Testing the bases of ethical decision-making: a study of the New Zealand auditing profession

This paper reports on a survey of auditors in New Zealand which investigates the nature of the moral judgements they make on a series of problems with ethical dimensions. The framework adopted for this purpose is developed from earlier work which identifies a range of ethical principles which may be involved in business ethical decision-making. Auditors responded to a questionnaire which posed, firstly, several questions about the context of their ethical decision-making, and secondly, a series of vignettes elaborating problematical dilemmas which required the selection of one of four possible responses. Data was analysed to determine whether or not it confirmed previous findings in suggesting a predominant ethical orientation for auditors. The results were correlated with demographic variables in order to determine whether or not age, gender, position in firm and size of employee firm were significantly correlated to ethical response. The survey results, on the whole, confirmed the ethical orientation suggested by previous findings, but there were some unexpected results in three out of the ten vignettes examined. Although some correlations were found between the demographic variables and subject responses, the evidence of this survey does not strongly suggest a consistent significant correlation.     

Firm growth in industrial clusters of the United Kingdom

This article examines how firm growth is influenced by the strength of the industrial cluster in which the firm is located. It presents econometric estimates of firm growth for 56 two-digit industries in the UK. In about half of these industries, there is a positive and statistically significant association between firm growth and own-sector employment. Significant associations between firm growth and other-sector employment are less common, but where these arise they are generally negative. We find that a weak rule of thumb applies in most industries: own-sector effects are positive or insignificant, while other-sector effects are negative or insignificant. Cluster effects are strongest in manufacturing, manufacturing-related, and infrastructure, but weaker in services.

Household Behavior with Imperfect Labor Markets

A household model with differential asset endowments and idiosyncratic transactions costs in accessing labor markets is developed to (1) explain membership of farm households to alternative labor regimes (sellers, employers, or self-sufficient in labor), (2) test for recursivity between production and consumption decisions selectively by labor regime, and (3) identify the determinants of differential labor productivity across labor regimes. The model is applied to a 1994 household survey of the Mexican land reform sector.     

Managing basis risk with multiscale index insurance

Agricultural index insurance indemnifies a farmer against losses based on an index that is correlated with, but not identical to, her or his individual outcomes. In practice, the level of correlation may be modest, exposing insured farmers to residual, basis risk. In this article, we study the impact of basis risk on the demand for index insurance under risk and compound risk aversion. We simulate the impact of basis risk on the demand for index insurance by Malian cotton farmers using data from field experiments that reveal the distributions of risk and compound risk aversion. The analysis shows that compound risk aversion depresses demand for a conventional index insurance contract some 13 percentage points below what would be predicted based on risk aversion alone. We then analyze an innovative multiscale index insurance contract that reduces basis risk relative to conventional, single‐scale index insurance contract. Simulations indicate that demand for this multiscale contract would be some 40% higher than the demand for an equivalently priced conventional contract in the population of Malian cotton farmers. Finally, we report and discuss the actual uptake of a multiscale contract introduced in Mali.     

The influence of the financial press on stockholder wealth: the case of corporate governance

This study examines the impact that the publication of ratings of boards of directors by the business press has on stockholder wealth. We report findings from an event study of price reactions to the publication of Business Week's 1996 and 1997 ratings of boards of directors of U.S. corporations. As hypothesized, favorable ratings resulted in significant positive abnormal returns after controlling for market effects and confounding events, with only novel information explaining statistical variance. Contrary to expectations, unfavorable ratings also resulted in positive abnormal returns. Copyright © 2005 John Wiley & Sons, Ltd.     

Economies of Desire: Sexuality and the Sex Industry in the 21st Century

New data from sex surveys confirm that demand for commercial sex is based on permanent disparities between male and female desire, and is therefore ineradicable. Demand and supply are growing, facilitated by economic growth, the Internet, globalisation and changing sexual attitudes. A key objection to the sex industry is that pornography, lap dancing and prostitution promote rape and other kinds of violence against women. However, the evidence contradicts this contention. The commercial sex industry is impervious to prohibitions and cannot be eliminated. Laws which constrain sellers of sexual services or criminalise purchasers are not evidence‐based, and are bound to fail, wasting public resources.     

Historical resources, uncertainty and preservation values: An application of option and optimal stopping models

State agencies and private historical organizations frequently acquire historical sites with unknown characteristics. In this paper, we provide two approaches to evaluating the preservation decision. In the first approach, we show that a historical site which is not permanently preserved provides citizens with a certain flexibility whose value can be measured as an option on the maximum between the current real estate value and the preservation value. In the second approach, we assume that the organization has an infinite planning horizon and chooses the optimal sale date. Using a contingent valuation estimate of the public's willingness to pay for preservation of a specific historical site and the real estate price, we provide simulation values of the preservation option value and the optimal stopping rule.