Why do people drink? Tests of the rational addiction model

The rational addiction (RA) model applied to alcoho consumption is tested using 1983 US Health Interview Survey data. The RA model yields refutable hypotheses concerning effects of current, past, and future prices, past and future consumption, time preference and marginal utility of wealth on addictive good consumption. The estimations provide relatively strong support for the RA model. Past and present consumption had strong positive relationship with current consumption. Coefficients on past, present, and future money prices and fines for first oflence drunk driving (as a form of price for alcohol consumption) were significant and of the predical sign.     

Persistence in Corporate Performance? Empirical Evidence from Panel Unit Root Tests

Persistence in corporate performance is analyzed in the framework of empirical tests of unit root behavior concerning firm profits. Data for firm-specific rates of return is applied in a set of panel unit root tests to address the question of persistence in profits both at firm level and for the aggregate level of industry-specific profits. The firm data all reject a null hypothesis of random walk behavior of profits but when smoothing profit rates at a two-digit NACE-code level for industries, the empirical evidence is more mixed as most industries show up with a unit root in aggregate rates of return, i.e. indicating persistence in corporate performance.     

Simple Statistical Tests Used in Positive Accounting Research： a Thing to be Noted

This paper is concerned with the right use of simple hypothesis tests in the area of positive accounting research. Both the usefulness and the limitations of the technique are dealt with in detail.