Reporting Discretion and Private Information Communication through Earnings

We model a two-period pure exchange economy where a risk averse manager, who has private information regarding future earnings, is required to issue an earnings report to investors at the end of each period. While the manager is prohibited from directly disclosing her private information, she is allowed to bias reported earnings in the first period, subject to GAAP rules that require that a specified proportion of the bias be reversed subsequently. We show there is a minimum threshold of reversal, such that, when the proportion of required reversal is above this threshold, the manager smooths income and communicates her private information through reported earnings. Consequently, the market attaches greater weight to reported earnings than under a regime that allows no discretion. When the required reversal is below the minimum threshold, the manager increases reported earnings without limit and the equilibrium degenerates. When the manager is not endowed with any private information, the market unravels the "true" earnings and price is unaffected by earnings management. Our results underscore the importance of both allowing and restricting reporting discretion through formal mechanisms.     

Service Competitiveness – An Anglo-US Study

This article reports on the latest in a series of international comparisons of management practices and performance outcomes of industries in various countries. Here, it is the service industries in the UK and the US which come under the microscope. Among the companies surveyed, there were more world-class performers in the US than the UK, but also more low performers. The concluding part of the article is diagnostic – the authors also suggest measures which could improve performance.     

The impact of a shift in organizational role on ethical perceptions: A comparative study

This study investigates ethical decision-making by considering the differences in ethical judgments between undergraduate business and MBA students on selected ethical issues facing employees and managers of today's businesses. The study further investigates differences in ethical judgments between undergraduates and MBAs in terms of a perceived position as an employee or as a manager. The findings indicate that undergraduate students tend to be more ethical than MBA students and that both groups tend to be more ethical when they perceive themselves as managers rather than employees. The authors discuss the implications for both business practitioners and educators.Shohreh A. Kaynama is Associate Professor of Marketing in the School of Business and Economics at Towson State University in Baltimore, Maryland. She earned a Ph.D. in Marketing and the Decision Sciences. Dr. Kaynama has published extensively in numerous National and International proceedings. Her area of research is strategic marketing, consumer behavior, applications of computers and decision sciences in marketing and global marketing. Louise W. Smith is Professor of Marketing in the School of Business and Economics at Towson State University in Baltimore, Maryland. Dr. Smith's main professional interest is consumer behavior. Dr. Smith's articles have appeared in the Journal of Public Policy & Marketing, Journal of Health Care Marketing, Journal of Marketing Education, Journal of Services Marketing, and Journal of Consumer Marketing among others. Algin B. King is Professor of Marketing in the School of Business and Economics at Towson State University in Baltimore, Maryland. He has served on the Faculties of seven universities, publishing numerous articles in National Professional Meetings Proceedings and scholarly journals including Journal of Euro-Marketing, Atlantic Economic Journal. In addition he has served as a business consultant to numerous business firms.     

The impacts of Hong Kong’s Currency Board reforms on the interbank market

Among the economies with a Currency Board System (CBS), Hong Kong (HK) is probably the one with the largest and most developed financial sector, as well as the highest capital mobility. Hence, studying HK’s CBS is not only crucial to HK, but also important for the understanding of the modern CBS. This paper outlines the major monetary reforms in HK since the late 1980s. The impacts of these reforms and the 1997–1998 Asian Financial Crisis are then examined empirically. We focus on the differentials between the US and HK interbank interest rates. We assume the conditional-mean equation follows an autoregressive process and the conditional-variance equation follows a generalized autoregressive conditional heteroscedasticity process. This model captures the time-varying level and volatility of the differential. In light of the empirical results we provide an assessment of the reforms in HK.     

The persistence of knowledge‐based advantage: an empirical test for product performance and technological knowledge

Resource‐based theory maintains that intrinsic characteristics of resources and capabilities, such as their tacitness, complexity, and specificity, prevent imitation and thereby prolong exceptional performance. There is little direct evidence to verify these claims, yet a substantial literature encourages firms to formulate competitive strategies around resources with these attributes. Further, work outside the resource‐based tradition suggests that these attributes can slow innovation, and it is not clear when this effect outweighs the benefits of inimitability. This paper seeks to clarify whether and how the complexity, tacitness, and specificity of a firm's knowledge affect the persistence of its performance advantages. We find that the complexity and tacitness of technological knowledge are useful for defending a firm's major product improvements from imitation, but not for protecting its minor improvements. The design specificity of technological knowledge delayed imitation of minor improvements in this study. Copyright © 2002 John Wiley & Sons, Ltd.     

Cross Entropy Estimation of the Almost Ideal Demand System for Greek Consumption

Cross entropy is used to estimate the Almost Ideal Demand System for consumption in Greece. The entropy estimates are found to improve upon the SUR estimates. It is recommended that practitioners consider employing entropy based procedures in systems where the data set is small, where there are a large number of parameters, or where the data are deficient.