the changing time series properties of earnings cash flows and accruals has financial reporting become more conservative abstract this paper documents changes in the patterns of earnings cash flows and accruals over the last four decades in the absence of a generally accepted definition of conservatism a number of measures of reporting conservatism are identified and examined these measures rely on the accumulation of nonoperating accruals the timeliness of earnings with respect to bad and good news characteristics of the earnings distribution and the market to book ratio the patterns are consistent with an increase in conservative financial reporting over time the findings have implications for accounting standard setting regulation of financial information and financial statement analysis

optimal nonparametric estimation of first price auctions this paper proposes a general approach and a computationally convenient estimation procedure for the structural analysis of auctioni data considering first price sealed bid auction models within the independent private value paradigm we show that the underlying distribution of bidders private values is identified from observed bids and the number of actual bidders without any parametric assumptions using the theoiy of minimax we establish the best rate of uniform convergence at which the latent density of private values can be estimated nonparametrically from available data we then propose a two step kernel based estimator that converges at the optimal rate

do cigarette producers price discriminate by state an empirical analysis of local cigarette pricing and taxation abstract this study analyzes the interactive effects of oligopoly pricing state taxation and anti smoking regulations on retail cigarette prices by state using panel data for the 50 us states between 1960 and 1990 the results indicate that cigarette producers do price discriminate by state though the effect is not large relative to the final retail price there are two further results 1 state taxes are more than passed on a 1 cent state tax increase results in a price increase of 1 11 cents and 2 sellers offset state and local anti smoking laws with lower prices thereby blunting effects of the regulations

taxing consumption and other sins taxes as their primary tools to collect revenue in the rest of the world governments also use income and payroll taxes but rely much more heavily than does the united states on taxing consumption consumption taxes take many forms including general sales taxes value added taxes and excise taxes on the consumption of specific items including gasoline alcohol tobacco products firearms air travel telephone communication and others the u s government does not use a value added tax making the united states unique among high income countries and a rarity in the larger world as of 2004 at least 134 countries rely on value added taxes as a substantial source of funding value added taxes are sophisticated forms of sales taxes in which taxes are withheld by businesses according to value added at every stage of production american states do impose sales taxes on broad categories of consumer purchases but state governments are considerably smaller than national governments and their sales tax rates are very low compared to the value added tax rates used in the rest of the world the united states also imposes unusually low excise taxes even after controlling for total tax collections which are lower in the united states than they are in most high income countries the deliberate social engineering that underlies the selection of certain commodities for unusually high rates of taxation appeals less to americans than to residents of other countries moreover the sin taxes on

quasi experimental price elasticities of cigarette demand and the bootlegging effect this paper updates the lyon and simon quasi experimental price elasticities of cigarette demand and studies their sensitivity to changes in the cigarette market over time as well as their sensitivity to the effects of bootlegging the results indicate a downward trend in these elasticities over time and an upward bias for states where bootlegging exists however once the comparison group is modified to include bootlegging free states only this difference over time and across groups becomes statistically insignificant

do higher tobacco taxes reduce adult smoking new evidence of the effect of recent cigarette tax increases on adult smoking there is a general consensus among policymakers that raising tobacco taxes reduces cigarette consumption however evidence that tobacco taxes reduce adult smoking is relatively sparse in this paper we extend the literature in two ways using data from the current population survey tobacco use supplements we focus on recent large tax changes which provide the best opportunity to empirically observe a response in cigarette consumption and employ a novel paired difference in differences technique to estimate the association between tax increases and cigarette consumption estimates indicate that for adults the association between cigarette taxes and either smoking participation or smoking intensity is negative small and not usually statistically significant our evidence suggests that increases in cigarette taxes are associated with small decreases in cigarette consumption and that it will take sizable tax increases on the order of 100 to decrease smoking by as much as 5 jel i18 i12

