The rise and rise of IFRS: An examination of IFRS diffusion

We seek to understand the ever-increasing push towards the international harmonization of accounting standards and particularly the inexorable rise of standards produced by the International Accounting Standards Board (IASB). While the primary justifications for the increasing recognition given to these standards (IFRS) are economic, we question whether the empirical evidence to date has yielded convincing support for these arguments. We therefore offer an alternative explanation for the origin and diffusion of IFRS that incorporates social and political factors. Outsourcing the manufacture of accounting standards to a single private agency appears to be a rational, lower cost option – lowering both economic and political costs for individual states as long as they continue to retain residual decision rights with respect to the adoption of IFRS. However, such outsourcing must also be perceived to be legitimate. IFRS confer institutionalized legitimacy because they possess three characteristics required of a technology for global governance. These are sponsorship by powerful interest groups/regulators, internationality and plasticity. We therefore conclude that the widespread diffusion today of IFRS can at best be only partially explained as an economically rational phenomenon. Rather, the demand for legitimate action in the face of tightly coupled and complex global markets is at least equally important in generating support for IFRS.     

Stock returns and volatility: Another look

Most empirical work examining the intertemporal mean-variance relationship in stock returns has tended to use relatively simple specifications of the mean and especially of the conditional variance. We augment the information set to include economic variables that other researchers have found to be important and use GARCH-M models to explore the relation between volatility and expected stock returns. We find that the additional variables have little impact on the conditional variance and that any intertemporal relationship between volatility and stock returns is weak or unstable. Our results signal the need for theoretical models of the intertemporal volatility-return relationship, and call for further studies of the determinants of the conditional variance of stock returns.     

Indian call centres and business process outsourcing: a study in union formation

In this exploratory study of union formation in the Indian call centre/business process outsourcing sector, the authors draw upon evidence from the first detailed survey of members of the recently formed UNITES, and from extensive interviews. This paper engages with mobilisation theory and analyses of trade union formation.     

Integer goal programming model for the implementation of multiple corporate objectives

The problem of long-range planning and investment project evaluation is complicated by the presence of multiple conflicting goals measured in incommensurable units, indivisibility of alternative projects, and the desire of management to consider mutually exclusive marketing-pricing strategies. The model proposed in this study attempts to allow for these complexities through the use of integer goal programming. It is the hope of the authors that this model will provide management with an additional decision-making tool for implementation of multiple corporate objectives.     

Full information estimation and stochastic simulation of models with rational expectations

A computationally feasible method for the full information maximum-likelihood estimation of models with rational expectations is described in this paper. The stochastic simulation of such models is also described. The methods discussed in this paper should open the way for many more tests of the rational expectations hypothesis within macroeconomic models.     

Monetary anticipation and the demand for money in the U.K.: Testing rationality in the Shock-Absorber hypothesis

The Carr-Darby shock-absorber hypothesis that unanticipated changes in the money supply cause changes in real balances but anticipated changes have a unit impact on the price level (and therefore leave real balances unchanged) is tested using two-step and joint estimation techniques. For the U.K., two-step methods appear to support the shock-absorber hypothesis, but the superior joint estimation technique decisively rejects the hypothesis, particularly the implicit rational expectations cross-equation restrictions.     

The Effects of Norms on Investor Reactions to Derivative Use

Prior research indicates that a firm's use of derivatives to manage business risks is viewed favorably by investors. However, these studies do not consider a potentially key factor in this setting—namely, the typical behavior (or norms) regarding derivatives by other firms in the industry or the firm itself. In this paper, we report the results of multiple experiments that test whether norms are influential in affecting investors’ evaluations of firms’ derivatives choices. Our results show that the generally favorable reactions to derivative use actually reverse and become unfavorable when firms’ derivative decisions are inconsistent with industry or firm norms. Somewhat surprisingly, though, we find that industry and firm norms are not viewed similarly by investors. These results expand our understanding of how investors respond to firm's derivative use decisions and demonstrate the role of norms as factors that influence investors’ judgments in financial reporting settings. Our results have implications for firm managers making decisions about derivative use.