SAVINGS AND PERSONAL DISCOUNT RATES IN A MATCHED SAVINGS PROGRAM FOR LOW‐INCOME FAMILIES

The ability to save for future needs is critical to family well‐being and is especially challenging for low‐income families with little extra income and limited access to institutional structures like employment‐based retirement funds or low cost savings mechanisms. Many nonprofits and governments have created new savings vehicles to fill this void. The ability of families to succeed in these programs may depend on their personal discount rates (time preferences). In this paper, we use survey data from a matched savings program and factor analysis to characterize family time preferences in order to predict their influence on savings levels. We find that a single latent factor describing the level of discount rates (rather than other dimensions of time or amount inconsistency) best describes family differences and is significantly related to the ability of families to save within the program. (JEL D91, I30)     

LOCAL AND STATEWIDE SMOKE‐FREE LAWS IN NEBRASKA: THE EFFECTS ON KENO ESTABLISHMENTS

This study examines how smoke‐free laws influence cross‐border keno shopping in Nebraska. We exploit smoke‐free law variation in timing and location to identify keno revenue gains and losses between neighboring smoke‐free and smoke‐friendly areas. We find the Lincoln municipal smoke‐free law reduced keno revenue by 23.5% in Lincoln and increased keno revenue by 30.0% in smoke‐friendly Surrounding Lincoln counties. The Omaha municipal smoke‐free law reduced keno revenue by 14.8% in Omaha and increased keno revenue by 7.1% in smoke‐friendly Surrounding Omaha counties. Following the Nebraska statewide law, no Nebraska areas had a smoke‐friendly advantage and keno revenue fell by an insignificant 1.0% and 5.2% in the surrounding Lincoln and Omaha counties, respectively. Our results may be of interest to local policy makers interested in understanding the amount of business activity and tax revenue that may be migrating out of a community or even the state. (JEL l18, K32)     

Consumer Vulnerability and Credit Card Knowledge Among Developmentally Disabled Citizens

This study represents an exploratory investigation of credit card knowledge among one vulnerable consumer segment—the developmentally disabled. The results suggest that many of the individuals did not understand the complexity of credit card products and were not able to make reasoned assessments of financial concepts and credit terms. A little knowledge (learning) is a dangerous thing. —Alexander Pope, 1709     

The Influence of Individual Factors on the Effectiveness of Message Content in Antismoking Advertisements Aimed at Adolescents

Approximately five million children under the age of 18 will eventually die from smoking‐related disease. However, antismoking advertisements directed to adolescents appear to be reducing the prevalence of smoking among youth. The reported study extends prior research using an experiment over time (N= 565) to test the influence of individual factors (grade level, gender, and ethnicity) on the effectiveness of two types of message content in antismoking advertisements. Predictor variables from prior research, such as beliefs about smoking and family and peer smoking, were included as covariates in the analysis. As expected, effectiveness was influenced by individual factors. Long‐term health content was more effective among nonwhites, males, and high school students, while short‐term content appeared to work better among junior high males.     

Firms' Voluntary Recognition of Stock-Based Compensation Expense

We investigate factors associated with firms' decisions in 2002 and early 2003 to recognize stock‐based compensation expense under Statement of Financial Accounting Standards (SFAS) No. 123. We find that the likelihood of SFAS 123 expense recognition is significantly related to the extent of the firm's participation in capital markets, the private incentives of top management and members of the board of directors, the level of information asymmetry, and political costs. Although recognizing firms have significantly smaller SFAS 123 expense, we find no significant incremental relation between recognition likelihood and SFAS 123 expense magnitude after controlling for other factors that we expect explain the recognition decision. We also find positive and significant announcement returns for earlier announcing firms, particularly those stating that increased earnings transparency motivates their decision.     

International Accounting Differences and Their Relation to Share Prices: Evidence from U.K., Australian,and Canadian Firms*

Abstract. We synthesize and extend research exploring differences between U.S. and other countries' Generally Accepted Accounting Principles (GAAP) by investigating whether differences between domestic and U.S. GAAP for U.S.-listed U.K., Australian, and Canadian firms are associated with firms' returns and prices. The accounting differences we investigate include goodwill, asset revaluations, income taxes, pensions, interest capitalization, foreign currency, and extractive industries accounting. We conclude that goodwill is priced as an asset; that asset revaluations, successful efforts accounting for extractive industries, and immediate recognition of foreign currency exchange gains and losses on long-term assets and liabilities are generally uncorrected with the information that investors consider relevant; that U.K., U.S., and Australian tax accounting methods do not recognize ‘enough’ tax expense or liability; and that accrual pension accounting and, in some specifications, interest capitalization add explanatory power beyond Australia's cash-based method. Our findings suggest that the U.S. Securities and Exchange Commission's (SEC's) required GAAP reconciliation reflects information useful to investors for U.K. and Australian firms, and to a more limited extent, for Canadian firms. Résumé. Les auteurs font la synthèse des travaux actuels portant sur l'analyse des différences entre les PCGR des États-Unis et ceux des autres pays; ils poussent plus loin les recherches en s'interrogeant sur la relation possible entre les différences des PCGR de divers pays par rapport à ceux des États-Unis, d'une part, et le rendement et le cours des actions d'entreprises du Royaume-Uni, de l'Australie et du Canada, inscrites en bourse aux États-Unis. Les différences comptables qu'ils étudient ont trait, entre autres, à l'achalandage, aux réévaluations de l'actif, aux impôts sur le bénéfice, aux régimes de retraite, à la capitalisation des intérêts, aux devises et aux méthodes comptables de l'industrie minière. Les auteurs concluent que l'on traite l'achalandage à titre d'élément d'actif; les réévaluations de l'actif, la capitalisation du coût de la recherche fructueuse dans l'industrie minière et la constatation immédiate des gains et pertes de change sur les éléments d'actif et de passif à long terme ne présentent généralement aucune corrélation avec l'information que les investisseurs jugent pertinente; les charges fiscales ou les impôts à payer que permettent de constater les méthodes comptables appliquées aux fins fiscales au Royaume-Uni, aux États-Unis et en Australie ne sont pas «suffisantes»; la comptabilisation de la charge de retraite sur la base des prestations constituées a un pouvoir explicatif supérieur à celui de la méthode basée sur la comptabilité de caisse en vigueur en Australie et, à certains égards, c'est aussi le cas de la capitalisation des intérêts. Les constatations des auteurs laissent croire que le rapprochement des PCGR exigé par la SEC livre de l'information utile aux investisseurs en ce qui a trait aux entreprises du Royaume-Uni, de l'Australie et, dans une moindre mesure, du Canada.     

Appliance service and repair

The appliance industry trade journal Appliance reported that during 1989 manufacturers shipped over 55 million major household appliances. Previous studies have explored length of appliance service life for a given household and the economic cost of energy consumption for major appliances. However, limited information is available on availability and cost of maintenance and repairs which affect the total useful life of equipment. Survey results from a study of Nebraska appliance service and repair firms are presented here. This research provides information regarding the distribution and cost of appliance service and repair. The findings serve as current estimates of service and repair information for consumers as well as manufacturers.