An Examination of Long-Term Abnormal Stock Returns and Operating Performance Following R&D Increases

We examine a sample of 8,313 cases, between 1951 and 2001, where firms unexpectedly increase their research and development (R&D) expenditures by a significant amount. We find consistent evidence of a misreaction, as manifested in the significantly positive abnormal stock returns that our sample firms' shareholders experience following these increases. We also find consistent evidence that our sample firms experience significantly positive long‐term abnormal operating performance following their R&D increases. Our findings suggest that R&D increases are beneficial investments, and that the market is slow to recognize the extent of this benefit (consistent with investor underreaction).     

The Value-Relevance of Derivative Disclosures by Commercial Banks: A Comprehensive Study of Information Content Under SFAS Nos. 119 and 133

This study examines the value-relevance of banks' derivative disclosures under Statements of Financial Accounting Standards (SFAS) Nos. 119 and 133. Using the complete time-series of SFAS No. 119 disaggregated notional value disclosures and the most recently available SFAS No. 133 fair value data, this study investigates whether such expanded disclosures provide incremental information content beyond earnings and book value. Our results indicate that banks' notional principal amount disclosures are value-relevant, and that this evidence of incremental information content is robust to the inclusion of recently available fair value data and alternative model specifications. JEL Classification: M41, G21     

Inflation volatility,economic growth and monetary policy in Bangladesh

This article provides an overview of the trends and movements of CPI-inflation in Bangladesh since the early 1950s and examines the key issues in rule-based monetary policy for price stability, implying low and stable inflation, in this country. Under a fixed exchange rate system, inflation in Bangladesh was moderately high and volatile during the 1950s and 1960s. Since the country’s independence from Pakistan in 1971, inflation in Bangladesh has remained moderately high on average and highly volatile and persistent under a fixed-pegged exchange rate system or under a managed floating system since 2003. Using data from the early 1970s or earlier depending on data availability, the article undertakes both Granger-causality and the structural vector autoregression (SVAR) analysis with two models. The first model is comprised of such variables as inflation, the real interest rate, the real exchange rate and output growth, and the second model is comprised of the volatilities of money growth, real output growth and inflation. Then, based on the empirical findings, the article concludes that a rule-based monetary policy, namely monetary targeting or inflation targeting, remains appropriate for Bangladesh provided that it adopts a more flexible, if not freely floating, exchange rate system. The article suggests that the use of monetary policy to achieve multiple objectives under a fixed-pegged exchange rate system creates a time-inconsistency problem, reduces monetary policy credibility and makes it (monetary policy) ineffective in lowering inflation and its volatility. Low credibility of monetary policy in particular raises inflation persistence. Within the present monetary-policy framework in Bangladesh, the article illustrates how the fixed-pegged exchange rate system has generated money growth volatility in the presence of large-scale inflows of overseas workers’ remittances and readymade garments export earnings. This does not seem to be a concern of the central bank of Bangladesh (Bangladesh Bank); rather, it (Bangladesh Bank) pursues monetary-base targeting to keep inflation low and stable after considering economic growth. The consequent diminishing credibility of monetary policy has kept inflation volatile and persistent, which has adversely affected economic growth.     

中原经济区城市发展效率及其时空分异特征研究

中原经济区是实施区域协调发展国家战略的重要组成部分,基于5省30个地级市的面板数据,构建考虑非期望产出的SBM-DEA超效率模型,测算了中原经济区城市发展效率,探讨了中原经济区城市发展效率的Malmquist-Luenberger指数及其分解特征,研究了总体空间分异状态。结果表明:各个城市发展效率存在明显的异质性,Malmquist-Luenberger指数及其分解值整体不高,发展方式仍未发生根本性转变,资源环境压力过大。中原经济区城市发展效率只在个别年份显现非常弱的集聚分布空间格局,郑州和洛阳等中心城市功能不强,难以通过“涓滴效应”成为带动中原经济区发展的动力源。     

Auditor Lobbying for Accounting Standards: The Case of Banks and Savings and Loan Associations

This study examines auditor lobbying on seven proposed US accounting standards which affect banks and savings and loan associations. Evidence is provided in support of the Watts and Zimmerman (1982, 1986) theory on auditor lobbying. Watts and Zimmerman (WZ) hypothesise that auditor lobbying is a function of the client-manager position and a set of wealth effect variables. These variables may provide an incentive for auditors to disagree with their clients on proposed accounting issues. The WZ model is modified by including an audit risk variable. Results show that the model is statistically significant and that the identified wealth and audit risk effects are significant explanatory variables of auditor lobbying behaviour.     

Relationships between innovation stimulus, innovation capacity, and innovation performance

This paper examines the integration of the human and technological aspects of innovation management by modelling the innovation stimulus – innovation capacity relationship in determining innovation performance. The research framework developed in this study was tested amongst 194 managers of Australian firms. The survey responses indicate that both the relationships between innovation stimulus and innovation capacity and between innovation capacity and innovation performance are significant and strong. However, innovation stimulus does not show any direct effect on innovation performance, suggesting that its effect is mediated through innovation capacity. The overall practical implication that can be drawn from the findings is that to achieve high innovation performance, organizations first need to develop the behavioural and cultural context and practices for innovation (i.e. stimulus), and only within such conducive environments is it possible for organizations to develop innovative capacity in research and development and technology so as to more effectively deliver innovation outcomes and performance.