Value versus Glamour

The fragility of the CAPM has led to a resurgence of research that frequently uses trading strategies based on sorting procedures to uncover relations between firm characteristics (such as “value” or “glamour”) and equity returns. We examine the propensity of these strategies to generate statistically and economically significant profits due to our familiarity with the data. Under plausible assumptions, data snooping can account for up to 50 percent of the in‐sample relations between firm characteristics and returns uncovered using single (one‐way) sorts. The biases can be much larger if we simultaneously condition returns on two (or more) characteristics.     

In Art we trust

Culture is an experience good and has strong externalities. Culture has social value, option value, existence value, innovation value, and intergenerational value. None of these are internalised by the market. One should avoid that culture appeals to a small elite. It is thus crucial to invest in cultural education, to bring culture to places where the people are, and to put a greater emphasis on demand-side rather than supply-side cultural subsidies. One should try to avoid that high culture becomes marginalised in a multicultural society with many demands on leisure time. The government should avoid deadweight losses, but should also minimise the potential for rent seeking and lobbying. It is crucial that the government stays at arm's length and leaves artistic judgements to independent experts and interested laymen.     

Measuring moral judgement and the implications of cooperative education and rule-based learning

The Defining Issues Test (DIT), developed by Rest (1986) , measures a person's level of moral development using hypothetical social dilemmas. Although the DIT is useful for measuring moral development in social settings, it might not adequately capture an individual's moral judgement abilities in solving work‐related problems ( Weber, 1990 ; Trevino, 1992 ; Welton et al., 1994 ). In the present study, the moral judgement levels of 97 accounting students were measured over a 1 year period using two separate test instruments, the DIT and a context‐specific instrument developed by Welton et al. (1994) . The test scores are significantly higher on the DIT than the Welton instrument (between the instruments and over time), suggesting that accounting students use higher levels of moral reasoning in resolving hypothetical social dilemmas and lower levels of moral reasoning in resolving context‐specific dilemmas. The difference in test scores was highest during cooperative education (work placement programme), implying that the environment is a significant determinant on students’ test scores.     

AN EPISTEMIC COMMUNITY AS INFLUENCER AND IMPLEMENTER IN LOCAL GOVERNMENT ACCOUNTING IN AUSTRALIA

This paper explicates the dual role of epistemic communities as influencers of accounting policy within regulatory space and as implementers who effect change within the domain of accounting. Set within the context of New South Wales in Australia, and the challenge of the financial sustainability of its local councils, the study was informed by documentary sources, and used data from interviews and a survey. Accounting and finance professionals, as an epistemic community, played a pivotal role in formulating accounting policy and in embedding fair value measurement of infrastructure assets.     

The Oxford Handbook of Work & Organization – Edited by Stephen Ackroyd,Rosemary Batt,Paul Thompson and Pamela S.

Books reviewed: The Oxford Handbook of Work & Organization edited by Stephen Ackroyd, Rosemary Batt, Paul Thompson and Pamela S. Tolbert. Oxford University Press, Oxford, 2005, xiii + 655 pp., ISBN 0 19 926992 0, £75.00.     

Modelling employment durations of NHL head coaches: turnover and post‐succession performance

Match‐level National Hockey League (NHL) data are used to identify factors likely to trigger the departure of a team's coach, and to measure the short‐term impact on subsequent match results. There is a statistically significant link between individual match results and the job departure hazard for up to 15 games prior to the point of departure. The hazard depends on the team's current standing within its conference relative to a pre‐season forecast, recent performance in the Stanley Cup, the coach's age and previous employment with his present team as a player. After controlling for a mean‐reversion effect, teams that changed their coach within‐season are found to perform worse subsequently than those that did not, but the negative effect is short‐lived. Copyright © 2006 John Wiley & Sons, Ltd.     

INTERNATIONAL TRADE AND GLOBAL STABILITY1

Trade liberalisation has played a critical role in advancing peace and prosperity. Differences on agriculture have been the major impediment to a future multilateral trade round. The recent agreement on agriculture at the WTO meetings in Geneva may signal a breakthrough in that sector. This article analyses the benefits of recent trade agreements and examines the prospects for future ones. It also presents an alternative framework for advancing trade, the Global Free Trade Association.     

Proposal for a common currency among rich democracies

This paper proposes the creation of a common currency for the industrialized democracies, notably the United States, the European Union, and Japan. A common currency implies a common monetary policy; institutional arrangements for which are discussed. The rationale rests on the assumption that asymmetrical financial shocks will become more important than asymmetrical real shocks for these large, diversified economies, and that one of the growing sources of financial shocks will be changing expectations about exchange rate movements among national currencies. These financial shocks will in turn disturb real economies, such that flexible exchange rates among major currencies will increasingly become sources of shock more than shock absorbers. Such a common currency would also make it much easier for emerging markets to frame their monetary and exchange rate policies.