Earnings Quality under Rules‐ versus Principles‐based Accounting Standards: A Test of the Skinner Hypothesis / LA QUALITÉ DES RÉSULTATS SELON QUE LES NORMES COMPTABLES SONT AXÉES SUR LES RÈGLES OU SUR LES PRINCIPES: VÉRIFICATION DE L'HYPOTHÈSE DE SKINNER*

We provide preliminary evidence, consistent with Skinner (1995), that Canada's relatively principles‐based GAAP yield higher accrual quality than the United States' relatively rules‐based GAAP. These results stem from a comparison of the Dechow‐Dichev (2002) measure of accrual quality for cross‐listed Canadian firms reporting under both Canadian and U.S. GAAP. However, we document lower accrual quality for Canadian firms reporting under U.S. GAAP than for U.S. firms, which are subject to stronger U.S. oversight, reporting under U.S. GAAP. The latter results suggest that stronger U.S. oversight compensates for inferior accrual quality associated with rules‐based GAAP. Consistent with the positive effect of Canada's principles‐based GAAP and the offsetting negative effect of Canada's weaker oversight, we find no overall difference in accrual quality between Canadian firms reporting under Canadian GAAP and U.S. firms reporting under U.S. GAAP. Our results imply that (1) policymakers who wish to compare the effectiveness of oversight across jurisdictions must control for the GAAP effect; and (2) accounting standard‐setters who wish to compare the effectiveness of principles‐ versus rules‐based GAAP must control for oversight strength.     

Calvin's Reformation in Geneva: Self and Social Signalling

As Weber ( 1904 ) recognized, Calvinistic beliefs about predestination may constitute a powerful incentive for good works; an individual wishes to receive assurances about her future prospects of salvation, and good works may provide a positive signal about such prospects. These beliefs can in turn create a social pressure to behave well, as good works can also signal to others that individuals belong to the “elect” and are therefore likely to behave well in social interactions. Moreover, the Consistory, an institution created by Calvin to monitor and publicize individuals' behavior, can allow for such social signalling. We analyze these self and social signalling incentives, and show how religions affect levels of cooperation and coordination.     

The Public Health Implications of Consumers' Environmental Concern and Their Willingness to Pay for an Eco‐Friendly Product

Environmental concern has been an important topic for more than 40 years and has recently become even more critical with today's concerns about creating a sustainable and healthy environment. This research examines factors affecting an individual's willingness to pay more for an environmentally friendly product. Our results show that willingness to pay more differs across demographic groups. We also find that individuals who rate concern for waste as highly important are willing to spend more money on an eco‐friendly product. Consequently, our findings provide insight into the development of appropriate educational strategies for different consumer groups to encourage consumers to purchase eco‐friendly products, with a goal of creating a healthier environment for current and future generations.     

INVESTING IN INSTITUTIONS

Robust institutional change is difficult to achieve. However, it is more difficult for some countries than others. We use data on 69 countries between 1870 and 2000 to show that political instability does not always affect growth outcomes. We then develop a simple model to explain this fact in which the likelihood that “good” institutions are abandoned during periods of political uncertainty depends on the opportunity cost of doing so. We operationalize our model by using contract intensive money as a proxy for this initial investment in growth‐enhancing institutions. Cross‐sectional and panel growth regressions support the model's predictions.     

Super‐Majorites,One‐Dimensional Policies,and Social Surplus

In the setting of a one‐dimensional legislative bargaining game, we characterize qualified majority rules maximizing social surplus, that is, the sum of individual benefits. The simple majority rule maximizes social surplus when individual utilities are tent‐shaped. When the utilities are strictly concave, the surplus maximizing rule is a strict supermajority.