Earnings management by the early adopters of SFAS No. 106

Statement of Financial Accounting Standard (SFAS) No. 106 on Nonpension Postretirement Benefits (NPB) provides managers with a relatively long adoption window and choice of transition methods which can be used by affected companies to manage earnings. This paper examines whether management's choice of adoption timing is motivated by the desire to manage earnings. Fisher's [1934] exact probability analysis is used to test the hypothesis regarding profitability of a sample of 200 early and late adopters of SFAS No. 106. The results indicate that the profitability of adopting the income-reducing accounting standard (SFAS No. 106) early is significantly higher for more profitable firms than for less profitable firms.     

Service Competitiveness – An Anglo-US Study

This article reports on the latest in a series of international comparisons of management practices and performance outcomes of industries in various countries. Here, it is the service industries in the UK and the US which come under the microscope. Among the companies surveyed, there were more world-class performers in the US than the UK, but also more low performers. The concluding part of the article is diagnostic – the authors also suggest measures which could improve performance.     

Auctioning the Airwaves: The Contest for Broadband pcs Spectrum

The House and Senate of the United States Congress recently passed legislation that directs the FCC to establish a system for using auctions to allocate the use of radio spectrum for personal communications services. There is a unique and unprecedented set of issues that arise in this context, which are of interest to economists, industry analysts, regulators, and policymakers. We discuss these issues and evaluate their likely impact on the outcome of the spectrum auctions. In addition, we argue that there may be pitfalls in the auction procedure adopted by the FCC, and we discuss possible alternative procedures.     

Choice of utility function form: its effect on classification of risk preferences and the prediction of farmer decisions

In applications of expected utility analysis, researchers are confronted with a choice among several utility functional forms. Subjective utility values and probability distributions for price and yield were elicited from Sri Lankan producers of minor export crops. Exponential quadratic and cubic utility functions were estimated. The choice of functional form was found to affect both the classification of risk attitudes and the prediction of harvesting strategy. The exponential function was the best predictor of harvesting strategy because it was the best predictor of mature harvesting. All three functions were equally poor predictors of premature harvesting.     

The impact of a shift in organizational role on ethical perceptions: A comparative study

This study investigates ethical decision-making by considering the differences in ethical judgments between undergraduate business and MBA students on selected ethical issues facing employees and managers of today's businesses. The study further investigates differences in ethical judgments between undergraduates and MBAs in terms of a perceived position as an employee or as a manager. The findings indicate that undergraduate students tend to be more ethical than MBA students and that both groups tend to be more ethical when they perceive themselves as managers rather than employees. The authors discuss the implications for both business practitioners and educators.Shohreh A. Kaynama is Associate Professor of Marketing in the School of Business and Economics at Towson State University in Baltimore, Maryland. She earned a Ph.D. in Marketing and the Decision Sciences. Dr. Kaynama has published extensively in numerous National and International proceedings. Her area of research is strategic marketing, consumer behavior, applications of computers and decision sciences in marketing and global marketing. Louise W. Smith is Professor of Marketing in the School of Business and Economics at Towson State University in Baltimore, Maryland. Dr. Smith's main professional interest is consumer behavior. Dr. Smith's articles have appeared in the Journal of Public Policy & Marketing, Journal of Health Care Marketing, Journal of Marketing Education, Journal of Services Marketing, and Journal of Consumer Marketing among others. Algin B. King is Professor of Marketing in the School of Business and Economics at Towson State University in Baltimore, Maryland. He has served on the Faculties of seven universities, publishing numerous articles in National Professional Meetings Proceedings and scholarly journals including Journal of Euro-Marketing, Atlantic Economic Journal. In addition he has served as a business consultant to numerous business firms.     

Pricing Options on an Asset with Bernoulli Jump-Diffusion Returns

The price movements of certain assets can be modeled by stochastic processes that combine continuous diffusion with discrete jumps. This paper compares values of options on assets with no jumps, jumps of fixed size, and jumps drawn from a lognormal distribution. It is shown that not only the magnitude but also the direction of the mispricing of the Black-Scholes model relative to jump models can vary with the distribution family of the jump component. This paper also discusses a methodology for the numerical valuation, via a backward induction algorithm, of American options on a jump-diffusion asset whose early exercise may be profitable. These cannot, in general, be accurately priced using analytic models. The procedure has the further advantage of being easily adaptable to nonanalytic, empirical distributions of period returns and to nonstationarity in the underlying diffusion process.     

Bond Yields, Ratings, and Financial Information: Evidence from Public Utility Issues

This study investigates the relative roles of bond ratings and financial information in the setting of bond yields. Structural equation modeling techniques are used to learn whether ratings determine yields or whether both ratings and yields are determined by a concurrent set of economic and financial factors. Tests of alternative structural model configurations provide evidence regarding the associations between bond ratings, financial information, and bond yields. Both ratings and financial information are found to play an important role in determining bond yields. In addition, yields are consistent with the higher rating in cases of split ratings.     

Supplier relations and management: A survey of Japanese,Japanese-transplant,and U.S. auto plants

This article presents the results of a questionnaire survey sent to a sample of automobile manufacturers in the United States and Japan (including Japanese-managed plants in the United States) during the spring of 1990. The data support observations that Japanese and U.S. practices tend to differ in key areas and Japanese suppliers perform better in dimensions such as quality (defects) and prices (meeting targets, reducing prices over time); and that Japanese-managed auto plants established in the United States have, in general, adopted Japanese practices and receive extremely high levels of quality from Japanese as well as U.S. suppliers. These findings provide evidence that Japanese practices and performance levels are transferable outside Japan and suggest that considerable improvements are possible for U.S. suppliers supplying U.S. auto plants. In addition, the survey indicates that U.S. firms have adopted at least some practices traditionally associated with Japanese firms, apparently reflecting some convergence toward Japanese practices and higher performance levels in supplier management.