A model of endogenous political party platforms

Summary. We develop a model of endogenous party platform formation in a multidimensional policy space. Party platforms depend on the composition of the parties primary electorate. The overall social outcome is taken to be a weighted average of party platforms and individuals vote strategically. Equilibrium is defined to obtain when no group of voters can shift the social outcome in its favor by deviating and the party platforms are consistent with their electorate. We provide sufficient conditions for existence of equilibria.Received: 20 November 2002, Revised: 21 August 2003JEL Classification Numbers: D72, C62.Correspondence to: Ignacio Ortuño-OrtínWe thank A. Caplin, S. Chattopadhyay, C. Martinelli and J. D. Moreno-Ternero and two anonymous referees for helpful comments. This research started while Ortuño-Ortín was a visitor in the Department of Economics at NYU; he thanks for the kind hospitality of this institution. F. Marhuenda and I. Ortuño-Ortín gratefully acknowledge financial support from the Spanish Ministry of Science and Technology Project BEC2001-1653 and Project BEC2001-0980, respectively; A. Gomberg gratefully acknowledges the financial support from the Asociación Mexicana de Cultura.     

Globalization and firm level adjustment with imperfect labor markets

In a model with search generated unemployment and heterogeneity on both sides of the labor market, exporting firms are bigger and pay higher wages than other firms. Moreover, there is imperfect persistence in the decision to export and liberalization increases the wage gap between high- and low-skill workers. Openness can increase aggregate productivity in export-oriented markets while generating within-firm productivity losses for the weakest firms. In contrast, openness can lead to within-firm productivity gains for the weakest firms in import-competing industries.     

Benchmarking CVB website performance: Spatial and structural patterns

This study evaluated 967 U.S. CVB websites using a modified Balanced Scorecard (mBSC) approach which assesses website performance with respect to overall technical functionality, customer friendliness and usability, effectiveness of marketing the destination, and information content. Spatial maps were constructed for these four dimensions and overall CVB website performance using ArcMap v.9.2 GIS software. A structural pattern of CVB website performance was obtained using Structural Equation Modeling (SEM). It was concluded that CVB websites primarily need improvement in marketing the destination product. The analysis revealed significant differences in website performance between members and non-members of Destination Marketing Association International (DMAI) as well as regional differences. Study implications for destination marketing organizations and CVB website designers are discussed.     

制胜多边平台

正一般来说,参与方越多越好。不过,更多方的参与者也会带来"最小公分母"的问题——协调更多方不同的述求,会在一定程度上制约多边平台实现开拓性创新多多边平台(Multisided platforms,MSPs)通过技术、产品或服务为两个及以上的客户群体提供直接互动,并由此创造价值。典型例子有阿里巴巴、易趣、淘宝、日本乐天(服务采购买卖双方)、空中食宿Airbnb(住宅业主与租客)、Uber打车App(专业司机与乘客)、脸谱网(用户、广告商、第三方游戏或内容开发商以及附属的第三方网站)、苹果的iOS(应用程序开发商和用户)、     

A generalised Gerber–Shiu measure for Markov-additive risk processes with phase-type claims and capital injections

In this paper we consider a risk reserve process where the arrivals (either claims or capital injections) occur according to a Markovian point process. Both claim and capital injection sizes are phase-type distributed and the model allows for possible correlations between these and the inter-claim times. The premium income is modelled by a Markov-modulated Brownian motion which may depend on the underlying phases of the point arrival process. For this risk reserve model we derive a generalised Gerber–Shiu measure that is the joint distribution of the time to ruin, the surplus immediately before ruin, the deficit at ruin, the minimal risk reserve before ruin, and the time until this minimum is attained. Numeral examples illustrate the influence of the parameters on selected marginal distributions.     

The Effect of Auditor Style on Reporting Quality: Evidence from Germany

This paper examines whether the ‘style’ of individual auditors influences financial reporting quality in Germany. Audit quality in Germany should be uniformly high, because of strong reputational needs, strict controls on operating procedures, and quality enforcement mechanisms. An audit partner's style should not affect this quality level. However, our results do not support this expectation. Exploiting a unique dataset comprising the names of the audit engagement and review partners of listed German companies, we find that audit engagement partners in Germany have a significant influence on audit quality, beyond firm‐ and office‐level factors. In contrast, audit review partners do not have a consistent significant influence on audit quality. We measure audit quality by the level of a firm's abnormal accruals and its propensity to meet or beat an earnings target. We also find that the 2005 adoption of a new audit quality enforcement system that includes ‘naming and shaming’ does not reduce the influence of audit partner style on financial reporting quality.     

