Arthur Andersen & Co. and the two-part opinion in the auditor's report: 1946–1962*

Abstract. This paper constitutes a historical study of the roots of the decision by Arthur Andersen & Co. in 1946 to adopt a two-part auditor's opinion for all of its engagements, and of its eventual decision in 1962 to return to the standard form of the auditor's report. The essence of the two-part opinion was to decouple the auditor's opinion on fairness of presentation from the opinion on conformity with generally accepted accounting principles. The paper also treats the factors that prompted the Canadian Institute of Chartered Accountants to adopt a two-part opinion, and the reasons why it opted to return to the single-opinion format in 1976. Résumé. L'auteur retrace l'historique de la décision prise en 1946 par Arthur Andersen & Cie de présenter l'opinion du verificateur en deux volets dans toutes ses missions, et de sa décision ultérieure, en 1962, de ramener le rapport du vérificateur à sa forme standard. Le choix de l'opinion en deux volets reposait sur l'intention de distinguer l'opinion du vérificateur quant à la fidélité avec laquelle est présentée l'information de l'opinion du vérificateur relative au respect des principes comptables généralement reconnus. L'auteur traite également des facteurs qui ont amené l'Institut Canadien des Comptables Agréés à adopter l'opinion en deux volets, et des raisons pour lesquelles il a choisi de rétablir l'opinion unique en 1976.     

TRADE UNIONS AND FINANCIAL PERFORMANCE

This paper investigates the relationship between trade unionsand financial performance using British establishment-leveldata. We estimate the average overall impact of manual unionrecognition in 1990 to be roughly half what it was in 1984.We report results suggesting that in 1990 unionized establishmentshave lower financial performance only where there are closedshop arrangements and the establishments have some product marketpower and that this effect is greater where managerial freedomto allocate tasks is limited by union work rules. This lattercombination occurs in only about one in ten of the unionizedworkplaces in our sample.     

THE VALUE OF TIGER SHARK DIVING WITHIN THE ALIWAL SHOAL MARINE PROTECTED AREA: A TRAVEL COST ANALYSIS

Using on‐site survey data collected via the administration of a questionnaire to 197 respondents during the period stretching from January 2007 to December 2007 from the Aliwal Shoal Marine Protected Area, this study estimates and compares an ordinary least squares and two Poisson count data models of recreational tiger shark diving demand. The Poisson model corrected for endogenous stratification and truncation provided the best results. It was concluded that in 2007, the consumer surplus per person per tiger shark dive was R1,136, and the total consumer surplus per annum was R2,080,925.     

Even After the Magnuson-Moss Act of 1975, Warranties Are Not Easy to Understand

This study was designed to measure the complexity of written material in a selected group of consumer durable warranties. The Fog Index and the Flesch Count were used in determining complexity and readability of warranties. Readability levels were computed for 125 warranties in nine categories of consumer durables: washing machines, refrigerators, vacuum cleaners, color televisions, coffee-makers, can openers, stereos, bicycles, and automobiles. The results revealed that most of these warranties will be difficult to read for those with a high school education or less. As a result, the warranties examined in this study provide little protection against risk or claims for individuals who may not understand their specific terms as they are presently stated.     

WILLINGNESS TO PAY FOR AIR QUALITY: THE CASE OF OUTDOOR EXERCISE

This study uses a contingent valuation (CV) survey to establish a sample of outdoor exercisers' willingness to pay (WTP) for ambient air quality improvements in East Baton Rouge parish, Louisiana. Estimated annual median and mean WTP values are £95 and £191, respectively, per person per year for assurance that ozone levels would not become "unhealthful" on any day. The survey informed respondents that in the prior year the local community experienced 14 days on which ozone levels exceeded federal standards. The study makes the strong assumptions that respondents believed they were "buying" 14 more healthy days and that WTP per day "bought" is constant. Given these assumptions, one can scale this WTP response to represent annual medians and means of approximately £7 and £14 per person per day, respectively. An econometric procedure for generalizing the community's annual WTP to avoid the 14 unhealthful days yields estimates ranging from £3.21 and £5.36 per person per healthy day, or between £12.4 and £20.6 million per year. The unit day estimates are comparable to CV and household production finction estimates of WTP in the Los Angeles basin, suggesting their usefulness for benefits transfer .     

The Total Cost of Transactions on the NYSE

This paper develops a measure of execution costs (market impact) of transactions on the NYSE. The measure is the volume-weighted average price over the trading day. It yields results that are less biased than measures that use single prices, such as closes. The paper then applies this measure to a data set containing more than 14,000 actual trades. We show that total transaction costs, commission plus market impact costs, average twenty-three basis points of principal value for our sample. Commission costs, averaging eighteen basis points, are considerably higher than execution costs, which average five basis points. They vary slightly across brokers and significantly across money managers. Though brokers do not incur consistently high or low transaction costs, money managers experience persistently high or lost costs. Finally, the paper explores the possible tradeoff between commission expenditures and market impact costs. Paying higher commissions does not yield commensurately lower execution costs, even after adjusting for trade difficulty. We cannot determine whether other valuable brokerage services are being purchased with higher commission payments or whether some money managers really are inefficient consumers of brokerage trading services.