Pension Substitution in the 1980s: Why the Shift toward Defined Contribution?

The relative decline of defined benefit (DB) pension plans, and growth of defined contribution (DC) plans, has been often noted but not extensively explored. This paper reports on the construction of a new longitudinal company-based data set on pension plans for the years 1980-86 (including all U.S. companies with large plans, and a 10 percent sample of companies with small plans, at any point during this period). The decline in DB coverage is primarily due to fewer participants in companies maintaining such plans, while very little of the growth in DC coverage is due to companies terminating DB plans. Also, multinomial logit analysis of manufacturing company choices indicates that the higher administrative costs of DB plans lead new adopters to favor DC plans, but this explains little of the tremendous growth in DC plans. In addition, higher industry variability and capital intensity, and smaller company size, lead new adopters to favor DC plans.     

Audit sampling with nonsampling errors of the first type

Abstract. Standard statistical auditing procedures rest upon the assumption that statistical nonsampling errors do not exist. Three distinct types of statistical nonsampling errors have been identified in the literature. This paper presents new theoretical results regarding the problem of audit sampling in the presence of nonsampling errors of the first type. When nonsampling errors of the first type exist, standard statistical auditing procedures yield a negatively biased estimate of the true number of errors and dollar amounts associated with those errors. A double-audit sampling plan is introduced here and provides an unbiased estimate of the true number of errors and dollar amounts of those errors in the presence of nonsampling errors of the first type. A new concept of auditor reliability also is defined, and results analogous to those in classical measurement theory are developed for the case of nonsampling errors of the first type. The multiple auditor results reported in a previous study are reanalyzed to give an estimate of the true number of problems and an estimate of auditor reliability in a complex auditing task. Résumé. Les procédés de vérification statistiques standard reposent sur l'hypothèse selon laquelle les erreurs non dues au sondage statistique n'existent pas. Trois catégories distinctes d'erreurs statistiques autres que celles d'échantillonnage sont identifiées dans la documentation existante. Les auteurs proposent de nouveaux résultats théoriques concernant le problème de vérification par sondages en présence d'erreurs non dues au sondage appartenant à la première de ces trois catégories. Lorsqu'il existe des erreurs non dues au sondage appartenant à cette première catégorie, les procédés de vérification statistiques standard livrent une estimation négativement biaisée du nombre véritable d'erreurs et des valeurs monétaires associées à ces erreurs. Le double plan de vérification par sondages proposé ici offre une estimation non biaisée du nombre d'erreurs véritable et des valeurs monétaires correspondant à ces erreurs en présence d'erreurs non dues au sondage appartenant encore une fois à la première catégorie. Les auteurs définissent également une nouvelle notion de fiabilité du vérificateur et mettent au point des résultats analogues à ceux que permet d'obtenir la théorie classique de mesure, pour les cas d'erreurs non dues au sondage appartenant à ladite première catégorie. Ils procédent à une nouvelle analyse des résultats multiples dont il est fait état dans une étude effectuée par d'autres auteurs, cela afin d'obtenir une estimation du nombre de problèmes véritable et une évaluation de la fiabilité du vérificateur dans une tâche de vérification complexe.     

Disclosure,Liquidity, and the Cost of Capital

This paper shows that revealing public information to reduce information asymmetry can reduce a firm's cost of capital by attracting increased demand from large investors due to increased liquidity of its securities. Large firms will disclose more information since they benefit most. Disclosure also reduces the risk bearing capacity available through market makers. If initial information asymmetry is large, reducing it will increase the current price of the security. However, the maximum current price occurs with some asymmetry of information: further reduction of information asymmetry accentuates the undesirable effects of exit from market making.     

RACIAL DISPARITIES IN FEDERAL DISABILITY BENEFITS

We estimate racial differences in the Social Security Administration’s (SSA) decision to award federal disability benefits using newly available data, multivariate econometric models, and Oaxaca decomposition methods. We focus on the appellate level of SSA’s disability decision‐making process. We find that for claimants represented by attorneys there is no statistically significant difference in benefit award rates between whites and African‐Americans. However, for claimants without attorney representation, we find sizable and significant differences between whites and African‐Americans. (JEL J15, H53)     

Reconciling Financial Information at Varied Levels of Aggregation*

Financial statements summarize a firm's fiscal position using only a limited number of accounts. Readers often interpret financial statements in conjunction with other information, some of which may be aggregated in a different way (or not at all). This paper exploits properties of the double‐entry accounting system to provide a systematic approach to reconciling diverse financial data. The key is the ability to represent the double‐entry system by network flows and, thereby, access well‐recognized network optimization techniques. Two specific uses are investigated: the reconciliation of audit evidence with management‐prepared financial statements, and the creation of transaction‐level financial ratios.     

Flexible Work Hours and Productivity: Some Evidence from the Pharmaceutical Industry

Flexible work hours potentially influence productivity through effects on absenteeism and turnover, organizational attachment, job attitudes, work-related stress, and other areas. Prior studies suggest positive effects on productivity but are inconclusive because of small sample sizes, failure to apply direct productivity measures, or failure to account for other associated changes. We apply alternative fixed- and random-effects models to estimate production functions using panel data, with controls included for firm effects, time effects, capital quality, autocorrelation, and specification error. The results suggest that flexible work schedules contribute to improvements of about 10 percent in productivity.     

U.S. High‐Performance Work Practices at Century's End

This study examines the incidence, industry differences, and economic environment of work practices in the United States in 1994 and 1997 using census data from a nationally representative random sample of establishments. Self‐managed work teams were used by a majority of workers in some sites. Work‐related meetings had higher incidence. A high‐performance work organization is used in about 1 percent of establishments. There were significant industry differences associated with globalization, namely, imports and exports.