An Investigation of the Association between Cultural Dimensions and Variations in Perceived Use of and Compliance with Internal Auditing Standards in 19 Countries

Using a large sample of chief audit executives and internal audit managers from 19 countries, we investigate potential associations between cultural dimensions and variations in perceived use/compliance with the internal auditing standards. We find uncertainty avoidance to be inversely related to both use and compliance. We also find assertiveness and human orientation to be positively related to compliance but not to use of Standards. Among control variables, we find positive associations for the length of Institute of Internal Auditors (IIA) membership, professional certification in internal auditing, and hours of continuing professional education (CPE) training on both perceived use and compliance. Finally, we find “Cost of compliance” and “Compliance not expected in my country” to be inversely related to perceived use/compliance. Implications of these findings are discussed.     

Flood Insurance Coverage in the Coastal Zone

We explore determinants of flood insurance demand in the coastal zone using micro‐data for nine Southeastern counties. Overall estimates indicate price inelastic demand, though subsidized policyholders have greater coverage and are more price sensitive. Mortgage borrowers exhibit no greater coverage; only 12 percent in 100‐year flood zone indicate flood insurance was required by their lender. Flood insurance demand is increasing in the levels of flood and erosion risk. We find a positive correlation between household income and coverage, but the effect is not monotonic. Community‐level erosion hazard mitigation projects influence flood insurance coverage, with beach replenishment acting as a complement.     

Bounds for the mean residual life function of a <Emphasis Type="Italic">k</Emphasis>-out-of-<Emphasis Type="Italic">n</Emphasis> system

In the reliability studies, k-out-of-n systems play an important role. In this paper, we consider sharp bounds for the mean residual life function of a k-out-of-n system consisting of n identical components with independent lifetimes having a common distribution function F, measured in location and scale units of the residual life random variable X _t  = (X−t|X > t). We characterize the probability distributions for which the bounds are attained. We also evaluate the so obtained bounds numerically for various choices of k and n.     

Mixture of MLP-experts for trend forecasting of time series: A case study of the Tehran stock exchange

A new method for forecasting the trend of time series, based on mixture of MLP experts, is presented. In this paper, three neural network combining methods and an Adaptive Network-Based Fuzzy Inference System (ANFIS) are applied to trend forecasting in the Tehran stock exchange. There are two experiments in this study. In experiment I, the time series data are the Kharg petrochemical company’s daily closing prices on the Tehran stock exchange. In this case study, which considers different schemes for forecasting the trend of the time series, the recognition rates are 75.97%, 77.13% and 81.64% for stacked generalization, modified stacked generalization and ANFIS, respectively. Using the mixture of MLP experts (ME) scheme, the recognition rate is strongly increased to 86.35%. A gain and loss analysis is also used, showing the relative forecasting success of the ME method with and without rejection criteria, compared to a simple buy and hold approach. In experiment II, the time series data are the daily closing prices of 37 companies on the Tehran stock exchange. This experiment is conducted to verify the results of experiment I and to show the efficiency of the ME method compared to stacked generalization, modified stacked generalization and ANFIS.     

Cancellation of Executive Stock Options: Tax and Accounting Income Considerations*

Canadian firms face a trade‐off between reporting higher accounting income and paying lower taxes that arises from their ability to cancel in‐the‐money executive stock options and making a substitute cash payment to the executive instead of issuing shares. Firms' trade‐off hypotheses are operationalized in a multilateral framework and empirically tested using insider‐trading data. The multilateral approach is designed to control for the incentive effects of alternative compensation schemes and to determine the cancellation payment that keeps the executive indifferent between receiving cash or shares. The results show that firms consider both taxes and financial reporting costs in determining their option cancellation behavior.     

Africa and The Global System Disaster

Abstract: The study proposes a critical review of the national modernization project on which every African country embarked as from 1960. Beyond the number of variants of this project based on the social content of the national liberation movement and the development strategy options implemented, the author reviews what he considers to be their common denominator, applicable to the entire third world for the whole post-war (1945-90) period which he calls the Bandoung period. He describes it as a bourgeois project, although there is no real national bourgeoisie: an attempt to build “capitalism without capitalists”. He then proposes a list of its achievements, on the basis of his own criteria, that of national construction and those of the populism of some experiences. He also proposes a classification based on the supreme criterion of the logic of capitalist globalization, that of the capacity of new industries to be competitive on world markets and explains Africa's failure from this standpoint by the delay caused by colonization in solving the agricultural problem. In the light of these considerations, he reviews the nature of the challenges raised today by globalization and outlines the main features of the transformations required in the design of national and regional policies and in the organization of the world system which could sustain a new departure for Africa. Résumé: L‘étude propose une lecture critique du projet national de modernisation dans lequel l'ensemble des pays africains se sont engagés à partir de 1960. L'auteur examine, par delà la variété des variantes de ce projet tenant au contenu social du mouvement de libération national et aux options de stratégie de développement mises en oeuvre, ce qui lui apparaît constituer leur dénominateur commun, caractéristique de toute la période de l'après guerre (1945-90) pour l'ensemble du tiers monde. II qualifie cette période de Bandoung. II catalogue ce projet de bourgeois, en dépit de l'absence d'une véritable bourgeoisie nationale, et l'analyse comme une tentative de construction “d'un capitalisme sans capitaliste”. II propose ensuite un bilan de ses réalisations, sur la base de ses propres critères, celui de la construction nationale et ceux du populisme de certaines expériences. II propose également un classement fondé sur le crière suprême de la logique de la mondialisation capitaliste, celui de la capacité des industries nouvelles de faire face à la compétition sur le marché mondial et explique l’échec africain de ce point de vue par le retard que la colonisation a apportée à la révolution agricole. A à lumière de ces considérations il examine la nature des défis que la mondialisation constitute aujourd'hui et brosse les grands traits des transformations que s'imposent dans la conception des politiques nationales et régionales et dans l'organisation du système mondial, susceptibles de soutenir un nouveau départ de l'Afrique.     

A TEST OF THE RISK PREMIUM HYPOTHESIS

Contrary to economic theory, there is international evidence that common stock returns and inflation are negatively related. This negative relationship is examined in this paper and the applicability of the risk premium hypothesis is tested. According to this hypothesis, an increase in unanticipated inflation causes the market risk premium to rise, which in turn lowers current stock prices. A model is developed and the effect of uncertain inflation on the market risk premium across four countries is tested empirically. Results indicate that the market risk premium is positively related to uncertain inflation.     

Credit risk dynamics in response to changes in the federal funds target: The implication for firm short-term debt

The recent credit crisis has raised a number of interesting questions regarding the role of the Federal Reserve Bank and the effectiveness of its expected and unexpected interventions in financial markets, especially during the crisis, given its mandate. This paper reviews and evaluates the impact of expected and unexpected changes in the federal funds rate target on credit risk premia. The paper's main innovation is the use of an ACH-VAR (autoregressive conditional hazard VAR) model to generate the Fed's expected and unexpected monetary policy shocks which are then used to determine the effects of a Federal Reserve policy change on counterparty credit risk and more importantly short-term firm debt financing. The findings answer a longstanding question sought by researchers on the effect of policy makers' announcements on firm debt financing. The results clearly show that the Federal Reserve influences short-term debt financing through the credit channel for both expansionary and contractionary monetary policies. In particular, we find that the growth in counterparty risk appears less responsive to anticipated responses in the Fed funds rate that fail to materialize than to an unanticipated increase in the federal funds rate. Finally, we also document that the results appear to validate the Feds interventions in financial markets to stem counterparty risk and to make liquidity more readily available to firms.