Accounting Conservatism and the Temporal Trends in Current Earnings’ Ability to Predict Future Cash Flows versus Future Earnings: Evidence on the Trade‐off between Relevance and Reliability*

This research reports that an increasing level of accounting conservatism over the 1973–2005 period is associated with: (1) an increase in the ability of current earnings to predict future cash flows and (2) a decrease in the ability of current earnings to predict future earnings. We also find that usefulness of earnings for explaining stock prices over book values is positively related to reliability but not to relevance. Our results hold for the constant and full samples in both in‐sample and out‐of‐sample analyses and are robust to the use of alternative measures for relevance, reliability, earnings usefulness, and conservatism. Our findings about the relations among conservatism, relevance, reliability, and usefulness suggest a trade‐off between relevance and reliability and seem to indicate that the adoption of an increasing number of conservative accounting standards has a possible adverse impact on earnings usefulness through a negative effect on reliability.     

Prudence comptable et évolution temporelle des propriétés prévisionnelles des résultats de l’exercice en ce qui a traitaux flux de trésorerie futurs et aux résultats futurs: constatations relatives au compromis pertinence‐fiabilité

Selon les observations des auteurs, l’augmentation du degré de prudence comptable au cours de la période s’échelonnant de 1973 à 2005 est associée aux facteurs suivants : 1) les propriétés prévisionnelles croissantes des résultats de l’exercice en ce qui a trait aux flux de trésorerie futurs et 2) les propriétés prévisionnelles décroissantes des résultats de l’exercice en ce qui a trait aux résultats futurs. Les auteurs constatent également que l’utilité des résultats pour expliquer le cours des actions par rapport aux valeurs comptables est en relation positive avec la fiabilité, mais non avec la pertinence. Les résultats de l’étude se vérifient pour l’échantillon constant et l’échantillon intégral, à la fois dans les analyses sur échantillon et hors échantillon, et ils résistent à l’utilisation d’autres indicateurs de pertinence, de fiabilité, d’utilité des résultats et de prudence. Les conclusions des auteurs au sujet des relations entre la prudence, la pertinence, la fiabilité et l’utilité semblent accréditer l’existence d’un compromis entre pertinence et fiabilité et paraissent indiquer que l’adoption d’un nombre croissant de normes comptables prudentes pourrait être préjudiciable à l’utilité des résultats en raison d’une incidence négative sur la fiabilité.     

Economic Reforms and Human Development Indicators in India*

This paper sketches the contours of progress in India across a broad range of human development indicators, especially those related to the Millennium Development Goals. This paper also considers the slackening of the drop in poverty reduction since the 1990s (as compared to the 1980s) and the theme of increasing personal and regional inequality in India in the post‐reforms period. It also considers the even more persistent incidence of hunger in India and concludes by assessing the potential role of public policy in addressing the twin problems of slowdown in poverty alleviation and reduction of hunger.     

Towards measuring allocative efficiency in selected industries of India

This paper examines trends in allocative efficiency over the period 1960–1961 to 1986–1987 in seven Indian industries, namely refining and manufacture of sugar; petroleum refining; manufacture of chemicals, fertilizers and pesticides locomotives and parts, locomotives, and cotton textiles. We discover that allocative inefficiency has been non zero in each industry for every year. Allocative inefficiency has not declined over time in those industries where prices are administered, whereas in industries where prices are not administered it has. Industries that are predominantly in the public sector are not necessarily characterized by greater allocative inefficiency than those that are predominantly in the private sector.     

Continuity and Change: Some Observations on the Landscape of Agricultural Labourers in North Bihar, India

This paper is an attempt to catalogue and analyse the changes over two decades in the world of agricultural labourers in a backward region in India. It is primarily based on a series of field visits to two villages in Purnia district, located in the north-eastern part of Bihar. Changes in the living conditions of labourers are obviously connected to developments in the rural economy of the region and there are important linkages with developments elsewhere, including changes in the overall macro-economic policy regime. An attempt is made to trace these. Agricultural wage workers in the surveyed region are extremely poor by any reckoning, although a few of them have made some progress through state-sponsored programmes and migration. These developments have also contributed significantly to altering the relations of dominance and subordination, thus creating greater elbow-room for labourers. However, it is important not to overstate these small gains and there are serious doubts as to whether they can be sustained. It appears that some of the material correlates of labourers' well-being in the surveyed region are being affected adversely by the currently ascendant neoliberal policy regime. There are no signs of the emergence of mechanisms that might imply sustained significant improvements in the very fragile life and work conditions of these labourers.