What Is Your Fraud IQ?

<正>ANSWERS 1.(a)Cash defalcations are the most common of all employee embezzlement schemes.However,since most companies keep relatively good control over cash,the schemes are frequent but rarely result in large losses. A2.(d)There are several basic accounting tech-     

Investment in Human Capital in Team Members Who Are Involved in Collective Decision Making

This paper studies an investment policy which improves the ability of team members to decide correctly. We specify sufficient conditions on the learning function such that the best policy of investment in human capital is to invest first in the least competent person. Despite the fact that team members who are endowed with more human capital contribute more to the probability that the whole team would decide correctly, the liberal policy is still optimal under these conditions. Moreover, within the dichotomous model of collective decision‐making, we show that these conditions are not so stringent.     

Thy neighbor’s jobs: geography and labor market dynamics

This paper develops three explanations for the extent of correlation between neighboring geographic areas’ economic outcomes. Export-oriented firms in neighboring counties might independently produce similar goods, or might be linked directly through the production of intermediate inputs. In either case, counties are exposed to similar demand shocks. Finally, regions share markets for goods and services that are both produced and consumed locally. Empirical results suggest that much of the ‘risk’ associated with economic decline in neighboring regions can be attributed to industrial similarity rather than direct dependence of jobs in one area on jobs in another.     

Identifying unexpected accruals: a comparison of current approaches

While prior research, as noted in our paper, often uses various accrual prediction models to detect earnings management, not much is known about the accuracy, both relative and absolute, associated with these models. Our paper investigates the accuracy of six different accrual prediction models, and offers the following findings. Only the Kang – Sivaramakrishnan (1995) model performs moderately well. The remaining five models provide little ability to predict total accruals: they are less accurate than a naïve model which predicts that total accruals equal −5% of the total assets (TA) for all firms and years. Conventional R² values from a regression of actual accruals on predicted accruals are less than zero for a substantial majority of firms for these five models. These low R² values in the prediction period contrast sharply with the much higher R² values that are obtained within the estimation period. Similar performance is observed when predicting current accruals alone. However, the relative rankings of the different models are altered somewhat: the Jones (1991) model is then the only model that exhibits some predictive ability.     

Corrections for trade imbalance: A survey

Zusammenfassung Korrektoren bei Handelsungleichgewichten: Ein überblick.-Um verzerrte Sch?tzungen des intra-industriellen Handels zu vermeiden, wurde in der Literatur vorgeschlagen, im Fall von Handelsungleichgewichten Korrekturen vorzunehmen. Von den fünf in diesem Artikel n?her betrachteten Verfahren k?nnen die Balassa-Korrektur und die Bergstrand-Korrektur als diejenigen angesehen werden, die den Vorzug verdienen. Beide Methoden korrigieren multilaterale Ungleichgewichte im gesamten Warenhandel und stellen ein konsistentes Ma\ auf verschiedenen Ebenen der Aggregation zur Verfügung. Jedoch liefert keine der beiden Methoden ein eindeutiges Ma\ für den intra-industriellen Handel. Statt eines der er?rterten starren Korrekturverfahren zu benutzen, wird in der Literatur vorgeschlagen, die Jahre für die Untersuchung so zu w?hlen, da\ Perioden mit einem offensichtlichen allgemeinen Ungleichgewicht vermieden werden, oder von den Indizes des intra-industriellen Handels in einem geschickt gew?hlten Zeitraum den Durchschnitt zu bilden.

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Résumé Des corrections en cas d’un déséquilibre en commerce international: une revue de la littérature. — Pour éviter des estimations biaisées du commerce intra-industriel on a discuté qu’il est nécessaire de corriger le déséquilibre en commerce international. Après avoir examiné cinq procédures, la correction Balassa et la correction Bergstrand peuvent être considérées comme les plus préférables. Tous les deux méthodes corrigent le déséquilibre multilatéral en commerce des biens manufacturés et représentent une mesure consistante aux niveaux différents des données agrégées. Mais les deux méthodes n’offrent pas de mésure pour le commerce intra-industriel sans équivoque. Au lieu d’appliquer une des procédures de correction discutées, on propose dans la littérature à choisir des années spécifiques pour éviter des périodes de déséquilibre total et évident ou à calculer une moyenne des indices du commerce intra-industriel pour une période bien choisie.

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Resumen Correcciones por desequilibrio comercial: una guía. — A los efectos de evitar estimaciones del comercio intrasectorial sesgadas se ha argumentado en favor de una corrección por desequilibrio comercial. De los cinco procedimientos de corrección en caso de desequilibrio comercial estudiados, la corrección segün Balassa y la corrección según Bergstrand pueden ser consideradas como las preferidas. Ambos métodos corrigen por desequilibrio comercial multilateral a todos los productos comerciados y proveen un indicador consistente para distintos nivelés de agregación. Sin embargo, ambos métodos proveen un indicador del comercio intrasectorial ambiguo. En vez de utilizar uno de los procedimientos de corrección rígidos, en la literatura se sugiere hacer una selección de a?os a juicio personal con el fin de evitar períodos de desequilibrio total o tomar el promedio de los índices de comercio intrasectorial para un período elegido a juicio personal.

     

Resource mobilization in developing countries: Financial institutions and policies

Discussion in this paper of the areas and scope for domestic policy action aimed at improving the process of domestic resource mobilization, allocation and use is developed in several stages. First, the authors assess the progress made by LDCs in raising their rates of saving and investment over the past 25 years. Next, government policies — government tax expenditure and pricing policies, in particular — and their effect on public savings are discussed. This is followed by treatment of the issues of private saving performance and allocation, i.e. how to stimulate and make better use of household savings. Institutional and policy measures are suggested as means of promoting a more active role of the banking system. Brief reference is made to the role of development banks in project preparation and in tapping the capital market.     

On the theory of the competitive firm with a utility function defined on profits and regret

In this paper we analyze the optimal output determined by a competitive firm facing uncertain demand. We analyze the effect of introducing uncertainty and the effect of increasing uncertainty on the optimal output, under the assumption that the utility function of the firm depends both on profits and on regret. We show that if the firm is more risk averse to profits than to regret (in a sense described below), both effects tend to decrease the optimal output. Similar effects of introducing uncertainty and of increased uncertainty were previously shown by Sandmo (1971) to exist in the case where utility is defined on profits only. Thus, this paper provides conditions under which the above results hold true, even when utility is defined on regret and on profits.