MANAGERIAL REMUNERATION AND ACCOUNTING FOR RECURRING EXTRAORDINARY ITEMS

The Australian standard on income statements (AAS 1) was recently amended to require that extraordinary items be non-recurring. Although the amendment applies from 1990, the Corporations Law requires that comparative financial statements for 1989, complying with the new rule, be included with the 1990 financial statements. Comparison of these with actual financial statements for 1989 indicates how the statements would have differed in 1989 if the standard had then required extraordinary items to be non-recurring. The differences are investigated to partially explain cross sectional differences in firms' classification criteria. Results imply that managers who are remunerated highly (relative to the magnitude of the earnings of the firm) prefer to classify gains as operating and losses as extraordinary.     

A cost-efficiency principle of spatial interaction behavior

A new macro-statistical principle of spatial interaction behavior is proposed. This cost-efficiency principle asserts in essence that, other things being equal, interaction patterns involving higher total costs are less likely to be observed than those involving lower costs. The main result of the paper is to show that this principle completely characterizes the important class of exponential gravity models. This characterization resolves the ‘sign’ problem inherent in the maximum- entropy derivation of these models. Moreover, since this principle focuses directly on the cost- minimizing nature of spatial interaction choices, it appears to have more behavioral content than the simple maximum-entropy approach. A number of extensions and generalizations of the cost-efficiency principle are also outlined which suggest that the principle may have a much wider range of application.     

Informal boundary-spanning communication in the innovation process: an empirical study

The sources of ideas embodied uithln successful technological innovation have been a subject of interest in many studies since the 1950s. This research suggests that sources external to the innovating organization account for between 34% and 65% of the inputs important to the development of successful innovation. In addition, studies have long highlighted personal boundary-spanning communication as an important mechanism for the transference of such ideas. Despite this recognition, there has been little systematic evaluation of the role and importance of informal boundary-spanning communication in the innovation process. This paper provides the results of an empirical study, of the role and source of infomally derived inputs into the development products of 35 commercially successful innovations. It was found that inormal mechanisms were often enlployad to transfer ideas and information, as well as other resources, during the idea-generation, ,problem-solving and field-testing phases of these innovation projects. Indeed, the research indicates that the mobilization of informal boundary-spanning contacts and networks my ofen be an important, and sometimes critival, factor in successful innovation.     

UK universities and the state: a Faustian bargain?

The universities are now‘one of the last seminationalised sectors of the British economy,’used by government as an instrument of social policy. This situation represents a‘Faustian bargain’which threatens both the quality and the prosperity of universities. One solution would be privatisation of some universities through public flotation. These universities could then contract with government to take state-funded students. Two objections are that the scheme would promote elitism and that it would encourage greater inequality between universities, but the relevant question is whether it would offer an improvement on the present regime.     

An analytic approximation formula for pricing zero-coupon bonds

This paper presents an analytic approximation formula for pricing zero-coupon bonds, when the dynamics of the short-term interest rate are driven by a one-factor mean-reverting process in which changes in the volatility of the interest rate are a function of the level of the interest rate.     

Translating Environmental Ideologies into Action: The Amplifying Role of Commitment to Beliefs

Consumers do not always follow their ideological beliefs about the need to engage in environmentally friendly (EF) consumption. We propose that Commitment to Beliefs (CTB)—the general tendency to follow one’s value-based beliefs—can help identify who is most likely to follow their environmental ideologies. We predicted that CTB would amplify the effect of beliefs prescribing environmental stewardship (e.g., new ecological paradigm), or neglect (e.g., economic system-justification), on corresponding intentions, behavior, and purchasing decisions. In two studies, CTB amplified the positive and negative effects of relevant EF ideologies on EF purchase decisions (Study 1), and consumption and conservation attitudes, intentions, as well as future behavior (Study 2). In each study, only people with higher levels of CTB demonstrated the most ideologically consistent consumption and conservation intentions and behavior. These findings clarify who is most likely to align their decisions and lifestyles according to their sustainable consumption ideologies. The amplification effect of CTB, and the CTB variable itself, present new contributions to consumer behavior research and the domains of sustainable or ethical consumption in particular and offer wide-ranging potential for marketing practitioners and researchers.     

The manager seeking virtue: Lessons from literature

The authors argue that studying classic literature (fiction) is useful in strengthening the manager's ability to resolve specific ethical dilemmas.The authors summarize stories, plays and novels that explicitly address a series of ethical trials common to many managers (e.g., whistleblowing, discrimination and greed). Recognizing the multicultural nature of contemporary business practice, the authors draw upon literature from Europe and Asia to illustrate their thesis. Studying literature offers a challenging and personally compelling method for managers (and management students) to improve their moral sensitivity and strengthen the decision making skills used in addressing the ethical ambiguities of business practice.The article concludes with a supplemental reading list that summarizes additional pieces of international literature with strong business ethics themes.Tony McAdams is Professor of business law in the Management Department at the University of Northern Iowa. Professor McAdams has been published in theHarvard Business Review andThe Academy of Management Review, among other journals, and he is the principal author of the text,Law, Business, and Society. He received the 1978 Distinguished Teaching Award from the student government at the University of Kentucky.Roswitha Koppensteiner received an MBA degree from the University of Northern Iowa in 1990.     

Self-regulation,Co-regulation and the Audio-Visual Media Services Directive

This paper criticises the use of the concepts of self-regulation and command and control regulation as simplistic and often having a political function. They neglect the fact that there is a continuum of different types of regulation; they represent extremes rarely found in the real world. Moreover, regulatory regimes will be comprised of a cocktail of different regulatory approaches. The developing concept of co-regulation is likely to be more productive. It is unhelpful to attempt to draw up restrictive definitions of different types of regulation; it is much more important to assess them through the application of normative principles, including those relating to procedures, accountability, and enforcement of rights. The drafting of the Audio-Visual Media Services Directive initially made the mistake of using the narrow definitions of co- and self-regulation contained in the Interinstitutional Agreement on Better Law-Making, but amendments during the Parliamentary process have resulted in a more flexible approach better adopted to the recognition of existing co-regulatory regimes.