Hedge Fund Intervention and Accounting Conservatism

Hedge fund intervention has been associated with many positive corporate changes and is an important vehicle for informed shareholder monitoring. Effective monitoring has also been positively associated with accounting conservatism. Building upon these prior results, we predict an increase in accounting conservatism after hedge fund intervention. We use a large sample of hedge fund activist events and identify control firms with similar likelihoods of being targeted using the propensity score matching method to apply difference‐in‐difference tests. We find that when hedge fund activists have relatively large ownership and sufficient time to exert their monitoring power, target firms experience significant increases in conditional conservatism. CFO turnovers, upward/lateral auditor switches, and improvements in audit committee independence after intervention are accompanied by greater increases in conditional conservatism. Finally, we find greater increases in conditional conservatism when there is a lack of monitoring by dedicated institutional investors before the intervention. Our study suggests that hedge fund activists improve accounting monitoring tools and thus adds important new evidence on the effectiveness of shareholder monitoring on accounting practices.     

Public Management and Network Specificity: Effects of colleges’ ties with professional organizations on graduates’ labour market success and satisfaction

Abstract

Research on managerial networking in the public sector reports positive effects of network activity on performance. However, little is known about which network relations influence different aspects of performance. We argue that for specific organizational goals, organizations should direct their networking activities towards specific types of organizations. We explore how different types of network relations of Dutch colleges for nursing studies affect the performance of these colleges. We analyse the effect of ties with professional organizations on: (1) graduates’ program satisfaction, (2) graduates’ wages and (3) graduates’ employment (n = 1,484 graduates). Multilevel analyses show that colleges’ ties with professional organizations positively affect graduates’ wages and employment.     

Drivers of Trust: Some Experiences from Hungarian Agricultural Cooperatives

This article examines the drivers of trust in the machinery-sharing cooperation arrangements of Hungarian field crops farms. Our research has focused on the role of 2 factors on the basis of the widely referred trust model: faith in loyalty and capability. The empirical results clearly confirm the hypothesis of the theoretical model, namely, partners will trust each other if their faith is high both in loyalty and in competence. Our research has also pointed out that the level of trust between partners is determined differently by the 2 examined factors: it is statistically proven that the impact of faith in loyalty is higher.     

Restaurant Advertising and Promotion Strategies of Two Gateway Cities: An Exploratory Study

ABSTRACT

This study compares perceived frequency and benefit of selected advertising strategies as reported by 390 restaurateurs in Houston, Texas and Beijing, China. Data analysis consists of quantitative and qualitative measures based on type of service and ownership. While restaurateurs in both cities reported using a variety of advertising and promotion strategies, overall, Beijing restaurants were more likely to benefit from these varied activities. Beijing restaurateurs reported strong benefit in food sampling and coupon use as advertising and promotion tools. Perceived benefit of selected strategies by Houston restaurateurs on average did not directly correlate with its frequency of use.     

Shareholder rights, financial disclosure and the cost of equity capital

This study extends research into whether shareholder rights and disclosures of financial-related attributes are associated with firms' costs of equity capital. Using cost-of-equity-capital estimates derived from expected earnings growth valuation models, we find that firms with stronger shareholder rights regimes and higher levels of financial transparency are associated with significantly lower costs of equity capital. We also find evidence that greater financial disclosure and stronger rights regimes interact in reducing firms' costs of equity capital, such that the effect of a high level of one mechanism is minimal when it is combined with a low level of the other. Finally, we document that neither factor dominates the other in their associations, and that there are tradeoffs between disclosure levels and shareholder rights in their influence on firms' implied costs of equity capital. JEL Classification G30 · M10     

The impact of household life‐cycle stages on subjective well‐being: Considering the effect of household expenditures in Hungary

The household life‐cycle stage is a significant contributor to the perception of subjective well‐being; however, the effect of household expenditures of life‐cycles on subjective well‐being has not been thoroughly explored. The life‐course perspective, specifically the study of family/household life‐cycles, emphasizes the understanding of subjective well‐being across the entire life‐span. Accordingly, in the literature subjective well‐being is often studied at different life‐stages considering the influence of variables such as age, cohabitation and fertility. The present study evaluates the level of subjective well‐being across the various life‐cycle stages using a matching method on a Hungarian national sample. This approach is appropriate for studies using observational data because the administration of a true experimental design is usually not feasible for this type of research. The main finding of the article is that controlling for the expenditure structure significantly modifies the effect of life‐cycle on subjective well‐being, which is varied across life‐cycle stages and shown to be highly dependent on household expenditures.     

Land Inheritance and Schooling in Matrilineal Societies: Evidence from Sumatra

This paper explores statistically the implications of the shift from communal to individualized tenure on the distribution of land and schooling between sons and daughters in matrilineal societies, based on a Sumatra case study. The inheritance system is evolving from a strictly matrilineal system to a more egalitarian system in which sons and daughters inherit the type of land which is more intensive in their respective work effort. While gender bias is either non-existent or small in land inheritance, daughters tend to be disadvantaged with respect to schooling. The gender gap in schooling, however, appears to be closing for the generation of younger children.     

What information belongs in a warning?

A general approach is described for determining the information content of warnings. It begins with a formal analysis of the magnitudes of the risks arising from misuse (or even from proper use) of a product. It proceeds with structured, open-ended interviews intended to elicit consumers' naive conceptualizations of the processes creating and controlling those risks. Communications are then focused on information filling the most consequential gaps in their knowledge. The implementation of those warnings will depend on the extent of the knowledge gaps, and the opportunities for closing them. This approach allows for an estimate of the residual problems to be expected, if a warning program is implemented. It can also help to focus the policy debate over whether a product warning will achieve an acceptable level of misunderstanding. © 1998 John Wiley & Sons, Inc.