THE DEVELOPMENT OF ACCOUNTING REGULATION, EDUCATION, AND LITERATURE IN AUSTRALIA, 1788–2005

Accounting involves the recording of events, the preparation and reporting of results and is a key medium in discharging accountability. It pervades organisations and institutions in every country and is a key element of the business fabric and economic development of any nation. This study examines the development of accounting regulation, education, and literature in Australia across five key phases of European settlement from 1788 to 2005 and presents an overview of the major historical trends in each of these periods. The development of accounting and the profession is intimately linked with significant economic development in Australia over 200 years.     

Wage differentials between skilled and unskilled workers

Wage Differentials Between Skilied and Unskilled Workers. — This paper analyzes the change in the ratio of wages paid to skilled and unskilled workers and the effect of these changes on employment by means of a simultaneous-equation pooled time-series cross-section analysis. Hypotheses are derived on the basis of specific theories. The data cover 23 industries over the period 1965–90. The explanatory variables are the cyclical deviations from long-run growth as well as several collective bargaining variables. The wage differential has a strong effect on employment of the two groups under investigation. However, demand has no significant impact on the wage relation.     

A HISTORICAL PERSPECTIVE ON MENTAL HEALTH SERVICES IN AUSTRALIA: 1883–84 TO 2003–04

This paper describes changes in the number of residents and admissions to public psychiatric hospitals in Australia, and in the state of Queensland in particular, from 1883 to 2003. It identifies when the deinstitutionalisation of dedicated psychiatric institutions began in Queensland and finds that the policy described as 'opening the back door' (discharging residents) began around 1952–53, while the policy of 'closing the front door' (reducing admissions) began in 1962–63. Deinstitutionalisation in Queensland thus began earlier than most contemporary writers suggest.     

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.     

Weathering the Storm: Measuring Household Willingness‐to‐Pay for Risk‐Reduction in Post‐Katrina New Orleans

The city of New Orleans suffered extensive damage as a result of Hurricane Katrina. Rebuilding involves decisions on investment in protective measures. An exhaustive list of protective measures has been studied in planning documents, with public comment solicited in town hall meetings. In this study we employ a different approach to examine public sentiment toward the selection and investment in protective measures. Our study uses a stated preference choice experiment with a stratified sample to investigate individuals' willingness‐to‐pay for rebuilding New Orleans's man‐made storm defenses, restoring natural storm protection, and improving evacuation options through a modernized transportation system. We target residents of the New Orleans metropolitan area as well as other U.S. citizens. Our results indicate that individuals are willing to pay for increased storm protection for New Orleans, but values differ among residents of the New Orleans metropolitan area and other U.S. citizens.     

So Many Hospitals,So Little Information: How Hospital Value‐Based Purchasing Is a Game of Chance

As part of the Patient Protection and Affordable Care Act, participating hospitals have part of their Medicare reimbursements withheld and then redistributed based on quality performance. The Hospital Value‐Based Purchasing reimbursement plan relies partly on ordinal rankings of hospitals to determine how money is distributed. We analyze the quality metric score distributions that underlie payment redistribution and show that there is not enough information to reliably differentiate hospitals from one another near the program point cutoffs, and conclude that a large part of the payment formula is driven by sampling variability rather than true quality information. An alternative plan for rewarding hospitals is developed.     

Job Allocation Rules and Sorting Efficiency: Experimental Outcomes in a Peter Principle Environment

An important issue in personnel economics is the design of efficient job allocation rules. Firms often use promotions both to sort workers across jobs and to provide them with incentives. However, the Peter Principle states that employees' output tends to fall after a promotion. Lazear (2004) suggests that self‐selection may improve job allocation efficiency while preserving incentive effects. We reproduce this Peter Principle in the laboratory and compare the efficiency of a promotion standard with subjects self‐selecting their task. We find no evidence of effort distortion, as predicted by theory. Furthermore, we find that when the Peter Principle is not severe, promotion rules often dominate self‐selection efficiency of task assignment. Results are consistent with imperfect appraisal of transitory ability and a lack of strategic behavior.     

