DIVIDEND POLICY AND ITS RELATIONSHIP TO INVESTMENT AND FINANCING POLICIES: EMPIRICAL EVIDENCE

In this paper it is argued that dividend policy is not determined as a residual, but rather that firms adopt independent dividend and investment policies. Empirical evidence, based on a questionnaire survey, supports this view. Independent dividend and investment policies are possible because debt finance is usually raised in sufficient quantities to accommodate the financial demands created by dividend and investment decisions.     

Anti-Public Broadcasting

The BBC has constantly sought to justify its state support by claiming that it must offer 'public-service' broadcasting. David Graham (right), of Channel 4's Diverse Reports, argues that the BBC's position is both a misunderstanding of economic reality and a brake upon the development of consumer choice and diversity in the market. The Government's 'protection of the well-heeled' imposes 'middle-class tastes on ordinary men and women'.     

How Big Are the Tax Benefits of Debt?

I integrate under firm-specific benefit functions to estimate that the capitalized tax benefit of debt equals 9.7 percent of firm value (or as low as 4.3 percent, net of personal taxes). The typical firm could double tax benefits by issuing debt until the marginal tax benefit begins to decline. I infer how aggressively a firm uses debt by observing the shape of its tax benefit function. Paradoxically, large, liquid, profitable firms with low expected distress costs use debt conservatively. Product market factors, growth options, low asset collateral, and planning for future expenditures lead to conservative debt usage. Conservative debt policy is persistent.     

Accounting Practices and the Market Valuation of Accounting Numbers: Evidence from Indonesia, Korea, Malaysia, the Philippines, Taiwan, and Thailand

This study examines the relation between stock prices and accounting earnings and book values in six Asian countries: Indonesia, South Korea, Malaysia, the Philippines, Taiwan, and Thailand. The analysis is based on a residual earnings model that expresses the value of the firm in terms of book value and residual income. The model holds for any clean surplus accounting system. However, for finite time horizons, biased accounting may affect model estimates. The six countries examined in this study differ in faithfulness to clean surplus accounting as well as bias (conservatism). The study addresses two questions. First, are there systematic differences across countries in the value relevance of accounting, and are these differences related to accounting differences? Second, are there systematic differences in the incremental and relative information content of book value per share (BVPS) and abnormal (residual) earnings per share (REPS) across the countries, and are such differences related to accounting differences? We find differences across the six countries in the explanatory power of BVPS and REPS for firm values. Explanatory power for Taiwan and Malaysia is relatively low while that for Korea and the Philippines is relatively high. These differences are generally consistent with differences in accounting practice; however, since Korean accounting practice is strongly influenced by tax law, we did not expect the high association for Korea. Second, with respect to the incremental and relative explanatory power of BVPS and REPS, we find BVPS to have high explanatory power in the Philippines and Korea but little in Taiwan. In all six countries REPS has less explanatory power than BVPS in most years. Again, the evidence may be interpreted as suggesting accounting practice affects valuation (with Korea again as the exception). Finally, we provide evidence on the sensitivity of the timing of comparisons of stock prices and accounting values. We find that comparing prices at year-end (even though annual accounting information has not been released at that time), in general, provides the highest correlation between market and accounting numbers.     

ESTIMATION OF THE CURRENT COST OF GOODS SOLD*

In recent years current cost accounting (CCA) has received considerable attention and has resulted in the Financial Accounting Standards Board (FASB) in the USA issuing FAS33 and the Accounting Standards Committee in the UK issuing SSAP16. Similar Statements have been issued in Australia, Canada and New Zealand. The requirement to provide current cost information introduces new measurement problems. Amongst the most intractable of these is the estimation of the current cost of goods sold. The paper considers the problems associated with the techniques for estimating the current cost of goods sold which have been suggested in FAS33 and SSAP16. Alternative methods of estimating current cost of goods sold using the discipline of numerical mathematics are then reviewed. It is shown that for individual inventory lines polynomial interpolating methods provide more reliable results than those recommended in the Statements. Where a firm possesses a large numbei of inventory lines it is likely to be impracticable to apply the interpolating methods to every item of inventory. In such cases a technique referred to as STAPOL is recommended.     

