earnings management the shapes of the frequency distributions of earnings metrics are not evidence ipso facto we provide evidence that the shapes particularly around zero of the frequency distributions of earnings metrics examined in the extant earnings management literature are affected by 1 deflation using for example price or market capitalization 2 sample selection criteria that lead to differential inclusion exclusion of observations to the left of zero versus observations to the right of zero implicit in studies focusing on firms followed by i b e s and explicit in studies partitioning on a variable differing between loss observations and profit observations 3 differences between the characteristics of observations to the left of zero and observations to the right of zero such as market pricing and analyst optimism pessimism or 4 a combination of these factors since the shapes of the frequency distributions of earnings metrics at zero are likely due to one of the above effects we conclude that the shapes cannot be used as ipso facto evidence of earnings management

the impact of obesity on wages abstract previous studies of the relationship between body weight and wages have found mixed results this paper uses a larger data set and several regres sion strategies in an attempt to generate more consistent estimates of the effect of weight on wages differences across gender race and ethnicity are explored this paperjnds that weight lowers wages for white females ols esti mates indicate that a difference in weight of two standard deviations roughly 65 pounds is associated with a difference in wages of 9 percent in absolute value this is equivalent to the wage effect of roughly one and a half years of education or three years of work experience negative cor relations between weight and wages observed for other gender ethnic groups appear to be due to unobserved heterogeneity i introduction several previous studies have found among females a negative cor relation between body weight and wages there exist three broad categories of ex planations for this finding the first explanation is that obesity lowers wages for example by lowering productivity or because of workplace discrimination the sec ond is that low wages cause obesity this would be true if poorer people consume

thick and thin borders in the european union how deep internal integration is within countries and how shallow between them the existence of large border effects is one of the main puzzles of international macroeconomics the seminal paper by mccallum found that trade between any two canadian provinces was on average 22 times greater than trade between any canadian province and any united state us although various authors have estimated internal and external border effects for the whole european union and some specific european countries none has done so in the manner that mccallum s seminal paper stymied by lack of data on region to region international trade flows this study uses a novel data set that captures intra and international truck shipments between spanish regions and regions in seven european countries during the period 2004 11 it computes internal and external border effects offering novel results for aggregate flows and the importing countries and estimates several specifications of the gravity equation so as to tackle such issues as the multilateral resistance term heteroskedasticity and zero flows and non linear relation between trade and distance the paper also adds a detailed analysis on the external border effect for each spanish exporting region and each of the seven european countries considered by means of this analysis we shed new light on the relative integration between regions of these seven countries and spanish exporting regions finally we conduct an extrapolation exercise computing the trade potentials that would be expected in a fully integrated europe and estimating how long full integration would take to achieve between each spanish exporting region and each european importing country to this regard two alternative scenarios are considered one using the growth rates of the spanish exports before the crisis 2001 08 and other considering the postcrisis growth rates 2011 13

the economic significance of national border effects to address the economic significance of national border effects this paper provides evidence on two fundamental questions 1 do large border effects arise because of high perceived price wedges between foreign and domestic products or because imports and domestic goods are very close substitutes and 2 if price wedges are important do they reflect distortionary barriers to trade or do they arise from nondistortionary factors such as differences in transactions costs or product characteristics i conclude that while border effects may imply barriers welfare costs and a role for policy distortions are probably not as substantial as initial border results suggested jel f1

intra national versus international trade in the european union why do national borders matter the first objective of this paper is to estimate border effects among european union countries in this context the specification of the gravity equation together with the choice of the distance measure are shown to be crucial for assessing the size of the border effect the second objective is to evaluate the determinants of the cross commodity variation in national border effects contrary to previous findings reported in the literature we show that trade barriers do provide an explanation in particular technical barriers to trade together with product specific information costs increase border effects whereas non tariff barriers are not significant our results further suggest that these barriers are not the only cause since the spatial clustering of firms is also found to matter

