Voluntary Causal Disclosures: Tendencies and Capital Market Reaction

In this study, we provide empirical evidence on whether voluntarily disclosed causal attributions made in management earnings forecasts are credible by investigating the conditions under which such attributions are made and the extent to which security price responses are associated with attribution existence. We find that causal attributions are more likely to be made when forecast news is bad (relative to good), and that the type of attribution made is more likely to be external (internal) for bad (good) forecast news. Incorporating the existence and type of attribution into models that explain announcement period three-day cumulative abnormal returns yields significant effects for attribution incidence and type after controlling for unexpected earnings and forecast type (e.g., point, range, etc.). Consistent with the idea that attributions enhance the credibility or precision of management forecasts, attribution disclosure enhances price reactions per dollar of unexpected earnings conveyed in a management forecast.     

Mutual fund separation in financial theory—The separating distributions

This paper finds necessary and sufficient conditions on the stochastic structure of asset returns for portfolio choice to be equivalent to choice among a limited number of mutual funds of assets, independent of investors' preferences. This type of separation result is central to modern financial theory and the distributions which satisfy these conditions, the separating distributions, form the underlying basis for much of this theory.     

The value relevance and reliability of reported goodwill and identifiable intangible assets

We examine the value relevance and reliability of reported goodwill and identifiable intangible assets under Australian GAAP from 1994 to 2003; a period characterised by relatively restrictive accounting treatment for goodwill and relatively flexible accounting treatment for identifiable intangible assets. Our findings, using an adaptation of Feltham and Ohlson (1995), suggest that for the average Australian company the information presented with respect to both goodwill and identifiable intangible assets is value relevant but not reliable. In particular, goodwill tends to be reported conservatively while identifiable intangible assets are reported aggressively.     

‘All sorts and conditions of men’: The social origins of the founders of the ICAEW

The early organisation of accountants in Scotland during the 1850s and 1860s has excited the intellectual curiosity and research endeavour of a number of students of professionalisation. By contrast, until recently there was a dearth of academic interest in institutional developments in England and Wales during the 1870s and 1880s. Yet, organisations such as the Institute of Chartered Accountants in England and Wales (ICAEW) which emanate from this period soon became the most significant players on the British professional scene and were to exert considerable influence on the development of accountancy institutions and professional ideologies in several locations. Exploiting a variety of genealogical sources this paper seeks to fill a void in the literature by analysing the social origins of the founding members of the principal professional association in England and Wales. It provides evidence of early chartered accountancy as a destination for long distance, upwardly mobile males, both intergenerationally and intragenerationally. The rate of self-recruitment among the founders of the ICAEW is shown to be low. The proportion of founders deriving from the upper and upper-middle classes is revealed to have been markedly less than that of their Scottish counterparts. The paper contributes to understandings of the complex professionalisation of British accountants, the extent of social mobility in Victorian Britain, the pathways to social advance in a class-based society, and illuminates the social complexion of one of the ‘new’ professions which emerged during the nineteenth century.     

Disagreement and Biases in Inflation Expectations

Disagreement in inflation expectations observed from survey data varies systematically over time in a way that reflects the level and variance of current inflation. This paper offers a simple explanation for these facts based on asymmetries in the forecasters' costs of over- and underpredicting inflation. Our model implies (i) biased forecasts, (ii) positive serial correlation in forecast errors, (iii) a cross-sectional dispersion that rises with the level and the variance of the inflation rate, and (iv) predictability of forecast errors at different horizons by means of the spread between the short- and long-term variance of inflation. We find empirically that these patterns are present in inflation forecasts from the Survey of Professional Forecasters. A constant bias component, not explained by asymmetric loss and rational expectations, is required to explain the shift in the sign of the bias observed for a substantial portion of forecasters around 1982.     

Advertising directed to children: A look at the mother's point of view

The issue of whether to ban children's advertising from television has generated quite a controversy over the past several years. One view of the controversy which has received little attention, however, is the mothers'. This paper looks at those mothers who are both pro can con with regard to the idea of banning children's advertising. Bold Advertising     

The innovation performance of MNE subsidiaries and local embeddedness: evidence from an emerging economy

We examine the innovation performance of MNE subsidiaries and their embeddedness in sources of local knowledge in a policy framework within the context of an emerging economy. Based on first-hand evidence from multiple case studies, we found that: (1) there was variability between the subsidiaries in terms of the cumulative manner and speed at which they improved their innovation performance over time, using progressively levels of accumulated capability as a proxy; (2) these differences in innovation performance improvement reflected heterogeneity between the subsidiaries in terms of the learning efforts made to acquire knowledge from local organizations; (3) the varied frequency in which the subsidiaries developed such local relationships reflects their differing responses to a common industrial policy that makes use of tax incentives to stimulate such links. The paper reveals the limitations of this conventional type of industrial policy in stimulating industrial development and the embeddedness of MNEs. It also suggests that a new direction for policy, which incorporates public–private negotiations and a focus on the firm-centred building of innovation capabilities, should be pursued in order to accelerate the innovation performance progress of latecomer firms.