Earnings management and earnings quality

Viewing the detection of earnings management from the perspective of a crime scene investigator sheds new light on prior research on earnings management and its close relative, earnings quality. The works of Ball and Shivakumar [2008. Earnings quality at initial public offerings. Journal of Accounting and Economics, in press.] and Teoh et al. [1998. Earnings management and the subsequent market performance of initial public offerings. Journal of Finance 53, 1935–1974.] are used to illustrate the application of seven components of a crime scene investigation to earnings management research.     

Perceived justice and customer loyalty in the retail banking sector in the UAE

In this study, the impacts of the three dimensions of justice (distributive, interactional, and procedural) on customers’ post-complaint behaviour (ie exit vs loyalty) of both conventional and Islamic banks in the UAE were investigated. The results showed that interactional justice (eg courtesy) and distributive justice (eg refund) play predominant roles, since they impact both positive and negative emotions and the exit-loyalty behaviour of customers regardless of the type of bank (conventional or Islamic). The results show, however, that procedural justice (eg timeliness) has no impact on either negative or positive emotions and the exit-loyalty behaviour of either conventional bank customers or Islamic bank customers. The results were interpreted in terms of cultural context and in terms of managerial implications for conventional and Islamic banks that are mostly dealing with complaint handling and employee training. The limitations of this study are also discussed at the end.     

A computational view of market efficiency

We study market efficiency from a computational viewpoint. Borrowing from theoretical computer science, we define a market to be efficient with respect to resources S (e.g., time, memory) if no strategy using resources S can make a profit. As a first step, we consider memory-m strategies whose action at time t depends only on the m previous observations at times t???m,?…?,?t???1. We introduce and study a simple model of market evolution, where strategies impact the market by their decision to buy or sell. We show that the effect of optimal strategies using memory m can lead to ‘market conditions’ that were not present initially, such as (1) market spikes and (2) the possibility for a strategy using memory m′?>?m to make a bigger profit than was initially possible. We suggest ours as a framework to rationalize the technological arms race of quantitative trading firms.     

Causes of nonlinearities in low-order models of the real exchange rate

This paper investigates the extent to which modern DSGE models, which feature local currency pricing, home bias, nontraded goods, and incomplete markets, can generate nonlinear real exchange rate dynamics that are consistent with those found in the time series literature using data from the current floating period. Our key findings are as follows. First, if the true model can be appropriately characterized as a set of linear equations, then linearity tests that utilize univariate autoregressions of the real exchange rate suffer from an omitted variables problem, which leads them to overestimate the true incidence of nonlinearity. Consequently, studies that fail to control for this problem may spuriously find evidence of nonlinearities in the data, despite the fact that the data generating process may be linear. Second, we propose a strategy that can largely eliminate this distortion. Finally, we find that DSGE models solved using higher order approximations are capable of generating true structural nonlinearities in real exchange rates both asymptotically and in short samples.     

Sustainable leadership: power of influence in MNCS in Malaysia

Building upon social exchange theory which explains how power is gained and lost in the process of influence between an agent and the target, this article hypothesized the impact of supervisors’ and subordinates’ power bases on the usage of influence tactics by the supervisors. Bases of power of supervisors, subordinates and influence tactics were conceptualized as seven-, seven- and nine-dimensional constructs, respectively. Three hundred and eighty-five pairs of Malaysian managers and executives working in large multinational companies participated. Currently, the manufacturing sector is considered as one of the cornerstone of Malaysia’s economic diversification strategy. The findings suggested that supervisors apply various influence tactics on their subordinates.     

Constructing stratifications for regions in China with sustainable development concerns

China??s economic boom has brought about environmental dark sides, i.e., serious air, water, and solid waste pollutions. As the largest developing countries in the world, China??s road toward economic-environmental balance is even complicated since there are various regions of diversified geographical and economic conditions. Using context-dependent-DEA (data envelopment analysis) as performance evaluating technique, this study constructs the regions?? benchmark-learning ladders for those inefficient regions to improve progressively; and to identify real benchmark for those efficient regions to rank ascendant by incorporating the stratification DEA method, attractiveness measure, and progress measure. Decision matrix covering attractiveness and progress scores is made to help the regions position themselves. Furthermore, we find that capital/employee ratio plays important role on forming levels of regions, which can be interpreted that advanced technology is one of key factors toward regional sustainable development.     

Quality as an autonomous body of knowledge. An in-depth survey on Italian higher education

The need of people skilled on quality topics is strongly increased in Italy, in the last 10 years, and new professional figures that are specialized in quality have been recently recognized by the Italian official classification of occupations. However, there seems to be a lack of empirical studies that analyse education about quality supplied by Italian universities and business schools. This paper shows the results of an exploratory survey on the education in quality offered by Italian universities. The research was conducted on a reasoned sample of Italian universities, selected on the basis of the number of students enrolled and the number of supplied degree courses, in the academic year 2005/2006. Thanks to the findings of the survey it is possible to know what (what subjects related to quality concepts and tools are taught), where (within which degree programs they are taught), and when (at which degree level they are taught) Italian higher education is devoted to quality.     

重塑“中国模式”

近年来,中国经济备受金融—债务风险的困扰,国内外一些舆论所塑造的决策导向是单纯地依靠紧缩来消除风险,同时单纯地依靠释放市场的活力来维持可接受的经济增长速度。从长期视角看,自20世纪90年代末期以来,中国经济其实呈现出走向黄金时代模式的趋势,表现为产出和生产率、消费和投资、就业和工资都是快速增长,在体制上则表现为国家主导的发展模式。这种趋势能否持续,快速经济增长能否得以维持,甚至于金融—债务风险能否消除,取决于政府的决策导向,归根究底取决于整体的经济结构动态和社会—政治体制安排,也就是取决于重塑中国模式。     

Foreign direct investment and economic performance in transition economies: evidence from China

Based upon a production function with FDI representing updated technology from more developed, market‐based economies, this study tests the hypothesis that FDI contributes to the economic growth of less developed, transition economies via technology updating, using data for 30 Chinese provinces from 1985 to 2000. It is found that provinces with a higher FDI ratio experienced faster technology updating and more rapid economic growth. The study suggests that less developed, transition economies should encourage FDI from more developed, market‐based economies so as to accelerate technology updating and economic growth.