Revisiting the effectiveness of the German accounting enforcement reforms: a replication study

Management Review Quarterly - In this paper, we replicate and extend the study “Economic Consequences of Accounting Enforcement Reforms: The Case of Germany” published by Ernstberger,...     

The super-alertness of central banks

The Review of Austrian Economics - This paper applies Kirzner’s theory of entrepreneurial alertness to central banking. As opposed to entrepreneurs operating within the market, central banks...     

The powerless yet relevant third: a three-player ultimatum/dictator game with earned funds and roles

We report the first experiment to pair a three-player ultimatum/dictator game with a real effort task. The inclusion of the real effort task shifts the standard for division from simple egalitarianism towards relative performance; even in treatments in which roles and funds are exogenous. Additionally, we find proposers overcompensate themselves relative to their effort, and this additional compensation comes at the expense of powerless (third) players. Individual characteristics predict the nature of a proposals. Lastly, we find that responders’ choice to accept is based on their own and the powerless third party’s compensation.     

MARKETS,EXTERNALITIES, AND THE DYNAMIC GAINS OF OPENNESS

Inflows of foreign knowledge are key for developing countries to catch up with the world technology frontier. I construct a model to analyze the entry decisions of foreign firms and the incentives of domestic firms to invest in their own know‐how, given the exposure to foreign ideas and competition. The model embeds two diffusion mechanisms typically considered separately in the literature: externalities and markets. I find that openness allows developing countries to fully catch up only when market transactions dominate the diffusion of ideas. Externalities are never enough to catch up and may lead to losses in income and welfare.     

Valuation Implications of Unconditional Accounting Conservatism: Evidence from Analysts' Target Prices

We examine whether financial analysts understand the valuation implications of unconditional accounting conservatism when forecasting target prices. While accounting conservatism affects reported earnings, conservatism per se does not have an effect on the present value of future cash flows. We examine whether analysts adjust for the effect of conservatism included in their earnings forecasts when using these forecasts to estimate target prices. We find that signed target price errors (actual minus forecast) have a significant positive association with the degree of conservatism in forward earnings, suggesting that target prices are biased due to accounting conservatism. Cross‐sectional analysis suggests that more sophisticated analysts and superior long‐term forecasters adjust for conservatism to a greater extent than other analysts. In additional analyses, we explore the mechanism through which conservatism leads to bias in target prices. We first show that analysts' earnings forecasts are negatively associated with the degree of conservatism; that is, analysts include the effect of unconditional conservatism in their earnings forecasts. Based on alternative earnings‐based valuation models that analysts may use, our evidence suggests that analysts fail to appropriately adjust their valuation multiple for the effect of conservatism included in their earnings forecasts when using these forecasts to derive target prices. As a consequence, we find that, for extreme changes in conservatism, the bias in analysts' target prices due to conservatism leads to a distortion of market prices. The evidence highlights the concern that analysts may not appreciate the valuation implications of conservative accounting which could inhibit price discovery.     

Genetic estimates of jurisdictional and strain contributions to the northeastern Lake Michigan brown trout sportfishing harvest

The Lake Michigan brown trout (Salmo trutta) fishery is sustained by the stocking of five hatchery strains by four state natural resource agencies. In the absence of exhaustive marking programs, strain-specific measures of stocking success are lacking for brown trout in Lake Michigan. We used microsatellite-based genetic assignment testing and genetic stock identification (GSI) to determine the strain of 122 angler-caught brown trout from four northeastern Lake Michigan ports. We compared strain composition estimates for sportfishing harvest to expected proportions of each brown trout strain in Lake Michigan at the time of harvest using stocking records corrected for age-specific mortality rates. Reassignment rates of individuals from baseline strains averaged 92.1% (range: 84.1–98.0%). Assignment testing and GSI analyses consistently found Wild Rose strain brown trout represented approximately 89% of the northeastern Lake Michigan sportfishing harvest, while only comprising 43.8% of the expected stock. Of the Michigan angler harvest of Wild Rose strain brown trout, approximately half were estimated to have originated from Wisconsin hatcheries, demonstrating a propensity for lake-wide movements. Continued assessments will improve understanding of strain relative contributions to angler harvests that can direct future stocking efforts.     

The value of active politicians on supervisory boards: evidence from the Berlin stock exchange and the parliament in interwar Germany

We provide the first overview over all political connections of firms via current Members of Parliament on supervisory boards and board of directors listed on the Berlin stock exchange in the 1920s. In contrast to anecdotal evidence, which suggest that political connections were expected to have a positive effect on firms’ performance, an event study based on the election in December 1924 and May 1928 shows only little evidence that a political connection via a newly elected or re-elected politician generated value. These results complement previous research emphasising that political connections might have mattered less in democracies.     

Improving customer profit predictions with customer mindset metrics through multiple overimputation

Journal of the Academy of Marketing Science - Research and practice have called for the incorporation of customer mindset metrics (CMMs) to improve the accuracy of models that predict individual...     

An information theoretic analysis of stock returns,volatility and trading volumes

Information theory is used to examine the dynamic relationships between stock returns, volatility and trading volumes for S&P500 stocks. This provides an alternative approach to traditional Granger causality tests when dealing with nonlinear relationships. The article highlights the dominant role played by trading volumes in all of these relationships – even in the return–volatility relation – and finds evidence of a market level feedback effect from index returns to the return–volatility relation at the stock level. The article also produces a number of stylized facts from an information theoretic perspective.     

An empirical investigation of lawn mower safety regulation

This paper tests for switching market conduct in an oligopsonistic industry. The model adopts Bresnahan's procedure for identifying the oligopoly solution and integrates the procedure with a switching regression model. Applied to the US beef slaughter industry, two distinct regimes of conduct in the industry were identified. The two regimes are consistent with the time periods during which the industry has undergone major structural change.