A Note on Perceptions of Finance Journal Quality

Finance journal quality is a critical issue for faculty annual elevations, for the tenure and promotion process, and for the administration of faculty workload plans. Unlike other studies that use objective measures (such as citation frequencies) to rate journals, this study focuses on the opinions of chairpersons about the relative quality of 55 finance, insurance, and real estate journals. A sample of 218 finance department chairpersons at AACSB accredited business schools were surveyed, and 125 responses were received (57.34% response rate). Besides overall aggregate scores, responses are segregated and tested for differences across several dimensions. The results offer interesting and current insight on general perceptions of journal quality.     

Political Risk and Purchases of Privatized State‐Owned Enterprises

We assess the valuation effects and risk for acquirers of privatized state‐owned enterprises (SOEs). The valuation effects of purchasers are positive and significant; they increase for purchasers that have recent high performance, better access to capital, and have engaged in larger acquisitions. The acquirer valuation effects are lower when the selling government is more corrupt, more bureaucratic, and a weaker financial performer. Acquirer's total and unsystematic risk increases, indicating that purchasers of SOEs realize diversification benefits. Systematic risk increases for purchasers when the government is characterized by high political risk.     

Accounting contagion: The case of Enron

The Enron scandal offers the opportunity to assess the degree to which misleading accounting can affect connected firms and industry rivals. While the market was inept at detecting the inaccuracy of Enron’s financial statements, it swiftly punished many connected firms once Enron's faulty accounting was publicized. A cross-sectional analysis documents that the market punished connected firms that had greater exposure to Enron’s business, whose financial statements were viewed as more complex, and that had greater financial leverage. Most of the negative news indicating concern with Enron’s accounting corresponded with a significant decline in the stock prices of firms in the energy and natural gas (ENG) industry, regardless of an explicit connection to Enron. Furthermore, rival firms with direct exposure to Enron and more aggressive earnings-reporting methods also experienced more detrimental effects.     

The Effects of Out‐of‐Regime Guidance on Auditor Judgments About Appropriate Application of Accounting Standards

Accountants making judgments with respect to a particular set of standards are increasingly aware of standards from other reporting regimes that offer additional or conflicting guidance. In fact, IFRS encourages reliance on out‐of‐regime standards when IFRS lacks guidance. This paper reports the results of two experiments which provide evidence that auditors in such circumstances are vulnerable to contrast effects, whereby reporting judgments under IFRS are systematically influenced away from the accounting treatment supported by standards from another regime (U.S. GAAP). Contrast effects are observed (i) when out‐of‐regime standards are considered before making a reporting judgment under IFRS, and (ii) when out‐of‐regime standards are applied as local GAAP for a subsidiary of a foreign parent that reports under IFRS. We also find that contrast effects are reduced when auditors believe IFRS lacks guidance. These results have implications for financial statement preparers and auditors in the current incomplete‐convergence environment.     

The deployment of temporary production workers in assembly operations: a case study of the hidden costs of learning and forgetting

The dynamics of workforce skill levels has a considerable impact on plant-level performance that is commonly overlooked by managers of manufacturing operations. In this study, we present a discrete event simulation model inspired by and validated in an actual manufacturing setting that includes short product life cycles, mid-volume production quantities, and a production environment consisting of assembly, inspection and testing.The effect of worker skill dynamics is analyzed using a factorial experimental design that contrasts the use of temporary versus permanent workers on manufacturing cost performance. The manufacturing costs assessed include labor, inspection and testing. The cost of reworking a defect is captured as an increase in the labor consumption. Materials costs are not assessed. At the core of the analysis, it is assumed that temporary workers have relatively less skill and therefore have higher average production times, higher average defect rates associated with their assembly activity, and lower rates of learning. In addition, the variance of the production time is higher for the temporary workers. Despite these indicators of performance problems, temporary workers may be used because of the considerably lower wage rate compared to permanent employees.Our in-depth case analyses shows that assigning skilled permanent workers to upstream build operations was superior to other policies deploying temporary workers, regardless of lot size or product complexity. Attesting to the importance of the labor mix component of manufacturing strategy, workforce deployment policies tended to dominate product switching frequency (a proxy variable for lot size and product mix) in impacting costs.     

JobKeeper: An Initial Assessment

We present details of the design and implementation of the 2020–2021 JobKeeper program and review the literature on its impacts. JobKeeper stimulated the macroeconomy and restrained job loss in the downturn. But because the program was not narrowly targeted, the cost per job saved was high and the impact most likely regressive. However, it would not have been possible to devise and implement a more targeted program in the available time, and as it was, JobKeeper was arguably implemented later than needed for maximum effectiveness. We therefore recommend that Australia consider establishing a short-time work program for use in future recessions.     

Introduction

This article introduces the Policy Forum. It contains: (i) a brief overview of the fiscal policies introduced to deal with COVID-19 and their impact on Australia's economic performance; (ii) summaries of the articles in the Forum; and (iii) suggested learnings for policymaking in future crises.