The Relation between Aggregate Earnings and Security Returns over Long Intervals*

This paper provides a theoretical explanation and consistent empirical evidence for the increase in the contemporaneous correlation between returns and aggregate earnings as the return interval is lengthened. Consistent with intuition and with Easton, Harris, and Ohlson 1992, the analysis shows that aggregation over time renders the lag in accounting recognition relatively less important and thus improves the returns‐earnings R². Interestingly, the analysis also reveals that aggregating earnings over longer periods increases the positive covariance between aggregate earnings and the accounting lag, which may further increase the R². This positive covariance can lead to an earnings coefficient greater than one over some range of aggregation, which is consistent with the findings of Easton et al. that over the 10‐year interval the returns‐earnings regression slope coefficient is greater than one (1.7). The empirical results highlight the fact that the slope coefficient, which is greater than one and increasing with the interval, accounts for much of the increment to the returns‐earnings R². In fact, constraining the slope coefficient to be one results in an R² of 11 percent for the 10‐year interval, which is considerably lower than the R² of 47 percent when the regression is unconstrained. Hence, the positive covariance between current earnings and the accounting lag, rather than the diminishing effect of the accounting lag, appears to be the dominant explanation for the observed high R² over long intervals.     

公共组织人力资源管理中存在的问题与对策

在建设和谐社会的今天,人力资源的管理水平,决定着公共组织的发展,关系到我国人力资源素质的提升,影响着整个地区及公众的社会生活质量。对公共组织实行有效的人力资源管理,应建设树立科学人才发展观,建立开放式的选拔和激励机制,完善人才理论培训和实践机制,同时应改革现有用人制度,引进竞争机制,建立与国际接轨的人力资源开发体系。     

小城镇劳务中介机构运行模式比较分析

本文将小城镇劳务中介机构按主办单位的不同,分为政府主办型和民办经营型;在此基础上,描述了小城镇劳务中介机构的三种运行模式,并从政府作用、服务内容与力度、收费制度和务工人员选择余地四个方面对上述三种运行模式进行了比较分析。     

福建食品安全监管体系先行先试研究

通过探讨食品质量安全标准与规范以及食品卫生监管问题,立足供应链,从政府、企业和消费者的角度,提出福建省食品安全监管体系先行先试的对策建议。     

Spatial Correlation in Household Choices in Rural Indonesia*

Many household choices in developing economies are correlated with choices of nearby households, because nearby locations have unobserved factors in common and households and their neighbors interact. However, models recognizing these spatial correlations are rarely used because few surveys give exact household locations. In the present paper, we use unusual data from rural Indonesia, where distances between households can be measured, to examine spatial effects in equations for non‐farm enterprises' share of household incomes and food's share of total household budgets. Our results indicate that ignoring spatial correlations in household choices might cause bias and inferential errors and could distort recommended policy interventions aiming to raise living standards in rural Asia.     

Evidence of Choice Avoidance in Capital‐Investment Judgements*

Evaluating capital‐investment decisions is an important function of managerial accountants. There is anecdotal evidence, however, that managers avoid making decisions or delay decisions, which is costly in terms of time, effort, and lost opportunities. Prior research has shown that choice avoidance among nonprofessionals making personal decisions is associated with having to choose between alternatives with very different features or that require trade‐offs of very important goals (choice difficulty). It is unclear, however, whether experienced managers, using the analytical decision tools at their disposal, respond in the same way as nonprofessionals when making accounting decisions. Hence, this study examines whether increased choice difficulty increases negative affect in the capital‐investment decision‐making process and, as a result, the tendency of managers to avoid choice even when analytical decision tools are used. In an experiment with 120 executives, participants facing more difficult decisions reported they felt more worried, nervous, uneasy, and anxious and had a greater desire to postpone making the decision than participants in a control group. Participants provided with a decision aid designed to help them focus their cognitive effort reported a lower desire to postpone making the decision than participants in the choice‐difficulty conditions without the decision aid. I conclude by discussing the result's implications for managers and accountants.     

Interaction between Foreign and Domestic Investors in the Korean Stock and Futures Markets*

The present paper analyzes the behavioral relations of major investor groups in the stabilized Korean stock and futures markets after the 1997 Asian financial crisis. Investor groups cannot be classified as positive or negative feedback traders on market returns when both stock and futures markets are considered, which is inconsistent with the results in Ghysels and Seon (2005). Foreign investors and domestic institutions tend to take opposite positions in both markets. The impact of foreign investors on the basis change is significantly negative in the futures market, whereas domestic institutions have a negative relation in the stock market. This supports the view that selling activity of foreign investors in the futures market pulls the futures price down compared with the index value and, consequently, induces the reverse cash‐and‐carry trade of domestic institutions. This relationship, which negatively influenced the Korean economy during the crisis, as shown in Ghysels and Seon (2005), still exists in the Korean financial markets.     

