Measuring discretionary accruals: are ROA-matched models better than the original Jones-type models?

Discretionary accruals estimated from Jones-type models are elevated or depressed for firms with extreme performance. Kothari et al. (J Acc Econ 39:163–197, 2005) propose performance matching to address the issue, that is, to difference discretionary accruals estimated from Jones-type models for treatment and control firms matched on current ROA. This study shows (1) performance matching will systematically cause discretionary accruals of either sign to be underestimated, and (2) the measurement error will be negatively correlated with the true discretionary accruals. As a result, using discretionary accruals estimated with performance matching to test whether certain events induce earnings management will increase the frequency of Type II errors, and using them as the dependent or an independent variable in regression analysis will bias the regression coefficient toward zero. The results of our empirical tests are consistent with these predictions.     

Emerging Economies: Operational Issues in China and India

This article addresses the current state of the infrastructure and other factors within China and India to consider in making operation expansion decisions. We compare the logistics, telecommunication, and energy infrastructure of these two nations followed by a discussion of their labor productivity, economic growth, and political and cultural stability. We find that China is ahead of India in terms of transportation and telecommunications infrastructure, but India leads in terms of skilled labor for supporting information technology (IT) and complex manufacturing-based operations. While it will be difficult for India to catch up with China's manufacturing base, there is a strong opportunity for India to become the back office of the world. We then outline the opportunities and challenges that MNCs may face by investing in these countries and close with advice for managers in making expansion decisions.     

The Value and Risk of Defined Contribution Pension Schemes: International Evidence

We use historical data on investment returns and labor income from 16 countries to quantify the value and risk of defined contribution pension plans, building frequency distributions of pension fund and pension replacement ratios for each country. We show that pension risk is substantial and find that pension fund ratios are lower and less variable than when the correlation between wage growth and investment returns is ignored, typically halving the median pension fund ratio. We also show that an all‐equity fund is the dominant investment strategy across all countries, although sometimes a life‐cycle strategy insures against downside risk.     

成功并购的四步流程

成功摆脱并购的危险困境,正逐渐成为进军亚太金融服务利基市场的全新课题我们与客户一起工作时发现,成功的并购交易, 在甄别、评估和整合潜在目标公司以显著增加成功机会方面,都遵守四步流程。