Earnings management and abnormal returns: Evidence from the 1970–1972 Price Control Regulations

We examine the association between abnormal returns and earnings management in the context of price control regulations to test the construct validity of the earnings management model. Abnormal returns are used as a market–based measure, and discretionary accruals are employed to measure earnings management. Our results support the hypotheses that (1) price control regulations affect firms' security prices negatively, (2) firms make income–decreasing discretionary accruals to increase the likelihood of price increase approval, and (3) firms that are affected most negatively by the regulations manage earnings more aggressively. We conclude that the earnings management model we use in this study is capable of predicting opportunistic discretionary accruals.     

Moderation by goal commitment of the feedback–performance relationship: Theoretical explanation and preliminary study

This paper presents goal commitment as one stage of a multidimensional goal striving process that affects feedback acquisition, processing, and use during the achievement of performance goals. Specifically, this paper argues that higher goal commitment leads to more effective acquisition, processing, and use of feedback that in turn fosters higher performance than does lower goal commitment. To provide a preliminary test of this proposition, data from an earlier field study conducted by the author and colleagues [J. Occup. Organ. Psychol. 72 (1999) 107] were used to examine the moderating effects of goal commitment on the relationship between perceived task feedback amount and work performance of 196 rehabilitation counselors. Results were consistent with this proposed interaction, as perceived task feedback amount had a positive linear relationship with work performance for higher goal commitment rehabilitation counselors and a negative linear relationship with performance for lower goal commitment counselors. The discussion urges researchers to broaden their views of goal commitment beyond the goal difficulty–performance relationship and to devote more attention to moderators of the feedback–performance relationship. Directions for future research and practical implications are also discussed.     

Predicting Household Poverty: A Methodological Note with a Kenyan Example

Household surveys provide data that is used for identifying and measuring the poverty status of households and individuals. However, carrying out such surveys is expensive, especially in poor developing countries. Thus it is important to make maximum use of the available survey data in developing countries, especially in sub‐Saharan Africa, where such data are expensive to collect and analyse. This paper develops a simple method for using poverty indices derived from survey data for a given year, to predict poverty rates for subsequent periods without having to conduct a new household survey. We illustrate the workings of the method with data from Kenyan household surveys for 1994 and 1997.     

Weakening Water Rights and Efficient Transfers 1

For more than half a century, in nearly all western states, the regulatory agencies (the State Engineer or equivalent) used impairment of other water rights as the primary criterion for approving or rejecting change applications to move water to higher-valued uses. In recent years, however, protests to change applications have been brought by 'stakeholders' who do not own water rights, but who argue that they are affected by water transfers. Under the impairment rule, these parties do not have statutory standing to protest successfully. But they have brought legal suits to block transfers, and the courts have considered whether additional criteria involving 'impacts on social welfare' are needed to evaluate transfers. State Supreme Court rulings on such suits in Utah and Nevada are reviewed as prototype cases. The Utah court held that additional 'social welfare' criteria must be utilized by the State Engineer in evaluating change applications, whereas the Nevada court held that such criteria were already incorporated in existing water statutes and administrative practice. The critical question raised in the paper is whether existing state regulatory agencies can effectively implement a real 'social welfare' criterion to evaluate change applications. The conclusion is that they probably cannot, and that if they try, water allocations will be politicized to a much greater extent than they are now, and efficient market transfers will be impeded if not completely prevented.     

An assessment of the Spanish national hydrological plan

The paper is a comprehensive review of the Spanish National Hydrological Plan, which proposes to transfer water from the lower part of the Ebro River up to the Levante basins, around 912 km away. The National Hydrological Plan is a conventional, static plan, which focuses primarily on supply management. The plan is based on the explicit assumption that the world will change only incrementally during its entire economic life of 100-200 years. The analysis indicates that much of the increased water demands forecasted are unlikely to materialize due to increasing emphasis on demand management practices, major structural changes in the agricultural sector that will occur by 2020 and the requirements of the Water Directive of the European Union, which must be fulfilled by 2010. Even now, the cost per cubic metre of water delivered at the end of the transfer is nearly twice the cost of desalinated water. The National Hydrological Plan in its present form cannot be justified for economic, environmental and social reasons. In addition, the plan will not be necessary if demand management practices are implemented.     

Estimation of sons' intergenerational earnings mobility in the presence of censoring

Based on intergenerational data from the Panel Study of Income Dynamics, I provide estimates of income mobility across generations for men. Special attention is paid to issues of censoring caused by a son's unemployment. Employing non‐parametric bounds estimates, I illustrate that previous income mobility estimates rely heavily on (unjustified) assumptions of exogenous selection. Assuming a son's potential income is instead a function of his reason for unemployment and work history, I re‐estimate mobility. Allowing for sampling variability, the range of feasible slopes consistent with these modified bounds restrictions is 0.27 to 0.55. Copyright © 2002 John Wiley & Sons, Ltd.     

Gender and Piece Rates, Commissions, and Bonuses

Previous work shows that establishments with higher proportions of women are more likely to use piece rates but that individual women are less likely to receive performance pay. We present a model in which lower expected tenure and labor force attachment are positively associated with piece rates but are negatively associated with other forms of performance pay. Analysis of the National Longitudinal Survey of Youth (NLSY) confirms that women are more likely to be paid piece rates and simultaneously less likely to be paid commissions and bonuses.     

Using Industry-Sponsored Game Nights to Educate About Risk and Insurance

As educators in the field of risk management and insurance, we see know- ledge of risk management and insurance as a core business function. However, some colleagues and students see insurance as cold-call sales or companies with a lot of money that continue to raise their prices. So we have to find ways to make our public aware of the usefulness of risk management and insurance in the business world and in private life and of the opportunities that having such knowledge presents to all business majors and business people. One method that is beginning to show dramatic improvements in at least our students' perceptions of the field and the major involves industry-sponsored game nights. While not an academic endeavor nor strictly risk management education, we believe the idea provides a useful tool for opening students' eyes to the need for knowledge of risk management and insurance and of the opportunities that are available in the insurance industry and its related fields. This article discusses the history of such an event at Appalachian State Univer- sity, the current status of the North Carolina Surplus Lines Association (NCSLA) event, and the benefits of the event.