Great Expectations: Benchmarking for Best Value

Many local authorities have embarked on benchmarking as one way of satisfying the Government's requirement that local authorities provide 'best value' services. This article suggests that the Government's initial enthusiasm for benchmarking was based on an incomplete understanding of the previous experiences of benchmarking in the local government sector. The most recent pronouncements make little mention of benchmarking, but there has been no explicit statement that it is no longer a key feature of best value. Local authorities are investing in developing benchmarking technology that may well fail to pay back in terms of meeting best value stipulations or in satisfying the authorities' own internal management needs. The authors suggest how local authority benchmarking efforts might be redirected to better effect.     

The Pivotal Role Of Accounting Concepts In The Development Of Public Sector Accounting Standards

Perhaps the most important decision made by the Public Sector Accounting Standards Board was taken soon after it was formed in 1983. That decision was to adopt a conceptual approach to the development of public-sector accounting standards. This paper explores the implications for the reform of public-sector financial reporting practices in Australia.     

Auditor's Engagement Risk and Audit Fees: The Role of Audit Firm Alumni

Abstract:  This study explores the effect of the association of audit firm alumni with their alma mater on audit prices. The tests indicate that there is a moderate reduction of up to 21% in the level of audit fee when alumni (i.e., former employees) of the incumbent audit firm sit on the client board of directors which is consistent with the engagement risk theory. This suggests that there is an 'alumni effect' in the market for audit services. The findings hold only in the large company segment of the market. The results are robust to different model specifications and alternative samples. The sample comprises all executive and non-executive directors who run the UK quoted companies and are simultaneously ICAEW qualified chartered accountants. The study's implications for the accounting profession and the regulators are also discussed.     

The Importance Of Inherent Risk Factors: Auditors‘ Perceptions

This research project investigated auditors' perceptions of the importance of inherent risk factors in assessing inherent risk for accounts receivable and inventory. Sixty-eight auditors completed a questionnaire listing 42 inherent risk factors and six control risk factors. The auditors were required to: identify whether each factor was an inherent risk factor; indicate whether the factor affected their assessment of inherent risk at the financial statement or account balance (class of transactions) level; indicate whether the factor was associated with high or low inherent risk; and assess how important the inherent risk factor was in their assessment of inherent risk. In general, the auditors perceived variables pertaining to the characteristics of management and the history of errors to be the major determinants of inherent risk.     

The Communicative Value of the Auditor's Report

Communicating the results of the audit is a crucial part of the audit process. This potentially enables the users of financial reports to assess the quality of the audit, which will in turn contribute to their assessments of financial reporting quality. This research reports the results of a verbal protocol study of 16 financial analysts to assess how they use an auditor's report as part of a company evaluation. Auditors’ reports perse are found to be important to analysts in that they signal a level of reliability in the financial statements. However, the content of the auditor's report, including the additional content of the recently issued longer form auditor's report (ISA 700, ASA 700), generally was not attended to by the analysts. This suggests the communicative value of the auditor's report is minimal beyond signalling the elevated reliability of the financial statements.     

Auditor's Reputation and Equity Offerings: The Case of Arthur Andersen

The certifying and monitoring role of auditors is valuable to clients. By examining the impact of Arthur Andersen's worsening reputation on its clients, we find a 200 basis point more negative reaction to seasoned equity offering (SEO) announcements for firms audited by Andersen. The median firm in our sample loses 31.4 million more than a non-Andersen client. We do not find any unusual underpricing for these SEOs, which suggests that any accounting concerns about the issuers are resolved before the issue dates.     

Expectations and Perceptions of Overseas Students in a Post-graduate Corporate Accounting Subject: A Research Note

This study examines the expectations and perceptions of overseas students undertaking the post-graduate corporate accounting subject taught at an Australian university. An understanding of students' perceptions and expectations in learning of the subject is important in assisting accounting academics to enhance their teaching programmes, and to manage the diverse student cohorts which are now a feature of university classrooms in Australia. The findings show that overseas students expected the post-graduate corporate accounting subject to be challenging and interesting. Moreover, they expressed a strong desire that the subject should emphasise the practicalities of accounting.     

公众预期与我国扩张性政策绩效

以理性预期理论为背景，分析我国扩张性政策实施中预期的作用，在博弈论和信息经济上探讨和何引导公众预期。     

Around and Around: The Expectations Hypothesis

We show how to construct models of the term structure of interest rates in which the expectations hypothesis holds. McCulloch (1993) presents such a model, thereby contradicting an assertion by Cox, Ingersoll, and Ross (1981), but his example is Gaussian and falls outside the class of finite-dimensional Markovian models. We generalize McCulloch's model in three ways: (i) We provide an arbitrage-free characterization of the unbiased expectations hypothesis in terms of forward rates; (ii) we extend this characterization to a whole class of expectations hypotheses; and (iii) we show how to construct finite-dimensional Markovian and non-Gaussian examples.     

