WHY A FREE TRADE AREA? THE TARIFF ALSO RISES*

This paper considers the choice between a customs union (wherein partners share a common external tariff) and a free trade area (wherein each partner chooses its own tariff against non-members). Following the result that a customs union dominates a free trade area, with coordination of domestic tax policies, we show that a free trade area may nevertheless be chosen if tariffs are determined endogenously through industry lobbying. This is so even when the free trade area equates producer prices within its borders and induces tariff revenue competition and whether or not there is domestic free-riding in lobbying.     

Do Firms Adjust Their Timely Loss Recognition in Response to Changes in the Banking Industry?

This paper investigates the impact of changes in the banking sector on firms’ timely recognition of economic losses. In particular, we focus on the entry of foreign banks into India during the 1990s, which likely causes an exogenous increase in lender demand for timely loss recognition. Analyzing variation in both the timing and the location of the new foreign banks’ entries, we find that foreign bank entry is associated with more timely loss recognition and this increase is positively related to a firm's subsequent debt levels. The change appears driven by a shift in firms’ incentives to supply additional information to lenders and lenders seem to value this information. The increase in timely loss recognition is also concentrated among firms more dependent on external financing: private firms, smaller firms, and nongroup firms. Overall, our evidence suggests that a firm's accounting choices respond to changes in the banking industry.     

Bounded Rationality and Use of Alternative Financial Services

The increasing pervasiveness of high‐cost alternative financial services (AFS) has captured the attention of policymakers, consumer educators, and financial counselors. Using data from the 2009 to 2012 waves of the National Financial Capability Study (NFCS), this article investigates AFS borrowing behaviors through the lens of a boundedly rational choice framework, with an emphasis on overconfidence. Through repeated testing of isolated samples of individuals with characteristics that make them less likely to objectively need such products, the roles of actual (objective) and perceived (subjective) financial knowledge in the decision‐making process are explored. Consistent results indicate that individuals with lower objective financial knowledge and those that are overconfident in their self‐assessed knowledge level are significantly more likely to utilize AFS instruments. These results suggest that a significant portion of AFS users may select these products without conducting adequate search, resulting in less than optimal financial decisions holding all else equal.     

穿越绩效管理盲区

如今,食业管理者掌握了各种各样的管理工具,包括预算、计划、质量控制等等。但是,很少有人能掌握一套系统的方法米履行他们最重要的职责之一--最大限度地激励员工。     

Explaining Eastern Germany's Wage Gap: The Impact of Structural Change

Since Eastern Germany's conversion to a market economy wages have remained considerably below the West German wage level. This article looks at the role of establishment-specific factors—such as sectoral affiliation and size of the labour force—in this process. A non-parametric decomposition that has played a prominent role in the gender wage gap literature is applied to breakdown the East–West wage gap into its constituent components. Using establishment data from German employment statistics, the article demonstrates that the catching-up process of Eastern Germany's wage level is hindered by the shift in its economic structure towards lower-paying types of companies, which has caused the lagging behind in the adjustment of wages.     

Sex equity in early childhood environments

Many children spend their days in day-care centres where they have the opportunity to learn about sex appropriate behaviours. The instrument Sex Equity in Early Childhood Environments (SEECE) was developed for use in promoting equiry. Field-tested and revised, the instrument addresses the areas of teaching behaviour, child awareness, centre and community, facilities and equipment and career awareness. The SEECE instrument can be used with relative ease in focusing on changes needed to achieve a more equitable environment.     

A Note on the Association between Audit Firm Size and Audit Quality*

Abstract. This study proposes that comparison of management earnings forecasts with audited, reported earnings provides an approach to the measurement of audit quality. Assuming that managers have incentives to minimize the difference between forecasted and reported income, higher-quality audit firms will tend to be associated with larger forecast errors. Therefore if, as previous literature suggests, larger auditing firms provide higher-quality audits than do smaller auditing firms, larger auditing firms will tend to be associated with larger forecast errors, all else being equal. Data from the Toronto Stock Exchange are used to examine this proposition. After controlling for client characteristics such as risk, the results indicate that larger auditing firms tend to be associated with larger forecast errors consistent with the proposition that, other things being equal, larger auditing firms provide higher-quality audits than do small auditing firms. Résumé. Les auteurs proposent une technique de mesure de la qualité de la vérification qui consiste à comparer les prévisions de la direction relatives aux bénéfices et les bénéfices déclarés qui ont été vérifiés. Si l'on suppose que les gestionnaires ont intérêt à minimiser l'écart entre les bénéfices prévus et les bénéfices déclarés, les vérificateurs de haut calibre auront tendance à être associés à des erreurs prévisionnelles plus importantes. Par conséquent, si, comme l'ont suggéré les études antérieures, les cabinets d'experts-comptables importants offrent des services de vérification de meilleure qualité que les cabinets d'experts-comptables de taille plus modeste, les cabinets d'experts-comptables importants auront tendance à être associés aux erreurs prévisionnelles plus grandes, toutes choses étant égales. Les auteurs utilisent les données de la Bourse de Toronto pour vérifier cette affirmation. Une fois contrôlées les caractéristiques du client telles que le risque, les résultats indiquent que les cabinets d'experts-comptables de grande taille tendent à être associés aux erreurs prévisionnelles plus importantes, ce qui confirme l'hypothèse voulant que, toutes choses étant égales, les cabinets d'experts-comptables de grande taille offrent des services de vérification de meilleure qualité que les cabinets d'experts-comptables de taille plus petite.