An outcome-based assessment of international transfer pricing policy

Instead of concentrating on the selection of the optimal transfer pricing method, this paper focuses on the consequences of international transfer pricing for multinational entities. A sample of U.S.-based multinational firms is employed to determine if transfer pricing results in measurable financial outcomes. Results of the study indicate that firms employ international transfer pricing to meet a variety of objectives. The dollar value of international transfers and the foreign sales percentage are both significant explanatory variables for the financial outcomes of these objectives.     

Financial acumen, women speculators, and the Royal African company during the South Sea bubble

Price bubbles provide a unique opportunity to study the financial acumen of shareholders. We focus on the 1720 South Sea episode as experienced by the Royal African Company whose stock was more speculative than other joint stocks. During 1720 the company had a new large stock issue. This paper examines the financial acumen of those women who traded senior and engrafted stock across 1720. We find that depending on the pricing regime, these women at worst broke even on their activities or had positive speculative gains. Our findings are consistent with a growing literature on the positive link between gender, capital gains and financial markets.     

SME Reporting in Australia: Where to Now for Decision‐usefulness?

This paper develops recommendations for simplified decision‐useful SME financial reporting in Australia – a country that has traditionally allowed a wide range of reporting standards to be used by these entities. Drawing on interviews and comment letters from a number of stakeholders, and data from a survey of users of financial statements of non‐publicly accountable unlisted entities, we analyse stakeholder arguments for and against SMEs providing less detailed reports, and identify the line items that might be most useful to users for decision making.     

Export Sophistication: A Dynamic Panel Data Approach

In this article, we analyze export sophistication based on a large panel dataset (2001–2015; 101 countries) and using various estimation algorithms. Using Monte Carlo simulations, we evaluate the bias properties of estimators and show that GMM-type estimators outperform instrumental-variable and fixed-effects estimators. Based on our analysis we document that GDP per capita and the size of the economy exhibit significant and positive effects on export sophistication; weak institutional quality exhibits negative effect. We also show that export sophistication is path-dependent and stable even during a major economic crisis, which is especially important for emerging and developing economies.     

The Roles of Innovators and Labor in a Schumpeterian Factor Endowments Based Model of Intra‐industry Trade

This paper builds a model of Schumpeterian innovation and trade that emphasizes endowments of innovators and labor as a key factor in determining the pattern of trade. The model suggests a strong complementarity between intra‐industry and inter‐industry trade. The pattern of inter‐industry vs intra‐industry trade is analyzed using the Grubel–Lloyd index. The theoretical model predicts that the prominence of intra‐industry trade is a nonlinear function of the ratio of the proportion of world knowledge domestically generated to the domestic share of the world labor supply. Strong empirical evidence for this key result is presented and implications are discussed.     

Disclosure of contingent legal liabilities

There has long been user dissatisfaction with firm’s disclosure of contingent legal liabilities, and the FASB, IASB, and SEC have all considered compliance issues and standard amendments on this topic in recent years. This study uses a sample of employment discrimination cases to provide evidence on the extent to which current contingent legal liability disclosures provide useful contingency evaluations. Consistent with legal concerns influencing reporting decisions, I find that current disclosure practices provide limited quantitative detail regarding the magnitude of the expected loss. However, the text of the disclosures does provide qualitative indicators of the probability of loss. I find evidence that statements about the inestimable nature of the loss and statements about the firm’s willingness to consider a settlement are related to higher probabilities of loss and higher loss amounts. I also find evidence that statements regarding an existing accrual for losses and warnings about materiality reflect a higher likelihood of a nontrivial loss. These results emphasize firms’ strong resistance to quantitative disclosures of legal contingencies but suggest that existing SFAS 5 disclosures do contain qualitative information useful for evaluating the loss contingency.     

An examination of EU trade disintegration scenarios

This paper demonstrates the welfare implications of the differential disintegration of the EU. Using a structural gravity approach, our estimates suggest that the rest of the EU countries have much more to lose from the disintegration of the EU compared to a disorderly Brexit. At the same time, neighbouring high‐income and middle‐income countries, such as Bosnia and Herzegovina and Norway, are expected to benefit from EU disintegration under some scenarios because trade would be diverted from EU countries.     

ADAM SMITH AND THE ROLE OF THE METAPHOR OF AN INVISIBLE HAND

Daniel Klein and Brandon Lucas's ‘In a Word or Two, Placed in the Middle: The Invisible Hand in Smith's Tomes’, following a vague hint by Peter Minowitz (2004) , offers original physical evidence that Smith ‘deliberately placed the phrase “led by an invisible hand”– at the physical centre of both his masterworks’. Further, it suggests that the invisible‐hand paragraphs are a response to Rousseau (1755 ); and that in ‘numerous and rich ways’, centrality holds ‘special and positive significance in Smith's thought’. This paper acknowledges the physical centrality of the invisible‐hand metaphor, but questions whether centrality alone gives weight to wider claims that the ‘invisible hand’ was Smith's ‘central idea’. It draws upon Smith's Rhetoric Lectures (1763), and argues that the invisible‐hand paragraphs in The Theory of Moral Sentiments and Wealth of Nations identify the actual objects of the invisible‐hand metaphor. This paper insists that Adam Smith is the most reliable source for revealing what he meant. In contrast, most modern attributions of special meaning to Adam Smith's use of the metaphor ignore Smith's teaching on the use of metaphors and, instead, make numerous, and often mutually exclusive, claims that Smith had a ‘doctrine’ of ‘an invisible‐hand’.     

Training professionals' usage and understanding of Kirkpatrick's Level 3 and Level 4 evaluations

Training professionals have long acknowledged the necessity of conducting behavior‐based (Level 3) and results‐based (Level 4) evaluations, yet organizations do not frequently conduct such evaluations. This research examined training professionals' perceptions of the utility of Level 3 and Level 4 evaluations and the factors that facilitate or obstruct their attempts to perform them. The research was conducted using Brinkerhoff's Success Case Method and Gilbert's Behavior Engineering Model as its frameworks. The three key factors identified by study participants as having an impact upon their ability to conduct Level 3 and Level 4 evaluations were the availability of resources such as time and personnel, managerial support (organizational) and expertise in evaluative methodology (individual). The research findings indicated a need to further explore how training professionals interpret Level 3 and Level 4 and how they can better develop their evaluative expertise, which in turn may increase effectiveness in gaining organizational support for evaluation efforts.