The Aggregation and Valuation of Deferred Taxes

Review of Accounting Studies - This paper clarifies some of the conflicting arguments about the value relevance of deferred taxes. We address two questions. First, does accounting aggregation hold,...     

Monitoring in Multiagent Organizations*

This paper studies how to assign “monitors” to productive agents in order to generate signals about the agents' performance that are most useful from a contracting perspective. We show that if signals generated by the same monitor are negatively (positively) correlated, then the optimal monitoring assignment will be “focused” (“dispersed”). This holds because dispersed monitoring allows the firm to better utilize relative performance evaluation. On the other hand, if each monitor communicates only an aggregated signal to the principal, then focused monitoring is always optimal since aggregation undermines relative performance evaluation. We also study team‐based compensation and randomized monitoring assignments. In particular, we show that the firm can gain from randomizing the monitoring assignment, compared with the optimal linear deterministic contract. Furthermore, under randomization, the conditional expected utility for the agent is higher when the agent is not monitored compared with the case where the agent is monitored. That is, the chance of being monitored serves as a “stick” rather than a “carrot”.     

Seasonality patterns in tanker spot freight rate markets

The aim of this paper is to investigate the existence and nature of seasonality (deterministic or stochastic) in tanker freight markets and measure and compare it across sub-sectors and under different market conditions (expansionary and contractionary) for the period January 1978 to December 1996. The existence of stochastic seasonality is rejected for all freight series while results on deterministic seasonality indicate increases in rates in November and December and decreases in rates from January to April. Seasonality is found to be varying across markets depending on vessel size and market condition. Seasonality comparisons under different market conditions, an issue investigated for the first time in the econometrics literature using Markov Switching models, reveal that seasonal rate movements are more pronounced when the market is recovering compared to smaller changes when the market is falling. This is well in line with the low and high elasticity of supply expected in expansionary and contractionary periods of shipping markets. The results have implications for tactical shipping operations such as budget planning, timing of dry-docking, vessel speed adjustments and repositioning. As expected, the out-of-sample forecasting performance of these Markov Regime Switching models is lacking somewhat, a result which is thought to be a consequence of having to predict ‘states’ simultaneously with mean values.     

On the Border of Indeterminacy: The Separation Wall in East Jerusalem

Drawing on a perspective which takes into account the convergences of sovereign and biopolitical ruling apparatuses, the aim of this article is to provide a comprehensive view of the Separation Wall constructed by Israel in East Jerusalem, and, through it, of Israeli control of Palestinian East Jerusalem. Neither a comprehensive border, nor a mere barrier, the Separation Wall which is being constructed in Jerusalem operates to reinstates sovereign power in arrays of governmentality for the purpose of drawing on the ability of sovereignty to appropriate legitimacy for the territorialisation of governmentality. This article claims that these territorialised arrays of governmentality give rise to processes of racialisation, by maintaining a grip on the communities of Palestinians in East Jerusalem and sustaining them in an intermediate position, standing in the way of their full integration into the Israeli population while severing their existing connections with the Palestinians in the West Bank.     

Temporal myopia in sustainable behavior under uncertainty

Consumers in today's world are confronted with the alarming consequences of unsustainable behavior such as pollution and resource degradation. In addition, they are facing increases in uncertainty due to external events such as economic crises and terror attacks. These two problems are central to consumers' lives, occur on a global scale, and have significant impact on the world's political, economic, environmental, and social landscapes. Contributing to research on persuasion and pro-social behavior, we show in four studies, conducted online, in the lab, and in the field, that these two problems are interconnected. Studies 1 and 2 demonstrate that uncertainty leads to lower levels of sustainable behavior in comparison to certainty. Study 2 reveals in addition that this is due to the display of higher levels of temporal discounting under uncertainty (i.e., adopting a more immediate orientation). Finally, Studies 3 and 4 show that emphasizing the immediate benefits of sustainability during uncertainty reverses the negative effect and leads consumers to act more sustainably. Overall, these findings provide valuable implications for policy makers and responsible marketers.     

Aesthetically (dis)pleasing visuals: A dual pathway to empathy and prosocial behavior

This research investigates how the combination of aesthetically appealing and unappealing visual elements in marketing communications can motivate prosocial behavior. Prior literature has investigated the effectiveness of aesthetically pleasing or displeasing visuals separately and has reported mixed results. Based on the notion that empathy is a key driver of prosocial behavior, the current work first makes a theoretical distinction between two antecedents of empathy—identification and perceived need—and then illustrates how these antecedents are evoked by pleasing and displeasing visual elements, respectively. The authors show that the combination of a pleasing individual (human or object) and a displeasing group is particularly effective in evoking identification and perceived need, and therefore empathy. The elevated empathy, in turn, motivates prosocial behavior. Five main experiments in the field, lab, and online, as well as a pre-study and two post-studies, provide supportive empirical evidence. Implications for theory and practice are discussed.     

The contribution of bank regulation and fair value accounting to procyclical leverage

Our analysis of how banks’ responses to asset price changes can result in procyclical leverage reveals that, for banks with a binding regulatory leverage constraint, absent differences in regulatory risk weights across assets, procyclical leverage does not occur. For banks without a binding constraint, fair value and bank regulation both can contribute to procyclical leverage. Empirical findings based on a large sample of U.S. commercial banks reveal that bank regulation explains procyclical leverage for banks relatively close to the regulatory leverage constraint and contributes to procyclical leverage for those that are not. We also show that fair value accounting does not contribute to procyclical leverage.     

Cournot Oligopoly and the Theory of Supermodular Games

We reconsider the Cournot oligopoly problem in light of the theory of supermodular games. Invoking the recent ordinal version of this theory proposed by Milgrom and Shannon, we generalize Novshek's existence result, derive the associated uniqueness result, give an extension of a classical existence result under symmetry, and provide conditions making a Cournot oligopoly into a log-supermodular game (with the natural order on the action sets). We also provide extensive and precise insight as to why decreasing best-responses are widely regarded as being “typical” for the Cournot model with production costs. Several illustrative examples are provided.Journal of Economic LiteratureClassification Numbers: C72, L10, L13.