Creditors’ and Shareholders’ Reporting Demands in Public Versus Private Firms: Evidence from Europe*

In this study we investigate whether the importance of accounting information in contracting and communication with shareholders and creditors affects earnings timeliness in publicly disclosed general‐purpose financial statements. To operationalize the relationship between timeliness demands and the importance of accounting information to shareholders and creditors, we compare the (asymmetry in) earnings timeliness of public firms with that of private firms. We attribute public versus private firm differences in timeliness to shareholders’ demands when a country’s institutions provide strong investor protection. Similarly, we attribute these differences to creditors’ demands when the institutions provide strong creditor protection. Our analysis of public and private firms in 13 Western European countries suggests that creditors and shareholders have different timeliness demands. In particular, we find that the public versus private firm difference in asymmetric timeliness is not associated with a country’s degree of investor protection but positively associated with a country’s degree of creditor protection. The results further suggest that shareholders demand symmetric rather than asymmetric timeliness. An important implication of our study is that general‐purpose financial statements are responsive to creditors’ reporting demands, which contrasts with the idea that these — primarily private — creditors would use special‐purpose reports.     

Government Bias in Education,Schooling Attainment,and Long‐Run Growth

A surprising cross‐country stylized fact is that higher public spending on education tends to lower the long‐run growth rate of per capita GDP and the returns to schooling. This is contrary to the conventional wisdom that education is a major driver of growth. In this article, we revisit this issue and try to understand these puzzling facts in terms of an endogenous growth model. Our cross‐country calibration of the growth model predicts that countries with a greater government involvement in education experience lower schooling efforts and lower growth.     

Go West Young Man: Self‐Selection and Endogenous Property Rights

If, as Hume argues, property is a self‐referring custom of a group of people, then property rights depend on how that group forms and orders itself. In this article we investigate how people construct a convention for property in an experiment in which groups of self‐selected individuals can migrate between three geographically separate regions. To test a hypothesis of Demsetz's, we vary across two treatments the external benefits of migrating. We find that self‐selection has a powerful effect on establishing conventions of property and begetting increases in wealth through exchange and specialization. We also find support for the Demsetz hypothesis.     

Estimating the Short Run Effects of South Africa's Employment Tax Incentive on Youth Employment Probabilities using A Difference‐in‐Differences Approach

South Africa's Employment Tax Incentive (ETI) came into effect on the 1st of January 2014, with the objective of reducing the substantial national youth unemployment rate. Under the ETI, firms are eligible to claim a deduction from their taxes due, for the portion of their wage bill that is paid to certain groups of youth employees. We utilise several waves of nationally representative data and implement a difference‐in‐differences methodology at the individual level, in order to identify the effects of the ETI on youth employment probabilities in the short run. Our primary finding is that the ETI did not have any statistically significant and positive effects on youth employment probabilities. The point estimate from our preferred regression is ?0.005 and the 95% confidence interval is from ?0.017 to 0.006. We also find no evidence that the ETI has resulted in an increase in the level of churning in the labour market for youth. Thus, any decrease in tax revenues that arise from the ETI are effectively accruing to firms which, collectively, would have employed as many youth even in the absence of the ETI.     

Why Chinese Exports Face So Many Trade Remedy Actions: An Empirical Study Based on Multi‐country and Multi‐industry Data

This paper offers a comprehensive analysis of the reasons for the large number of trade remedy actions taken against China. Using a multi‐country and multi‐industry dataset, the present paper shows that the macroeconomic situation of China's partners has a great influence on the probability of trade frictions arising with China. Moreover, the more powerful the industry is, the more likely it is to take trade remedy actions against China. The empirical results reveal that China has been hurt under the operating mechanism of the WTO, and the number of free trade agreements is negatively related to the initiation and approval of trade remedy actions. Basically, the determinants for countervailing and double remedy measures are identical, while they are different from determinants of antidumping measures. Accordingly, strengthening communication with trade partners will alleviate friction between China and its trade partners. Meanwhile, making use of foreign lobbies' power, actively integrating into the international trading system and participating in regional trade agreements are effective ways for China to deal with the “new normal” of trade frictions.     

Job Security and Risk‐Taking: Theory and Evidence From Professional Football

This article investigates how job security impacts risky decision making. In a theoretical model, we show how risk‐taking can be affected by job security. Agents with moderate job security become more risk averse as their job security increases. Conversely, agents with very high (or low) job security act in a more risk neutral manner. We test these predictions using data on head coaching decisions from the National Football League, finding that job security has a negative and statistically significant effect on risk‐taking.     

