An empirical study of a new method for forming group judgments: Qualitative Controlled Feedback

The Qualitative Controlled Feedback (QCF) method was developed by Press [1] to assist policy makers in forming judgments and making decisions that reflect the careful interactive reasoning and arguments of all of the members of a group or population. Since the QCF method involves controlled feedback, it tends to minimize the effects of face-to-face group interaction pressures. Since the feedback is “qualitative,” however, the procedure tends not to artificially induce a consensus on the group. This paper summarizes a feasibility study of the procedure. A sample of 111 faculty and staff members of the University of British Columbia participated in the testing of the method. The participants were asked to make a judgment on the importance of building an aquatic center on campus. A second (control) group of 89 faculty and staff members was surveyed on the same issue, but using the conventional survey method, that is, no feedback. It was observed that Qualitative Controlled Feedback created a good interaction (in the sense of exchanging arguments and reasons) among group members. Changes in judgments occurred as subjects went from one stage to another after having qualitative feedback of information. It was also found that the judgments given by the subjects in the qualitative controlled feedback group were distributed quite differently from those given by the control group. The method suggests a significantly new way of collecting and interpreting group judgments.     

TESTING ALTERNATIVE VIEWS OF GOVERNMENT BUDGETING

We develop three competing models of government budgeting: (1) a rational model, in which government services are provided in accordance with consumer tastes, (2) a Friedman-type model, in which spending and borrowing decisions derive from the level of taxes, and (3) a Buchanan public-choice type model, in which the extent of deficit spending determines government spending plans. We use quarterly U.S. data over the period 1947 to 1987 to empirically test each of these models within a vector autoregressive framework, taking into account the potential role of other relevant macro variables. We first specify the testing framework utilizing data on the levels of government revenue, spending and deficit, and show that the resulting estimates are unrealistic. We then divide each of these variables into anticipated and unanticipated components. The results thus obtained reject the Buchanan-type models, but are unable to reject either a Friedman-type model or a “weak” form of the rational model. Our results suggest that future research should concentrate on developing appropriate tests capable of distinguishing between these two models of the government budgeting process.     

Herding with collective preferences

This paper studies a simple model of observational learning where agents care not only about the information of others but also about their actions. We show that despite complex strategic considerations that arise from forward-looking incentives, herd behavior can arise in equilibrium. The model encompasses applications such as sequential elections, public good contributions, and leadership charitable giving.     

Disaggregation and consolidation of imperfect quality shipments in an extended EPQ model

We consider a standard economic production quantity (EPQ) model. Due to manufacturing variability, a fraction P of the produced inventory will have imperfect quality, where P is a random variable with a known distribution. We consider a 100% inspection policy and further assume that the inspection rate is larger than that of production. Thus, all imperfect quality items will be detected by the end of the production cycle. For such an augmented EPQ model, we first derive the new optimal production quantity assuming that the imperfect quality items are salvaged once at the end of every production cycle. Then, we extend this base model to allow for disaggregating the shipments of imperfect quality items during a single production run. Finally, we consider aggregating (or consolidating) the shipments of imperfect items over multiple production runs. Under both scenarios we derive closed-form expressions for both the economic production quantity and the batching policy, and show that our desegregation/consolidation schemes can lead to significant cost savings over the base model.     

IMF programs, financial and real sector performance, and the Asian crisis

This paper has three objectives. First, using a richer and more comprehensive set of IMF-related news than previous studies, we examine the impact of IMF-related news on both financial and real stock sector returns in Indonesia during the Asian crisis. Second, we draw lessons about financial and real sectoral patterns of adjustment in crisis countries, including whether and how IMF programs facilitate this adjustment. Third, we explore the interplay between IMF actions in crisis countries and the actions and responses of local authorities. To do so, not only do we account for the impact of news regarding IMF policy actions but also the government’s reaction to them and willingness to implement such policies, and the public sentiment about the implemented IMF programs and government policies. We discuss the policy implications of the findings.     

Attitude toward business environment of auditing,corporate governance and balance between auditing and marketing

The aim of this study was to evaluate the attitude of Iranian auditors toward balance between auditing and marketing with respect to two important components of audit process such as business environment of auditing and corporate governance. The analysis is based on survey data from 257 respondents. To achieve the research aims, we specified four hypotheses based on social theories. The results of this study show that the auditors having positive attitude toward marketing and those who consider it as significant are able, to a large extent, balance spent time for inherent auditing tasks and marketing activities. In addition, the results show that an increase by a unit for the attitude toward business environment results in 0.489 unit increase in attitude toward balance of time spent on marketing and auditing activities, of which 0.396 is direct impact and 0.093 is indirect impact.     

Countercyclical Bank Capital Requirement and Optimized Monetary Policy Rules

Using BoC-GEM-Fin, a large-scale dynamic stochastic general equilibrium (DSGE) model with real, nominal, and financial frictions featuring a banking sector, we explore the macroeconomic implications of various types of countercyclical bank capital regulations. Results suggest that countercyclical capital requirements have a significant stabilizing effect on key macroeconomic variables, but mostly after financial shocks. Moreover, the bank capital regulatory policy and monetary policy interact, and this interaction is contingent on the type of shocks that drive the economic cycle. Finally, we analyze loss functions based on macroeconomic and financial variables to arrive at an optimal countercyclical regulatory policy in a class of simple implementable Taylor-type rules. Compared to bank capital regulatory policy, monetary policy is able to stabilize the economy more efficiently after real shocks. On the other hand, financial shocks require the regulator to be more aggressive in loosening/tightening capital requirements for banks, even as monetary policy works to counter the deviations of inflation from the target.     

Market Reaction to Seasoned Offerings in China

This study examines stock market reaction to the announcement of various forms of seasoned issues in China. Our empirical evidence demonstrates that market reactions differ in ways that suggest a difference between management's internal assessment and the market's assessment of the stock price. The market responds unfavourably to the announcement, notably in the case of rights issues and also with regard to open offers. Private placements experience an unfavourable pre‐announcement reaction, which contrasts with the favourable reaction after the event. Convertible bond issues generate positive excess returns consistent with the market's confidence that they can help to align management and shareholders’ interests. Further investigation shows that market reaction is related to factors specific to the issuer and issue by reference to the period immediately surrounding the issue. Specifically, ownership concentration, agency matters connected with equity offerings, investor protection connected with fund allocation and security pricing, and the influence of powerful moneyed interests together provide an instructive insight into market reaction. Institutional inefficiency pertaining to underwriting, auditing, analysts’ forecasts and credit ratings are found to have a weak association with market price, consistent with due public scepticism concerning management and their gatekeepers.