Inconsistency in U.S. Accounting Standards: The Treatment of Interest

Consistency is an essential part of financial reporting: it applies both to the continuous use of the same accounting principles by an entity from period to period, and to consistency between various accounting principles used by the same entity. In the development of accounting standards, risks to users of inconsistencies can be reduced by good disclosure requirements, particularly so between various pronouncements. A study examining the treatment of interest found inconsistencies in two-thirds of the relevant U.S. GAAP pronouncements.     

The Repugnant Conclusion and Utilitarianism under Domain Restrictions

The paper investigates the problem of the repugnant conclusion in variable‐population social choice. A choice rule exhibits the repugnant conclusion if, given any alternative in which all individuals enjoy a high quality of life, there is always a better alternative (according to the choice rule) in which the population is larger and each individual has a life which is barely worth living. While it is well‐known that classical utilitarianism (CU) exhibits the repugnant conclusion on an unrestricted domain, the paper shows that critical‐level utilitarianism (CLU) also exhibits the repugnant conclusion on an unrestricted domain when repugnance is defined in terms of the critical level. In contrast, both CU and CLU are shown to avoid the repugnant conclusion on a restricted domain defined by bounded resources, the law of conservation of matter, concavity and monotonicity of preferences, positive subsistence consumption, and positive “neutral consumption.” In light of the universality of these restrictions, one may conclude that the problem of the repugnant conclusion may not be as great as previously thought.     

FORM OF CONTROL: A CRITICAL DETERMINANT OF ACQUISITION PERFORMANCE AND CEO REWARDS

Based on two research streams, we investigate whether acquiring firms’ form of control might be associated differently with CEO rewards or excess returns. We theoretically reason that in manager-controlled corporations acquisitions may be detrimental to the interests of shareholders and CEO rewards might be based on nonperformance criteria. In owner-manager-controlled and owner-controlled firms acquisitions may benefit the stockholders. While CEO rewards of owner-controlled firms may be based on performance criteria, however, executive rewards of owner-manager-controlled firms may be based on both performance and nonperformance factors. The findings indicate that for manager-controlled firms acquisition announcements result in negative excess returns to shareholders. For owner-controlled and owner-manager-controlled firms such announcements result in positive excess returns. The findings also suggest that increases in corporate size due to acquisitions are significantly and positively associated with CEO rewards of manager-controlled and owner-manager-controlled firms. For owner-controlled firms, excess returns are significantly and positively associated with CEO rewards. © 1997 by John Wiley & Sons, Ltd.     

Cultural Determinants of Household Saving Behavior

Relying on the epidemiological approach, we show that culture is a significant driver of household saving behavior. Second-generation immigrants from countries that put strong emphasis on thrift or wealth accumulation tend to save more in Germany. We confirm these results in data from the United Kingdom. By linking parents to their children, we show that these two cultural components affect the saving behavior of both first-generation immigrants and their children.