Loss Aversion,Audit Risk Judgments,and Auditor Liability

Abstract

I investigate how different legal regimes affect auditor's effort and investors' investment decisions when the auditor is subject to probability weighting and loss aversion, which are two important characteristics of Prospect Theory. Probability weighting encourages an auditor to overrate the audit risk and the likelihood of damages leading to inflated audit fees which could help to explain the BigN audit-fee premium. With loss aversion, an auditor is sensitive to the risk of damage compensation and, thus, tends to exert excessive caution which also generates excessive audit fees. Consequently, investors may choose not to hire an auditor and, as a result, may forego an otherwise profitable investment. These effects are more intense with a strict liability regime than with a negligence rule because with the latter, the auditor is not held liable when due care has been exerted. This removes the risk of incurring losses. The paper highlights the robustness of the negligence regime when preferences are unobservable.     

On the relationship between supplier integration and time-to-market

Recent operations management and innovation management research emphasizes the importance of supplier integration. However, the empirical results as to the relationship between supplier integration and time-to-market are ambivalent. To understand this important relationship, we incorporate two major recent developments. First, the literature has started to redefine supplier integration into two dimensions, supplier product integration and supplier process integration. Second, recent research has begun to examine spillover effects that extend beyond the direct costs and benefits of the supplier contract. Using survey data of 116 firms in the industrials, health care, and information technology industries, the results confirm our hypotheses and show that supplier product integration decelerates time-to-market while supplier process integration accelerates time-to-market. The results also show a positive relationship between supplier integration and the adoption of external technologies, which either decelerates or accelerates time-to-market depending on the level of internal exploration activities. Our research, thus, helps to open the ‘black-box’ of the relationship between supplier integration and time-to-market, and provides a theoretically grounded explanation to the apparent contradictory results in prior research about the influence of supplier integration on time-to-market. In addition, we contribute to research on spillover effects by emphasizing that information technology adoption and assimilation is an important spillover effect of supplier integration.     

Tumorpatienten – die Rolle der Angehörigen

Zusammenfasung  Belastungen, Bew?ltigungen, Ressourcen — Angeh?rige von Patienten werden im medizinischen Behandlungsprozess nicht selten als „St?rfaktoren“ wahrgenommen, die durch ihre Gegenwart, ihre Fragen und Anliegen den Arbeitsalltag „behindern“. Nur allzu schnell wird übersehen, welche gro?e Bedeutung sie bei der Betreuung der Patienten haben und wie hilfreich und unterstützend sie auch für das Pflegepersonal sein k?nnen – das gilt auch und besonders in der Onkologie.     

用工经济学：测评人的重要性

随着知识型员工和优质服务日益成为公司组织竞争优势的重要来源,对于人才的争夺战更为激烈。要在市场上取得胜利,高级主管们必须吸引和留住最优秀的人才。然而,在这一点上,许多公司暴露出了根本弱点：用于测评员工业绩的管理体系是依据资本的有效运用而设计的,而不是人力资源的充分利用。     

The impact of tax reforms on unemployment in a SMOPEC

This paper analyzes revenue-neutral tax reforms for a small open economy which is constrained to a balanced current account and whose producers have market power on the world market. We consider origin-based and destination-based commodity taxes as well as taxes on income, the payroll, and on an imported factor of production. Our main findings are the following. First, the strength, and for some parameter constellations, even the sign of the employment effect of tax reforms varies with the degree of openness of the economy. Second, the indeterminacy of the sign of the employment effect crucially hinges on the presence of an internationally mobile factor. The central mechanism underlying our results are adjustments of the real exchange rate which have repercussions on wage and price setting and therefore on employment.     

Heinrich von Storch's innovative contributions to economics

Heinrich von Storch was a classical economist of the late eighteenth and early nineteenth century; he was of German descent and of Russian nationality; his main work was written in French. This paper tries to present the essence of Storch's innovative ideas and contrasts them with contemporary British and French economic thinking on value, land rent, foreign trade, money and currency, “inner goods,” and development. It is argued that Storch was an economist of moderate impact on literature but of high professional relevance.     

Employee voice and lifelong education capabilities in France and Germany: two models of responsibility

This paper discusses the scope of the employee’s voice in lifelong education decisions, with a focus on qualified assembly‐line workers and professional development schemes allowing their upward mobility out of the assembly line. Using a capability approach, it investigates voice as part of people’s agency. Beyond examining the channels that allow employees to have a say in training matters – weak definition of voice – it addresses voice as a process that participates in the conversion of the available training resources and opportunities into lifelong education achievements – strong definition of voice. Comparing two subsidiaries of a multinational firm, one located in Germany and the other in France, we ask under what institutional and organizational conditions employees are able to express and then achieve what they value. In adopting a multi‐level perspective which integrates qualitative data of an institutional, organizational and individual nature, we show how in France and Germany the worker’s voice in training matters pertains to two different models of responsibility sharing. In Germany the worker’s voice is associated with self‐determination and self‐care as a consequence of the externalization of lifelong education outside the confines of the firm; this results in a weak voice that requires personal or family resources in order to get converted into a strong voice. In France, where national legislation obliges firms to devote a percentage of the gross wage bill to training, companies have historically played an important role in the lifelong education of workers, so that until the country’s last training reforms introducing a personal training account in 2014, the worker’s voice was strongly shaped by organizational factors. Whether this voice is weak or strong depends upon the organizational strategy, processes and involvement in lifelong training.     

On rationality of business expectations: A micro analysis of qualitative responses

Rationality of expectations of individual agents have been shown to play a crucial role for macroeconomic model building and economic policy. Many applied studies therefore tried to test the implications of rationality by use of survey data. This paper differs from previous studies in that the data used are qualitative monthly survey responses by a large number of individual manufacturing firms to questions concerning their own expected and current business conditions. Results tend to reject the validity of the hypothesis of unbiasedness and efficiency. Due to the qualitative nature of the data, use is made of the log-linear probability model.     

Relative export prices and firm size in imperfect markets

This paper contributes to the rising field in international trade and industrial organization. A vast sample of Italian micro data is used to study the behavior of relative export prices in imperfect markets. It is shown that relative export prices, the relation of prices a firm charges on export and domestic markets, are, in general, downward biased. Moreover, relative export prices depend negatively on firm size and market concentration, but positively on the average export share of the industry. This indicates that markets are segmented and firms are able to discriminate prices.