The Evolving Food Chain: Competitive Effects of Wal-Mart's Entry into the Supermarket Industry

We analyze the effect of Wal-Mart's entry into the grocery market using a unique store-level price panel data set. We use ordinary least squares and two instrumental-variables specifications to estimate the effect of Wal-Mart's entry on competitors' prices of 24 grocery items across several categories. Wal-Mart's price advantage over competitors for these products averages approximately 10%. On average, competitors' response to entry by a Wal-Mart Supercenter is a price reduction of 1–1.2%, mostly due to smaller-scale competitors; the response of the "Big Three" supermarket chains (Albertson's, Safeway, and Kroger) is less than half that size. Low-end grocery stores, which compete more directly with Wal-Mart, cut their prices more than twice as much as higher-end stores. We confirm our results using a falsification exercise, in which we test for Wal-Mart's effect on prices of services that it does not provide, such as movie tickets and dry-cleaning services.     

Preconditions for Successful Implementation of Accrual Accounting in Central Government

A number of national governments, including the UK, have successfully implemented a change to accrual accounting. But the change should not be regarded as an end in itself: it will not solve the problems that arise where inadequate cash accounting systems exist; it will not improve control or management where inadequate control and poor management exist; nor will it improve external audit or the legislature's control over the executive. Before this reform is introduced, cash accounting should be robust, control should be secure, external audit should be functioning well and the legislature should have an ability to call the executive to account. This article sets out preconditions that governments need to meet to ensure that the full benefits of accrual accounting are achieved.     

Executive Agencies, Performance Targets and External Reporting

Since 1988, the role of Next Steps executive agencies has been crucial in delivering central government services. Agencies were established to improve service delivery, with changes being supported by an increasing focus on quantification. The Government argued that performance measures and targets are vital in supporting management in planning and controlling the operation of an agency, and that they are also important in providing a basis for reporting to those outside its immediate management—an aspect of discharging accountability. This article discusses the connections between targeting and reporting performance in agencies and, through an empirical study of business plans, corporate plans and annual reports, shows the extent of such linkages. The article provides evidence that key targets in planning documents of agencies provide a useful platform for external reporting, although improvements can still be made.     

Are the markets for financial assets efficient? : Evidence for the USA, 1974–1988

The analysis in this paper addresses the efficient markets hypothesis as it pertains to the markets for financial assets. Both weak form efficiency and semistrong form efficiency are investigated for three different financial assets - common stocks, preferred stocks and government bonds. For these assets the markets are indicated to be weak form efficient based on monthly data covering the period January 1974 to June 1988. In the case of semistrong form efficiency, the financial assets markets are efficient with respect to the supply of money for the period after October 1979 but not before. This anomaly is attributed to the different procedures used by the Federal Open Market Committee between the two periods for controlling the growth rate of the money supply.     

The Effect of Incentive Regulation in Telecommunications in the United States

Incentive regulation is now an important regulatory tool in the telecommunications industry in the United States. The issue explored here is whether incentive regulation has resulted in an increase in productive efficiency. After providing an overview of the nature of incentive regulation, one methodology for measuring the effects of incentive regulation on productive efficiency is reviewed. This methodology is data envelopment analysis (DEA) and allows for the measurement of both scale efficiency and technical efficiency of individual local exchange carriers. The results indicate that most local exchange carriers were technically efficient over the 1988–1998 period. Four LECs, however, consistently demonstrate scale inefficiency. In the aggregate, however, based on the DEA results there was no identifiable improvement in aggregate LECs' technical efficiency between 1988 and 1998. Subsequently, an alternative methodology, a stochastic frontier production function approach, is considered. The results from this methodology confirm that there was no change in technical efficiency over the period of study, something that incentive regulation was specifically designed to enhance.     

Effects of U.S. equal employment opportunity and affirmative action programs on women's employment stability

An important labor market issue in the United States is the effect that the Equal Employment Opportunity and affirmative action programs that were implemented in 1965 have had on the employment of women relative to that of men. Using time series data covering the period 1947–1988, an analysis of this issue is undertaken. The results indicate that women in the 20–54 age group benefitted in terms of greater stability of employment (i.e., less sensitivity to short run variations in employment) over the period 1965–1980 while they lost some of these gains over the period 1981–1988 (corresponding to the tenure of the Reagan Administration). Men in the same age group, on the other hand, experienced the opposite effect. That is, men in the 20–54 age group became more sensitive to short run variations in employment over the period 1965–1980 and less sensitive over the period 1981–1988. The evidence also indicates that the EEO and affirmative action programs had the effect of increasing the share of projected employment of women in the 20–54 age group and in the 55–64 age group while decreasing the share of projected employment of men in the comparable age groups.     

The Change in Productive Efficiency in Telecommunications in the United States

The question addressed here is whether the adoption of incentive regulation, which has become an important regulatory tool in the telecommunications industry in the USA, has resulted in a change in the technical efficiency of local exchange carriers in the USA. After providing an overview of the nature of incentive regulation, a methodology for measuring technical efficiency and its change is introduced. This is a multiple-output/multiple-input distance function approach to measuring technical efficiency. The results of implementing this approach for 19 local exchange carriers for the 1988-2001 period indicate that in the production of local service, intrastate toll/access service, and interstate access to local loops, there was no change in technical efficiency between the 1988-1990 period and the 1991- 2001 period, something that incentive regulation was specifically designed to promote.     

A Comparative Study on the Impact of Revised SORP 2 on British and Irish Charities

Charities constitute an important sector in the economies of Britain and Ireland. However, despite their economic importance, charity external financial reporting has been characterised by a diversity of accounting practice and a lack of standardisation. Over the last 20 years an attempt has been made to improve this situation by the publication of a Statement of Recommended Practice (SORP) for charities in 1988 and its revision in 1995. It is argued that inconsistencies in the financial statements of charities and the adoption of dubious accounting practices make it difficult for users of charity accounts to understand (and therefore use) the information provided. Previous studies have mainly looked at the impact of the original SORP (1988) on large charities in Britain. Little is known with respect to the impact on Irish charities. This paper presents the results of a comparative analysis of over 200 financial statements of Irish and British charities with respect to the recommendations contained in the revised SORP (1995). The results provide evidence that the accounts of Irish charities are considerably less compliant with the recommendations made in the revised SORP than their British counterparts. Possible reasons for this are discussed.     

Audit Strategies and Multiple Fraud Opportunities of Misreporting and Defalcation*

We examine how an auditor assesses the risk of fraud and formulates an audit plan when the auditee has the opportunity to commit various types of fraud. Unlike previous studies, the audi‐tee can misappropriate assets (defalcation), misreport financial information (fraudulent financial reporting), or misreport financial information in combination with defalcation. Our results identify four possible equilibria whose characteristics depend on the auditee's relative rewards and penalties from the various types of fraud, the cost of audit effort, and expectations about the auditee‐firm's performance. When the cost of audit effort is sufficiently small, fraud risk assessment depends on the auditee's rewards and penalties associated with each type of fraud, but not on the auditor's beliefs about firm performance. The auditor develops an audit plan that focuses on the type of fraud the auditee is most motivated to commit, and in turn, the audit plan deters all other types of fraud.