Audit Firm Attributes and Auditor Litigation Risk

This study examines the association between auditors' litigation risk and audit firm attributes. Using professional liability insurance premiums as a proxy for auditors' litigation risk, we present evidence that the risk is lower in audit firms having: (1) separate non-audit and audit divisions; (2) a higher proportion of partners; and (3) a higher annual growth in number of CPAs employed. Additionally, we find that the risk is higher in audit firms having: (1) operating losses; and (2) high revenue growth. Our results are consistent with the idea that audit firms' financial condition and organizational structure affect their independence/ expertise, and, in turn, their litigation risk. Our results are broadly supportive of the PCAOB's (2015) and US Department of Treasury's (2008) views that investors, audit committees, management, and other regulators could benefit from having access to financial and organizational information about audit firms.     

GLAMOUR VERSUS VALUE: TRADING BEHAVIOR OF INSTITUTIONS AND INDIVIDUAL INVESTORS

We design a new metric to measure the net buying and selling by institutions and individual investors and find that from 1980 to 2004 institutional investors were net buyers of growth stocks and net sellers of value stocks, implying that individual investors were net buyers of value stocks and net sellers of glamour stocks. The institutional preference for glamour and value stocks seems to be related to sell‐side analysts' recommendations and recent favorable stock price performances, especially during the post‐1994 period. Finally, the institutional buying of growth stocks and sale of value stocks was not based on superior information.     

Are recent segment disclosures of Japanese firms useful?: Views of Japanese financial analysts

Since 1990, the Japanese Ministry of Finance (MOF) has required Japanese firms to disclose segment data in annual financial statements. Using a survey instrument, we examine whether Japanese analysts find these segment disclosures to be useful. Our study finds that analysts perceive that segment data aid them in forecasting consolidated sales and net income. However, results also show that analysts are concerned that Japanese firms do not define segments meaningfully and consistently and are arbitrary in the allocation of common costs. Further, the analysts do not believe that the usefulness of segment data improves when it is audited. These results have implications for investors in Japanese stocks and accounting policy bodies, such as the US Securities and Exchange Commission (SEC).     

Common pool resources and contextual factors: Evolution of a fishermen's cooperative in Calcutta

The CPR school has successfully rebutted Hardin's pessimistic Tragedy of the Commons model. However, in recent years, critics have focussed on the inward orientation and lack of contextual analysis characterising the writings of the CPR school.Oakerson [A Model for the analysis of common property problems. Working Paper R86-13. Workshop in Political Theory and Policy Analysis, Indiana University, 1986] and Ostrom [Governing the Commons. Cambridge, Cambridge University Press, 1990] have detailed the list of variables that have to be studied to understand the mechanics of collective action. However, these factors are internal to the community. Recent critics' point out that the actions of individual agents are also influenced by the alternatives embedded outside the system. These variables are collectively labelled contextual factors.In our paper, we have analysed the case of a fishermen's cooperative in the Calcutta Metropolitan District to show how the historic and economic context shapes targets of resource users and affects the feasibility of alternative courses to achieve the target by determining opportunity and transaction costs of actions. This indicates the importance of contextual factors in explaining the formation and evolution of the resource regime.     

Pricing U.S. Dollar Index Futures Options: An Empirical Investigation

This paper develops a pricing model and empirically tests the pricing efficiency of options on the U.S. Dollar Index (USDX) futures contract. Empirical tests of the model indicate that the market consistently overprices these options relative to the derived model. This overpricing is more pronounced for out‐of‐the‐money options than for in‐the‐money options and more pronounced for put options than for call options. To validate the above results, delta neutral portfolios are created for one‐ and two‐day holding periods and consistently generate positive arbitrage profits, indicating that on average the market overprices the options on the USDX futures contracts.     

The EC‐LQO five‐factor framework: An alternative lens for business model innovation in highly knowledge‐intensive industries

Growing technological complexity continues to drive firms to interact with the external innovation environment to achieve firm success. However, industries' complexities and the business model concept's underlying ontology have limited research on modeling the key factors that enable this interface. In this study, results of an empirical analysis of a unique dataset of 102 biopharmaceutical companies broadly support the EC‐LQO five‐factor framework as a useful tool to guide business model innovation for highly knowledge‐intensive environments.     

Business model innovation and decision making: uncovering mechanisms for coping with uncertainty

As a research subject, business model innovation spans the strategy, innovation, and entrepreneurship fields. Yet, despite the importance of the concept, prior work has paid little attention to how decision-makers cope with uncertainty and gain understanding about interdependencies in new business model configurations. To address this gap, we combine top-down theorising and evidence-based exploration and seek to unpack some of the coping mechanisms that operate in the evolutionary view of business model innovation. Using in-depth interviewing to collect data, our study reveals five strategies – customer centricity, value co-creation, capability evolution, ecosystem growth, and adaptive pricing – that decision-makers apply to cope with uncertainty in business model innovation. We find that coping mechanisms support decision making during the development of new business models. Furthermore, we find that the five coping strategies delineate decision making for value proposition, value creation, and value capture configurations in more detail than existing literature has described. Our findings have important implications for decision making in business model innovation.     

The Interaction of Financial Attitudes and Financial Knowledge: Evidence for Low-Income Hispanic Families

We add to the literature on the association of financial knowledge and financial attitudes with financial outcomes by focusing on predominantly low-income Hispanic families. We examine (i) saving for emergencies, for college, and in 401(k) plans, and (ii) ownership of a home, land or rental property, and an investment account. We find that financial knowledge is strongly related to our savings measures and to owning an investment account. Financial attitudes play less of a role, but assume some importance when interacted with financial knowledge. Self-reported financial knowledge in addition to factual financial knowledge is associated with favorable financial outcomes. Our results are important for the upward economic mobility of a demographic group that has received less attention in the literature.     

Impact of Payment Technology on Seasonality of Currency in Circulation: Evidence from the USA and India

Journal of Quantitative Economics - This paper examines the impact of payment technology on seasonality in currency in circulation. We specify that total transaction in a period follows a Gompertz...