Safety of the U.S. food supply: consumer concerns and behaviour

To examine consumer concern about food safety, identify characteristics of those most concerned, and determine behavioural responses to concerns, we used mailed questionnaires to survey a random sample of 630 adults. Eighty-eight percent of respondents were very or somewhat concerned about safety of the food supply. Subjects perceived greatest likelihood of harm from chemicals and lowest likelihood of harm from bacterial contamination. Relative to other concerns about food such as cost or taste, food safety ranked low. Because the concern was across all ages, education levels, genders, and places of residence, we were unable to define a type of person most likely to be concerned about food safety. Less than half the subjects had changed dietary behaviour in response to food safety concerns. Foods reduced or eliminated from the diet most often were meats, fruits, eggs and vegetables. The findings indicate that consumers need risk assessment education and help in making food choices that do not compromise diet quality.     

The Information Content of Tax Expense for Firms Reporting Losses

We investigate whether management's decision regarding the recognition of the valuation allowance (VA) for deferred tax assets provides incremental information about the persistence of accounting losses. We introduce a classification scheme that assigns loss firm‐years into three categories based on whether management appears to have recognized a material change in the VA, and whether or not the firm has positive taxable income (e.g., a net operating loss). The results of our study show that our tax categories contain information about the persistence of accounting losses over the following three years beyond variables previously identified to predict loss persistence. This incremental information is consistent with management using private information about the firm's future prospects in setting the VA. Finally, we find that investors’ pricing of the VA varies with the saliency of the tax signal and the information environment of the firm.