Modeling Effort and Lobbying in a Heterogeneous Common Pool Resource Setting

Extraction from a common pool resource (CPR), such as a fishery, can lead to socially inefficient and undesirable outcomes as a result of appropriation problems. Through regulation of the CPR, users may achieve a more profitable and socially efficient outcome. Feeny et al. (Land Econ 72(2):187–205, 1996) delve into some of the assumptions made by traditional CPR models and how use of those assumptions provides an incomplete framework to guide fishery policy. In the theoretical models we develop, we relax two of those assumptions: CPR users are homogeneous and are unable to create, or influence, management of the resource. We note a case where regulation of the individual user can induce others to harvest more, and relate this to the slippage effect concept. Regarding resource sustainability, we document situations where incentives exist for CPR users to lobby for tighter regulations and thus increase profits by limiting the tragedy of the commons influence.     

On the rationalizability of observed consumers’ choices when preferences depend on budget sets: comment

In a recent article, Bilancini (J Econ 102:275–286, 2011) demonstrates that assuming either price-dependent preferences or preferences that depend on the choices of other individuals can render the theory of revealed preference effectively unusable. Some readers might be tempted to infer that economists had better avoid such assumptions. In this note, we argue against that conclusion in favor of a less categorical and more pragmatic approach. In several domains, we identify fundamental weaknesses in revealed preference theory and argue that in those domains, nontraditional assumptions about preferences significantly enhance our ability to explain and predict behavior.     

Mutual fund risk and market share-adjusted fund flows

Several papers use a fractional specification (net inflow/ assets under management) to infer a convex relation between flow and past performance. However, heterogeneous linear response functions combined with the pooled analysis commonly used in these studies can yield false convexity estimates. We show that such heterogeneity obtains in practice. Along these same lines, the paper also finds that several previously unexamined implications of a convex flow-performance relation fail to hold. Moreover, convexity with fractional flows (which we confirm) largely disappears in a conditional analysis that controls for heterogeneity. Market shares offer an alternative specification for flow that is more resilient to heterogeneity. Using this alternative specification, we again find no evidence of convexity in the flow-performance relation. We conclude that the widely held belief that the flow response function is convex is due solely to misspecification of the empirical model. The flow-return relation is linear.     

External COO/presidents as expert directors: A new look at the service role of boards

Much of the scholarship on boards of directors has examined either the control (i.e., monitoring) role or the resource dependence role that boards fill. Relatively little has examined the service role, wherein directors provide advice and guidance to management. This study builds on recent work exploring director expertise by asking how operational expertise on boards impacts firm performance. We find that having external COO/presidents on a board of directors positively impacts firm performance when the firm's operational efficiency is declining, but negatively impacts performance when the firm's operational efficiency is improving. We also find that other types of external executives serving as directors exhibit the opposite relationship, suggesting that the value of director expertise is context‐dependent. We discuss the implications of these findings for director selection. Copyright © 2013 John Wiley & Sons, Ltd.     

Skin in the game: personal stock holdings and investors’ response to stock analysis on social media

Review of Accounting Studies - Motivated by concerns that financial positions impair analyst objectivity, we examine investor perceptions of the financial positions of nonprofessional analysts...     

Budget repair or budget spectacle? The passage of Wisconsin’s Act 10

Strategic planning processes use budgets to implement control and accountability. However, budgets can also be used to generate support for strategic decisions, for example by creating a political spectacle. A political spectacle is a problem engineered to have a specific political impact. This paper investigates politicians’ use of a state budget as a political manoeuvre to defend strategic decisions regarding public employee unions in Wisconsin. The analysis shows how the 2011 state budget in Wisconsin was used to create a political spectacle to generate support for eliminating collective bargaining for public workers, especially public (state) school teachers.     

Keeping it private: financial reporting by large proprietary companies in Australia

Since 2010, proprietary companies have had a choice of preparing three types of financial reports that vary in scope. We find that between 2010 and 2015, most proprietary companies in our random sample chose the lowest scope option, with very low quality financial reports. Few adopted the new option provided by AASB 1053 Application of Tiers of Australian Accounting Standards. The characteristics of the firms that adopted each type of report are consistent with the regulator's intention. Our findings should provide a better understanding of how accounting standards impact practice, and should assist regulators to reform private company financial reporting.