The value relevance and reliability of reported goodwill and identifiable intangible assets

We examine the value relevance and reliability of reported goodwill and identifiable intangible assets under Australian GAAP from 1994 to 2003; a period characterised by relatively restrictive accounting treatment for goodwill and relatively flexible accounting treatment for identifiable intangible assets. Our findings, using an adaptation of Feltham and Ohlson (1995), suggest that for the average Australian company the information presented with respect to both goodwill and identifiable intangible assets is value relevant but not reliable. In particular, goodwill tends to be reported conservatively while identifiable intangible assets are reported aggressively.     

The Persistence of Profits in the Long Run: A New Approach

We present a trend‐based alternative to the standard first‐order autoregression model in persistence of profits studies. This is motivated by reservations over the interpretation of the standard model, and rests on a different concept of dynamic competition. A nine‐category taxonomy of long‐run persistence stereotypes is developed. Structural time series estimates are presented for a sample of UK companies. We find the null of long run competitive equilibrium not rejected in nearly a third of cases, but non‐eroding persistence to be present in around 60%.     

Limits to forecasting in personalized medicine: An overview

Biomedical research is generating massive amounts of information about potential prognostic factors for health and disease. However, few prognostic factors or systems are robustly validated, and still fewer have made a convincing difference in health outcomes or in prolonging life expectancy. For most diseases and outcomes, a considerable component of the prognostic variance remains unknown, and may remain so for the foreseeable future. I discuss here some of the main problems in medical forecasting that pose obstacles to personalized medicine. Their recognition may help identify solutions to improve personalized prognosis, or at least understand and cope with the component of the future that we cannot predict. Much prognostic research is stuck at generating “publishable units”, without any interest in conclusively proving their worth, let alone moving them into real life applications. Information is reported selectively and reporting is deficient. The replication record of prognostic claims is poor. Even among replicated prognostic effects, few are convincingly shown to add much information besides what is already known through more simple, traditional measurements. There are few efforts to systematize prognostic knowledge. Most prognostic effects are subtle when traced to the molecular level, where most current research operates. Many researchers, clinicians, and the public are not appropriately educated to interpret prognostic information. We still have not even agreed on what the important health outcomes are that we want to predict and intervene for, and some subjectivity may be unavoidable. Finally, without concomitant effective, affordable, and non-harmful interventions, prognosis alone is of questionable value, and wrong prognosis or a wrong interpretation thereof can be harmful. The identification of these problems also suggests a roadmap on what could be done to amend them. Solutions include a systematic approach to the design, conduct, reporting, replication, and clinical translation of prognostic research; as well as the education of researchers, clinicians, and the general public. Finally, we need to recognize that perfect individualized health forecasting is not a realistic target in the foreseeable future, and we have to live with considerable residual uncertainty.     

On building better construct measures: Implications of a general hierarchical model

Four problems occur in the scale development process: (a) defining the construct, (b) drawing items from multiple domains, (c) identifying dimensions, and (d) showing nomological validity. In order to minimize these problems, the authors propose a general hierarchical model (GHM) that provides an organizational structure for placing many of the individual difference constructs used in marketing and consumer behavior. Three principles, which were derived from the GHM, add to the current scale development paradigm: (a) Define and test the construct within a hierarchical network that includes antecedents and consequences, (b) define and test the construct's dimensionality, and (c) match the construct's items to its level in the hierarchical system. By using these steps in scale development, researchers can build more precise measures possessing higher levels of validity and reliability. © 2008 Wiley Periodicals, Inc.     

The Optimal Linear Income Tax Model: Utility or Equivalent Income?

This paper compares the use of equivalent income with that of utility, in the social welfare function, in optimal income tax models. Equivalent income is a money metric welfare measure that, unlike utility, is not affected by monotonic transformations of utility. The use of equivalent income is found to produce an optimal tax rate that is more sensitive to the degree of inequality aversion, compared with the use of utility. With Cobb-Douglas and CES utility functions, the optimal tax rate is the same for utility and equivalent income where relative inequality aversion is unity. When using equivalent incomes, the case for high marginal rates does not depend on the assumption of a very low elasticity of substitution between consumption and leisure.     

Biases in demand analysis due to variation in retail distribution

Aggregate demand models typically assume that consumers choose between all available products. Since consumers may be unwilling to search across every store in a given market for a particular item, this assumption is problematic when product assortments vary across stores. Using supermarket scanner data for five product categories we demonstrate that approximately one third of products have limited retail distribution, which account for one fourth of dollar sales. Monte Carlo analysis demonstrates that the level of limited product availability observed in the data can significantly bias the results of aggregate demand models that incorrectly assume all consumers in a given market face the same choice set.     

Trends and developments in industrial relations and industrial relations law: Trade union discipline and non-strikers

Perhaps the most controversial change introduced in the 1988 Employment Act was the statutory right given to union members not to be disciplined by their unions for continuing to work during lawful industrial action approved by a majority in a secret ballot. Here the authors examine the legal contexts, implications for trade unions and the wider industrial relations and political significance of this important new right.