Men,women, and the ballot: Gender imbalances and suffrage extensions in the United States

Women's suffrage led to one of the greatest enfranchisements in history. Voting rights, however, were not won by force or threats thereof, a fact leading political economy theories find hard to explain. Studying the timing of suffrage extensions in US states between 1869 and 1919, we find that a scarcity of women strongly promoted early transitions to women's suffrage. Such scarcity significantly reduced the political costs and risks for male grantors of the suffrage. It might also have made women's suffrage attractive as a means to attract more women.     

TRADE‐OFFS AND RIP‐OFFS: IMITATION‐LED INDUSTRIALISATION AND THE EVOLUTION OF TRADEMARK LAW IN HONG KONG*

Hong Kong's development as an industrial exporter was advantaged by a flexible institutional regime, which generated gains from imitation‐led industrialisation and which allowed the mobilisation of public and private resources to enable a transition to a more stringent enforcement regime for intellectual property. Fragmentary industrial structures raised monitoring costs for trademark proprietors and gave opportunities for infringers to exploit information asymmetries. However, colonial state building, the formation of specialist markets in knowledge, and collective actions by business groups caused the law to evolve. These overlapping processes of formal and informal institutional change were mutually reinforcing.     

Indonesian Local Government Spending,Taxing and Saving: An Explanation of Pre‐ and Post‐decentralization Fiscal Outcomes*

As a result of Indonesia's decentralization program, local governments have gained significantly more responsibility for service delivery, considerably larger fiscal resources, and much greater authority over the use of those resources than before. The present paper develops a simple budget model to describe and explain the substantial differences in pre‐ and post‐decentralization local government fiscal behavior related to spending, taxing and saving. During the post‐decentralization period special attention is paid to the fiscal behavior of natural resource rich regions. Among other things, the evidence suggests that: post‐decentralization local government spending is partly responsive to increasing needs and partly the subject of elite capture; local government taxation has become more aggressive under decentralization and appears to be mostly driven by local bureaucratic expectations related to routine overhead budgets; and the increased savings of local governments during the post‐decentralization period is determined to a large degree by delayed central government transfer payments.     

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.     

Monetary Policy and Borrowers’ Loan Defaults: Research Based on Data from Renrendai

This paper uses Renrendai data to study the relationship between monetary policy and the default behavior of borrowers, and analyzes the transmission channels. The research shows that tight monetary policy will lead to a significant increase in a borrower's probability to default, and this effect will continue for several months. There may be two transmission channels: (i) monetary policy changes a debtor's liquidity through credit and balance sheet channels, which directly affects their current repayment behavior; and (ii) monetary policy may affect a borrower's investment, production and profitability, thus changing their long‐term solvency. The paper also finds that the repayment behavior of productive borrowers is more susceptible to monetary policy than consumptive borrowers, and that the default behavior of borrowers in coastal provinces is more susceptible to monetary policy than of borrowers in inland provinces. These findings provide new evidence for understanding how monetary policy affects individual behavior and its transmission mechanisms.     

Reactions to Shocks and Monetary Policy Regimes: Inflation Targeting Versus Flexible Currency Board in Sub‐Saharan Africa

The paper examines the monetary policy actions through which central banks in sub‐Saharan Africa have tried to eliminate the negative impacts of the shocks facing their economies. We compare two different monetary policy regimes: a currency board regime (in the CFA zone) and an inflation targeting policy regime (Ghana and South Africa) when central banks respond to demand, supply, and fiscal shocks. We extend the usual forecasting and policy analysis system models to replicate the economic features of these economies during the period 2002–12 and to evaluate the impact of several policies in response to these shocks. We find that both policies are inappropriate in helping the economies escape from the effects of negative demand shocks, both are essential when negative shocks to primary balance occur, while inflation targeting dominates the currency board regime as a strategy to cope with positive shocks to inflation.     

Renminbi in Ordinary Economies: A Demand‐side Study of Currency Globalization

Most studies of renminbi internationalization focus on the supply side, by examining China's own economic and political conditions. In contrast, this study addresses the demand side of renminbi internationalization, by providing an in‐depth analysis of renminbi use in ordinary foreign economies from both economic and political perspectives, with a particular focus on South Korea, China's next‐door neighbor. The study finds that sustainable indigenous market forces facilitating renminbi use in South Korea remain weak, despite the country's close economic ties with China. This research also shows, however, that the Korean Government has itself recently been able, through its policy measures, to generate new domestic support for greater use of the renminbi. These findings ultimately highlight the significant impact on the internationalization of a currency of the politics in the foreign countries using it.