Accounting for lifetime memberships: The case of Travel Time Partners, Inc.

Travel Time Partners, Inc. is a travel agency which offers lifetime memberships to its customers. These lifetime memberships entitle the members (among other benefits) to receive a travel magazine. The transaction described in this case offers interesting accounting possibilities for class discussion. The case can be viewed either as a revenue recognition problem or a liability measurement problem. The sliding scale refunds offered on lifetime memberships, the discounts on classified advertisements and the accumulation of points leading to travel discounts for lifetime members, add interesting accounting complexities. The case can also be used to discuss the ethical behavior of management with respect to accounting issues and the role of the auditor in the preparation of financial statements.     

A GOOD ADVISOR

Effective education requires strategic consideration. If students doubt the motives of teachers and advisors, then students rationally ignore the advice they receive. Valuable information is lost in such bad communication outcomes and, consequently, the quality of education suffers. In this paper, we argue that an advisor's sacrifice is an essential virtue of a good advisor for efficient communication between an advisor and a student. We model the relation between them as a signaling game. We find a separating equilibrium in which a good advisor (whose objective function truly coincides with the student's own objective function) makes a costly sacrifice that causes the student to believe what the advisor says, while a non‐good advisor (whose objective does not coincide with the student's) chooses not to make the costly sacrifice and, consequently, the student completely ignores the advisor. In fact, it turns out to be the unique equilibrium that survives the Intuitive Criterion. The model demonstrates the importance of making students aware of those aspects of the advisor's objectives that students may not realize are closely aligned with their own (e.g., the extent to which an advisor cares about students' academic and professional trajectories as evaluated by students themselves).     

Should I allow my confirmatory factors to correlate during factor score extraction? Implications for the applied researcher

Quality & Quantity - With complex models becoming increasingly popular in the social sciences, many researchers have begun using latent variable modeling in multiple-steps, saving, estimating,...     

Did Canadian welfare reform work? The effects of new reform strategies on social assistance participation

This paper measures the extent to which declines in social assistance (SA) participation were associated with novel and aggressive reforms referred to as new reform strategies: work requirements, diversion, earning exemptions and time limits. Controlling for province‐specific benefit levels, eligibility requirements, GDP growth, labour market conditions and demographics, SA participation rates were more than one percentage point lower (equivalent to a 13% decline) in provinces with new reforms. Work requirements with strong sanctions had the sharpest negative associations. New reform strategies explain at least 10% of observed declines in SA participation, twice that of benefit levels and eligibility requirements.     

Economics at the FTC: Quantitative Analyses of Two Chemical Manufacturing Mergers

Review of Industrial Organization - Economists at the Federal Trade Commission support the agency’s competition and consumer protection missions in numerous ways. In this article, we discuss...     

Is coworker feedback more important than supervisor feedback for increasing innovative behavior?

A growing body of research explores human resource management practices that encourage employees to innovate. In this study, we examine the links between different sources of feedback (supervisor and coworker) and employees’ innovative behavior. Drawing on social exchange theory and the job demands‐resources theory, we first propose that work engagement and psychological contract breach mediate the relationship between supervisor feedback and employees’ innovative behavior. Second, we propose a moderated mediation model in which coworker feedback attenuates the relationships between supervisor feedback and employees’ innovative behavior through the mediating mechanisms of both work engagement and psychological contract breach. Using three waves of multisource data from 300 Chinese employees and their 64 supervisors, we found a dual‐mediation pathway by which employees’ work engagement and perceptions of psychological contract breach mediate the influence of supervisor feedback on innovative behavior. Our results also show that coworker feedback can be used to supplement the lack of supervisor feedback when required. Organizations are advised to ensure that employees obtain regular feedback from multiple sources because such feedback can promote employees’ work engagement and perceptions that the organization is upholding its side of the psychological contract, which fosters employees’ innovative behavior.     

Premium subsidies and demand for private health insurance: results from a regression discontinuity design

This article investigates the impact of a private health insurance (PHI) subsidy on the demand for PHI in the context of the Australian health care system. In particular, we focus on the subpopulation of elderly Australians and exploit discontinuous increases to the universal ‘PHI rebate’ that occur when people turn 65 and 70 years. Using a regression discontinuity design, we find the policy has little effect on take-up of PHI and is best interpreted as a wealth transfer to elderly Australians who already have insurance.     

Individual‐Level Ambidexterity and Entrepreneurial Entry

This study examines the organizational drivers of entrepreneurial entry through the lens of individual‐level ambidexterity. We theorize that employees that both explore and exploit new activities within organizations are more likely to become entrepreneurs outside the organization. Multilevel analysis results from a large sample of Global Entrepreneurship Monitor survey data support this hypothesis. This study contributes to the entrepreneurship literature by highlighting the role of individuals' prior ambidexterity experiences in organizations as foundational building blocks of entrepreneurial entry. The study links entrepreneurship and ambidexterity theories with evidence that an individual's ambidexterity and entrepreneurial activities are related.     

VIX changes and derivative returns on FOMC meeting days

We examine the link between scheduled Federal Open Market Committee (FOMC) meetings and the VIX measure. Our results indicate that VIX declines significantly on scheduled meeting dates. Unlike prior studies suggesting that the drop in VIX is mechanical, we attribute the decline to the resolution of uncertainty regarding future interest rates provided by the meetings. We examine returns to investable positions on VIX. Though a decline in the VIX level commonly occurs on FOMC meeting dates, we find that significant returns may still be garnered from taking short-VIX positions in derivative markets, even after accounting for the bid-ask spread.     

Uncertain regulatory timing and market dynamics

Using a dynamic model of capacity accumulation, I examine the relationship between uncertainty about the timing of a new Pigouvian tax and oligopolistic competition. I find that for some market structures uncertainty about the timing of the regulatory change leads firms to increase investment. These results stem from the nature of the uncertainty and its interaction with firms' strategic incentive to engage in capacity races. They dramatize the importance of accounting for initial conditions when forecasting firms' reactions to anticipated regulatory changes. In addition, I find that more protracted uncertainty leads to greater welfare costs.