Accounting information,salesforce compensation and acquisition of new customers

The need for the management accounting system (MAS) to support marketing decisions has been identified in literature and practice. Accordingly, several improvements have been suggested with the main intention of providing more detailed information on marketing segments. Yet, even with respect to these improved systems it has to be acknowledged that the quality of the information provided will not be identical for all marketing segments: it can be assumed that it will be more precise for existing segments, which are already served by the firm, than for new ones, with which the firm has comparatively little experience. Further, it has to be considered that the MAS will seldom be the only source of useful information, as the example of the good salesforce having gained a ‘deep understanding’ of the market while doing his job shows. A problem arises if the acquisition of this additional information is (personally) costly and unobservable and therefore has to be motivated by incentive compensation schemes. This paper emphasizes that standard compensation contracts, as recommended by literature and practice, may fail to induce goal-congruent behaviour. It is shown that ranking commission rates according to the profitabilities reported by the MAS may be dysfunctional and that a non-intuitive rank order may be necessary to motivate the salesforce to become better informed and to use this knowledge appropriately.     

Target costing,co-ordination and strategic cost management

During the last years issues of strategic management accounting have received widespread attention in the accounting literature. Yet the conceptual foundation of most proposals is not clear. This paper presents a theoretical analysis of one of the most prominent approaches of strategic management accounting, i.e. target costing. We analyse three distinct characteristics of this strategic management accounting tool, namely its market orientation, its use as co-ordination instrument and its interaction with other factors affecting long-term cost structure in the form of strategic learning. The analysis shows that the more ‘strategic’ dimensions are added to the problem of cost management, the less valid are ‘strategic’ management accounting proposals in terms of the usual way target costing is employed.     

Employees' concerns about change and commitment to change among Italian organizations: the moderating role of innovative work behavior

Despite being regarded as a critical psychological process influencing the effectiveness of change initiatives, concerns about change have not received empirical attention in the organizational change literature. The present study addresses this issue by examining the relationships among employees' concerns about change (conceptualized as including concerns about the contents and benefits of change, and concerns about mastering the change), commitment to change and innovative work behavior. First, in a hospital undergoing a major administrative change (N = 435), concerns about change were generally found to be negatively related to affective and normative commitment to change and positively related to continuance commitment to change. These results were replicated in a chemical and pharmaceutical company undergoing a technological change (N = 113), except that concerns about change were unrelated to normative commitment to change. In addition, employees' innovative work behavior moderated the relationship of concerns about change to affective commitment to change such that the relationship was negative when innovative behavior was low but nonsignificant when innovative behavior was high. This study provides scholars and practitioners with a theoretically and empirically grounded framework for assessing employees' concerns about change, and moves research a step forward into identifying the behaviors that organizations should support to counteract this psychological threat.     

CHOOSING THE VARIABLES TO ESTIMATE SINGULAR DSGE MODELS

We propose two methods to choose the variables to be used in the estimation of the structural parameters of a singular DSGE model. The first selects the vector of observables that optimizes parameter identification; the second selects the vector that minimizes the informational discrepancy between the singular and non‐singular model. An application to a standard model is discussed and the estimation properties of different setups compared. Practical suggestions for applied researchers are provided. Copyright © 2014 John Wiley & Sons, Ltd.     

The formation and evolution of childhood skill acquisition: Evidence from India

Building on recent advances in the literature and using a rich data set for two cohorts of children aged between one and twelve for Andhra Pradesh, India, we investigate the determinants of children's cognitive as well as non-cognitive skills. We find evidence of self-productivity for cognitive skills and cross-productivity effects from cognitive on non-cognitive skills. Moreover, we demonstrate that parental investment has contemporaneously positive effects on skill levels for all age groups. Investigating other determinants of these skills, we find child health at age one to influence cognitive abilities at age five, whilst child health at age one is influenced by parental care already during pregnancy and earliest childhood. Understanding the determinants which account explicitly for the effect of a large number of child, caregiver and household characteristics provides insights with regard to possible policy interventions to improve the chances of children in poor environments of developing cognitive and non-cognitive skills crucial for success in many spheres of life.     

Local versus Global Assessment of Mobility*

Mobility indices are popular tools designed to quantify the extent of income changes by aggregating “local” distributional change into a “global” scalar according to some rule. For some mobility measures, this aggregation rule is only implicit in their standard definition. We derive an insightful approximation to the (statistical) aggregation rule for the important class of mobility indices introduced by Shorrocks (Journal of Economic Theory 19 (1978), 376–93) and further generalized by Maasoumi and Zandvakili (Economic Letters 22 (1986), 97–102), which enables us to characterize their normative properties. We also develop methods for estimation and inference. A substantive empirical contribution emerges from the comparison of mobility between the United States and Germany. Our methods reveal why income mobility is higher in Germany than in the United States: Higher German mobility in the bottom of the distribution is combined with an implicitly higher weighting by the mobility index at the bottom.     

Subsampling the distribution of diverging statistics with applications to finance

In this paper we propose a subsampling estimator for the distribution of statistics diverging at either known or unknown rates when the underlying time series is strictly stationary and strong mixing. Based on our results we provide a detailed discussion of how to estimate extreme order statistics with dependent data and present two applications to assessing financial market risk. Our method performs well in estimating Value at Risk and provides a superior alternative to Hill's estimator in operationalizing Safety First portfolio selection.