The Influence of Improvements in Accounting Standards on Earnings Management: The Case of IFRS

This article examines the effect of improvements in the quality of International Financial Reporting Standards (IFRS) on the level of earnings management. In order to achieve this aim, we study the accounting quality of German listed companies through discretionary accruals yielded from 1998 to 2006. We assess the effectiveness of efforts by the International Accounting Standards Board to improve IFRS by using two indices that consider the revision process of the standards, and their mandatory application. Our results indicate that the improvement of accounting standards quality significantly reduces the level of reported negative discretionary accruals of the German listed firms during the period of analysis, once incentive variables are controlled. Further, companies gradually assume the quality of the new standards from the moment they can be voluntarily applied.     

Drivers of customer likelihood to join grocery retail loyalty programs. An analysis of reward programs and loyalty cards

This paper aims to identify which personal features of customers may determine their likelihood to join a grocery retail loyalty program. We consider five aspects: price sensitivity, search for variety, shopping enjoyment, attitude toward loyalty schemes, and one personality trait: privacy concerns. Some of these variables have already been explored in the literature. Where our research breaks new ground is in establishing the difference between profiles of customers attracted by two of the most common types of loyalty programs currently used by grocery retail firms: a reward program and a loyalty card. The two kinds of program evidence differences in how they are managed, and we posit that the drivers of likelihood to take part in each are different. The study was carried out using logistic regression with a sample of 600 clients of a Spanish supermarket chain. Findings show that one particular type of customer is more likely to take part in these schemes: those displaying little shopping enjoyment, who are greatly concerned with privacy, and who show a favorable attitude toward loyalty programs in general. Furthermore, as expected, differences were observed between drivers of participation likelihood in reward programs and loyalty cards.     

Education, corruption, and the distribution of income

We examine how the interaction between education and corruption affects institutional reform and economic development. While corruption reduces average income and education, education increases not only output and hence potential corruption rents, but also produces more informed electorates that better monitor government actions. We find that economies with intermediate levels of education remain in a poverty trap since the level of skills creates sufficient corruption rents but not enough monitoring. Economies with low or high levels of education can escape the poverty trap, and inequality plays a key role in determining whether this occurs through a change in institutions or an expansion of education.     

A linear approximation to the power function of a test

In this paper we obtain a linear approximation to the power function of a test that is very accurate for small sample sizes. This is especially useful for robust tests where not many power functions are available. The approximation is based on the von Mises expansion of the tail probability functional and on the Tail Area Influence Function (TAIF). The goals of the paper are, first to extend the definition of the TAIF to the case of non identically distributed random variables, defining the Partial Tail Area Influence Functions and the Vectorial Tail Area Influence Function; second, to obtain exact expressions for computing these new influence functions; and, finally, to find accurate approximations to the power function, that can be used in the case of non identically distributed random variables. We include some examples of the application of this linear approximation to tests that involve the Huber statistic and also saddlepoint tests, so proving that the approximations apply not only to simple problems but also to complex ones.     

Estimation of Asymmetric Stochastic Volatility Models: Application to Daily Average Prices of Energy Products

Energy supply and demand, and as a consequence energy prices, are likely to represent one of the biggest challenges of the 21st century. Commodity markets exhibit increased volatility when there is little or no underutilized supply capability to meet natural fluctuations in demand. In the case of energy markets, the large capital requirements and significant lead times associated with energy production and delivery make them more susceptible to the imbalances in supply capability and demand. Energy price volatility has destructive impact on market agents, and this impact is intensified when the prices exhibit asymmetric volatility. This article pursues two aspects of the issue. First we consider general aspects, especially the asymmetric pattern of volatility of daily returns of different types of energy products. Then, we analyze the behaviour of daily returns by using traditional models of volatility that include AGARCH, TGARCH, EGARCH, and ARSV strategies, as well as a threshold asymmetric autoregressive stochastic volatility (TA-ARSV) model that we propose. The energy products considered in this analysis are probably the most relevant energy products for the economic activity of the nations and the economic relations between countries: Crude Oil (OPEC reference basket and London Brent index), Gasoline, Natural Gas, Butane, and Propane. We use spot prices and the time reference ranges from 1986–1993 to 2009 depending on the product.     

The transmission mechanism in a changing world

The paper aims to identify those factors that cause changes in the speed and strength of the international transmission of output shocks from the USA to specified European economies. These factors are identified through the use of generalized impulse response functions conditioned on histories defined by an abrupt transition VAR. The chosen transition variables comprise changes in exchange rates, financial prices, international capital flows, trade links and monetary policy instruments. Besides the identification of asymmetric responses, the proposed model is useful in analyzing the strong effect of the recent US recession on the European economies and changes in business cycle synchronization over time. Copyright © 2007 John Wiley & Sons, Ltd.     

A Model of Elitist Qualification

This paper deals with the collective qualification of members of society as belonging to a certain category or group based on a fixed attribute. Our model contains three main features: the existence of individual gradual opinions, the notion of elitism (only the opinions of certain individuals are taken into account to delineate the reference group), and the idea of sequentiality (elites are successively created by using the previous elites’ opinions on a social decision scheme). The main results of the paper characterize when this sequential procedure converges for some intuitive ways of aggregating individual opinions. Finally, we analyze the role of convergence for two extra basic properties (symmetry and contractiveness) that elitist rules should possess.     

The Importance of Internal Resources and Capabilities and Destination Resources to Explain Firm Competitive Position in the Spanish Tourism Industry

This study draws on the Resource‐Based View to analyze the effects of distinctive competences in tourism firms and location in a tourism district on competitive position, and explores the moderating effects of the tourism destination. Multiple linear regression was used to test the research hypotheses on a sample of 1019 Spanish tourism firms. Results reveal that financial resources and dynamic and production capabilities favor a better competitive position for tourism firms in general; however, coordination and marketing capabilities are key factors for firms embedded in a tourism district, while dynamic capabilities have a negative effect in this case. Copyright © 2015 John Wiley & Sons, Ltd.     

Ramsey policies in a small open economy with sticky prices and capital

This paper analyzes jointly optimal fiscal and monetary policies in a small open economy with capital and sticky prices. We allow for trade in consumption goods under perfect international risk-sharing. We consider balanced-budget fiscal policies where authorities use distortionary taxes on labor and capital together with monetary policy using the nominal interest rate. First, as long as a symmetric equilibrium is considered, the steady state in an open economy is isomorphic to that of a closed economy. Second, sticky prices’ allocations are almost indistinguishable from flexible prices allocations both in open and closed economies. Third, the open economy dimension delivers results that are qualitatively similar to those of a closed economy but with significant quantitative changes. Tax rates are both more volatile and more persistent to undo the distortions implied by terms of trade fluctuations.     

Effects of database choice on international accounting research

Data availability is one of the traditional obstacles confronting researchers carrying out international empirical studies in accounting. In recent years several databases have claimed to offer comprehensive coverage of accounting and financial data of firms worldwide. We analyse whether the choice of database has an effect on the results of empirical studies. We find that the results of a simple empirical adaptation of the Ohlson (1995 ) model for fourteen member states of the European Union change significantly depending on the database chosen (Datastream, Global Vantage, Company Analysis, Worldscope, Thomson Financial, Financials and BvD Osiris). These differences are mainly attributable to differences in the samples across databases. When we match observations across all databases the differences persist but are much less pronounced. Our main conclusion is that database choice matters, as it leads to different results when the same research design is used.