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.     

New or traditional careers? A study of UK graduates' preferences

Due to extensive changes to higher education in Britain, it is possible that graduates entering the labour market will have work experiences approximating to the ‘new’ career. We know little about whether this is a situation graduates are prepared for, or whether they welcome it. This article argues that a view about the changing nature of careers from the employee's perspective is needed. It describes some research investigating the career preferences and career self‐management of UK graduates in different organisational contexts, and provides evidence to suggest that graduates' endorsement of the ‘new’ career is limited. Employability is a key concern, but graduates expect to be able to develop that employability within the context of a traditional career. The article concludes by considering the implications for organisational career management, arguing that the traditional career still has considerable value for both employers and employees.     

Measurement distortion and missing contingencies in optimal contracts

Summary Theory suggests that optimal contracts should include many contingencies to achieve optimal risk sharing. However, in practice, few contracts are as complex as theory suggests. This paper develops a model which is consistent with this observation. The lack of risk sharing results from the interplay of two factors. First, contingencies must be based on information produced by measurement systems, which may be manipulable. Second, when two parties to a contract meet, they often have incomplete information. The type of contract offered may reveal information about the party who proposes it. Different types of agents have different preferences over contingent contracts, because they have different abilities to manipulate the measurement system. These differences in preferences allow the parties to signal their types through the contracts they offer. Noncontingent contracts may be chosen in equilibrium because they are the only contracts which do not give any type an incentive to distort the measurement system and, hence, do not reveal information about the party proposing the contract.We have benefited from conversations with Oliver Hart, Rick Lambert, Michael Riordan and Jean Tirole and the comments of Michel Habib, Nick Yannelis and two anonymous referees. Financial support from the National Science Foundation under grants SES-8920048 and SES-8720589 is gratefully acknowledged.     

Substance, Form and PFI Contracts

The Private Finance Initiative (PFI) was launched by the United Kingdom Government in 1992 in order to encourage the private sector in the UK to become more involved in public sector development projects. A key theme of the initiative was that the public should receive 'value for money'. This article investigates the accounting issue as to whether or not the private or the public sector should record any property related to PFI projects on balance sheet. It argues that although both HM Treasury and the Accounting Standards Board (ASB) might agree on the accounting principles, the practical impact is that in order for related properties to stay off the public sector's balance sheet, substantial risk needs to be transferred to the private sector. As a consequence of this, the objective of providing value for money to the public may not be achieved.     

Stability, Asymmetry and Seasonality of Fund Performance: An Analysis of Australian Multi‐sector Managed Funds

Using a sample of Australian Multi-sector trusts we examine selectivity and market timing performance and extend the analysis to include the relatively new measure of volatility timing. This is of particular relevance to our data set, as high levels of volatility persistence are prevalent in Australia. In addition we consider the stability, asymmetry and seasonality of the various performance and risk measures. A survivorship adjustment procedure is also employed in order to assess the impact of survivorship on selectivity, market timing and volatility timing performance.     

Contemporary ethical issues in labor-management relations

Numerous labor-management issues possess ethical dimensions and pose ethical questions. In this article, the authors discuss four labor-management issues that present important contemporary problems: union organizing, labor-management negotiations, employee involvement programs, and union obligations of fair representation. In the authors view, labor and management too often view their ethical obligations as beginning and ending at the law's boundaries. Contemporary business realities suggest that cooperative and enlightened modes of interaction between labor and management seem appropriate.Robert S. Adler is Associate Professor of Legal Studies at the Kenan-Flagler Business School, University of North Carolina at Chapel Hill. He teaches courses in Business Law, Business Ethics, and Regulation. Prior to coming to UNC, Professor Adler served as Counsel to the Subcommittee on Health and the Environment of the Committee on Energy and Commerce of the U.S. House of Representatives.William J. Bigoness is Professor of Business Administration and Director, Center for Management Studies at the Kenan-Flagler Business School, University of North Carolina at Chapel Hill. His professional interests include organizational behavior, human resource management, and labor-management relations. Dr. Bigoness was Visiting Professor of Business Administration at the International Institute for Management Development (IMD) located in Lausanne, Switzerland from 1985 to 1987.     

Efficiency in agricultural production: the case of peasant farmers in eastern Paraguay

This paper contributes to the productivity literature in developing country agriculture by quantifying the level of efficiency for a sample of peasant farmers from Eastern Paraguay. A stochastic efficiency decomposition methodology is used to derive technical, allocative and economic efficiency measures separately for cotton and cassava. An average economic efficiency of 40.1% for cotton and of 52.3% for cassava is found, which suggests considerable room for productivity gains for the farms in the sample through better use of available resources given the state of technology. Gains in output through productivity growth have become increasingly important to Paraguay as the opportunities to bring additional virgin lands into cultivation have significantly diminished in recent years. No clear strategy to improve farm productivity could be gleaned from an examination of the relationship between efficiency and various socioeconomic variables. One possible explanation for this finding is the existence of a stage of development threshold below which there is no consistent relationship between socioeconomic variables and productivity. If this is the case, then our results suggest that this sample of Paraguayan peasants are yet to reach such a threshold. Hence, improvements in educational and extension services, for example, would be needed to go beyond this threshold. Once this is accomplished, additional productivity gains would be obtained by further investments in human capital and related factors.     

Utility and construct validity of an ethical dilemmas scale in management education

Business ethics has gained much attention over the past decade in both work and educational settings. This study used a version of Lysonski and Gaidis' (1991) ethical vignettes to examine by gender the ethical views of 165 Canadian undergraduate management students, to examine the psychometric properties and construct validity of the instrument, and to determine if the instrument is a useful tool for introducing undergraduates to the topic of ethics in management practice. Results showed that while the instrument is a useful teaching tool, it has psychometric and validity inadequacies that need to be corrected.Robert Loo is currently a Professor of Human Resource Management and Organizational Studies in the Faculty of Management at the University of Lethbridge, Canada. Over the past 20 years, he has published extensively in the management and psychology literature. Ethics is a key theme throughout every management course he teaches. Bob strives to make ethics a relevant and interesting issue for students by using a variety of learning techniques such as cases, videos, self-assessment tools, and research projects.     

A study of the effect of age and gender upon student business ethics

The present survey was voluntarily and anonymously completed by 2,196 students enrolled in business courses at the University of Southern Mississippi. The intent of the survey was to determine whether or not age or gender played a role in a person's perception of proper ethical conduct.The findings suggests that gender is a significant factor in the determination of ethical conduct and that females are more ethical than males in their perception of business ethical situations.Students were divided into groups according to age as follows: under 21 years, 22–30 years, 31–40 years, and 40 plus years. The results of this survey also suggest that age is a determining factor in making ethical decisions. The statistics suggest that those students falling in the 40 plus years age group were the most ethical, followed in order by the 31–40 group, the 22–30 group and those of 21 years of age and under.Durwood Ruegger is currently an Associate Professor of Finance and General Business at the University of Southern Mississippi. Prior to joining the University, he was a practicing attorney and former municipal judge. His publications have appeared in theJournal of Health and Human Resources Administration, Labor Law Journal, Business Insights, andThe Practical Real Estate Lawyer.Ernest W. King is an Assistant Professor of Finance and General Business at the University of Southern Mississippi. He is a member of the Florida and Washington, D.C. Bars. His publications have appeared inBusiness Insights, Nursing Administration Quarterly, and theCPCU Journal.