Efficiency of the Banking Industry Structure in Korea*

This paper analyzes whether the efficiency of the Korean banking industry has improved since the bank restructuring in 1997, and whether a bank with high efficiency has a larger market share. This paper uses an efficient structure hypothesis model to examine the relationship between the banks' efficiencies and their profitability. The data envelopment analysis method is applied to measure the efficiency and profitability of the banking industry in order to minimize possible bias due to the inflow of public funds for the bank consolidation. The two‐step Heckman selection method is used to correct for survivorship bias in the model. The derived result indicates that banks with higher efficiencies tend to record higher profit. Moreover, higher pure technological efficiency and scale efficiency have a positive effect on a bank's market share and concentration.     

The Difficult Client‐Acceptance Decision in Canadian Audit Firms: A Field Investigation*

Auditing is often depicted in scientific and professional literature as being subject to conflicting forces, such as mechanization versus flexibility, and professionalism versus commercialism. This paper examines how auditors actually make the client‐acceptance decision in the midst of these forces. The investigation was conducted via a field study at three Big 6 firms located in Canada. The results show that in all firms the client‐acceptance decision process in action is largely flexible, being characterized by a high degree of informal communication and the adaptation of the client‐acceptance written policies and decision aids to circumstances. Furthermore, while commercialism in one firm (A) has a significant influence on the decision process, in the two other firms (B and C) the decision process is mostly consistent with professionalism. This result conflicts with the concerns that North American regulators have recently expressed about auditors' professionalism.     

Impact of the National Pension Fund on the Suitability of Elderly Pensions in Thailand*

This study combines a traditional hypothetical worker approach with the techniques of stochastic forecasting to provide a better sense about the suitability of the pension system for formal sector private workers in Thailand. With regard to the proposed defined‐contribution pension, we find that workers with a 40‐year career can only expect a median replacement rate of approximately 13–14 percent of their final 5 years of income. Most of the pension benefits will still likely come from the unsustainable defined‐benefit pension system and further reforms will be needed to maintain suitable pensions.     

An Experimental Test of the Interaction of the Insurance and Information‐Signaling Hypotheses in Auditing*

Three incentives for hiring auditing services have been proposed in the literature: (1) to signal outsiders about the company's prospects, (2) to provide a potential source of loss recovery for investors (insurance), and (3) to reduce agency costs. The objective of this study is to examine the potential for the first two (signaling and insurance) to interact while controlling for agency costs. We conduct an experiment in which highly experienced financial analysts provide stock price estimates for a company that is under financial stress. We manipulate, between participants, the signal provided by the audit opinion (going‐concern modification, yes/no) and the ability of investors to recover losses from auditors. The key finding is that the effect of the going‐concern opinion on investor value judgements is moderated by the extent to which the auditor provides an insurance function. Specifically, the negative effect of a going‐concern opinion on the analysts' stock price estimates is reduced by the extent that the environment treats the auditor as an insurer.     

Study of the Measurement and Determinants of Intra‐industry Trade in East Asia*

The present paper investigates the development of intra‐industry trade (IIT) among the East Asian economies over the 1970–1996 period. A dynamic index is used to capture the changes in the structure of trade flows. Based on this approach, IIT is decomposed into horizontal (HIIT) and vertical components (VIIT) and the determinants of each are investigated. The results show that both HIIT and VIIT have exhibited increased importance over the sample period in manufacturing. Using pooled panel data the two‐way trade in all measures of IIT is found to be positively related to the country‐specific variables, such as the market size, exhange rate depreciation, the levels of development and income, and negatively to the geographic proximity of the partners. Economies of scale are seen to have a positive influence on IIT and HIIT, but a negative relationship with VIIT. Although the relative openness of a country's trade regime shows no significant relationship with any form of IIT, a trade imbalance does affect IIT and HIIT flows. The findings have implications for assessing the structural adjustment costs associated with the trade liberalization process as HIIT is associated with demand for variety and relates to two‐way trade in goods of similar quality, while VIIT is driven by international specialization and differences in relative factor endowments.     

