Naïve theories of price: A developmental model

A model of the development of naïve theories of price is presented and tested. The criterion used to account for price variations within a product category is product features at age five, product features and quality at age ten, product quality and buyer utility at age thirteen, and a combination of supply considerations and buyer utility/demand in adulthood. Five-year-olds do not justify their use of product features as a price criterion; however, older respondents all justify their price criterion by referring to a source of value. At age ten, variation in the amount of manufacturing inputs is the source of value which justifies the use of product features as a price criterion; at age thirteen, variations in the quality of manufacturing inputs justify the use of product quality as a price criterion; and in adulthood, relative scarcity and buyer preferences justify the use of cost and demand as price criteria.     

THE CHANGING RISK PROFILE OF U.S.-BASED MULTINATIONAL CORPORATIONS EXPOSED TO EUROPEAN COMMUNITY MARKETS

In this study we investigate the risk characteristics of U.S.-based multinational corporations (MNCs) that conduct much of their business in the European Community. Specifically, we assess the efficacy of a multifactor return-generating model that incorporates the influence of U.S. and European markets. Our results demonstrate that the European market is a significant factor in explaining the time-series behavior of MNC returns, and that the European market influence is stronger since the adoption of the Single European Act. In addition, the reduction in the sensitivity of MNCs to the U.S. market since the Single European Act is cross-sectionally associated with changes in their proportional levels of European sales. The results suggest that the returns of other MNCs expanding into increasingly integrated regional blocs may experience similar changes in their systematic risk profile.     

A content analysis of the comment letters to the FASB and IASB: Accounting for contingencies

In this study, we read and analyze 369 comment letters written in response to the IASB's Exposure Draft (ED) of Proposed Amendments to IAS 37 and the FASB's Exposure Draft of Proposed Amendments to FASB Statement No. 5. We also examine how responses to the IASB ED are affected by whether or not the use of IFRS is mandated or permitted by the respondent's country. Although responses were overwhelmingly unfavorable to both EDs, more support was shown for the IASB's proposal to eliminate the probability recognition criterion than for the FASB's proposal to amend the U.S. GAAP disclosure rules. Users responding to the FASB ED provided significantly more intense support than corporate preparers, financial preparers, and legal practitioners. Significantly more respondents to the IASB ED were from countries required or permitted to use IFRS than from countries required to report under their national GAAP. In addition, constituents required or permitted to use IFRS were significantly more likely to express an unfavorable response to the ED and to cite relevance to support their position.     

Testing conditional asset pricing models: An emerging market perspective

The CAPM as the benchmark asset pricing model generally performs poorly in both developed and emerging markets. We investigate whether allowing the model parameters to vary improves the performance of the CAPM and the Fama–French model. Conditional asset pricing models scaled by conditioning variables such as Trading Volume and Dividend Yield generally result in small pricing errors. However, a graphical analysis reveals that the predictions of conditional models are generally upward biased. We demonstrate that the bias in prediction may be the consequence of ignoring frequent large variation in asset returns caused by volatile institutional, political and macroeconomic conditions. This is characterised by excess kurtosis. An unconditional Fama–French model augmented with a cubic market factor performs the best among some competing models when local risk factors are employed. Moreover, the conditional models with global risk factors scaled by global conditioning variables perform better than the unconditional models with global risk factors.     

Experimental Results on Expressed Certainty and Hypothetical Bias in Contingent Valuation

Use of the contingent valuation method is controversial among economists because it is based on hypothetical rather than real choices. Previous experiments have suggested that the commonly used dichotomous choice contingent valuation method leads to hypothetical bias, i.e., overestimates the real willingness to pay. We carried out an experiment to compare the dichotomous choice contingent valuation method with real purchase decisions for a consumer good. We confirm previous findings that hypothetical yes responses overestimate real purchase decisions, but we cannot reject the null hypothesis that definitely sure yes responses correspond to real purchase decisions.     

Are trade restrictions to protect the Balance of payments becoming obsolete?

With the removal of exchange controls and other restrictions to capital mobility, the need for, and the use of, import restrictions for balance-of-payment reasons, as provided for under GATT Articles XII and XVIII:B, has diminished. Since a recent WTO ruling also seems to have put a stop to developing countries' using the ambiguity of treaty language to justify measures designed to protect their domestic industries, there is reason to expect that trade restrictions justified with a foreign exchange crisis will finally fall into disuse. The views reflected here are solely those of the author and should not be attributed to the WTO.     

Disclosing elements of disclosure: a test of legitimacy theory and company ethics

This paper focuses on some of the ethical issues related to voluntary disclosure of qualitative information by Canadian public companies. Drawing on various organizational theories, we examine some of the ways that companies can symbolically manage legitimacy through disclosure. Press releases of a sample of companies that received cease‐trading orders were analysed for their use of language. We found that high‐risk companies attempted to manage legitimacy by selectively releasing information and by using ambiguous language. Moreover, some companies behaved unethically by using language that suggested a positive future despite the imminent release of a cease‐trading order. These findings have implications for organizational and accounting theorists and stakeholders in the corporate, fiduciary, and investment communities. Copyright © 2008 ASAC. Published by John Wiley & Sons, Ltd.     

Young consumers’ food preferences within selected sectors of the Hospitality Spectrum

In society, young consumers are influenced by an array of factors within their home, school and social environments. The adolescent period is one in which the individual becomes a more independent consumer, exerting increased degrees of independence and a subsequent freedom of preference. Such independence may be particularly apparent within the social environment, despite young consumers generally being categorized under the ‘family market’, within the Hospitality Spectrum. The aim of the study was to analyse young consumers’ food preferences within the home, school and social environments, with particular reference to the role of the Hospitality Spectrum. Young consumers for the study, are defined as being between 11 and 16 years, segmented into two age groups: 11–13 years and 14–16 years. The selected sectors of the Hospitality Spectrum which were studied, were the fast food service and school canteen sectors. In order to fulfil the research aim and objectives, a range of research instruments and analysis techniques were used. The results of the study to date would illustrate that tentative steps have been taken within the school and fast food sectors, to bridge the ‘gaps’ between business supply and consumer preferences. Gender differences were found in food selections within school canteens and fast food establishments, with females more likely to select ‘British’ styled fast foods at school and males more likely to select ethnic foods at fast‐food establishments. No significant differences were found between the two age segments. It is vital that the increasingly important role of the young consumer segment is recognized, in particular considering them as individuals rather than as a part of the ‘total’ family consumer package. However, in market segmentation young consumers are an important consumer group and it must not be overlooked that they will be the future adult consumers. The Hospitality Spectrum must therefore treat this group with respect for the consumer service industry to achieve its full potential. The results of this Northern Ireland study indicates that although the young consumer segment is viewed as important within the selected sectors of the Hospitality Spectrum, the extent of their full potential has yet to be recognized.     

In search of FDI-transmitted R&D spillovers: A study based on Swedish data

In Search of FDI-Transmitted R& D Spillovers: A Study Based on Swedish Data. — This paper analyzes empirically whether inward and outward foreign direct investment (FDI) work as channels for international R&D spillovers. The authors utilize firm-level and industry-level data for Swedish manufacturing. Hardly any evidence of FDI-related R&D spillovers is found. But while the results do not provide support for the hypothesis that the activity level of MNEs’ affiliates matters for the extent of FDI-transmitted international spillovers, they suggest that utilizing foreign affiliates’ employment as a weighting scheme may be too crude a measure. The authors’ analysis shows indeed that the type of activity — R&D or assembly — carried out in the affiliates matters significantly for technology sourcing.