Auditor conservatism and voluntary disclosure: Evidence from the Year 2000 systems issue

This study further examines the phenomenon of conservative auditor behaviour by considering the level of voluntary disclosure of Year 2000 remediation information in company annual reports. Previous studies have provided evidence of conservative auditor behaviour by examining the link between Big 6 auditor choice and accruals (Francis and Krishnan 1999; Becker et al ., 1998; Defond and Subramanyam 1998). Protecting their reputation capital increases Big 6 auditor incentives to act conservatively to avoid litigation risk. We propose and find that Big 6 auditor clients disclose more Year 2000 remediation information than non–Big 6 auditor clients.     

Food Safety Through Food Irradiation: Should it be Adopted More by the EU?

Food Safety Through Food Irradiation: Should it be Adopted More by the EU? Food Irradiation is a food safety technology that can eliminate disease‐causing germs from foods. Faut il encourager ?irradiation pour améliorer la sécurité des aliments en Europe? ?irradiation des aliments est une technique de sécurité alimentaire, qui permet ?en éliminer les germes pathogènes. De même que la pasteurisation du lait, le traitement par des radiations ionisantes permet de tuer les bactéries susceptibles de causer des infections ?origine alimentaire. Celles‐ci sont toujours présentes, et ont de graves conséquences tant pour la santé que pour ?économie. Aux Etats‐Unis, ?irradiation est une technique autorisée pour beaucoup de produits alimentaires. Dans ce pays, le nombre de restaurants et de supermarchés vendant des produits irradiés a augmenté de façon considérable au cours des trois dernières années. Des expérimentations économiques montrent que les consommateurs américains sont disposés à dépenser pour le b?uf irradié des sommes sensiblement supérieures aux suppléments de coûts associés à?irradiation. En Europe, ?utilisation de ?irradiation comme technique de conservation des aliments, susceptible de s'insérer dans des programmes de sécurité alimentaire rigoureux, est beaucoup plus limitée. Jusqu'ici, laliste des produits dont ?irradiation est autorisée dans ?ensemble de la Communauté Européenne ne contient qu'une seule catégorie de produits alimentaires:les herbes aromatiques, épices, et assaisonnements ?origine végétale. Avec la globalisation des circuits commerciaux et le renforcement, exigé par les agences de régulation, des normes de sécurité du champ à la fourchette, la généralisation de l0'irradiation des produits alimentaires devrait profiter à?ensemble des producteurs et des consommateurs européens. Nahrungsmittelsicherheit durch Bestrahlung von Nahrungsmitteln: Sollte dies in der EU verstärkt angewandt werden? Bei der Bestrahlung von Nahrungsmitteln handelt es sich um ein Verfahren zur Gewährleistung der Nahrungsmittelsicherheit, bei der krankheitsverursachende Keime in den Nahrungsmitteln abgetötet werden. Wie bei der Pasteurisierung von Milch können Bakterien mit Hilfe von ionisierenden Strahlen in Nahrungsmitteln abgetötet werden, die anderenfalls durch Nahrungsmittel übertragbare Erkrankungen hervorrufen würden. Diese Erkrankungen stellen eine permanente Bedrohung dar und Ziehen ernstzunehmende Konsequenzen für Gesundheit und Wirtschaft nach sich. In den USA dürfen verschiedene Nahrungsmittelarten bestrahlt werden. In den vergangenen drei Jahren hat die Anzahl der Supermärkte und Restaurants in den USA, die strahlungsbehandelte Produkte anbieten, enorm zugenommen. Erste ökonomische Versuche in den USA legen es nahe, dass die Bereitschaft der Verbraucher, einen höheren Preis für bestrahltes Rinderhackfleisch zu zahlen, sehr viel höher ist als die mit der Bestrahlung verbundenen zusätzlichen Kosten. Die Anwendung der Bestrahlung von Nahrungsmitteln als Werkzeug zur Gewährleistung der Nahrungsmittelsicherheit, welches die strengenNahrungsmittelsicherheitspro‐gramme ergänzen könnte, ist in Europa eher begrenzt. Bislang handelt es sich bei den Produkten, die für die Bestrahlung innerhalb der gesamten EU zugelassen sind, nur um eine einzige Nahrungsmittelklasse: getrocknete aromatische Kräuter und Gewürze. Durch die zunehmende Nachfrage der Aufsichtsbehörden nach Nahrungsmittelsicherheit ?vom Stall bis zum Teller? und die Globalisierung des Nahrungsmittelhandels könnten die Produzenten und Verbraucher in der EU von einer verstärkten Anwendung der Bestrahlung von Nahrungsmitteln profitieren. Like pasteurization of milk, treating food with ionizing radiation can kill bacteria that would otherwise cause foodborne disease. Foodborne illnesses are ever present and have serious health and economic consequences. In the US, food irradiation is approved for use in various foods. The number of supermarkets and restaurants in the US that offer irradiated products has increased dramatically in the last three years. Preliminary economic experiments in the US suggest that consumer willingness to pay for irradiated ground beef is substantially greater than the additional costs associated with irradiation. The use of food irradiation as a food safety tool that could complement rigorous food safety programmes is rather limited in Europe. So far, the list of products authorized for irradiation within the whole EU contains only a single food category: dried aromatic herbs, spices, and vegetable seasonings. With increasing demand by regulatory authorities on food safety from ‘farm to fork’ and the globalization of food trade, EU producers and consumers may benefit from wider adoption of irradiation of food products.     

