BIASED REFEREES?: RECONCILING RESULTS WITH THE NBA'S ANALYSIS

In a recent study, we used National Basketball Association (NBA) box‐score data over a 13‐year period including nearly 600,000 foul calls to show that NBA referees call relatively more fouls on players of another race. The NBA commissioned its own study using internal data with information on calls made by individual referees and claimed the results show there is no bias among the referees in the NBA. This paper is an attempt to reconcile these competing claims. (JEL J15, J71)     

Ready to stop: socioeconomic status and the fertility transition in Stockholm, 1878–1926

The western fertility decline is arguably the most significant demographic change to have occurred in the past 200 years, yet its causes and processes are still shrouded in ambiguity due to a lack of individual‐level longitudinal data. A growing body of research has helped improve our understanding of the decline's causes by examining the development of socioeconomic differences in fertility using historical micro‐data, but these have largely only considered rural areas where fertility was generally slower to decline. This article contributes to the literature by utilizing individual‐level data from the Roteman Database for Stockholm, Sweden between 1878 and 1926 to examine the association of socioeconomic status and fertility and the adoption of stopping behaviour during the city's transition. Using piecewise constant hazard models and logistic regression, we find that a clear class pattern arises in which the elite were early practitioners of fertility control, followed by the working classes. As the transition unfolded, socioeconomic differences in stopping behaviour disappeared and overall fertility differentials were also minimized, both of them being consistent with patterns observed in rural populations. The implications of these findings for major explanations of the decline are discussed in the concluding section.     

INCREASED INDUSTRIAL USES OF AGRICULTURAL COMMODITIES POLICY, TRADE AND ETHANOL

Using agricultural feedstocks for industrial products affects domestic and international agricultural markets, all of which are encumbered with complex policies. This article examines the interaction of three seemingly unrelated policies: the Clean Air Act, the U.S. corn program, and European Union agricultural subsidies. More ethanol production, resulting from new regulations associated with the Clean Air Act, increases the use of U.S. corn and increases the supply of corn gluten feed, an ethanol co-product. Corn gluten feed is primarily exported to Europe under a loophole in European Union trade barriers. But recent reform of European Union farm policy will lower the price of the European grain for which corn gluten feed is a substitute. This development lowers prices for a major ethanol co-product and thus makes ethanol itself less profitable just as the demand for the fuel is expanding. NAFTA, GATT, and new technologies also play cameo roles in the story .     

SOCIAL INTERACTIONS AND THE DEMAND FOR SPORT: AN ECONOMIC ANALYSIS

This paper explores the decision to participate in sports activities in the United Kingdom and the subsequent frequency of participation. The paper draws links between economic and other theories of social interaction to motivate the discussion and links these theories to assessing policy initiatives in the United Kingdom. Cluster analysis is combined with a Heckman analysis to examine the empirical evidence provided by the General Household Survey in 2002. The results suggest that social and personal capital are of paramount importance in determining sports participation, and consequently, it is these features that policy should focus upon. However, the legitimacy of policy activism requires philosophical justification. ( JEL B41, C2, D11, D12)     

Does Auditor Reputation Matter? The Case of KPMG Germany and ComROAD AG

We study the stock and audit market effects associated with a widely publicized accounting scandal involving a public company (ComROAD AG) and a large, reputable audit firm (KPMG) in a country (Germany) that has long provided auditors with substantial protection from shareholder legal liability. We use this event to study whether an auditor's reputation helps to ensure audit quality, a rationale for which recent literature and events provide scant support. Given the absence of a strong insurance rationale for audit quality, Germany permits a relatively clean test of whether auditor reputation matters. We find that KPMG's clients sustain negative abnormal returns of 3% at events pertaining to ComROAD, and that these returns are more negative for companies that are likely to have higher demands for audit quality. We also find an increase in the number of clients that drop KPMG in the year of the ComROAD scandal (mostly smaller, recently public companies that are similar to ComROAD). Overall, our results provide support for the reputation rationale for audit quality.     

Regulation and Bonding: The Sarbanes-Oxley Act and the Flow of International Listings

In this paper, we examine the economic impact of the Sarbanes‐Oxley Act (SOX) by analyzing foreign listing behavior onto U.S. and U.K. stock exchanges before and after the enactment of SOX in 2002. Using a sample of all listing events onto U.S. and U.K. exchanges from 1995–2006, we develop an exchange choice model that captures firm‐level, industry‐level, exchange‐level, and country‐level listing incentives, and test whether these listing preferences changed following the enactment of SOX. After controlling for firm characteristics and other economic determinants of these firms' exchange choice, we find that the listing preferences of large foreign firms choosing between U.S. exchanges and the London Stock Exchange's (LSE) Main Market did not change following the enactment of SOX. In contrast, we find that the likelihood of a U.S. listing among small foreign firms choosing between the NASDAQ and LSE's Alternative Investment Market decreased following the enactment of SOX. The negative effect among small firms is consistent with these marginal companies being less able to absorb the incremental costs associated with SOX compliance. The screening of smaller firms with weaker governance attributes from U.S. exchanges is consistent with the heightened governance costs imposed by SOX increasing the bonding‐related benefits of a U.S. listing.