Differential effects of regulation FD on short- and long-term analyst forecasts

In this paper, we provide evidence that the quality of short-term analyst forecasts improved but the quality of long-term analyst forecasts deteriorated after the implementation of Regulation Fair Disclosure (FD). More specifically, our results show that the precision of the idiosyncratic information component of short-term forecasts improved in the post-FD period, whereas the precision of both the common and idiosyncratic information components of long-term forecasts declined. We attribute this result to the reduced disclosure of long-term, future-oriented information in the post-FD period. Thus our results support assertions by some analysts that FD has had a chilling effect on information that is relevant to long-term forecasts.     

Multi-dimensional struggles in the greening of industry: A dialectic issue lifecycle model and case study

This paper aims to make two conceptual contributions to the greening of industry literature. Firstly, we propose that the greening process can be conceptualized as an issue lifecycle dynamics with multi-dimensional struggles between ‘greening’ pressures and industry response strategies. To capture the endogenous dynamics, we develop a Dialectic Issue LifeCycle model with five phases, which conceptualize how these struggles play out over time. Secondly, we propose that issue lifecycle dynamics are also influenced by (external) alignments with contextual field-level developments. This proposition accommodates the notion that industries not only face ‘green’ issues but also other relevant pressures. We apply the model to a historical case study: air pollution problems and responses from American automakers (1943–1985). The case study presents a good match with the first three phases of the model, but shows deviations in the fourth and fifth phase, which are due to: a) decreasing pressure from public opinion; b) limited spillovers from air pollution to consumer demand; c) rise of competing issues; and d) strong resistance from the car industry. The findings underline that the greening of industry cannot be fully understood by looking only at the focal issue (e.g. air pollution). Broader developments in industry and external contexts also need to be taken into account.     

Anthropology and Institutional Economics

Defense and commercial trade offsets (also known as countertrade or industrial participation) are valued in the tens of billions of dollars each year andoften accompany the export of advanced technological goods. An offset is any type of non-monetary compensation that a procuring government requires an exporting firm to provide as a condition of the sale and generally commits the exporting firm to spend a certain percentage of the value of the sale in the procuring country. This paper examines 1) how procuring governments use offsets to achieve their goals, and 2) the economic and national security implications of offsets.     

Reviews

Book Reviews in This Article: W. E. Wightman . The Lacy Family in England and Normandy, 1066-1194. H. S. Bennett . Life on the English Manor: A Study of Peasant Conditions, 1150-1400. Margaret Wood . The English Mediaeval House. D. Portman . Exeter Houses, 1400-1700. Patrick Collinson . The Elizabethan Puritan Movement. Calendar of the Patent Rolls. Preserved in the Public Record Office. Elizabeth I. Margaret Cash (Ed.). Devon Inventories of the Sixteenth and Seventeenth Centuries. P. E. Jones (Ed.). The Fire Court: Calendar to the Judgments and Decrees of the Court of Judicature appointed to determine differences between landlords and tenants as to rebuilding after the Great Fire. G. E. Fussell . The English Dairy Farmer, 1500-1900. A. Andréadès . History of the Bank of England, 1640-1903. P. G. M. Dickson . The Financial Revolution in England. A Study in the Development of Public Credit, 1688-1756. Robert Munter . The History of the Irish Newspaper, 1685-1760. W. A. Mc Cutcheon . The Canals of the North of Ireland. J. D. Williams . Audley End. The Restoration of 1762-1797. W. E. Minchinton (Ed.). Politics and the Port of Bristol in the Eighteenth Century. Stanley D. Chapman . The Early Factory Masters. The Transition to the Factory System in the Midlands Textile Industry. Phyllis Deane . The First Industrial Revolution. J. Child . Industrial Relations in the British Printing Industry. The Quest for Security. Werner von Siemens . Inventor and Entrepreneur: Recollections of Werner von Siemens. Kurt Grunwald . Türkenhirsch: A Study of Baron Maurice de Hirsch, Entrepreneur and Philanthropist. J. D. Bailey . A Hundred Tears of Pastoral Banking. A History of the Australian Mercantile Land and Finance Company, 1863-1963. F. B. Smith . The Making of the Second Reform Bill. W. R. Powell (Ed.). A History of the County of Essex. Peter Mathias . Retailing Revolution. A History of Multiple Retailing in the Food Trades based upon the Allied Suppliers Group of Companies. Marc Bloch . French Rural History: an Essay on its Basic Characteristics. J. P. Nettl . Rosa Luxemburg. Erich Gruner and Karl Frei . Die schweizerische Bundesversammlung, 1848-1920 L'Assemblée fédérale suisse, 1848-1920. Richard Colebrook Harris . The Seigneurial System in Early Canada. Geographical Study. Ashin Das Gupta . Malabar in Asian Trade, 1740-1800. David Birmingham . Trade and Conflict in Angola.     

