Audit Committees,Boards, and the Quality of Reported Earnings*

I use data on 252 U.S. firms between 1994 and 2000 to study the relationship between audit committees and boards of directors with financial reporting quality. I initially document several changes in committee and board profile during the sample period. Results from logistic regressions suggest that measures of audit committee and board structure are related to earnings quality in a manner that is generally consistent with the predictions of agency theory. This study contributes to extant knowledge by employing different earnings quality measures from prior studies, and by expanding the range of audit committee attributes deemed important in determining audit committee performance.     

US shipping initial public offerings: Do prospectus and market information matter?

This paper examines the extent that public information, available prior to the initial public offering of shipping companies, is only partially incorporated in the final offer price. The sample includes shipping US initial public offerings that took place in the period 1987-2008, and the analysis employs a set of IPO, market, and firm specific characteristics. Our findings have both theoretical and empirical implications for shipping IPOs, and indicate that there is no asymmetry of information between participants in shipping IPOs. On the theoretical part, the partial adjustment theory of Benveniste and Spindt (1989) is supported, whereas the winner’s curse theory of Rock (1986) is rejected. On the empirical side, the probability of underpricing can be predicted by employing variables available to all IPO participants prior to the issue.     

A comparative statics analysis of punishment in public-good experiments

This paper provides a comparative-statics analysis of punishment in public-good experiments. We vary the effectiveness of punishment, that is, the factor by which punishment reduces the punished player’s income. The data show that contributions increase monotonically in punishment effectiveness. High effectiveness leads to near complete cooperation and welfare improvements. Below a certain threshold, however, punishment cannot prevent the decay of cooperation. In these cases, punishment opportunities reduce welfare. The results suggest that the experimenter’s choice of the punishment effectiveness is of great importance for the experimental outcome.

---

Electronic Supplementary Material  The online version of this article () contains supplementary material, which is available to authorized users.      

CO2 Emissions and Income Dynamics: What Does the Global Evidence Tell Us?

This paper analyzes the co-evolution of two major determinants of social welfare, namely, income and carbon emissions. In particular, by using a distribution dynamics approach based on Markov chains, we investigate the shape and behavior of the joint distribution of per-capita income and carbon dioxide emissions. We arrive at several interesting conclusions, especially in the context of international negotiations on climate change. First, evidence does not support theoretical models predicting the existence of a poverty-environment trap. Specifically, in the long-run two main groups of countries will emerge: poor versus polluting countries. Second, the typical development path leads initially to high emission levels and, subsequently, to high income. Third, the convergence process towards the stationary distribution is very slow. Finally, for carbon emissions, whenever it is observed, the environmental Kuznets curve seems to be only a transitory phenomenon.     

The Association between Board Composition and Corporate Pension Policies

This study examines the role of board composition in the determination of pension policies. The results suggest that the proportion of outside directors serving on the board is positively related with pension plan funding levels. In addition, the proportion of outside directors mitigates the relation between financial distress risk and plan underfunding. Last, as firms approach distress, boards with a greater proportion of outside directors tend to allocate a lower fraction of plan assets to riskier securities. Together, our findings suggest that outside directors are mindful of their obligations toward pension plan beneficiaries.     

Smoothing and Benchmarking for Small Area Estimation

Small area estimation is concerned with methodology for estimating population parameters associated with a geographic area defined by a cross-classification that may also include non-geographic dimensions. In this paper, we develop constrained estimation methods for small area problems: those requiring smoothness with respect to similarity across areas, such as geographic proximity or clustering by covariates, and benchmarking constraints, requiring weighted means of estimates to agree across levels of aggregation. We develop methods for constrained estimation decision theoretically and discuss their geometric interpretation. The constrained estimators are the solutions to tractable optimisation problems and have closed-form solutions. Mean squared errors of the constrained estimators are calculated via bootstrapping. Our approach assumes the Bayes estimator exists and is applicable to any proposed model. In addition, we give special cases of our techniques under certain distributional assumptions. We illustrate the proposed methodology using web-scraped data on Berlin rents aggregated over areas to ensure privacy.     

Public procurement policy and the Czech industry

The aim of this paper is to specify the extent of buy-national policies of the Czech Republic and the impact of opening its public procurement market to domestic production and employment due to the Europe Agreements of 1995. Two series of indicators are proposed for measuring the impact of Czech buy-national policies. The first series outlines the behavior of the public sector vis-à-vis domestic production and imports. The second series sketches the industrial structure of the sectors which, following the above analysis, seem to be protected by preferential public procurement. The interaction of both series of indicators can provide information about the level of protection in terms of public procurement on a sectoral level. This paper is part of the Phare Program of Action for Cooperation in Economics, a research project launched by the Commission of the European Union. The authors gratefully acknowledge contributions by Andrew Cox and anonymous project referees. The authors are responsible for any remaining errors.     

R&D and Tobin's q in an emerging financial market: the case of the Athens Stock Exchange

This paper aims at providing further evidence on the consequences of R&D investment on Tobin's q for firms publicly traded in an emerging financial market. Panel data methodology is applied using data for the manufacturing and computer firms listed in the Athens Stock Exchange, a market classified as emerging by the major securities analysts, for the period 1996–2004. The empirical findings show first, that the Greek firms' R&D investment effect on the market value of a firm is consistent with other US and European studies. Second, the impact of the R&D investment on the market value is higher for small firms. The findings of this paper may have significant industrial and technological policy implications for other emerging markets sharing similar characteristics to Greece. Copyright © 2010 John Wiley & Sons, Ltd.     

Adoption of Activity-Based Costing: A Survey of the Education Sector of Greece

The need to invest in education becomes evident during difficult economic periods. Nevertheless, the lack of sufficient financial resources leads educational institutes to form competitive cost strategies. Despite the increasing competition in the education sector, educational institutes usually refrain from using complex cost methods to improve their operations. In this study, we chose the activity-based costing (ABC) method to understand the reaction of educational institutes when they are confronted by the implementation of innovative cost methods. An institute willing to implement ABC should be capable of comprehending the associated operational adjustments. This study investigates the education sector’s potential in adapting to the ABC method to improve cost management. Additionally, factors that prevent educational institutes from making cost strategy reforms were also observed. Initially, we conducted semi-structured interviews of experts to develop our research instrument. The survey was then applied to 152 educational institutes located in the seven most populous regions of Greece. The findings of the hierarchical regression analysis indicate that educational institutes are not capable of accurately allocating costs and they lack specific data concerning overheads. However, the sector is more eager to implement sophisticated methods for increasing competitiveness than was anticipated.