Making sense of corporate social responsibility in international business: experiences from Shell

International business organizations are regularly addressed on their corporate social responsibility (CSR). As illustrated in this paper, it is not yet clear exactly what CSR means to organizations and how to deal with it. In this paper, the authors explore how a sensemaking approach helps to understand the business challenges of CSR within an organizational context. The theories of Karl Weick are applied to the experiences of CSR in Royal Dutch Shell. The authors argue that the key to CSR in international business organizations is to engage stakeholders and start a process of joint sensemaking. Three main competencies are crucial in this: the competency to engage stakeholders through listening and understanding; the creation of an organizational language so that CSR makes sense to members of the organization; and recognizing the momentum of taking action.     

Discussion of “Earnings Surprises,Growth Expectations,and Stock Returns,or, Don't Let an Earnings Torpedo Sink Your Portfolio”

Review of Accounting Studies -     

Research notes and communications management and organizational change: A note on the railroad industry

Hypotheses which relate top-level managers' age, years of company and industry service, and education to strategic change are studied with a sample of 855 managers from 27 railroads. Results generally support hypotheses that younger managers and those with less experience are more likely to alter their strategies with changing environmental conditions.     

Duration and the price behavior of fixed-rate level payment mortgages: An analytical investigation

In this research we use a continuous payment formula for duration to examine the price behavior of a fixed-rate level payment mortgage. In the case where the mortgage is held to maturity, duration increases monotonically as term-to-maturity increases, regardless of changes in the market rate of interest. In the case where the mortgage is prepaid prior to maturity, there exists a unique market interest rate below which duration is a monotonically increasing function of time of prepayment, but above which duration has a global maximum at some time of prepayment prior to the term-to-maturity.     

An empirical analysis of bank interest rate swaps

Considering the characteristics of banks that do and do not report interest rate swaps, the long-term interest rate exposure of a bank and the likelihood and extent of swap market participation are found to be positively related. Key to the finding is the inclusion of variables related to the provision of swap market intermediary services, which significantly explain both the likelihood of swap market participation and the notional value of outstanding swaps. The results suggest that the likelihood and extent of swap market participation by low-capitalized banks is less than for other banks.     

Adjustment costs and time-to-build in factor demand in the U.S. manufacturing industry

In order to explain cyclical behavior of factor demand, the static neoclassical model of the firm has been extended to include either adjustment costs (e.g. Lucas (1967)) or time-to-build considerations as in Kydland and Prescott (1982). This paper presents an intertemporal factor demand model which accounts for adjustment costs and gestation lags. The closed form solution of the model is a highly restricted vector ARMA-process that is estimated using quarterly data for the manufacturing industry in the U.S., 1960–1988. The main conclusion is that both sources of dynamics of factor demand are identifiable and found to be empirically of importance.     

Cultural influences on the design of incentive systems: The case of East Asia

Arguing that culture moderates the potency of various incentives in motivating employees, we propose a culture-contingent model of incentive system design in this article. Four nation-level determinants of culture are identified: historical events, economic/political structure, geographical location, and language characteristics. Based on evidence found in East Asia, specific propositions that either relate a national characteristic to some cultural attributes or predict how a cultural characteristic favours a particular type of incentive system are generated. The implications of this culture-contingent model for incentive system design in multinational firms are discussed.We would like to thank Donna Randall for her helpful comments on an earlier draft.