Do HR System Characteristics Affect the Frequency of Interpersonal Deviance in Organizations? The Role of Team Autonomy and Internal Labor Market Practices

Current research on determinants of interpersonal deviant behaviors in organizations, including incivility, bullying, and sexual harassment has focused primarily on the effects of individual‐level characteristics while neglecting inter‐organizational differences in human resource (HR) systems that shape the context for employee interactions at work. Using data from a nationally representative survey of over three hundred U.S. work establishments, I find empirical support for theory‐based predictions that organizations with HR systems characterized by greater use of internal labor markets and less team autonomy are associated with lower frequencies of reported interpersonal deviance behaviors than those that rely on external labor markets and self‐managed teams.     

Who Believes the Hype? An Experimental Examination of How Language Affects Investor Judgments

This paper investigates the effect of vivid language on investor judgments. Recent research finds that investor judgments are significantly influenced by disclosure tone (positive versus negative). Holding tone constant, we investigate investors’ reactions to vivid versus pallid information. Drawing on theories from psychology, we predict that investors will be sensitive to the differences between vivid and pallid language when the underlying information is preference inconsistent, but not when the information is preference consistent. Results of two experiments support our prediction. Vivid language significantly influences the judgment of investors who hold contrarian positions (i.e., short investors in a bull market and long investors in a bear market). Interestingly, vivid language has limited influence on the judgment of investors who hold positions consistent with the general tenor of the market. Our results provide evidence regarding when vividness matters and when it does not in financial contexts, thereby contributing to both psychology and a growing literature on disclosure tone in financial reporting. In addition, our results also speak to concerns raised by regulators and academics asserting that vivid language can inflate bubbles and incite panics.     

Big Five Audits and Accounting Fraud*

We examine the association between Big Five audits and the incidence of accounting frauds allegedly committed by U.S. public companies between 1981 and 2001. Many commentators argue that the prominent financial reporting failures that led to major corporate governance reforms cast serious doubt on whether the large public accounting firms continue to supply relatively high‐quality audits, especially in recent years. However, in unmatched and matched samples, we provide strong, robust evidence that fraudulent financial reporting becomes less likely with the presence of a Big Five auditor. Importantly, time‐series tests suggest that the Big Five are consistently associated with a lower incidence of fraudulent accounting, including in the last five years of our sample period when the number of frauds soared. Moreover, we find evidence implying that these relations are causal rather than an artifact of endogeneity in auditor choice.     

FACTOR ENDOWMENTS, TRADE LIBERALIZATION, AND THE FUTURE OF APEC TRADE PATTERNS

The heads of state of Asia-Pacific Economic Cooperation (APEC) nations have committed member nations to remove all barriers to trade both among themselves and with respect to the rest of the world by 2020. The present paper uses a simple econometric model of bilateral trade flows based on country size, relative factor endowments, and trade barriers of importing as well as exporting countries to estimate the shares by country of origin in imports of each of the 16 major APEC countries and the rest of the world for each of 45 commodity groups comprising world trade in commodities. The estimates reveal that APEC trade would be expanded by 13% with complete liberalization of tariff barriers, by an additional 5% if nontariff barriers are also removed, and by another 4% if the rest of the world would also remove all barriers to trade. Variants on this base scenario show that such trade expansion could be substantially reduced were trade liberalization, capital growth, or both to be reduced in the countries affected by the Asian financial crisis. ( JEL Fl, F17)     

Capital Equalization and the Australian States

The Australian Grants Commission has recently considered ways to take account of differences in capital costs across States within the existing fiscal equalization formula. Here we develop a theoretical methodology for estimating differences in the costs of capital faced by the States in the General Government Sector. This methodology is used to generate preliminary estimates of State capital cost 'disabilities' from 1962–63 to 1995–96. Finally, we suggest how the methodology and the estimates of capital cost disabilities might be integrated into the Commission's formula to produce a grant distribution which reflects different costs of capital across States.     

Do Taxes Affect Corporate Financing Decisions?

This paper provides clear evidence of substantial tax effects on the choice between issuing debt or equity; most studies fail to find significant effects. The relationship between tax shields and debt policy is clarified. Other papers miss the fact that most tax shields have a negligible effect on the marginal tax rate for most firms. New predictions are strongly supported by an empirical analysis; the method is to study incremental financing decisions using discrete choice analysis. Previous researchers examined debt/equity ratios, but tests based on incremental decisions should have greater power.     

Job Classifications and Plant Performance in the Auto Industry

This study assess the relationship between plant economic performance and job classifications, using data from a large, unionized, automobile manufacturer. Combining skilled and semi-skilled job classifications leads to small improvements in economic performance, while reductions in the member of assembly job classifications affect neither plant productivity nor plant quality. The data also reveal that classification reductions predict plant modernization, although the magnitude of this effect varies with the occupational group.