show how quantity and effort are affected as assumptions on observability are progrssively relaxed. The analysis of the second case, having two observable variables, identifies the necessary and sufficient condition under which the local approach can be applied. The third case is reinterpreted as transfer prices in a direct delegation setting. The main results are: First, the optimal transfer price is standard average cost plus. Second, it is not necessarily decreasing in quantity unlike the downward sloping demand function.     

Is the decline in the value relevance of accounting driven by increased conservatism?

This paper examines the association between conservatism and the value relevance of accounting information over the 1975 through 2004 period. We measure conservatism using approaches developed in Penman and Zhang, The Accounting Review 77:237–264, (2002) and Beaver and Ryan, Journal of Accounting Research 38:127–148, (2000) and value relevance using (1) adjusted R ² from regressions of price on earnings and book values, (2) adjusted R ² from regressions of returns on earnings and changes in earnings, and (3) returns earned by perfect foresight of earnings and book values. We find no evidence that firms with increasing conservatism exhibit greater declines in value relevance. Rather, we observe most significant declines in value relevance for firms where conservatism has not increased. When we adjust financial statements for the effects of conservatism, we find that the value relevance of adjusted numbers is generally lower and trends in value relevance unaffected. Based on these results, it is implausible that increasing conservatism drives the decline in value relevance.