The Effect of Tax Treaties on Multinational Firms: New Evidence from Microdata

This paper uses affiliate‐level data from Swedish multinationals to examine the impact of tax treaties on both overall affiliate sales and the composition of those sales. In line with previous results, we find little evidence for an effect of treaties on the level of total sales. We do, however, find that a tax treaty increases the probability of investment by a firm in a given country. In addition, we find that a treaty reduces exports to the parent but increases imports of intermediate inputs from the parent. This is consistent with treaties increasing the effective host tax. This suggests that tax treaties impact the behaviour of multinationals along some dimensions but not along others.     

The Rise and Rise of Evidence in Health Care

Health care practitioners (especially doctors) have always given assurances that what they do is efficacious. But in the past 50 years justification of the effectiveness of health care interventions has attained a new prominence. Evidence, at least notionally, now lies at the heart of health care policy and practice. This article provides an overview of the generation and use of evidence on effectiveness in health care. It explains why rigorous methodologies have taken hold and describes the major preoccupation with trying to ensure that research evidence has an impact on clinical practice. The strengths and weaknesses of evidence-based health care are explored to identify the opportunities for profitable transfer of experience across the public sector.     

ON THE SIZE DISTRIBUTION OF WEALTH IN CANADA*

This paper is concerned with measurement of the size distribution of personal wealth in Canada. The only available estimates of this distribution are those provided on the occasions when Statistics Canada's Survey of Consumer Finance has surveyed assets and debts. Results of the latest “SCF” to do this, that of 1977, are not yet available. The paper shows that the previous study, conducted in 1970, indicated wealth-inequality as viewed by top quantile shares roughly of the same order as estimated by others for the U.S. and U.K. A comparison of asset and debt aggregates implied by the survey, however, with independent totals indicates that for almost all items the SCF likely under-estimated true holdings. The possible relative importance of sampling and non-sampling errors in explaining this distortion is considered, drawing on Monte Carlo evidence and American validation studies of survey response. It is concluded that sampling error is unlikely to provide the explanation for SCF discrepancies in aggregates, but that non-sampling error is capable of doing so. Finally the 1970 SCF distribution of wealth is re-estimated. First a correction is made for hypothetical differential response according to true net worth. Second an attempt is made to remove the effects of under-reporting by respondents. The “best-guess” re-estimated distribution exhibits mean net worth considerably greater than shown by the SCF but only a slightly greater degree of concentration. Under certain fundamental assumptions this result is surprisingly robust. The appropriate conclusion is not that survey estimates of the distribution of wealth are reliable, but that the strong non-sampling errors affecting the 1970 Canadian SCF wealth estimates may have been composed of almost completely offsetting sources of bias.     

Investor confusion and similarly identified securities

This paper extends the analysis of Rashes (2001) to examine the co‐movement of prices for a sample of UK equity securities with similar ticker symbols and names. In contrast to Rashes (2001), we find only limited evidence of price changes that could be attributed to ticker symbol or name confusion. Our results suggest that any such confusion, if it exists at all, is most likely confined to very short time horizons and is not a systematic occurrence for similarly identified securities.     

Auditor specialization, perceived audit quality, and audit fees in the local government audit market

Prior governmental research implies a positive relation between auditor specialization and audit quality, but the effect of specialization on audit fees is mixed. However, no single governmental study investigates the effect of auditor specialization on both audit quality and audit fees. Also, prior studies focus on either large- or small audit firms and often employ indirect proxies for audit quality. We study the effects of auditor specialization on perceived audit quality and audit fees. Our data represent both Big 5 and smaller audit firms and include three market-based measures of specialization. We survey 241 Florida local government finance directors and find that specialization is positively associated with perceived audit quality but not with audit fees. We also find that Big 5 auditors, often used as a proxy for higher audit quality in prior research, are not uniformly associated with increased perceived audit quality but consistently charge higher audit fees. Our results confirm a relation between measures of audit firm specialization and audit quality and raise questions regarding audit firm size and audit quality in the municipal sector. Our findings suggest that engaging specialized auditors may be good policy for many local governments.     

Constructing a knowledge‐based system to aid scenario‐based strategic planning: an application to the European airline industry

This paper explores the use of scenario planning and the design of a knowledge‐based system in strategic decision making, in the context of the European airline industry. Several innovative strategies were derived, as well as other key recommendations based on sound strategic reasoning, and participants testified to the effectiveness of the approach in stretching their thinking. The requirement to draft strategies as expert system rules, with reasons, was useful in clarifying thinking and achieving group consensus. This methodology, therefore, aids effectiveness of the scenario planning process itself, while providing a dynamic, accessible means of storing the resulting strategic thinking. Copyright © 2005 John Wiley & Sons, Ltd.