Stated Preferences, Real Behaviour and Anchoring: Some Empirical Evidence

We compare different contingent valuation question formats with each other and with observed behaviour for a non-monetary estimation task, the expected number of kilometers travelled by automobile. Open-ended questions, open-ended follow-up questions, dichotomous choice (DC) questions, and double-bound DC questions are included. The single and double-bound DC questions result in an estimated mean about twice as high as the actual value and the open-ended mean. The DC question overestimation seems to be due to an anchoring effect leading to yea-saying behaviour. Our results about the difference between DC questions and open-ended questions is consistent with the pattern observed in contingent valuations studies of the willingness to pay. Our results indicates that DC questions seem to be associated with a general overestimation problem that is present even for simple non-monetary estimation tasks.     

The Interaction of Learning Styles and Teaching Methodologies in Accounting Ethical Instruction

Ethical instruction is critical for trainee accountants. Various teaching methods, both active and passive, are normally utilised when teaching accounting ethics. However, students’ learning styles are rarely assessed. This study evaluates the learning styles of accounting students and assesses the interaction of teaching methods and learning styles in an ethics instruction environment. The ethical attitudes and preferred learning styles of a cohort (137) of final year accounting students were evaluated pre-instruction. They were then subject to three different teaching methods while studying ethics during an auditing course. When ethical attitudes and preferred learning styles were re-assessed post-instruction, the teaching methods were found to have influenced active learners more than passive ones. Furthermore, when learning styles matched teaching methods used, usefulness was assessed as high but when learning styles and teaching methods differed, usefulness deteriorated significantly. Students displayed a preference for passive learning styles, despite being so advanced in their education. The implications are that instructors should consider learning styles before deciding on appropriate teaching methods, in accounting ethics environments.     

Short reviews

Centre for Employment Research, 1990: Ethnic Minority Businesses and Employment in Greater Manchester. Manchester: Greater Manchester Economic Development Officers Ltd, no price stated.

The National Economic Development Council, 1990: Working for Pleasure -Tourism and Leisure Tomorrow. London: NEDO, £15.00 Report, £35.00 Conference Papers.

John Freeman, Frank Gaffikin and Mike Morrissey, 1989: The Irish Economies: A Common Future? Amalgamated Transport and General Workers Union, Belfast. No price given.

Morrissey, H. 1989: Women in Ireland: The Impact of 1992. The Amalgamated Transport and General Workers Union.

Gorman. G. 1989: School-Industry Links. London: Kogan Page.

Brewster, C. and Teague, P. 1989: European Community Social Policy-Its Impact on the UK. Institute of Personnel Management, £30.00 cloth.     

Household savings constraints,uncertainty and macroprudential policy

We investigate the impact of macroprudential policy on Irish households' perception of savings adequacy, with a particular focus on households intending to purchase a home. These measures tighten loan-to-value ratios and raise the entry cost for home purchase. We find that the measures have had a significant impact on savings constraints. Indeed, constrained potential buyers, who are planning to purchase, but not presently saving to buy a home, are the group most affected as the macroprudential rules increase the downpayment size required. Heterogeneous effects across households indicate younger, private renting households, and those with relatively uncertain cash flows.     

Place,space, and foreign direct investment into peripheral cities

Perspectives drawn from the economic geography literature are increasingly used to generate insights into locational issues in international business. In this paper, we seek to integrate these literatures further by investigating the locational determinants of foreign direct investment (FDI) into peripheral cities within an emerging economy. Peripheral cities in emerging economies are attracting a growing proportion of global FDI flows, but the international business literature lacks a framework for understanding subnational determinants of FDI, particularly into non-core locations. We draw on the core-periphery model to build and test theory on how spatial interdependencies between subnational locations impact on the distribution of FDI inflows into a large and heterogeneous country China. Our results show that whilst peripheral cities tend to have a negative effect on FDI, this effect is positively moderated by proximity to core cities. The results highlight the importance of considering interactions between place and space when investigating locational issues in international business.     

Unidimensional median voter results in probabilistic voting models

This paper studies the policy outcomes that can be expected to occur when candidates are uncertain about voter behavior. Its analysis begins with an example that illustrates how the ‘Comaner–Hinich effect’ (i.e., the possibility of non-median outcomes) can occur under such circumstances. This example is then modified in ways which restore a median outcome. After this is done, the method of restoration is generalized to obtain a unidimensional median voter result for probabilistic voting models.     

Private Equity vs. PLC Boards in the U.K.: A Comparison of Practices and Effectiveness

The consistently higher returns generated by the most successful private equity firms have been attributed in part to their willingness to take on high levels of debt and their ability to exit from their investments at attractive multiples. But recent research suggests that the largest contributor to the superior performance of the best PE firms has been their ability to improve the operating performance of the companies they buy. And as the authors of this article argue, a key source of such improvements are fundamental differences in the way boards function in the public and private realm.
Using in-depth interviews with 20 executives who have served on both PE and plc boards of relatively large U.K. companies, the authors provide a number of suggestive insights into such differences:
Perhaps the most visible of these differences is the "single-minded" focus of PE boards on "value creation," as contrasted with the focus of plc boards on issues of "governance" and "compliance."
Whereas PE boards view their role as "leading" the strategy of the firm and overseeing its execution by top management, plc boards are described as "monitoring" or "accompanying" strategies that are proposed and executed by management.
Whereas PE boards report near-complete alignment of objectives between executive and non-executive directors, plc boards are described as having multiple commitments to and priorities that are divided among multiple stakeholders.
Finally, whereas PE board members undergo an intensive "due diligence" process when joining boards, have frequent ongoing contacts with management, and focus heavily on the cash-generating capacity of the business, initiations of plc board members are much more formal and ceremonial, their dealings with operating management are few and limited, and the information provided them has an "accounting" orientation and covers a broad range of subjects and corporate "responsibilities."     

Timothy J. Bartik: Making Sense of Incentives: Taming Business Incentives to Promote Prosperity

Business Economics -