Professionalization in Action: Accountants' Attempt at Building a Network of Support for the WebTrust Seal of Assurance*

This paper examines the attempts by the North American accounting institutes to develop a new market in e‐commerce assurance based on their claims to professional expertise through the WebTrust project. Employing actor‐network theory in an in‐depth longitudinal field study, we investigate how WebTrust was originally developed and promoted as a seal of business‐to‐consumer assurance, which largely failed to generate support in the marketplace. Proponents were subsequently able to generate more interest in the eyes of managers of online organizations by reshaping WebTrust as a flexible set of principles and criteria for systems advice and business‐to‐business assurance. Our analysis suggests that attempts to expand the accounting profession's domain of expertise reflect a trial‐and‐error process where the outcome achieved may be far from the vision that motivated the institutes into undertaking the project in the first place. We further show that the initial network of support for such projects can be quite fragile and dynamic as various actors reposition themselves around the shifting meanings attributed to the project.     

Corporate Venture Capital and Its Contribution to Intermediate Goods Firms in South Korea*

Set by government, corporate, financial and individual sources, venture capitalists in Korea have adapted themselves to the new and uncertain venture capital market through stand‐alone and syndicated investments. The present study raises questions about whether various financial sources contributed differentially to their portfolio firms during the market boom of 2000. Results show that no single capital source showed better performance, and only corporate venture capitalists contributed to intermediate goods firms. The latter finding might reflect the unique ability of corporate venture capitalists to use vertical value‐chain linkages for their investments.     

Technological Capability and FDI in Asia: Firm‐level Relationships among Japanese Manufacturers*

The present paper reexamines the relationship between technological capabilities and FDI decisions at the firm level. The data cover 118 300 Japanese firms in all manufacturing industries. The R&D of Japanese firms has a noticeably weaker relationship with FDI in Asia than with FDI in industrial countries. This finding is confirmed to be robust even when alternative estimation techniques are used and when R&D expenditure data are replaced by patent data. The estimation results also reveal non‐negligible fixed entry costs for FDI, a finding consistent with the observation that only approximately 2 percent of the firms invest abroad.     

Testing the “Inverted‐U” Phenomenon in Moral Development on Recently Promoted Senior Managers and Partners*

This paper examines the change in the average level of moral development over a 7.5‐year period of promotion, attrition, and survival in five Big 6 firms. The study improves upon previous cross‐sectional studies that found decreases in the average level of moral development at the senior manager and partner levels, which has been referred to as the “inverted‐U” phenomenon. Problems with these studies that limit the generalizability of their findings include their cross‐sectional nature and samples that usually come from one or two firms. Over a 7.5‐year period, we found that the participating Big 6 firms retained auditors with higher average levels of moral development (measured using the defining issues test), while those with lower average levels left the firms. The average level of moral development for new partners was at least as high as the group from which they came. This research suggests that the concern about Big 6 firms retaining a higher proportion of auditors with lower moral development may be an artifact of research design.     

Social networks,rule of law and economic growth in China: The elusive pursuit of the right combination of private and public ordering

Social networks have always been an integral part of every society. However, they are different and play a more prominent role in Asian societies. In particular, it will be argued that the relationship of private ordering, networks of relationships, and informal law to formal law are necessary in addition to rule of law for a sustained economic growth. This is evident in how various Asian countries escaped the financial crisis that crippled the region. Rather than an analysis of several different Asian societies, China will be the main focus.     

Human Capital and Hours Worked of Children in Cambodia: Empirical Evidence for Policy Implications*

This study uses data from the Cambodian Child Labor Survey 2001/02 (CCLS‐2001/02) to investigate the trade‐off between child labor and their human capital formation. It also investigates the determinants of child schooling and that of the income earned from child labor. This study finds that children's education is a significant determinant of their wage rate, which implicitly explains the logic behind the household's decision to allow a child to both work and study, and thus explains why parents keep investing in their children's education. We also find that non‐poor households and fathers’ and mothers’ education have statistically significant effects on child schooling. Finally, this study has found that if children's average working hours are below the threshold level of 22 h per week, then education is not affected. These research findings have policy implications for the human capital development of children, as well as for broader social policy in Cambodia.     

Human Capital and Economic Growth in Asia 1890–2000: A Time‐series Analysis*

There is a general consensus that human capital is a major factor behind long‐run economic growth. Yet, on a macro level, the empirical results do not always seem to concur with this view. To explain this gap between theory and empirics, more focus has been laid on measurement error and data quality. Using an alternative estimate of the stock of human capital, based on Judson (2002), we find evidence that the two major views on the role of human capital in economic development by Lucas (1988) and Romer (1990) coexist and are by no means mutually exclusive. Using a Johansen cointegration test, we find that in India and Indonesia the level of human capital is cointegrated with the level of aggregate income during the whole 20th century, which confirms the theory of Lucas (1988). In Japan, however, the Lucasian approach can be verified only for the first half of the century, while after 1950 there is cointegration between the growth rate of aggregate income and the level of human capital, which is in line with Romer's view.