Inflation Adjustments to Income in Entry and Exit Price Systems

There are different views on the way in which price level adjustments might be made in the income account. Pratt (1988) noted that adjustments might be made in respect of individual assets or as a single adjustment to the opening capital. Multiple adjustments are commonly believed to be necessary when monetary assets are separated from non-monetary assets. An hypothesis is presented here that may explain why accounting theorists have believed (erroneously) that inflation affects monetary items differently from non-monetary items. Some complexities are considered and questions raised about the appropriateness of definitions of purchasing power and wealth.     

OPTIMAL BANKING STRUCTURE: IMPLICATIONS FOR INTERSTATE BANKING

This paper assesses the implications for the banking industry of relaxing interstate branching prohibitions. Theoretical models suggest that the number, size distribution, and specialization of firms in an industry are determined so as to minimize costs of production. Analysis presented here shows that interstate branching prohibitions, or their removal, are likely to affect costs only if the "convenience" of office location is important and if significant economies of scale are associated with office expansion. These conditions apparently do not hold in either retail banking or wholesale banking. The paper concludes that productive efficiency alone will not force a major consolidation of the banking system when branching restrictions are eliminated. To the extent that a consolidation does occur, it likely will reflect factors not considered in our model. These factors include (1) possibilities for increased diversification with greater size, (2) scarce managerial resources, (3) managerial incentives to maximize the organization's size, and (4) demand for multi-office banking.     

Introducing Recursive Partitioning for Financial Classification: The Case of Financial Distress

The purpose of this study is to present a new classification procedure, Recursive Partitioning Algorithm (RPA), for financial analysis and to compare it with discriminant analysis within the context of firm financial distress. RPA is a computerized, nonparametric technique based on pattern recognition which has attributes of both the classical univariate classification approach and multivariate procedures. RPA is found to outperform discriminant analysis in most original sample and holdout comparisons. We also observe that additional information can be derived by assessing both RPA and discriminant analysis results.     

The Impact of Human Resource Policies on Union Organizing

Using newly available data from the Conference Board on employer human resource policies, certification election outcomes, and union organization of new company facilities, we find that the logic of "union substitution" efforts by employers is supported: Companies having or encouraging employee communication and participation programs, including nonunion grievance procedures, are more successful in maintaining nonunion status than are companies without such programs. However, certain human resource policies, such as work sharing (as an alternative to layoffs), may actually enhance chances of union success.     

Do Immigrants Have Lower Unionization Propensities than Natives?

Using a unique source of data-the April 1983 Current Population Survey-this paper examines unionization behavior by nativity. The results indicate that the unionization propensity of immigrants is similar to that of natives, even when controlling for individual, regional, and industrial characteristics. The explanation lies in the lower unionization propensity of all recent entrants to the U.S. labor force, whether immigrant or native.     

From Implicit to Explicit: The Impact of Disclosure Requirements on Hidden Transaction Costs

This paper provides evidence that disclosing corporate bond investors' transaction costs (markups) affects the size of the markups. Until recently, markups were embedded in the reported transaction price and not explicitly disclosed. Without explicit disclosure, investors can estimate their markups using executed transaction prices. However, estimating markups imposes information processing costs on investors, potentially creating information asymmetry between unsophisticated investors and bond‐market professionals. We explore changes in markups after bond‐market professionals were required to explicitly disclose the markup on certain retail trade confirmations. We find that markups decline for trades that are subject to the disclosure requirement relative to those that are not. The findings are pronounced when constraints on investors' information processing capacity limit their ability to be informed about their markups without explicit disclosure.