estimating dynamic demand for cigarettes using panel data the effects of bootlegging taxation and advertising reconsidered abstracct a dynamic demand for cigarette consumption is estimated using pooled data of 46 states over the period 1963 to 1980 a price elasticity of 0 2 and an insignificant income elasticity is found using pooled estimation techniques the bootlegging effect is modeled explicitly using neighboring price the effect is found to be significant two major policy issues are analyzed in light of these new estimates 1 cigarette taxation is found to be an effective tool for generating revenues even though there may be spillover effects to neighboring states where bootlegging is significant 2 the effects of the fairness doctrine act and the advertising ban on cigarette consumption are re examined we find mild support for the effectiveness of subsidized anti smoking messages in reducing cigarette consumption and no support for the thesis that the ban on advertising helps to increase per capita consumption

the demand for cigarette smuggling introduction an enduring issue in economic analysis involves accounting for the behavior of agents when illegal or quasi legal activity is rewarded smuggling retrading under regulations or restrictions bribery and bootlegging are all aspects of the general phenomenon common contemporary forms of such activity are the smuggling of prohibited substances such as drugs or medicines prohibited arms or weapons or highly taxed commodities between countries 1 but smuggling or bootlegging of highly taxed or otherwise regulated legal commodities such as alcohol cigarettes or gasoline also takes place within countries in the united states such illegal activity both casual and organized may have significant effects on state tax revenues it may also alter the expected consumption effects of specific tax changes in a competitive environment the existence of different tax structures between states may mean that a given state s tax enactments will not have their desired revenue or consumption effects this paper offers a new econometric methodology for estimating the economic effect of border crossing between u s states our technique in contrast to previous models of cross border effects allows accommodation of the dichotomy between variations in state level sales due to state specific characteristics such as prices tastes incomes and other demographic factors the presence of organized smuggling tourism and so on and demand variations due to casual border crossing beginning with a simple theoretical model of a representative consumer s border crossing decision we develop a nonlinear econometric model which produces estimates of the representative consumer s demand in each state it allows estimation of the degree and direction of sales to border crossing consumers for each state and facilitates explicit testing of the statistical significance of border crossing in explaining variations in cigarette sales between jurisdictions the data set is comprised of state level cigarette sales for the forty eight contiguous states and the district of columbia over the period 1960 to 1986 we obtain strong evidence that border crossing is a significant factor in explaining cigarette sales differentials and we identify states which have important border crossing sales further we note the consequences of border crossing for demand elasticity estimation and tax policy in general the evidence indicates that the ability of states to raise revenue via cigarette taxation is more constrained than conventional analysis suggests the paper is divided into five sections section ii discusses bootlegging and previous literature on cigarette demands and smuggling section iii presents our theoretical and empirical models while section iv discusses the data and our statistical results section v concludes the paper and examines some of the policy implications of our findings ii the economic literature on smuggling smuggling bootlegging or arbitrage takes place when full prices net of all costs differ for legal or illegal goods between specific economic units when net returns to smuggling or bootlegging all production and consumption opportunity costs being considered are positive arbitrage will occur in an organized and or casual fashion a primary though not an exclusive reason for smuggling has been the often significant divergence between full prices in different locales caused by differences in tax treatment a variety of models starting with wales 1968 have been employed to analyze problems related to smuggling and bootlegging jensen thursby and thursby 1988 and bhagwati and hansen 1973 study camouflaging systems the mixture of legal and illegal sales from the firm s perspective with contrasting welfare results smith 1976 integrates illegal markets into the traditional theory of taxation but explicitly ignores casual smuggling earlier studies considering cross border effects have not specified a theoretical foundation and in this respect our approach is fundamentally different

market exit through divestment the effect of accounting bias on competition we analyze the effect of accounting bias on the competition and market structure of an industry in our model firms interim accounting reports on investment projects may contain bias introduced by the mandatory accounting system we find that this bias strictly decreases firms profits when investors do not have an abandonment option but different results emerge when we allow the investors to divest in the interim specifically a conservative accounting regime may increase the likelihood of projects being discontinued inducing some firms to exit from the product market and leaving rivals to capture their market share a conservative regime can thus soften market competition and result in ex ante higher investment payoff higher consumer surplus and higher total social welfare since industries often have common reporting standards we also identify the degrees of industry wide accounting bias that maximize the expected investor payoffs finally we allow for investors to coordinate their divestment