The Role of Prices for Excludable Public Goods

When a public good is excludable it is possible to charge individuals for using the good. We study the role of prices for publicly provided excludable public goods within an extension of the Stern-Stiglitz version of the Mirrlees optimal income tax model.We show that for a public consumer good there is a range of circumstances in which charging a price for the public good decreases welfare. We find that a necessary condition for a positive price to be desirable is that the marginal valuation of the public good is increasing in leisure. However, even under this condition, welfare is initially decreasing in the price, implying that charging a lower than optimal price may be less efficient than setting a zero price. Thus, even when there is a case for charging a price for the public good, an attempt to implement the optimum in practice may be risky, as even setting a modest price to avoid overshooting the optimum may be Pareto inferior to charging no price at all. The policy case for a price may thus appear rather weak. We also find that producers using an intermediate excludable public good as an input should not be charged a price for using the good.     

The Role of Lockups in Initial Public Offerings

In a sample of 2,794 initial public offerings (IPOs), we testthree potential explanations for the existence of IPO lockups:lockups serve as (i) a signal of firm quality, (ii) a commitmentdevice to alleviate moral hazard problems, or (iii) a mechanismfor underwriters to extract additional compensation from theissuing firm. Our results support the commitment hypothesis.Insiders of firms that are associated with greater potentialfor moral hazard lockup their shares for a longer period oftime. Insiders of firms that have experienced larger excessreturns, are backed by venture capitalists, or go public withhigh-quality underwriters are more likely to be released fromthe lockup restrictions.     

Performance of Private to Public MBOs: The Role of Venture Capital

Abstract:   Using a unique dataset, we examine financial performance, and venture capital involvement in 167 MBOs exiting through IPOs (MBO‐IPOs) on the London Stock Exchange, during the period 1964 –1997. VC backed MBOs seem to be more underpriced than MBOs without venture capital backing, based on average value‐weighted returns. MBOs backed by highly reputable VCs tend to be older companies, and exit earlier than MBOs backed by less reputable VCs. The results contradict 'certification' and 'grandstanding' hypotheses supported by US data ( Megginson and Weiss, 1991 ; and Gompers, 1996 , respectively). We found no evidence of either significant underperformance, or that VC backed MBOs perform better than their non‐VC backed counterparts in the long run. However, MBOs backed by highly reputable venture capital firms seem to be better long‐term investments as compared to those backed by less prestigious venture capitalist firms. The results remain robust after using different methods to measure performance, and after controlling for sample selectivity bias.     

信息沟通与央行预期管理:基于公众关注度视角

结合公众预期形成机理,将公众关注度作为一个变量,引入央行预期管理理论之中,发现公众通胀预期偏差是央行信息沟通的二次函数,表现为一条开口向上的抛物线。这表明"央行信息沟通并非越透明越好"。进一步分析表明,一旦央行信息沟通不能完全被公众吸收,央行预期引导效应会大幅衰减。     

Discussion of “The Role of Expectations in Explaining the Cross-Section of Stock Returns”

This paper discusses Copeland et al. (2004), which empirically investigates the role of changes in expectations in explaining contemporaneous cross-sectional stock returns. Because the main results in this study are largely confirmatory of results reported in prior literature, my discussion emphasizes conceptual issues in the econometric specification of earnings–return relations. I derive three versions of return specifications from popular valuation models based on residual earnings, free cash flows, or earnings growth, and contrast them with that adopted by Copeland et al. (2004). This analysis suggests that firmer grounding in theory would help the paper in empirical specifications as well as interpretations of results.     

Decision Usefulness of Cash and Accrual Information: Public Sector Managers’ Perceptions

This study examines the usefulness of accrual accounting information for internal decision‐making contexts in the Western Australian public sector. Based on questionnaire responses of public sector managers, it was found that accrual accounting is perceived to be more useful than cash accounting in 16 of the 19 decision situations. These results suggest that the perceived usefulness of the accrual accounting system has improved with the passage of time. It may well be that perceptions of the usefulness of information derived from an accounting system will change over time as users gain familiarity and experience with a system.     

农村公共财政的必然作用:支持农村全面发展

在我国建立公共财政的过程中,由于二元经济性质、农村经济制度和经济水平的限制,政府对农村的收支具有相对独立性.将农村公共财政作为相对独立的体系来研究,从农村公共财政的制度环境出发,阐明农村公共财政具有全新意义上的保障和发展职能,指出公共财政向农村倾斜的必然性,认为农村公共财政的实质就是支持农村全面发展的财政.