does meeting earnings expectations matter evidence from analyst forecast revisions and share prices this paper investigates whether the market rewards firms meeting current period earnings expectations and whether any such reward reflects the implications of meeting expectations in the current period for future earnings or reflects a distinct market premium we document that abnormal annual returns are significantly greater for firms meeting expectations controlling for the information in the current year s earnings we then test whether firms meeting expectations experience higher returns simply because their expected future earnings are also higher we find firms meeting expectations have significantly higher earnings forecasts and realized earnings than firms that do not we find that controlling for these higher future earnings firms meeting expectations in one or two years do not receive a greater valuation than their fundamentals would suggest we find however that the market assigns a higher value to firms that meet expectations consistently controlling for an estimate of the firm s fundamental value

bundled forecasts in empirical accounting research abstract this paper examines bundled forecasts or management earnings forecasts issued concurrently with earnings announcements which have evolved to become the most common type of management forecast we describe the econometric problems associated with measuring bundled forecast news and in particular provide evidence that the measurement error in the traditional calculation of forecast news is material and is systematically associated with variables frequently studied in forecast related research we illustrate an application of conditional expectations to overcome these problems finally we offer guidance and caveats to researchers considering the use of this method in the future

insiders sales under rule 10b5 1 plans and meeting or beating earnings expectations we find that firms with insider sales executed under rule 10b5 1 plans exhibit a higher likelihood of meeting or beating analysts earnings expectations mbe this relation between mbe and plan sales is more pronounced for the plan sales of chief executive officers ceos and chief financial officers cfos and is nonexistent for other key insiders the market reactions to firms that successfully meet or beat expectations are relatively positive compared with their peers that fail to do so one interpretation of our results is that ceos and cfos who sell under these plans may be more likely to engage in strategic behavior to meet or beat expectations in an effort to maximize their proceeds from plan sales however readers should exercise caution in making inferences because the potential presence of limit order transactions makes it difficult to unambiguously determine the direction of causality of the relation we document this paper was accepted by mary barth accounting

complementarities of trade advantage and trade competitiveness measures the complementarities of trade advantage and trade competitiveness measures for agro food trade of five central european ce 5 countries with the european union are analysed the stability and duration of the trade measures over time is investigated by the survival analysis using the nonparametric kaplan meier product limit estimator and the consistency test between the trade measures is conducted by the stratified cox proportional hazard model the ce 5 countries experienced a greater number of products with relative trade disadvantages and greater significance of one way imports unlike the czech republic poland slovakia and slovenia hungary experienced relative trade advantages rtas for bulk raw commodities processed intermediates and horticulture with the greatest significance of successful quality competition and one way exports and the lowest significance of unsuccessful price and unsuccessful quality competition the duration of rtas is longer than the duration for the successful trade co

the information content of losses abstract this study hypothesizes that because shareholders have a liquidation option losses are not expected to perpetuate they are thus less informative than profits about the firm s future prospects the results are consistent with the hypothesis they also show that the documented increase in the earnings response coefficent as the cumulation period increases appears to be due exclusively to the effect of losses the liquidation option effect extends to profitable cases where earnings are low enough to make the option attractive alternating explanations for the low informativeness of losses such as mean reversal of earnings are not supported by the tests

what insiders know about future earnings and how they use it evidence from insider trades abstract this paper provides evidence that insiders possess and trade upon knowledge of specific and economically significant forthcoming accounting disclosures as long as 2 years prior to the disclosure stock sales by insiders increase three to nine quarters prior to a break in a string of consecutive increases in quarterly earnings insider stock sales are greater for growth firms before a longer period of declining earnings and when the earnings decline at the break is greater consistent with avoiding an established legal jeopardy there is little abnormal selling in the two quarters immediately prior to the break

the rewards to meeting or beating earnings expectations abstract this paper finds that firms that meet or beat current analysts earnings expectations mbe enjoy a higher return over the quarter than firms with similar quarterly earnings forecast errors that fail to meet these expectations further such a premium to mbe although somewhat smaller exists in the cases where mbe is likely to have been achieved through earnings or expectations management the findings also indicate that the premium to mbe is a leading indicator of future performance this premium and its predictive ability are only marginally affected by whether the mbe is genuine or the result of earnings or expectations management