the potential for using excise taxes to reduce smoking we examine the potential for reducing cigarette smoking through increases in cigarette excise taxes by estimating the price elasticity of demand for cigarettes using information on individual smoking behavior from the 1976 health interview survey we estimate the adult price elasticity of demand for cigarettes to be 0 42 we find that price has its greatest effect on the smoking behavior of young males and that it operates primarily on the decision to smoke rather than via adjustments in the quantity of cigarettes smoked an excise tax increase would discourage smoking by successive cohorts of young adults and those reduced smoking levels would be reflected in aggregate smoking as these cohorts mature

conservatism and debt abstract despite the unquestionable influence of conservatism disagreement remains about what economic demands lead to financial reporting conservatism research examining lenders demands for reporting conservatism has been questioned for ignoring conservative contract modifications we document that these modifications exist but are not ubiquitous we find contract modifications are more likely when agency costs are higher and litigation tax and equity demands for conservatism are lower however we find a positive association between unexplained reporting conservatism and contract modifications suggesting contractual modifications alone do not fulfill lenders demands for conservatism

minimum wages and alcohol related traffic fatalities among teens abstract using cross state variation in minimum wages we observe a positive relationship between the minimum wage and the number of alcohol related accidents involving teen drivers a similar effect is not observed when examining accidents among adults the results are consistent with a positive income elasticity for alcoholic beverages and driving activities among young people in particular for consumption out of discretionary income accorded by higher minimum wages evidence of a sizable impact of beer taxes on alcohol related accidents among youths suggests that beer taxes are one avenue for policymakers to consider in counteracting this unintended consequence of minimum wages

do expenditures on tobacco control decrease smoking prevalence effectiveness of tobacco control programmes in reducing smoking prevalence during 2001 to 2005 is examined tobacco control spending is found to exert no significant effects on smoking prevalence across the 50 states cigarette prices are found to lower prevalence of daily smokers but exert no effect on nondaily smoking prevalence several reasons are suggested for why these results might conflict with previous research these include that most previous studies examined two states california and massachusetts with long standing tobacco control programmes and that most studies examined periods in which many of the states in their samples did not actively fund their programmes another reason may be that unlike most previous studies this study controls for the possibility that tobacco control spending is endogenous when for example states exhibiting relatively low smoking prevalence are also states with relatively high distaste for smoking and accordingly fund tobacco control programmes more generous

is addiction rational theory and evidence this paper makes two contributions to the modeling of addiction first we provide new and convincing evidence that smokers are forward looking in their smoking decisions using state excise tax increases that have been legislatively enacted but are not yet effective and monthly data on consumption second we recognize the strong evidence that preferences with respect to smoking are time inconsistent with individuals both not recognizing the true dife culty of quitting and searching for self control devices to help them quit we develop a new model of addictive behavior that takes as its starting point the standard rational addiction model but incorporates time inconsistent preferences this model also exhibits forward looking behavior but it has strikingly different normative implications in this case optimal government policy should depend not only on the externalities that smokers impose on others but also on the internalities imposed by smokers on themselves we estimate that the optimal tax per pack of cigarettes should be at least one dollar higher under our formulation than in the rational addiction case

a shape constrained estimator of bidding function of first price sealed bid auctions this paper is concerned with economic analysis of first price sealed bid auctions with risk averse bidders the identification is based on exogenous variations in the number of bidders across auctions we present a shape constrained estimator of the bidding function which satisfies the theoretical properties of passing through origin positivity and monotonicity the underlying utility function and bidder value distribution are readily obtained from the estimated bidding function monte carlo simulations demonstrate good performance of the proposed estimator