Have ‘European’ and US GAAP measures of income and equity converged under IFRS? Evidence from European companies listed in the US

The EU's adoption of IFRS, combined with the SEC's removal of the US GAAP reconciliation requirement for non‐US registrants reporting under IFRS, signifies a major shift towards the acceptance of global standards. Based on 20‐F reconciliations provided by the population of US listed European companies filing IFRS‐based statements with the SEC in 2005, we examine whether ‘European’ and US GAAP measures of income and equity converged under IFRS. We find that during the period immediately preceding IFRS, for our sample companies, European and US GAAP measures are generally comparable in respect of income and equity. However, as an exception to the latter, we find that UK GAAP yielded significantly lower measures of equity than US GAAP For companies adopting IFRS for the first time in 2005, we find a significant gap between IFRS and US GAAP measures of income, thereby, signifying de facto divergence from US GAAP in regard to income determination. Furthermore, we find that, following IFRS adoption, significant differences with US GAAP equity persisted for companies that previously reported using UK GAAP. Our findings, thus, support critics’ claims that standard‐setters, most notably the IASB and FASB, have more work to do to achieve a sufficient degree of convergence between IFRS and US GAAP that will convince the SEC to require US companies to use IFRS.     

Motivating managers with money: How to assess and reward performance

Does money motivate managers? Many current compensation programs are merely annual bonuses or profit-sharing plans. Seldom is an executive rewarded for actual improvement in performance. The author looks at the situation from two angles: salary administration and incentive bonus administration. First, there must be equality between salary earned and salary received. Second, a company has to establish criteria for evaluating an employee's earned income. The author suggests that an employee's evaluation be based on his observable daily performance, rather than on vague concepts such as his willingness to cooperate or his loyalty to the firm. When a company does award bonuses it should give them for performance that exceeds the daily criteria, and it should pay the bonus immediately.     

The impact of regulatory reform on the value-relevance of accounting information: Evidence from the 1993 regulatory reforms in New Zealand

This paper examines the impact of the 1993 financial reporting regulatory reforms in New Zealand on the value-relevance of accounting information. The study achieves this by regressing stock data of companies on book values and earnings for the pre- and post-regulatory periods. The Financial Reporting Act of 1993 was enacted in New Zealand as part of a wider package of company law reform. The 1987 share market collapse led to a Ministerial Committee of Inquiry that criticised the quality of financial reporting and the high level of non-compliance with accounting standards. The Committee recommended establishing an Accounting Standards Review Board to give the accounting standards a force of law. Whether this development increases the value-relevance of accounting information is an empirical question. The results, however, fail to find any significant increase in the total value-relevance of accounting information in the post-regulation period. There is, however, a corresponding increase in the incremental explanatory power of equity book values in the post-regulation period. This study also extends extant research on the effect of regulation on the value-relevance of accounting information by incorporating firm-specific factors to isolate the effect of regulation.