DO AFRICAN COUNTRIES MOVE ASYMMETRICALLY TOWARDS PURCHASING POWER PARITY?

This paper investigates the possibility that the adjustment towards long‐run relative purchasing power parity (PPP) is dependent upon the nature of deviations from PPP that are experienced. While existing studies involving developed and less developed countries often find against PPP having employed linear tests of non‐stationarity or non‐cointegration, we employ a new cointegration test, recently advocated by Enders and Siklos and Enders and Dibooglu, that tests for an asymmetric adjustment towards parity with respect to positive and negative deviations of the real exchange rate from its equilibrium value. Using a sample often African economies with data taken from the post‐Bretton Woods floating exchange rate era, long‐run PPP holds in eight of these cases if an explicit distinction is made between positive and negative deviations. Across the sample, we find variation in the type of asymmetry experienced and the roles played by price and nominal exchange rate adjustment.     

Private Predecision Information,Performance Measure Congruity,and the Value of Delegation*

We use a linear contracting framework to study how the relation between performance measures used in an agent's incentive contract and the agent's private predecision information affects the value of delegating decision rights to the agent. The analysis relies on the idea that available performance measures are often imperfect representations of the economic consequences of managerial actions and decisions, and this, along with gaming possibilities provided to the agent by access to private predecision information, may overwhelm any benefits associated with delegation. Our analytical framework allows us to derive intuitive conditions under which delegation does and does not have value, and to provide new insights into the linkage between imperfections in performance measurement and agency costs.     

Insider Trading in Financial Signaling Models

We study the impact of voluntary trade by the manager. We find that, in contrast to standard signaling models, an action is good news for some firms and bad news for others, depending on observable characteristics of the firm, its managers, and their compensation plans. Further, voluntary trade eliminates separating equilibria and thus the possibility of exactly inferring the manager's private information. This may cause the manager to take inefficient actions so as to earn trading profits. Such undesirable behavior can be more effectively constrained by compensation contracts based on phantom shares or nontradeable options instead of large stockholdings.     

ENERGY INTENSITY IMPROVEMENTS IN STEEL MINIMILLS

Over the past 20 years, U.S. steel manufacturing has experienced an episode of creative destruction. Iron-ore based plants closed, and new electric arc furnace (EAF) plants–the "minimills"–opened. The steel industry is an energy intensive segment of manufacturing, and the changeover causes major change in energy use. The analysis here links a plant-level database from the Bureau of the Census with publicly available sources and obtains measures of the best practice energy use in minimills. The analysis examines how technical efficiency, vintage, and capacity utilization affect plant-level electricity use per ton of steel. This measure of electricity use gives a plant's "energy intensity." Plants in the sample keep operating even during deep recessions, suggesting that energy, e.g., BTU, taxes may fall short of the fullest potential for reducing energy use. During recession, plants actually may continue to operate at lower output rates and higher energy intensities rather than close down. Substantial potential exists for energy improvements of as much as 1 billion kWh per year. New facilities exhibit energy intensity improvement of 6.2 kWh/ton per year. This finding is consistent with engineering estimates. Realizing this potential among all plants would require policies that assist capital turnover.     

Estimating Current Cost Depreciation Expense Using Numerical Analysis and the STAPOL Technique: A Pedagogic Exposition

Current cost accounting (CCA) recommendations have led to complex measurement problems. This paper aims to provoke discussion of the use of numerical analysis and the STAPOL technique as a method for measuring current cost depreciation expense. The measurement method analysed has a scientific foundation, is simple to apply, and yields accurate results. With slight modification, the method analysed is also applicable to other areas of CCA characterized by intractable measurement problems. Unlike other papers which have used differential calculus to analyse the use of numerical analysis in accounting, the exposition in this paper depends on only a rudimentary knowledge of algebra.     

The Effects of Analyst‐Country Institutions on Biased Research: Evidence from Target Prices

Prior research demonstrates that a strong institutional infrastructure in a country moderates self‐serving behavior of market participants. Cross‐country economic activities have increased significantly, presenting a research opportunity to examine the relative influence of local versus foreign institutional infrastructure on individual market participants. We utilize variation in analyst‐country location relative to covered firm location to examine institutional determinants of optimism in analyst research. Focusing on target prices, where persistent optimism is well documented, we find that analysts domiciled in countries with stronger institutional infrastructures exhibit significantly attenuated target price optimism and more value‐relevant target prices. Our results demonstrate the importance of domestic country‐level institutional factors in moderating self‐serving behavior of market participants engaged in cross‐country activities.     

Reproducibility in Accounting Research: Views of the Research Community

We have little knowledge about the prevalence of irreproducibility in the accounting literature. To narrow this gap, we conducted a survey among the participants of the 2019 JAR Conference on their perceptions of the frequency, causes, and consequences of irreproducible research published in accounting journals. A majority of respondents believe that irreproducibility is common in the literature, constitutes a major problem, and receives too little attention. Most have encountered irreproducibility in the work of others (although not in their own work) but chose not to pursue their failed reproduction attempts to publication. Respondents believe irreproducibility results chiefly from career or publication incentives as well as from selective reporting of results. They also believe that practices like sharing code and data combined with stronger incentives to replicate the work of others would enhance reproducibility. The views of accounting researchers are remarkably similar to those expressed in a survey by the scientific journal Nature. We conclude by discussing the implications of our findings and provide several potential paths forward for the accounting research community.