Predicting Retirement Upon Eligibility: An Embeddedness Perspective

Concern over the impact of baby‐boomers' retirement on needed skills and proprietary knowledge has stimulated an interest in identifying workplace factors associated with retirement upon eligibility. Drawing from embeddedness theory, the authors identify work‐based antecedents potentially underlying a related, but distinct, form of withdrawal—retirement upon eligibility. The authors generate and test hypotheses regarding the impact of fit‐, sacrifice‐, and links‐related antecedents using a prospective study design and a national probability sample of some 500 older individuals who, at the time of the initial interview, were within months of becoming—for the first time—eligible to receive such benefits. The findings indicate that, beyond the effects of person‐based antecedents (e.g., age, health, assets, expected retirement income), a combination of fit‐ (i.e., job challenge), sacrifice‐ (i.e., perceived organizational support), and links‐related factors (i.e., stability of close workplace peer relations) have a substantial influence on the decision to retire upon eligibility. © 2013 Wiley Periodicals, Inc.     

Do Homeowners Mark to Market? A Comparison of Self‐Reported and Estimated Market Home Values During the Housing Boom and Bust

This article examines homeowners’ self‐reported values in the American Housing Survey and the Health and Retirement Study from the start of the recent housing price run‐ups through recent price declines. We compare ZIP‐Code‐level market‐based estimates of housing prices to those derived from homeowners’ self‐reported values. We show that there are systematic differences which vary with market conditions and the amount of equity owners hold in their homes. When prices have fallen, homeowners systematically state that their homes are worth more than market estimates suggest, and homeowners with little or no equity in their homes state values above the market estimates to a greater degree. Over time, homeowners appear to adjust their assessments to be more in line with past market trends, but only slowly. Our results suggest that underwater borrowers are likely to understate their losses and either may not be aware that their mortgages are underwater or underestimate the degree to which they are.     

Mortality Regimes and Pricing

Abstract

Mortality dynamics are characterized by changes in mortality regimes. This paper describes a Markov regime-switching model that incorporates mortality state switches into mortality dynamics. Using the 1901-2005 U.S. population mortality data, we illustrate that regime-switching models can perform better than well-known models in the literature. Furthermore, we extend the 1992 Lee-Carter model in such a way that the time-series common risk factor to all cohorts has distinct mortality regimes with different means and volatilities. Finally, we show how to price mortality securities with this model.     

Optimal versus suboptimal choices of accounting expertise on audit committees and earnings quality

By employing a Heckman two-stage selection model, we identify whether employing a financial expert with or without accounting expertise on the audit committee is optimal and how earnings quality varies across these optimal and suboptimal choices. Using four earnings quality measures (informativeness, timely loss recognition, earnings persistence, and accruals quality), we find no differences in earnings quality between firms optimally choosing an expert with or without accounting expertise, consistent with Demsetz and Lehn (J Polit Econ 93:1155–1177, 1985) and others who argue that when firms optimize their choice (i.e., accounting expertise), there should be no difference across the characteristic (i.e., earnings quality) being examined. We do find, however, earnings quality is significantly higher for firms that optimally choose an accounting expert relative to firms that choose (with/without accounting expertise) suboptimally. Finally, firms suboptimally choosing an accounting expert exhibit no improvement, or even lower earnings quality, than firms that optimally choose no accounting expert. Our results provide important evidence of the impact accounting expertise has on earnings quality when considering the firm’s choice.     

An economic impact analysis of the Korean exhibition industry

This study estimates the multiplier effect of the exhibition industry. In order to calculate the exhibition industry's total expenditure, consideration is made of three major sources of expenditure including hosts, exhibitors and foreign attendees. According to the summary of the economic impact analysis, the total exhibition receipts of US$645.7 million produced US$1.2 billion in output; 21 692 full‐time equivalent jobs, US$260 million in personal income for residents, US$577.4 million in value‐added, US$54.2 million in indirect tax and US$104.3 million in imports. Copyright © 2008 John Wiley & Sons, Ltd.     

Preemptive collusion among corruptible law enforcers

This paper considers collusion between a supervisor and an agent within a Principal–Supervisor–Agent model. Other papers consider the possibility of collusion after the supervisor has exerted costly effort to obtain hard (“verifiable”) evidence regarding the agent’s actions, information which, if reported would result in the agent being fined with a certain probability. That is, collusion occurs because the supervisor may accept a bribe in exchange for hiding the information he has obtained. This paper allows the supervisor and the agent to enter into a collusive contract either before or after the supervisor has exerted effort to find verifiable information regarding the agent’s actions. The former type of collusion, which occurs after the supervisor has exerted effort, entails ex-post corruption, while the latter, which occurs before the supervisor has exerted effort, entails preemptive corruption. This paper shows that although raising the supervisor’s reward discourages ex-post corruption, it can simultaneously encourage preemptive corruption. Hence, raising the supervisor’s reward will not always discourage collusion. This result further implies that though privatizing law enforcement can always be used to eliminate ex-post corruption, it cannot be used to eliminate preemptive corruption. Furthermore, when compared to ex-post collusion, an equilibrium without corruption is always socially preferred. However, when compared to preemptive collusion, an equilibrium without corruption may not always be socially preferred.     

(Un)Ethical Leadership and Identity: What Did We Learn and Where Do We Go from Here?

The purpose of this article is to highlight and comment on the key findings emerging from the collective efforts of the special issue on leadership, ethics, and identity. Highlights include definitional advancements, processes comprising ethical leadership, as well as outcomes and moderating factors. In addition, I attempt to synthesize work across authors by identifying common themes as well as conflicting elements in the article. I conclude with a discussion on emerging areas in need of future research investigation in the leadership and ethics arena.     

The 100% money proposal and its implications for banking: the Currie–Fisher approach versus the Chicago Plan approach

The literature on the 100% money proposal often reveals some confusion when it comes to its implications for the banking sphere. We argue that this can be partly explained by a failure to have distinguished between two divergent approaches to the proposal: the “Currie–Fisher” (or “transaction”) approach, on the one hand, which would preserve banking; and the “Chicago Plan” (or “liquidity”) approach, on the other hand, which would abolish banking. This division among 100% money proponents stemmed, in particular, from different definitions of money, and different explanations of monetary instability. The present paper attempts to clarify this divergence of views.     

Deciphering Tax Avoidance: Evidence from Credit Rating Disagreements

This study investigates the role of tax avoidance in the credit‐rating process and whether differences exist in how rating agencies account for the risk relevance of tax avoidance. Using a sample of initial credit ratings assigned to public debt issuances during 1994–2013, our evidence is consistent with Moody's Investors Service and Standard & Poor's assessing the costs and benefits associated with tax avoidance differently from one another, resulting in more frequent and pronounced rating agency disagreement. Rating agency disagreement over tax avoidance is most evident when it is accompanied by relatively high levels of uncertain tax positions, foreign activities, research and development activities, or tax footnote opacity. We also find evidence that decreases (increases) in tax avoidance or tax footnote disclosure opacity are positively (negatively) associated with the convergence of split ratings. This suggests that firms can exacerbate or mitigate rating agency disagreement subsequent to bond issuance. Our study complements prior research by examining why sophisticated information intermediaries disagree about the risk relevance of tax avoidance. It also sheds light on how firms can influence rating agencies’ understanding of tax avoidance.