the role of supplementary statements with management earnings forecasts we investigate managers decisions to supplement their firms management earnings forecasts we classify these supplementary disclosures as qualitative soft talk disclosures or verifiable forward looking statements we find that managers provide soft talk disclosures with similar frequency for good and bad news forecasts but are more likely to supplement good news forecasts with verifiable forward looking statements we examine the market response to these forecasts and find that bad news earnings forecasts are always informative but that good news forecasts are informative only when supplemented by verifiable forward looking statements supporting our argument that these statements bolster the credibility of good news forecasts

unemployment and health behaviors over the business cycle a longitudinal view we examine the first order internal effects of unemployment and nonemployment on a range of health behaviors during the most recent recession using longitudinal data from the panel study of income dynamics and the national longitudinal survey of youth 1979 ours is the first study to analyze the effect of own unemployment on energy intake energy expenditure and the net effect body mass index using longitudinal records exploiting information enveloping the recent steep recession and prolonged recovery is valuable since recent job losers will modify their behavior little if they expect soon to be re employed whereas if they expect joblessness to last they will adjust to a possibly prolonged decline in income and increase in nonwork time we find that becoming unemployed is associated with a small increase in leisure time exercise a moderate decrease in smoking and a substantial decline in total physical activity we also find that unemployment and nonemployment are associated with a decline in purchases of fast food together these results imply that both energy consumption and expenditure may decline in the united states during recessions the net result being essentially no change in body weight there is considerable heterogeneity in these effects across specific health behaviors across the intensive and extensive margins across the outcome distribution and across gender

measuring internal trade distances a new method applied to estimate provincial border effects in canada in this paper we suggest an improved methodology for comparing the intensity of trade across and within national and provincial boundaries earlier efforts to assess border effects for provinces or for countries without internal trade statistics made fairly arbitrary assumptions about average distances for internal trade flows we improve on earlier efforts by taking more complete account of the distribution of population within each province or country internal distance is estimated as a population weighted average of intra city and intercity distances as well as distances to and within rural areas we find higher estimates of internal distances and hence border effects than found in previous studies

the association between outside directors institutional investors and the properties of management earnings forecasts we investigate the relation of the board of directors and institutional ownership with the properties of management earnings forecasts we find that firms with more outside directors and greater institutional ownership are more likely to issue a forecast and are inclined to forecast more frequently in addition these forecasts tend to be more specific accurate and less optimistically biased these results are robust to changes specification granger causality tests and simultaneous equation analyses the results are similar in the pre and post regulation fair disclosure reg fd eras additional analysis suggests that concentrated institutional ownership is negatively associated with forecast properties this association is less negative in the post reg fd environment which is consistent with reg fd reducing the ability of firms to privately communicate information to select audiences

biased forecasts or biased earnings the role of reported earnings in explaining apparent bias and over underreaction in analysts earnings forecasts the extensive literature that investigates whether analysts earnings forecasts are biased and or inefficient has produced conflicting evidence and no definitive answers to either question this paper shows how two relatively small but statistically influential asymmetries in the tail and the middle of distributions of analysts forecast errors can exaggerate or obscure evidence consistent with analyst bias and inefficiency leading to inconsistent inferences we identify an empirical link between firms recognition of unexpected accruals and the presence of the two asymmetries in distributions of forecast errors that suggests that firm reporting choices play an important role in determining analysts forecast errors r 2003 elsevier b v all rights reserved

earnings management to avoid earnings decreases and losses this paper provides evidence that firms manage reported earnings to avoid earnings decreases and losses specifically in cross sectional distributions of earnings changes and earnings we lind unusually low frequencies of small decreases in earnings and small losscs and unusually high frequencies of small increases in earnings and small positive income we find evidence that two components of earnings cash flow from operations and changes in working capital are used to achieve increases in earnings we present two theories based on stakeholder use of information processing heuristics and prospect theory about the motivation for avoidance of earnings decreases and losses

