WIFE'S EMPLOYMENT—ITS INFLUENCE ON MAJOR FAMILY EXPENDITURES

This study was undertaken to examine the influence of wife's employment on major family expenditures. Tobit analysis of data from the 1972–73 Consumer Expenditure Surveys found no relationship between wife's employment and outlays on twelve categories of expenditures. Family income had the greatest overall influence on the expenditure categories examined. Therefore, it appears that the absolute amount of income was more important than its sources in determining expenditures.     

An Empirical Investigation of Accounting Methods for Goodwill and Identifiable Intangible Assets: 1985 to 1989

Accounting for intangible assets represents one of the more controversial accounting standards issues. This study examines the accounting policies adopted for goodwill and for identifiable intangible assets by a sample of 150 Australian Stock Exchange listed companies over the five-year period 1985 to 1989 inclusive. Findings reveal a general decrease in the diversity of goodwill accounting policies over the study period but the converse for identifiable intangible policies. In particular, an increase in the percentage of companies electing not to amortize identifiable intangibles was found. The study provides evidence to support claims that companies have been recognizing identifiable intangibles to reduce the impact on reported operating profits of the requirement of accounting standards for the amortization of goodwill.     

Estimating Consumer Losses From Unavailable Advertised Grocery Specials

Supermarkets regularly advertise food specials to provide information on new products and seasonal products, to induce new customers to the store and to retain old customers by good price / quality relationships. But how important are the purchase of advertised food specials to food shoppers? Do they realize significant savings from buying advertised specials? If advertised specials are not available, how much do consumers lose? These questions are addressed in this article through the use of a Monte Carlo simulation, based on a comprehensive conceptual model of the determinants of unavailability.     

Australian Audit Reports: 1996–2003

In 1996 Australia revised audit reporting standard AUS 702 to align with many of the concepts in the international audit reporting standard ISA 700. These included preventing auditors issuing a "subject to" qualified opinion, and permitting auditors to modify the audit report in specific circumstances by including an emphasis of matter (EoM) paragraph. This research examines the frequency with which different types of opinions are issued and the circumstances giving rise to the inclusion of an EoM paragraph, and compares the types of opinions issued by the major audit firms and for the various industry sectors over the period 1996–2003.     

In Defense of Technical Analysis

Many investors occasionally receive what they believe to be nonpublic information about a security. Others feel that by applying superior analytical skills to public information, they are able to arrive at valuable insights that are not generally appreciated. In either case, there is a substantial opportunity for profit if the investor is correct. The investor must be correct on two counts. First, the estimate of the worth of the information must be reasonably accurate in terms of its impact on the price of the stock, and second, the investor must make a realistic assessment of the likelihood that the market already has received the information or insight in question. This paper is concerned only with the latter problem. The probability distribution of the date on which the market receives information already in the hands of the investor is calculated for a simple model of information propagation. It is then shown how this probability distribution can be brought to bear on the management of a portfolio.     

Nonaudit Services and Earnings Management: UK Evidence*

Using a sample of UK firms for the period 1996‐98, we provide empirical evidence on the relation between nonaudit services (NAS) purchase and three proxies for earnings management: (1) the likelihood that client firm accounting practices during the sample period were publicly criticized or subject to regulatory investigation; (2) the likelihood that client firms were required to restate prior financial statements or adjust current year results upon adoption of Financial Reporting Standard (FRS) No. 12, which was intended to curb opportunistic use of provisions; and (3) the mean absolute value of client discretionary working capital accruals over the sample period. The level of NAS purchase is measured, alternatively, as (1) the ratio of nonaudit to total auditor fees, (2) the natural log of NAS fees, and (3) the decile rank of a particular client's NAS fees given all NAS fees received by the audit firm practice office. With one exception, we find that all three measures of earnings management are positively and significantly associated with the three measures of NAS purchase.     

Pierpont and the Capital Market

For almost forty years Trevor Sykes was one of the most recognizable business journalists in Australia. Sykes created his Pierpont character in February 1972 while writing for Australia's leading financial paper, the Australian Financial Review . Pierpont was a take on J. Pierpont Morgan, founder of the J. P. Morgan banking house. Sykes used his Pierpont column to research and reflect on the curious world of Australian business. Articles were mostly in narrative form, comprising an in-depth critique of one or more companies and written with more than a touch of humour. Over the years Pierpont garnered a large following, and it is therefore quite possible his musings influenced investors' beliefs about company fundamentals. We assess this possibility by examining the share price movements of companies around the time they found themselves featured in a Pierpont column. We extend previous work in this area by examining the market reaction to a popular columnist's writings published regularly over a lengthy period, and by implementing an extensive double-coding procedure that allows us to more finely and reliably partition trading recommendations based on the content of each column. In brief, we find evidence that stocks with positive coverage by Pierpont enjoyed abnormal returns averaging 6.4 per cent over thirty days around the publication date, while stocks with negative coverage suffered abnormal losses of 5.5 per cent. Trading volume was also affected.     

What Constitutes Evidence of Discrimination in Lending?

We analyze a simple model of bank lending in order to ascertain what can be inferred from relative denial and default rates about lending discrimination. We show that if minority applicants are of lower average creditworthiness than majority applicants, then, contrary to a popular argument, a uniform, nondiscriminatory credit policy cannot simultaneously produce (i) higher denial rates for minority applicants, and (ii) equal default rates for minority and majority applicants. Moreover, we show that equality of denial or default rates always implies discrimination. In particular, equal denial (default) rates imply discrimination against majority (minority) applicants.     

Political risk and the international bond market between the 1848 revolution and the outbreak of the First World War1

This article uses price data and editorial commentaries from the contemporary financial press to measure the impact of political events on investors’ expectations from the middle of the nineteenth century until the First World War. The main question addressed is why political events appeared to affect the world's biggest financial market, the London bond market, much less between 1881 and 1914 than they had between 1843 and 1880. In particular, I ask why the outbreak of the First World War, an event traditionally seen as having been heralded by a series of international crises, was not apparently anticipated by investors. The article considers how far the declining sensitivity of the bond market to political events was a result of the spread of the gold standard, increased international financial integration, or changes in the fiscal policies of the great powers. I suggest that the increasing national separation of bond markets offers a better explanation. However, even this structural change cannot explain why the London market was so slow to appreciate the risk of war in 1914. To investors, the First World War truly came as a bolt from the blue.