The valuation relevance of R&D expenditures: Time series evidence

The literature on the valuation relevance of R&D investments is based primarily on cross-sectional regressions or panel data regressions with time and firm (or industry) fixed effects such that the parameters relating R&D to market value are cross-sectionally constant. In an alternative approach, this paper investigates the value relevance of R&D investment using an earnings-based time series valuation model. Model parameters are estimated for each firm separately. In contradistinction to the results obtained from cross-sectional and fixed effects panel models, this study finds weak empirical support at best for the value relevance of R&D expenditures at the firm level.     

An analysis of the implications of discontinued operations for continuing income

We examine the extent to which changes in the accounting for discontinued operations affects the usefulness of disaggregated income components in predicting an entity’s future continuing income. Our study is motivated by the joint FASB/IASB convergence project which seeks to define the scope of transactions reported in discontinued operations. To examine our question, we compare the properties of continuing income and discontinued operations reported under SFAS 144 and APB 30, where APB 30 closely parallels IFRS 5. We find that the broader scope of the rule under SFAS 144 results in more persistent continuing income among firms reporting discontinued operations, and that this is concentrated among single-segment firms, which previously were less likely to fall within the scope of APB 30. Because we find no evidence of increased opportunism, we conclude that the broader scope of the rule results in a finer partitioning of recurring and nonrecurring income. Overall, our results support the broader scope of discontinued operations.     

Children's relationships with brands: “True love” or “one‐night” stand?

Group and individual interviews were conducted to examine relationships developed between children and brands in the family setting. Children's stories about brands suggest that they develop relationships with a wide range of brands and these relationships are imbedded in the social environment where children live and grow. Interpersonal relationship metaphors were utilized to describe different forms of child–brand relationships. The article concludes that children's relationships with brands serve important functions in their lives and have significant implications for marketers. © 2002 Wiley Periodicals, Inc.     

Integrating benefits decision making

Integrated employee benefit decision making helps employees use their benefits more wisely and identify opportunities to balance their immediate benefits needs (such as health care) and future benefits needs (such as retirement). This article discusses how employers can overcome employees' behavioral barriers to making integrated employee benefit decisions by changing the ways benefits are communicated and employees are presented with action decisions. Undertaking these steps allows employers to not only improve their employees' overall financial perspectives, but also furthers plan sponsors' goals of actively promoting personal responsibility with respect to retirement funding and changing employee behavior with respect to controlling health care costs.     

Measuring price discovery between nearby and deferred contracts in storable and nonstorable commodity futures markets

Using price discovery measures, including Putniņš’ (2013) information leadership share and intraday data, we quantify the proportional contribution of nearby and deferred contracts in price discovery in the corn and live cattle futures markets. On average, nearby contracts reflect information more quickly than deferred contracts in the corn market, but have a relatively less dominant role in the live cattle market. In both markets, the nearby contract loses dominance when its relative volume share dips below 50%, which typically occurs when the nearby is close to maturity. Regression results indicate that the share of price discovery is mainly related to trading volume and time to expiration in both markets. In the corn market, price discovery share between nearby and deferred contracts is also related to inverse carrying charges, crop year differences, USDA announcements, market crashes, and commodity index position rolls. Differences between corn and live cattle markets are consistent with differences in the contracts’ liquidity and commodity storability.     

An event-based perspective on the development of commitment

This paper proposes a new perspective on the development of commitment. We propose that organizational events are evaluated relative to a person's values to determine whether the person fits or misfits the organization. The fit information is then organized into commitment elements, which reflect the extent to which workplace events fit (relative to misfit) a particular value across events over time. We propose that elements are organized around values, not events, such that values are the main effect and events are the moderators of said effect on elements. Elements are, in turn, formative indicators of the latent commitment construct. They are the proximal causes of commitment. Multiple elements contribute to a single commitment and they are weighted via the value hierarchy. Our perspective contributes to the literature by: (a) being developmental; (b) focusing on events; and, (c) having implications for both within-person and between-person questions about commitment development.     

Employee Movements from Audit Firms to Audit Clients

Regulators have expressed concerns about the “revolving door” between auditors and clients, whereby audit employees move directly from audit firms to audit clients (i.e., “direct alumni hires”). Regulators are concerned that these direct hires could compromise audit quality, partly because these employees could have previously audited their hiring company's financial statements. In contrast, we examine accounting and finance executives who move indirectly from audit firms to audit clients and who could not have previously audited the hiring company's financial statements (i.e., “indirect alumni hires”). We show that indirect hires occur more often than the direct hires that have concerned regulators. We predict and find that both direct and indirect alumni hires are associated with lower rates of executive turnover and audit firm turnover. However, there is no evidence that the reduced rates of executive turnover are explained by managerial entrenchment or that these hires are associated with lower audit quality. Overall, our findings suggest that direct and indirect employee movements from audit firms to audit clients are beneficial to executives, audit clients, and audit firms because they reduce the incidence of costly turnover.     

How Chinese Children's Commercials Differ from Those of the United States: A Content Analysis

Abstract

A content analysis was conducted of children's television commercials from China and the United States that were recorded over a period of eighteen months. We describe how the content of the two sets of commercials differs and the underlying reasons for the differences, including cultural, economic, and social conditions. The results suggest that, for the most part, Chinese children's commercials reflect China's traditional cultural values and its social and economic development level. However, the analysis was able to detect a shifting in power in Chinese society from the elderly to the young, resulting mainly from its one-child policy implemented during the past two decades. We also found some evidence of Western values creeping into Chinese children's commercials. Limitations are noted, and suggestions are offered for additional research that will corroborate these findings.     

Linear Accounting Valuation When Abnormal Earnings Are AR(2)

The Ohlson (1995) model assumes that abnormal earnings follow an AR(1) process primarily for reasons of mathematical tractability. However, the empirical literature on the Garman and Ohlson (1980) model finds that the data support an AR(2) lag structure for earnings, book values and dividends. Moreover, the AR(2) process encompasses a far richer variety of time series patterns than does the AR(1) process and includes the AR(1) process as a special case. This paper solves the Ohlson model directly for an AR(2) abnormal earnings dynamic. The model is estimated on a time series firm-level basis following the approach used by Myers (1999). It is found that, like the Ohlson AR(1) model, the Ohlson AR(2) model severely underestimates market prices even relative to book values. These results further bring into question the empirical validity of the Ohlson model.