Accounting, Valuation and Duration of Football Player Contracts

Abstract:   FRS 10 requires investments in player contracts by football companies to be capitalized and amortized. Given the high degree of uncertainty associated with such contracts, it is not clear that this treatment is consistent with asset capitalization criteria. The evidence provided in this paper does not support inconclusively this capitalization requirement in that it indicates weak association of investment in player contracts with three measures of future benefits. In particular, the duration of this association is at most two years, which is shorter than the duration implied by the amortization period reported by sample companies. Nonetheless, other findings suggest that market participants seem to agree with the treatment prescribed by FRS 10 . These results should be of interest to practitioner and standard setters who (axiomatically) regard intangibles acquired in an arm's length transaction as assets.     

Modeling Foreign Bank Performance and Lending Behavior

This paper examines the profitability and commercial loan growth of foreign banks using a simultaneous‐equation framework. Maximizing behavior provides a two‐equation system in which bank profitability depends on variables related to expected returns, costs, and risks and in which loan growth is determined by risk and return variables. The model is tested to evaluate the determinants of foreign bank performace and lending behavior in the United States between 1987 and 1991. Overall the results indicate that factors such as capital strength, commercial and industrial loan growth, and assets composition were important in determining foreign banks' return‐on‐assets in the period under study. The role of capital appears to be particularly important in explaining foreign bank performance. The single significant determinant of loan growth was found to be previous period's loan growth.     

Introducing socioeconomic characteristics into production analysis under risk

A theoretical framework is developed to study the effects of socioeconomic factors on farmers' risk attitudes and production decisions. No maintained assumptions about the individual's utility are required. A key element in this framework is the categorization of socioeconomic factors by their effect on the farmer's risk attitudes. A simple methodology for this categorization, based on the equivalence between the Arrow–Pratt measure of risk aversion and the probability of winning demanded, is proposed. The latter is illustrated with data collected in a survey of 180 Israeli farmers from 20 villages.     

Municipal Disclosure Timeliness and the Cost of Debt

A longstanding concern for municipal bond investors is the lack of timely financial statement disclosures. Municipalities are held to lower disclosure standards than corporations. Using continuing disclosure dates for audited financial statements, we find bond issuers with slower disclosure have higher secondary market yields and spreads, less frequent secondary market trading, and are less likely to issue new bonds. We observe that future disclosure is largely predictable based on past disclosure and that disclosure often improves prior to new bond issuances. When municipalities do not capitalize on the benefits of timely disclosure, economic consequences are imposed on bondholders and taxpayers.     

The Use of Organic vs. Chemical Fertilizer with a Mineral Losses Tax: The Case of Dutch Arable Farmers

The paper focuses on farm-level nitrogen fertilization strategies of Dutch arable farmers for analyzing the substitution of organic fertilizers (manure) with chemical fertilizers. The model developed investigates the impact of the major parameters affecting the inferiority of manure compared with chemical fertilizers, including the low availability and non-uniformity of the nitrogen in manure, and the low level and high non-uniformity of plant-available nitrogen supplied via manure. The sensitivity of the optimal fertilization decisions and its associated environmental impact to product price, manure cost, and environmental tax is also examined. The theoretical analysis is applied to a representative Dutch grower of ware potatoes in the northern part of the Netherlands. The results suggest that in the absence of a subsidy the representative farmer will prefer to apply nitrogen only via chemical fertilizers.     

The Interaction of Building Codes and Housing Prices

The study analyzes the effect of restrictive building codes on the price of housing, and the simultaneous impact of housing values on the strictness of codes. A model is defined and estimated, using data for more than 1100 localities. The results show that strict codes raised housing values, in 1970, by about one thousand dollars. They furthermore show that the strictness of codes is in turn affected by housing values, as well as by the strength of construction unions. Homeowners and construction unions are thus both observed to gain from restrictive building codes, which can explain the prevalence of such regulations.     

Productivity and its rewards: Toward a new work ethic

A new American work ethic, needed to effectively compete in global markets, might develop if the wealth created by increased productivity is invested in creating open-ended, mutual obligations within organizations, and socially significant roles for employees beyond organizations. An anthropological perspective is applied to gain sharing to propose allocations that could engender job security, capital formation, enhanced social roles, higher productivity, and a new work ethic congruent with voluntaristic American culture. The proposed gain-sharing allocation supports participative work organization.     

Accruals Management, Investor Sophistication, and Equity Valuation: Evidence from 10–Q Filings

The release of the full set of financial statements in Form 10–Q provides investors with the data necessary to estimate the discretionary portion of earnings, thereby allowing them to better assess the integrity of reported quarterly earnings. We thus expect a negative association between unexpected discretionary accruals estimated using 10–Q disclosures and stock returns around 10–Q filing dates. Consistent with our expectations, we document a negative association between unexpected discretionary accruals and cumulative abnormal returns over a short window around the 10–Q filing date. Furthermore, this association varies systematically with investor sophistication. Finally, results from portfolio tests indicate that this association is economically as well as statistically significant. One interpretation of our findings is that accruals management has substantial valuation consequences, which are quickly impounded into stock prices.     

Technology's varying impact on the success of strategic business units within the miles and snow typology

The high-tech industry is usually treated as an homogeneous entity, without differentiating between organizations according to the relative importance of technology in their business strategy. This paper investigates the varying impact of technology on the success of strategic business units within the Miles and Snow typology. Although common wisdom might lead to the conclusion that prospectors are more dependent on technological progress than the other strategic types, the results show rather that the influence is greater and more fruitful for the defenders both in the short and the long term.