Managerial discretion to delay the recognition of goodwill impairment: The role of enforcement

Under International Financial Reporting Standards, managers can use two approaches to increase the estimated fair value of goodwill in order to justify not recognizing impairment: (1) make overly optimistic valuation assumptions, and (2) increase future cash flow forecasts by inflating current cash flows. Because enforcement constrains the use of optimistic valuation assumptions, we hypothesize that enforcement influences the relative use of these two choices. We test this hypothesis by comparing a sample of 1,958 firms from 36 countries that are likely to delay recognizing goodwill impairment (suspect firms) to a sample of control firms. First, we find that firms in high‐enforcement countries use a higher discount rate to test goodwill for impairment than firms in low‐enforcement countries. We also find a more positive association between discount rate and upward cash flow management for suspect firms than for control firms. This result is consistent with suspect firms substituting optimistic valuation assumptions with inflated current cash flows. Second, we find that, relative to control firms, suspect firms exhibit higher upward cash flow management in high‐enforcement countries than in low‐enforcement countries. Third, we show that suspect firms in high‐enforcement countries are more likely to eventually impair goodwill.     

Two-Sided Platforms: Product Variety and Pricing Structures

This paper provides a new modeling framework to analyze two-sided platforms connecting producers and consumers. In contrast to the existing literature, indirect network effects are determined endogenously, through consumers' taste for variety and producer competition. Three new aspects of platform pricing structures are derived.   First, the optimal platform pricing structure shifts towards extracting more rents from producers relative to consumers when consumers have stronger demand for variety, since producers become less substitutable. With platform competition, consumer preferences for variety, producer market power, and producer economies of scale in multihoming also make platforms' price-cutting strategies on the consumer side less effective. This second effect on equilibrium pricing structures goes in the opposite direction relative to the first one.   Third, variable fees charged to producers can serve to trade off producer innovation incentives against the need to reduce a platform holdup problem.     

The Effect of Mandatory IFRS Adoption on Conditional Conservatism in Europe

We study the effect of mandatory adoption of International Financial Reporting Standards (IFRS) in Europe in 2005 on conditional conservatism. We capture conditional conservatism with a modified version of the Khan and Watts measure (C_Score) that also controls for potential shifts in unconditional conservatism and cost of capital. From a sample of 13,711 firm‐year observations drawn from 16 European countries spanning the 2000–2010 period, we document an overall decline in the degree of conditional conservatism after the adoption of IFRS. We show that the decline in conditional conservatism is less pronounced for countries with high quality audit environments and strong enforcement of compliance with accounting standards using the Brown et al. audit and enforcement index. As asset impairment tests are a key mechanism ensuring conditional conservatism in the IFRS framework, we further examine these. We show that firms booking an asset impairment present a smaller decline in the degree of conditional conservatism relative to firms that do not. We also demonstrate that firms that do not book an asset impairment when evidence suggests the probable need to do so experience a more pronounced reduction in conditional conservatism. We argue that IFRS are conceptually conditionally conservative but that inappropriate application of conditional conservatism principles is likely to prevent financial reporting from reaching the level of conservatism targeted by the International Accounting Standards Board (IASB).     

Information percolation,momentum and reversal

We propose a joint theory of time-series momentum and reversal based on a rational-expectations model. We show that a necessary condition for momentum to arise in this framework is that information flows at an increasing rate. We focus on word-of-mouth communication as a mechanism that enforces this condition and generates short-term momentum and long-term reversal. Investors with heterogeneous trading strategies—contrarian and momentum traders—coexist in the marketplace. Although a significant proportion of investors are momentum traders, momentum is not completely eliminated. Word-of-mouth communication spreads rumors and generates price run-ups and reversals. Our theoretical predictions are in line with empirical findings.