Roads, Land Use, and Deforestation: A Spatial Model Applied to Belize

Rural roads promote economic development, but they also facilitatedeforestation. To explore this tradeoff, this article developsa spatially explicit model of land use and estimates probabilitiesof alternative land uses as a function of land characteristicsand distance to market using a multinomial logit specificationof this model. Controls are incorporated for the endogeneityof road placement. The model is applied to data for southern Belize, an area experiencingrapid expansion of both subsistence and commercial agriculture,using geographic information system (GIS) techniques to selectsample points at 1-kilometer intervals. Market access, landquality, and tenure status affect the probability of agriculturalland use synergistically, having differential effects on thelikelihood of commercial versus semisubsistence farming. Theresults suggest that road building in areas with agriculturallypoor soils and low population densities may be a "lose-lose"proposition, causing habitat fragmentation and providing loweconomic returns.     

Research Note: Revisiting Fair Value Accounting––Measuring Commercial Banks' Liabilities

IAS 39, Financial Instruments: Recognition and Measurement (IASB, 2000), requires assets to be marked to fair value if held-for-trading, available-for-sale purposes, or if they are derivatives; held-to-maturity securities, originated loans and originated securities are measured at amortized cost, providing they are not held-for-trading. Financial liabilities are measured at amortized cost except those that are held-for-trading or derivatives. A proposed amendment would accommodate improved fair value measurement of financial instruments. Commercial banks are greatly affected by any accounting standard concerning the recognition and measurement of financial instruments, whether related to assets or liabilities. This article demonstrates that the existing and proposed standards perpetuate the mismeasurement of interest rate risk for commercial banks. Under IAS 39 banks that have a balanced position, that is, no interest rate risk, counterfactually could show large changes in income through interest rate changes. An alternative accounting treatment, full fair value reporting of financial assets and liabilities, including all loans and deposits, is offered. Presently fair value data are mandated as footnote disclosure.     

Price Linkages in Asian Equity Markets: Evidence Bordering the Asian Economic, Currency and Financial Crises

This paper examines price linkages among Asian equity markets in the period surrounding the recent Asian economic, financial and currency crises. Three developed markets (Hong Kong, Japan and Singapore) and six emerging markets (Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand) are included in the analysis. Multivariate cointegration and level VAR procedures are conducted to examine causal relationships among these markets. The results indicate that there is a stationary relationship and significant causal linkages between the Asian equity markets. Nevertheless, lower causal relationships that exist between the developed and emerging equity markets suggest that opportunities for international portfolio diversification in Asian equity markets still exist.     

Insights from Accounting Practitioners on China's Convergence with IFRS

This study provides insights from accounting practitioners on China's convergence with International Financial Reporting Standards (IFRS). Through a survey of 33 senior financial executives of Chinese listed companies in 2014, the study reports their perceptions on the following issues: first, the degree of convergence between IFRS and Chinese Accounting Standards (CAS); second, the choice between fair value and historical cost accounting, and the usefulness of fair value accounting for Chinese companies’ financial reporting; third, challenges in the process of China's harmonisation with IFRS; and finally, essential capabilities of Chinese accounting professionals in the process of China's harmonisation with IFRS. Multivariate regression was used for further analysis. The survey findings reveal that in general CAS have converged with IFRS, with a few exceptions that reflect the unique Chinese context. Historical cost accounting is the preferred measurement base to fair value accounting. Exercising professional judgement was identified as a challenge for China's full convergence with IFRS. Ownership structure and the expertise of accounting practitioners were found to affect respondents’ judgements on China's convergence with IFRS. This study has policy implications for international accounting standard setters and accounting educators to consider the contextual issues of implementing IFRS in an emerging economy.     

Liquidity operations during the financial crisis 2008/09: evidence from the relations between Korean won onshore and offshore markets

This paper addresses the interrelation of onshore and offshore markets before and after the Bank of Korea intervened in 2008/09. During the financial crisis, Korea faced a liquidity crunch and leveraged its high level of reserves to conduct swap agreements in late 2008. To analyse how the reforms affected the mean and volatility spillover in between the spot and NDF markets, an extended GARCH model is used. The main findings of this paper are that prior to the financial crisis, the spot market dominated the offshore market. This changed after South Korea addressed the won’s liquidity crunch at the height of the crisis. Mean and volatility spillover between the markets diminished and the price gap narrowed. In addition to the empirical results, the paper also underlines the significance of liquidity and robust capital requirements for central banks.     

Using Limited Information to Support the Decision to Launch a New Product in the Fruit Juice Market: A Teaching Case Study

Fresh Juice Incorporated (FJI) is in the process of determining whether it should launch a new fruit juice, Genetically Enhanced (GE) Juice. The GE Juice meets consumers' demands for a tasty, nutritious product and it would be the first new juice product in the last fifteen years. Before FJI decides to launch GE Juice, it must analyze the uncertainty surrounding market size, market share, and price of GE Juice. Finally, if FJI decides to launch GE Juice, then they must decide if they will bottle the juice themselves or outsource this process. This case teaches students how to discuss the strategic implications of launching a new product and develop a net present value and financial feasibility simulation model given limited information.     

Estimating the Effect of Air Quality: Spatial versus Traditional Hedonic Price Models

Empirical studies of hedonic housing prices show that the spatial maximum likelihood estimation (MLE) method is preferable to the traditional ordinary least squares (OLS) hedonic method. Current computing capabilities restrict the MLE method to relatively small data sets. This paper circumvents this limitation by coupling the spatial MLE method with block bootstrapping, a form of Monte Carlo simulation that accounts for spatially dependent data. Blocks are created based on monthly and census tract information for resampling. For each month, we obtained 50 resamples of 750 observations from a data set of 15,727 residential properties to compare OLS and MLE empirical results. We find that the spatial MLE method consistently outperforms the traditional OLS method under these simulated conditions and that air quality matters irrespective of the method used.     

CPA credential perceptions: a case study of Hispanic accountants

One of the recommendations of The Pathways Commission report was to increase the number of diverse entrants into the accounting profession. While the Commission’s recommendation is commendable, the lack of diversity in the accounting profession is not a new problem. Hence, the accounting profession has attempted to address the underrepresentation of minority Certified Public Accountants (CPAs) for many years. To this end, organizations such as American Institute of CPAs (AICPA), National Association of Black Accountants (NABA), Association of Latino Professionals in Finance and Accounting (ALPFA), and the Ph.D. Project have provided different types of support to alleviate the problem. However, the numbers are still disturbingly low. This is particularly true for Hispanic accountants. Therefore, the purpose of this study was to examine Hispanic accountants’ perception of the CPA credential. While the results indicate that gender, exam affordability, and job incentives are positively associated with the likelihood of being a CPA, the 150-hour requirement was not perceived as a hindrance for certification.     

Managerial Sharing,Mutual Fund Connections,and Performance

In this study, we examine the effect of mutual fund connections, through managerial sharing, on performance and stock holding commonalities. Our analysis of return correlations and portfolio holdings indicates that more interconnected funds tend to buy and sell similar stocks, hence increasing the similarity of portfolio holdings and undermining the distinctiveness of their investment strategy. Our results also indicate that highly connected funds significantly underperform weakly connected funds by about 1.4% on a yearly risk‐adjusted basis. We show that fund family performance is unaffected by the intensity of fund connections, and that greater fund connections could significantly enhance family‐level profit margins.