Deferred Taxes and Bond Ratings: A Canadian Case

This paper explores the usefulness of the current Canadian Institute of Chartered Accountants standard on accounting for income taxes in bond rating decisions by credit analysts. Bond rating prediction models using accounting variables generated with alternate treatment of income taxes, have been developed. The analysis indicates that additional information presented by the above standard has not contributed significantly to the bond raters' decision making process.     

So,how long have you been in the market? The effect of the timing of observation on purchase

Concentrating on the duration of the purchase deliberation process, we set out to address the following two questions: (1) Given that an individual is at a certain point in the deliberation process, what factors affect the likelihood of purchase? (2) Do the factors affecting purchase vary with the duration of the deliberation process? An empirical analysis of new car purchase survey data suggests that there are in fact significant differences at different stages of the deliberation process. Considerable differences are also found between those individuals who trade in a vehicle and those who do not.     

Effects of teleconferencing technologies: An exploration of comprehension,feedback, satisfaction and role-related differences

Several theoretical approaches have been put forth to predict and explain the effects of teleconferencing technologies. One approach is to examine the functions of nonverbal signals and to make predictions based on the fact that different teleconferencing technologies allow nonverbal communication to different extents. One of the functions of nonverbal signals is to allow the listener to provide feedback to the speaker in a communication. Prior research has shown that such feedback enhances listener comprehension. In this study, it was hypothesized that different teleconferencing technologies would allow different levels of feedback based on their ability to accommodate nonverbal signals, and this in turn would affect comprehension. An experimental study was conducted to compare comprehension, feedback, and satisfaction in telephone and computer conferencing. The study confirmed that comprehension and speaker satisfaction are related to feedback, but failed to show a relationship between listener satisfaction and feedback. No difference in comprehension, listener, or speaker satisfaction was observed across teleconferencing technologies. Role-related differences were observed between the speaker and the listener. It is suggested that the effects of teleconferencing technologies can be mapped systematically by examining each of the functions of nonverbal signals, one at a time.     

The prognostics of diversifying acquisitions

The paper offers a possible explanation for the discrepancy between the observed increase in the number of diversified firms in the U.S. and the evidence from finance studies which at best offers only weak support for value creation in diversifying acquisitions. It is argued that the acquisition could be the culmination of a series of related strategic moves by the acquiring firm to enter a new industry, and therefore a significant fraction of the gains from synergy could have been anticipated by the capital market well ahead of the acquisition. Results from an event study of the stock market's reactions to the antecedents of the recent acquisition of Rolm Inc. by IBM lend support to this argument.     

Using Rule Induction for Expert System Development: The Case of Asset Writedowns

There was a significant increase in the frequency and magnitude of asset writedowns by US firms during the 1980s. Auditors, financial analysts and regulators have shown considerable interest in evaluating the writedown phenomenon. This paper reports on the use of inductive learning to discover knowledge in financial data structures and describes the development and testing of a prototype expert system, WDXPERT, which evaluates asset writedowns. Real-world data relating to writedown and non-writedown firms are used for rule induction. A set of training examples comprising 42 writedown and 25 non-writedown firms are used to generate the rules using IXL, a machine-learning program. A separate holdout sample containing 43 writedown and 25 non-writedown firms are used to validate the expert system that incorporates these rules. A second validation procedure is performed by comparing the performance of the expert system with a conventional discriminant analysis model and a logit model using the same data sets. The results indicate that the expert system, WDXPERT, is a useful classification tool to group firms into writedown and non-writedown classes.     

Technical change,competition and vertical integration

This paper starts with a survey of the received theories of vertical integration. We then extend these theories by arguing that while uncertainty in general will make integration more effective, a particular type of uncertainty, the possibility of technological obsolescence, works the other way. After making this point at a conceptual level, we build a model to study how the frequency of technological change interacts with the intensity of competition to influence the optimal level of integration. The predictions of the model are then tested and very strongly supported by data from 93 industries.     

A test for normality

Summary An analogue of the C ramer - von M ism W ²-statistic is given for testing the composite hypothesis of normality with unspecified parameters. Some Monte Carlo percentiles of this statistic are provided. A power comparison with the test developed in [4] shows that the present test is better against certain alternatives.     

Do Short Sellers Target Firms with Poor Earnings Quality? Evidence from Earnings Restatements

We study the behavior of short sellers around earnings restatements. We find that short sellers accumulate positions in restating firms several months in advance of the restatement and subsequently unwind these positions after the drop in share price induced by the restatement. The increase in short interest is larger for firms with high levels of accruals prior to restatement. We document that heavily shorted firms experience poor subsequent performance and a higher rate of delisting. Overall, these results suggest that the motive for short selling is, at least in part, related to suspect financial reporting and that short sellers pay attention to information being conveyed by accruals.