trade frictions and welfare in the gravity model how much of the iceberg melts a key element missing from the structural gravity literature is an examination of the implied general equilibrium by design the gravity equation is adept at predicting bilateral trade flows to make inferences beyond trade flows however the theoretic models should be consistent with other observables structural econometric estimates from anderson and van wincoop 2003 allow us to evaluate their proposed general equilibrium along several dimensions we find that their gravity model predicts too large a difference between consumer and producer prices excessive variation in the geographic distribution of consumer price indices and an exceptionally large portion of output devoted to overcoming trade frictions under plausible parameterizations of the model at least 50 of output melts in transit jel classification f10 frictions commerciales et bien etre dans un modele gravitationnel quelle portion du iceberg fond un element cle qui manque dans la litterature specialisee sur la gravite structurelle est l examen de l equilibre general implicite par construction l equation de gravite predit bien les flux de commerce bilateraux pour suggerer des inferences au dela des flux de commerce il faut cependant que les modeles theoriques soient compatibles avec ce qu on observe par ailleurs les calibrations econometriques structurelles d anderson et van wincoop 2003 permettent d evaluer leur equilibre general propose selon plusieurs dimensions il s avere que leur modele de gravite predit une difference trop grande entre les prix des producteurs et des consommateurs une variation excessive dans la distribution geographique des indices de prix a la consommation et une portion anormalement grande de la production depensee pour surmonter les frictions commerciales a partir de parametrisations plausibles du modele on montre que 50 de la production fond en cours de route

national borders and international trade evidence from the european union in this paper the impact of national borders on international trade within the european union is considered using a gravity model i find that averaged over all eu countries intranational trade is about ten times as high as international trade with an eu partner country of similar size and distance this relatively strong home bias suggests that even within the european union national borders still have a decisive impact on trade patterns jel classification f02 f14 f15 o52 ce memoire examine l impact des frontieres nationales sur le commerce international a l interieur de l union europeenne on montre que en moyenne pour tous les pays de l union europeenne le commerce intranational est a peu pres dix fois plus important que le commerce international avec un pays partenaire de l union europeenne de meme taille et a meme distance ce degre relativement important de preference nationale suggere que meme dans le cadre de l union europeenne les frontieres nationales ont encore un impact determinant sur les patterns de commerce

local labor market fluctuations and health is there a connection and for whom we examine the relationship between local labor market conditions and several measures of health and health behaviors for a sample of working aged men living in the 58 largest metropolitan areas in the united states we find evidence of procyclical relationships for weight related health and mental health for men with low ex ante employment probabilities separate estimates suggest worsening labor market conditions lead to weight gains and reduced mental health among african american men and lower mental health among less educated males among our findings those related to mental health are most pronounced

consistency in meeting or beating earnings expectations and management earnings forecasts abstract this paper provides evidence that firms that have consistently met or beaten analysts earnings expectations mbe provide more frequent bad news management forecasts than firms with no established string of mbe particularly when existing analyst forecasts are optimistic this suggests that firms with a consistent mbe record are more likely to guide analysts expectations downward to avoid breaking the consistency subsequent analyst forecast revisions following bad news management forecasts issued by these firms are dampened implying that analysts suspect that these forecasts may be opportunistic the relation between management forecasts and mbe consistency is stronger after regulation fd

understanding the numbers game abstract two well known stylized facts on earnings management are that the earnings surprise distribution has a discontinuity at zero and that positive earnings surprises are associated with positive abnormal returns we link these two facts in a model of the earnings management decision in which the manager trades off the capital market benefits of meeting earnings benchmarks against the costs of manipulation we develop a new structural methodology to estimate the model and uncover the unobserved cost function the estimated model parameters yield the percentage of manipulating firms magnitude of manipulation noise in manipulation and sufficient statistics to evaluate proxies for identifying firms suspected of manipulation finally we use the sarbanes oxley act as a policy experiment and find that by increasing costs the act reduced equilibrium earnings management by 36 this reduction occurred despite an increase in benefits consistent with the market rationally becoming less skeptical of firms that just meet benchmarks

the disappearance of the border barrier in some european union countries bilateral trade this paper estimates the tariff equivalent of the border barrier in each bilateral trade among european union countries the results show that there are large differences in the border barrier across european union countries bilateral trade in some bilateral trade flows the border barrier has almost disappeared whereas in other cases it is still equivalent to a 75 per cent tariff the results also show that some countries have low border barriers in most of their bilateral trade flows with other eu members whereas other countries persistently present large border barriers