ACCOUNTING POLICIES FOR EXCHANGE GAINS AND LOSSES ON LONG-TERM MONETARY ITEMS

Accounting standards and exposure drafts on foreign currency translation have differed in their recommended treatment of unrealised exchange gains and losses on long-term monetary assets and liabilities of domestic firms denominated in foreign currencies. This paper compares the immediate recognition method (U.S. and U.K.) to the defer and amortise method (Australia and Canada) with respect to their effects on net income, asset and liability measurement. Reasons why management will be concerned with the financial statement effect of exchange rate changes are advanced and these, together with the empirical analysis of the competing accounting methods, help explain the evident support the Australian corporate sector has shown for the defer and amortise method.     

EXPLAINING INTRAPERIOD ACCOUNTING CHOICES: THE REPORTING OF CURRENCY TRANSLATION GAINS AND LOSSES

Prior to the introduction of an Australian Accounting Standard relating to the treatment of foreign currency items, we find agreement among firms on the method of translating foreign subsidiaries' assets and liabilities, but no such agreement on the method of reporting the resulting gain or loss. The reporting choice represents an intraperiod accounting decision. We show that this choice is a function of the demand for ex ante optimal risk sharing agreements between management and shareholders, although auditor identity and firm size are also found to influence the choice of reporting method. We model the policy choice as both a dichotomous and a more finely graded three-way problem, introducing to the accounting literature an experimental technique designed to test for the existence of any mutual dependence between alternatives.     

AN ANALYSIS OF THE JANUARY EFFECT IN STOCKS AND INTEREST RATES UNDER VARYING MONETARY REGIMES

In this paper the meaning of the January effect is clarified. The early literature indicates that differing views on the existence of such an effect were based on different data sets, various time periods, and different measurement tools. A model is formulated to test the January effect hypothesis with seven assets from 1871 to 1986, including tests performed for subperiods corresponding to different monetary regimes. The hypothesis tests incorporate an unbiased estimator to avoid the biases caused by heteroscedasticity and autocorrelation. Findings suggest that asset return behavior differs among assets and regimes.     

REINTERPRETATION OF THE SHAREHOLDER GAINS IN SELLOFF TRANSACTIONS

This paper examines the overall wealth effects of selloffs. When sellers and buyers are examined separately, abnormal returns are found around the announcement days. However, a combination of matched-pair buyers and sellers in value-weighted portfolios wipes out these gains. In a sample of 182 selloff portfolios, 93 of them experience positive returns while the remaining 89 cases face negative price reactions. These results cast doubt on the conclusion that selloff activity is generally synergistic. In addition, a large size difference is found between buyers and sellers. Large buyers win more often than small buyers. Small sellers win more often than large sellers. Our results show that when examining selloffs for synergy equally-weighted results can be biased.     

日本"泡沫经济"时期的货币与财政政策及其教训

日本80年代后期的"泡沫经济"引起了各国经济理论界与实际部门的重视.本文通过对日本"泡沫经济"形成、发展以及破裂三个时期货币与财政政策的考察,认为"泡沫经济"与宏观经济政策的运用与协调失误有很大关系.在80年代中期,过分强调内外经济协调,导致日元在短时期内急剧升值,为了防止由此而引发的经济衰退,在国内政策上又单纯依赖货币政策,财政政策过于保守;在"泡沫经济"形成与发展过程中,日本银行恪守传统的货币政策目标,在一般物价水平稳定的情况下,忽视了资产价格的上涨及其对经济的影响;在"泡沫"破裂之后,货币政策几乎无所作为,而单纯依靠扩张性财政政策的效果有限.     

THE INTERACTION OF MONETARY POLICY AND STOCK RETURNS

The “irrational exuberance” of the stock market in the late 1990s led to a discussion of the appropriate policy response by monetary authorities. Any response would be contingent on the stock market reaction to policy shocks. In this study, I employ a structural vector autoregression to estimate the response of the stock market returns to innovations in the federal funds rate. The role of the stock market in the Federal Reserve policy rule can also be examined empirically.