Climate for Scandal: Corporate Environments that Contribute to Accounting Fraud

We examine the governance characteristics, earnings quality, growth rates, dividend policy, and compensation structure of 97 firms recently under investigation by the Securities and Exchange Commission (SEC) for accounting fraud. Our results show that the corporate environment most likely to lead to an accounting scandal manifests significant growth and accounting practices that are already pushing the envelope of earnings smoothing. Firms operating in this environment seem more likely to tip over the edge into fraud if there are fewer outsiders on the audit committee and outside directors appear overcommitted.     

Dynamics and Long-run Structure in U.S. Meat Demand

Empirical analysis, based on a general dynamic Almost Ideal Demand System, shows the commonly used autoregressive and partial adjustment processes are restrictive to meat demand data. This study derives a linear specification in levels form to investigate dynamics in a general framework. Merging a long-run steady state structure with short-run dynamics results in consistent and robust long-run demand elasticities Une analyse empirique, basée sur un systéme dynamique général de demande quasi optimale, montre que les mécanismes courants d'ajustement autorégressif et d'ajustement partiel ont un effect restrictif sur l'évaluation des données de la demande de viande. Les auteurs proposent une spécifcation linéaire par niveaux pour examiner la dynamique du cadre général. La combinaison d'une structure stable de longue durée avec une dynamique de courte période a produit des élasticités cohérentes et solides de la demande à long terme     

Optimal portfolio choice with wash sale constraints

We analytically solve the portfolio choice problem in the presence of wash sale constraints in a two-period model with one risky asset. Our results show that wash sale constraints can heavily affect portfolio choice of investors with unrealized losses. The trading behavior of such investors is to a large extent driven by the desire to realize those losses, either immediately by sharply decreasing the holding of assets carrying unrealized losses, or indirectly by increasing such holdings in order to prepare for a decrease in a future period to earn the tax rebate payment. Our findings are robust to increasing the number of trading dates and introducing a second risky asset and a correlation structure.     

Illegal Landings: An Aggregate Catch Self-Reporting Mechanism

To solve the problem of illegal landings this article proposes a new tax mechanism based on the regulator's own aggregate catch estimates and ex ante self-reports of planned catch by fishermen. We show that the mechanism avoids illegal landings while ensuring (nearly) optimal exploitation and generating (nearly) correct entry and exit incentives. Finally we simulate the mechanism for the Danish cod fishery in Kattegat to obtain a rough indicator of the size of the tax. It turns out that the average tax payment as a percentage of profit is surprisingly low.     

Interpenetration Versus Embeddedness

A bstract .   The economy and economics are important fields in Talcott Parsons's work. Parsons's contributions on this subject were, however, mostly critically received in the new economic sociology. In this article, main points of criticism of Parsons's economic sociology will be discussed and the question asked whether the importance of Parsons's works in economic sociology was adequately treated. It will be demonstrated that the critical assessments was based for the most part on theoretical conceptions Parsons developed during his structural-functionalist period. Hence the assessments neglected to discuss the theory of expressive-symbolic communication of affect that Parsons developed in his later systems-functionalist period. However, precisely these later theoretical developments correlate directly with the concept of social embeddedness as a key concept in the new economic sociology. A stronger linking with this development in Parsons's theory could bring economic sociology closer to finding a foundation in action theory, which has been missing up to the present.     

Monetary Policy Cooperation May Not Be Counterproductive

This paper qualifies Rogoff's famous (1985) result that international monetary policy cooperation is counterproductive. In a model similar to his, it is shown that if wage-setters are non-atomistic and inflation averse — as policymakers are — cooperation leads to higher employment and possibly lower inflation.