The Effect of Short Selling on Market Reactions to Earnings Announcements*

This paper examines the effect of the inherent demand implied by short interest by studying how stock price reactions to earnings announcements depend on the level of short interest. We find that, for extreme good and bad news events, the inherent demand increases stock prices around the earnings announcement date, with the effect being stronger for good news relative to bad news. Specifically, the initial market reaction to an extreme positive earnings surprise is larger for firms with high levels of short interest. On the other hand, for an extreme negative earnings surprise event, the initial market reaction is less negative for heavily shorted firms. Furthermore, we find that the post‐earnings‐announcement drift is smaller (larger) in magnitude for extreme positive (negative) earnings surprises for the heavily shorted firms.     

中国城市劳动力市场的一体化进程

本文从区域劳动经济学的视角分析城市间劳动力市场的发育和融合。我们介绍了分析区域劳动力市场的理论框架与国际经验，并利用住户调查数据发现，1988-1995年间，随着工资和教育回报率的上升，它们在城市间的差异有所扩大；虽然区域间的工资收敛并不显著，但受教育程度较低的工人工资收敛速度快于受教育程度高的技术型工人。针对这些实证结论，我们提出了促进区域劳动力市场统一的配套改革措施，以及建立全国性的以身份证为核心的大学生就业市场的建议。     

Social Issues and Socially Responsible Investment Behavior: A Preliminary Empirical Investigation

An important dimension of the ongoing trend toward greater corporate social responsibility is the emergence of individual and institutional investors who invest in companies that support social objectives. While a small number of studies have examined the criteria used by institutions, no studies have looked at individual investors. Using a mail survey of 4,000 investors in two mutual funds that incorporate social screens in their investment decisions, this study finds that compared with other investors, socially responsible investors are younger and better educated. Respondents most frequently identify environmental and labor relations issues when asked what defines socially responsible corporate behavior. Although the respondents value socially responsible behavior in companies they invest in, they are unwilling to sacrifice financial returns to achieve it.     

Consumption Habits in a New Keynesian Business Cycle Model

Consumption habits have become an integral component in new Keynesian models. However, consumption habits can be modeled in a host of different ways and this diversity is reflected in the literature. I examine whether different approaches to modeling consumption habits have important implications for business cycle behavior. Using a standard New Keynesian business cycle model, I show that, to a first-order log-approximation, the consumption Euler equation associated with the additive functional form for habit formation encompasses the multiplicative function form. Empirically, I show that whether consumption habits are internal or external has little effect on the model's business cycle characteristics.     

Outsourcing and Audit Risk for Internal Audit Services*

Some companies now outsource their internal audit function to public accountants. Internal auditors and accounting firms disagree about the merits of outsourcing. Each type of auditor claims to provide more cost‐effective services and appears to claim superior expertise. This paper uses agency theory to examine outsourcing and reconciles the outsourcing debate without resorting to differential auditor expertise. Under the assumptions that public accountants' “deep pockets” provide incentives to outsource and their higher opportunity cost provides a disincentive, we characterize the optimal employment contract with each auditor. We find that public accountants provide higher levels of testing, but possibly for a higher expected fee. This result supports both the internal auditor's claim as the lower cost provider, and the public accountant's claim of higher quality. We also find that incentives to outsource generally increase in various measures of risk, including the risk that a control weakness exists and the size of the loss that can result from an undetected control weakness.     

Trade Union Influence on Human Resource Management Practices

This paper examines the influence of unions on 37 human resource management practices, ranging from hiring policies to promotion practices. The logistic regression results show that unionization is positively associated with a more formal approach to human resource management. There is, however, a shift from performance-based payment systems and performance appraisal (P.A.) functions in unionized settings. The results also indicate that union firms are more selective of new hires by adopting a formal probationary period for new employees. Last, the estimates suggest that the impact of unions on training programs varies with the nature of the programs.