Money Demand in an EU Accession Country: A VECM Study of Croatia

The paper estimates the money demand in Croatia using monthly data from 1994 to 2002. A failure of the Fisher equation is found, and adjustment to the standard money‐demand function is made to include the inflation rate as well as the nominal interest rate. In a two‐equation cointegrated system, a stable money demand shows rapid convergence back to equilibrium after shocks. This function performs better than an alternative using the exchange rate instead of the inflation rate as in the ‘pass‐through’ literature on exchange rates. The results provide a basis for inflation rate forecasting and suggest the ability to use inflation targeting goals in transition countries during the EU accession process. Finding a stable money demand also limits the scope for central bank ‘inflation bias’.     

Information content, audit reports and going-concern: an Australian study

Research conducted on the information content of going concern ‘modified’ reports in the USA and UK indicates that a modified audit report does not appear to have information content to users if the going concern contingency is disclosed in the notes to the financial statements. In the present study, we provide evidence from Australia. We examine whether modification/qualification by an auditor in Australia (an ‘Emphasis of Matter’ and an ‘Except for’ report, respectively) has information content to a user. The results indicate that for a company in a state of financial distress, the modification, in either form, does not appear to significantly enhance either perceptions of risk or decision-making.     

Higher Education Finance in the UK*

The introduction of top‐up fees for home‐domiciled undergraduate tuition in England from 2006–07 – and their planned increase in 2012–13 – raises important issues for university funding in Scotland, since it abolished tuition fees for Scottish and EU students in 2000–01. This paper focuses on what the increase in resources directed at English universities arising from top‐up fees means for the relative funding of English and Scottish undergraduates. Widely‐used funding‐per‐head figures do not provide an accurate picture of home‐ and EU‐domiciled undergraduate funding, as they include funding for research, postgraduate degrees and overseas students. The empirical work of this paper focuses on creating a consistent series of funding per full‐time equivalent undergraduate over time for England and for Scotland, stripping out funding for research, non‐EU students and postgraduate degrees to create a more accurate picture of the funding gap between the two countries. It also takes into account the different composition of undergraduate degree subjects taken in England and Scotland. The findings indicate that the apparent historical advantage in funding per head in Scottish institutions compared with English ones has been largely driven by compositional differences: Scotland has a high proportion of medical, science and engineering undergraduates – subjects that command greater funding due to their relative complexity to teach. The top‐up fee introduced in 2006–07 brought funding per head in England to a level similar to that experienced in Scotland, and the future increase will result in funding per head in England outstripping that in Scotland by some magnitude. This suggests that the funding of Scottish students will fall significantly behind that of English students unless additional new sources of public or private funding for nScottish universities are found.     

Do Shareholders Assess Managers' Use of Accruals to Manage Earnings as a Negative Signal of Trustworthiness Even When Its Outcome Serves Shareholders' Interests?*

We examine how shareholders' trust in managers is affected by (i) the outcome of earnings management (inconsistent vs. consistent with shareholders' interests) and (ii) the method of earnings management (accruals vs. real methods). Using a controlled experiment, we predict and find that trust is impaired when the outcome of earnings management suggests that managers have put their interests above shareholders' interests and/or when the method of earnings management suggests that managers misreported the firm's economic performance. We argue that shareholders assess managers putting their interests above shareholders' interests as a signal of untrustworthiness because it involves a transfer of the firm's resources away from shareholders to managers. We argue that shareholders also assess managers' use of accruals to manage earnings as a signal of untrustworthiness because, in this instance, managers misreport the firm's economic performance. Finally, we show that trust mediates the combined effects of the outcome of earnings management and the method of earnings management on investment decisions. Our study incrementally contributes to the literature by highlighting the adverse implications of managers' use of accruals to manage earnings even when its outcome serves shareholders' interests.     

Land use change and environmental stress of wheat, rice and corn production in China

Grain self-sufficiency is one of the most important agricultural policy goals in China. With only modest imports, China has succeeded in feeding 22% of the world's population on only 7% of its land. However, a high price has been paid for this enormous achievement. Increase in grain yields, in particular in rice, as the main source of production growth, relied heavily on intensive use of physical inputs and increasing intensity of farming systems. Soil degradation, water scarcity, and severe pollution were among the consequences as well as declining efficiency of fertilizer application. Using county-level panel data from 1980 to 2003 and graphical (GIS-based) analysis, this paper first looks at the spatial change of the major grain production across regions over the past two decades, towards the northern and northeastern provinces. The analysis is complemented by using a random panel data model, which underscores the significant influence of land availability, degree of urbanization, and government policy on grain production. Finally, this analysis addresses environmental stress which includes both soil degradation and water shortage. The latter is already severe in many of the traditional grain producing areas, but will now become a bigger problem in the “new” grain producing areas, as these have traditionally much less water resources. Hence, while the economic rational of the “grain shift” towards the northern and northeastern regions is understandable, its sustainability is not guaranteed.     

Does exposure to dogs (cows) increase the preference for Puma (the colour white)? Not always

Recently, Berger, & Fitzsimons (2008) showed that conceptual fluency effects could spread to concepts sharing a second-level relation (e.g., priming “dog” can activate “cat,” which can increase the evaluation of the brand Puma). In three laboratory studies we found weak evidence for the above priming effects on related concepts. However, in a population sample, we did find evidence that repeated exposure to a prime is associated with preference for related brands and products.     

The costs and opportunities of doing diversity work in mainstream organisations

This paper provides insights into the impact that the shift from ‘equal opportunities’ to diversity management is having on the people who do diversity work. Equality officers have been largely replaced by diversity specialists, often with mainstream HR or business management backgrounds. They are often supplemented and supported by a new cadre of ‘part‐time’ diversity practitioners – diversity champions, drawn from middle‐senior managers. The study suggests that doing diversity work in the 2000s is a different experience from doing equality work in the 1980s/1990s. The ascendance of the business case and the depoliticisation of equality lend DM greater legitimacy and respectability. This, combined with the changing backgrounds and characteristics of diversity practitioners means that diversity work usually carries lower costs and potentially offers more opportunities than did equality work. The conclusion summarises the costs and opportunities, drawing out the main policy implications for the practitioners themselves and for organisations.     

Package mountaineer tourists holidaying in the French Alps: An evaluation of key influences encouraging their participation

This study investigates the key influences that encourage mountaineer tourists, classified as a type of adventure tourist, to participate in package mountaineering holidays. There is limited understanding of why tourists take package adventure holidays, yet the demand for such holidays has grown dramatically in recent years. The author conducted in-depth interviews with mountaineer tourists either during or at the end of their package mountaineering holiday in the Chamonix region of the French Alps. Interview findings provide an insight into package mountaineer tourists. Firstly, mountaineering was an important part of respondents’ lifestyles. Secondly, contrary to previous research on experienced mountaineers, respondents did not consider risk as an important motive and they did not view themselves as risk takers. Thirdly, skills development and experience were key motives encouraging package mountaineering holiday participation. Fourthly, a major concern for respondents was to have a safe mountaineering experience in which the mountaineering organisation and the guide played a key role.