Effects of Increasing Enforcement on Financial Reporting Quality and Audit Quality

A widely held assumption in policy making and empirical research is that increasing the strength of public enforcement improves financial reporting quality and audit quality. This paper provides a more nuanced view. In a model with a manager who can manage earnings, a strategic auditor, and an enforcement institution, we show that enforcement and auditing are complements in a weak enforcement regime but can be substitutes in a strong regime. Although stronger enforcement always mitigates earnings management, the effects of different instruments of strengthening enforcement are ambiguous. We show that they can improve or impair financial reporting quality and audit quality, depending on production risk, accounting system characteristics, and the scope of auditing relative to enforcement.     

Early-Life Outdoor Experiences and an Individual's Environmental Attitudes

This study investigated the effects of early-life experiences on an individual's environmental beliefs. Data from a survey of 533 university undergraduate students from 20 areas of academic study were analyzed using sequential regression to determine the degree to which current environmental beliefs could be explained by early childhood experiences. Results showed that four of the seven independent variables (appreciative outdoor activities, consumptive outdoor activities, media exposure, and witnessing negative environmental events) explained 14% of the variance in the eco-centric/anthropocentric beliefs. Three of the independent variables (early-life participation in mechanized outdoor activities, education, and involvement with organizations) were not significant predictors of eco-centric/anthropocentric beliefs. Implications for research and practice were discussed.     

Using Academic Research for the Post‐Implementation Review of Accounting Standards: A Note

The IASB and the FASB discuss formal processes for a post‐implementation review (PIR). This note contributes to this discussion in three ways. First, we argue that academics can, and should, play a significant role in a PIR. Second, we suggest a framework for empirical studies that are useful in a PIR, which enhances understandability of accounting research by standard setters. And third, we propose a process by which standard setters can take advantage of and embed academic research in a PIR.     

FIVE YEARS OF SINGLE EUROPEAN MONETARY POLICY IN PRACTICE: IS THE ECB RULE‐BASED?

The article discusses the conduct of monetary policy of the ECB during its first five years. The authors estimate different versions of the forward-looking policy rule proposed by Clarida et al. (1998, 2000). The results suggest that the ECB applied indeed a Taylor-type rule to its monetary policy. The implied inflation targets that are extracted from the regressions are close to the range of the target that the ECB announced. (JEL E52, E58, F4 )