earnings quality in uk private firms comparative loss recognition timeliness abstract uk private and public companies face substantially equivalent regulation on auditing accounting standards and taxes we hypothesize that private company financial reporting nevertheless is of lower quality due to different market demand regulation notwithstanding a large uk sample supports this hypothesis quality is operationalized using basu s 1997 time series measure of timely loss recognition and a new accruals based method the result is not affected by controls for size leverage industry membership and auditor size or by allowing endogenous listing choice the result enhances understanding of private companies which are predominant in the economy it also provides insight into the economics of accounting standards

will a special tax on tobacco reduce lung cancer mortality evidence for eu countries this article carrys out a quantitative evaluation of the effects on the health of smokers of increasing a special tobacco tax using the mortality rate from lung cancer as an indicator to that end it estimates two models that relate tobacco consumption the mortality rate and this special tax employing data drawn from a sample made up of 12 eu countries and covering the years 1983 1993 the results show that increasing the special tax is a useful tool for reducing lung cancer mortality specifically it finds that a 10 increase will reduce the lung cancer mortality rate by 1 21 in the first year with such a reduction implying the avoidance of 1707 deaths in the sample countries

implications for gaap from an analysis of positive research in accounting based on extant literature we review the positive theory of gaap the theory predicts that gaap s principal focus is on control performance measurement and stewardship and that verifiability and conservatism are critical features of a gaap shaped by market forces we recognize the advantage of using fair values in circumstances where these are based on observable prices in liquid secondary markets but caution against expanding fair values to financial reporting more generally we conclude that rather than converging u s gaap with ifrs competition between the fasb and the iasb would allow gaap to better respond to market forces

a measurement approach to conservatism and earnings management this paper formalizes a two step representation of accounting measurement and uses it to formalize a general rationale for conservatism as a measurement principle a transaction s economic substance manifests itself in characteristics of the transaction and an accounting rule is a mapping from transaction characteristics to an accounting report managers who have stakes in the accounting report are able to influence transaction characteristics such earnings management is ex post rational for managers but ex ante inefficient to safeguard against such ex post opportunism the optimal ex ante accounting rule is conservative in the sense that it requires more verification of the transaction characteristics favorable to managers thus this rationale for conservatism is as general as the managers ability and incentive to inflate transaction characteristics by opening the black box of accounting measurement the two step representation also formalizes some classic accounting concepts such as relevance reliability verifiability verification and accounting motivated transactions

conservative financial reporting debt covenants and the agency costs of debt abstract considerable research has documented the role of debt covenants and conservative financial accounting in addressing agency conflicts between lenders and borrowers beatty a weber j and yu j 2008 conservatism and debt journal of accounting and economics forthcoming document interesting but mixed findings on the relation between debt covenants and conservative accounting and the extent to which the two contracting mechanisms act as substitutes or complements in this paper i discuss the economic roles of financial reporting debt covenants and conservatism within the debt contracting environment and attempt to fit bwy s findings within this context

taxes cigarette consumption and smoking intensity comment previous studies have consistently found that increases in cigarette prices and taxes lead to lower consumption of cigarettes as measured by both i the per centage of smokers and ii the number of cigarettes per day consumed by smok ers 1 from a public health perspective the effectiveness of higher excise taxes on cigarettes also depends upon the extent to which smokers exhibit compensatory behavior that may partially or fully offset the lower quantity of cigarettes being smoked for instance evans and farrelly 1998 and farrelly et al 2004 find that cigarette tax increases cause individuals to purchase cigarettes that contain more tar and nicotine in a recent contribution to this journal adda and cornaglia 2006 ac hereafter find that tax increases are associated with lower cigarette consump tion but consistent with the notion of compensatory behavior find no such associa tion with nicotine intake a novel aspect of the ac study is the use of data on salivary cotinine a biomarker for nicotine which is commonly used in medical studies but had not previously been considered in the economics literature based upon data from the third wave of the national health and nutrition examination survey nhanes iii 1988 1994 ac find that cotinine level seems to be unaffected by higher cigarette taxes despite a negative elasticity of smoking with respect to cigarette taxes 2 with this empirical evidence ac question the usefulness of excise taxes as a tool to regulate smoking intake adda and cornaglia 2006 p 1025 this comment examines the robustness of the empirical findings in ac we rep licate the original ac tax elasticity regressions but we provide statistical inference that uses appropriate clustered standard errors at the state level and accounts for the small number of states just 13 in the ac data in addition we repeat the analy sis using a larger sample from nhanes iii that covers the same years as the ac data but includes more states 26 in total use of appropriate inference causes most of the original ac point estimates to become less precise for the expanded sample we find no statistically significant elasticities of cigarette consumption cotinine