The Soft Spaces of Local Economic Development

This article examines soft spaces, soft outcomes and soft infrastructure, trying to make some connections between them. We argue that soft spaces of governance constitute one of the most important but little understood components of contemporary sub-national economic development policy.     

Tourism Policy Making:: The Policymakers’ Perspectives

This research explores tourism policy making, from the perspectives of policy makers using grounded theory. It focuses on Leeds, a city in the North of England, which is characterized by its turbulent environment. The paper identifies themes around policy making, including low status, lack of clarity, uncertainty, lack of consensus and congruence and complexity. Its findings indicate policy making is essentially a social process, involving communication and negotiation between people in the context of wider change. It suggests a social conceptualization, and further research to investigate the communications involved in producing policy rather than the focus on the tangible outputs of the process such as a plan or a physical development.     

A dyadic study of interpersonal information search

Although interpersonal word-of-mouth communication, by definition, takes place between two people, rarely has the phenomenon of word of mouth been studied using both members of the dyad. Building on the literature, this article offers a model of active interpersonal information search that is tested by using a method in which information seeker and source perceptions were obtained. Source characteristics were important determinants of interpersonal influence, but seeker characteristics also played an important role. Interestingly, it proved useful to distinguish between demographic and attitudinal homophily of seeker and source as the former was inversely and the latter directly related to interpersonal influence. Mary C. Gilly is an associate professor in the Graduate School of Management and associate dean of Graduate Studies at the University of California, Irvine. Her Ph.D. is in marketing from the University of Houston. Her research interests include the unintended effects of marketing actions, such as the effects of advertising on employees. She also has interests in services marketing, such as customer service, including consumer complaint handling, and cross-cultural service encounters. Her work has been published in theJournal of Marketing, theJournal of Consumer Research, theJournal of Business Research, and other academic journals. John L. Graham is a professor in the Graduate School of Management at the University of California, Irvine. His Ph.D. is in marketing from the University of California, Berkeley. His primary research interests regard international marketing, international business negotiations, and structural equations modeling. His work has been published in theJournal of Marketing, theJournal of Consumer Research, Marketing Science, theJournal of International Business Studies, Management Science, and other academic journals. Mary Finley Wolfinbarger is an associate professor at California State University, Long Beach and is doing research on the topics of internal marketing and gift giving. She teaches Marketing Principles and Marketing Research. She received her Ph.D. in marketing from the University of California, Irvine. Her work has appeared in theJournal of Marketing and other academic journals. Laura J. Yale came to Fort Lewis College in 1991. She holds degrees in Hotel, Restaurant, and Travel Administration from the University of Massachusetts, Amherst, and received her Ph.D. from the University of California, Irvine. She teaches a variety of courses in Marketing and Travel and Tourism Administration, including Marketing Research, International Marketing and Services. Her industry experience and most of her research interest are in the services sector, particularly the tourism industry. She is on sabbatical leave this academic year, writing an introductory textbook on the tourism industry. She will return to teaching in September 1998.     

Reflexive Local and Regional Economic Development and International Policy Transfer

This article looks at the international dimension of local and regional economic development policy. We illustrate our argument about the difficulties of comparing the relative effectiveness of policy using the experience of a comparative study of local and regional economic development in Australia, the US, England and Northern Ireland. The empirical work suggests that the preferred tools of local economic development and their locally perceived effectiveness vary but that careful interpretation is necessary to understand why this is the case. Given that international policy exchange is neither inherently bad nor good, but that it is inevitable, we argue for further exploration of the process of cross-national policy transfer to ensure we are learning appropriate lessons.