Discounting inflation — a note

The aim of this paper is to clarify the confused issue of the effect of inflation on the discounting procedure for investment appraisal. The standard approach is considered, together with the impact of inflation, and the problem of how to adjust the standard approach to take account of inflation. The point is made that it is usually easiest to estimate expected returns in current prices, in which case the discount rate should reflect the real opportunity cost of capital, to avoid mixing real returns and nominal interest in a manner which leads to the rejection of worthwhile projects. An example is given of how the real rate of interest can be computed from the nominal rate of interest and the rate of inflation, and the difference this makes to discounting a sample project. The paper then illustrates how real rates of interest have frequently been negative over the past decade and how this implies that projects may be acceptable even if the sum of future undiscounted returns is less than the initial outlay. The conclusion drawn is that investors should maximize economic profit defined as the surplus over opportunity cost, which reduces the deterrent of nominally high interest rates, for the maximization of surplus over opportunity cost has the corollary of minimization of opportunity loss.     

Reconstructing “behavioural accounting”

This paper adopts a critical stance towards behavioural accounting research methodology. It is argued that most accountants have based their behavioural research on the natural scientific approach, a paradigm whose relevance and suitability for conducting social research has been increasingly questioned in recent years. The author discusses some alternatives to the positivistic research methodology of the natural sciences as a way of developing social science and the implications these have for providing a coherent theoretical and methodological perspective for future “behavioural accounting” research.It is the contention of this paper that the study of the behavioural aspects of accounting has largely failed to develop into a coherent theoretical or practical body of knowledge. In an attempt to overcome this state of affairs, there is an increasing trend to employ organizational and sociological theory as a basis for research, as opposed to psychology and social psychology which informed earlier conceptual thinking and research. While accountants may see this conceptual development as an advancement in that it locates accounting processes in their organizational and social contexts, the way in which it is being conducted is criticized in this paper because, like psychology, it is characterized by an essentially positivistic methodology.This article will first provide a broad overview of the relationship between accounting research and the behavioural sciences. From that overview it will be argued that accounting researchers are unlikely to make much progress by borrowing behavioural scientific concepts unless they develop a deeper understanding of the philosophical underpinnings of these concepts and the competing schools of methodological thought which exist within the behavioural sciences. In an attempt to fill this apparent gap in understanding, the paper will discuss the scientific approach of the natural sciences, why it is felt to be inappropriate for the behavioural sciences and what alternatives exist.     

Teachers learning about technology and technology education: Insights from a professional development experience

The introduction of technology education in primary and secondary schools during the past 10–15 years around the world has presented a number of difficulties for teachers, primarily related to their coming to understand the phenomenon of technology and to conceptualise the technology learning area in line with national frameworks. This paper reports on a professional development experience that aimed to assist a small group of primary school teachers to develop their understandings of technology and technology education. A theoretical model framed a series of professional development interactions between the researchers and the experienced teachers who were new to teaching technology. Data sources included teacher interviews, video recordings of the activities, teacher made models, and extracts from their reflective journals. The study presented some insights into how professional development experiences for teachers new to technology could be organised and implemented to best support their developing technology practices and understandings.     

Short-run Returns around the Trades of Corporate Insiders on the London Stock Exchange

Previous work examined the long-run profitability of strategies mimicking the trades company directors in the shares of their own company, as a way of testing for market efficiency. The current paper examines patterns in abnormal returns in the days around these trades on the London Stock Exchange.
We find movements in returns that are consistent with directors engaging in short-term market timing. We also report that some types of trades have superior predictive content over future returns. In particular, medium-sized trades are more informative for short-term returns than large ones, consistent with Barclay and Warner's (1993) 'stealth trading' hypothesis whereby informed traders avoid trading in blocks.
Another contribution of this study is to properly adjust the abnormal return estimates for microstructure (spread) transactions costs using daily bid-ask spread data. On a net basis, we find that abnormal returns all but disappear.