is there the threshold effect of cigarette price on smoking prevalence a cross country panel data analysis this article shows new cross country evidences by empirically investigating the joint effects of cigarette price levels and joining the world health organization framework convention on tobacco control who fctc on smoking prevalence in 74 countries over the period of 2000 2003 2005 and 2006 we assessed cigarette price elasticity for three national income levels using different databases on cigarette price from the economist intelligence unit eiu demographic and socioeconomic country characteristics from the world bank and adjusted smoking prevalence rates published by various yearly who reports on the global tobacco epidemic from 2000 to 2010 a panel threshold regression was used to capture the nonlinear effects that cigarette prices on smoking prevalence at the three national income levels endogenously determined by estimation our findings supported the evidence that joining the who fctc would have a positive effect on reducing cross country smoking prevalence especially among countries with l

tax harmonisation and the reduction of european smoking rates abstract amidst growing optimism that smoking in europe can be greatly reduced by the year 2000 this paper simulates the possible impacts of european tax harmonisation in the context of rising incomes a range of price and income elasticities are chosen from econometric studies which use micro information this is justified by the aggregation problems associated with studies in the smoking literature which use aggregate data using micro elasticities the simulations reported in this paper show that the aims of fiscal harmonisation are at variance with the aims of health promotion

cigarette tax avoidance and evasion variation in state cigarette taxes provides incentives for tax avoidance through smuggling legal border crossing to low tax jurisdictions or internet purchasing when taxes rise tax paid sales of cigarettes will decline both because consumption will decrease and because tax avoidance will increase the key innovation of this paper is to compare cigarette sales data to cigarette consumption data from the behavioral risk factor surveillance system brfss i show that after subtracting percent changes in consumption residual percent changes in sales are associated with state cigarette tax changes implying the existence of tax avoidance i estimate that the tax avoidance response to tax changes is at least twice the consumption response and that tax avoidance accounted for up to 9 6 of sales between 1985 and 2001 because of the increase in tax avoidance tax paid sales data understate the level of smoking and overstate the drop in smoking i also find that the level of legal border crossing was very low relative to other forms of tax avoidance if states have strong preferences for smoking control they must pair high cigarette taxes with effective policies to curb smuggling and other forms of tax avoidance or employ alternative policies such as counter advertising and smoking restrictions

a theory of rational addiction we develop a theory of rational addiction in which rationality means a consistent plan to maximize utility over time strong addiction to a good requires a big effect of past consumption of the good on current consumption such powerful complementarities cause some steady states to be unstable they are an important part of our analysis because even small deviations from the consumption at an unstable steady state can lead to large cumulative rises over time in addictive consumption or to rapid falls in consumption to abstention our theory also implies that cold turkey is used to end strong addictions that addicts often go on binges that addicts respond more to permanent than to temporary changes in prices of addictive goods and that anxiety and tensions can precipitate an addiction

accounting conservatism and the efficiency of debt contracts in this paper we examine how accounting conservatism affects the efficiency of debt contracting we develop the statistical and informational properties of accounting reports under varying degrees of conditional and unconditional accounting conservatism consistent with basu s 1997 description of differ ential verifiability standards optimal debt covenants and interest rates on debt are derived from a natural tension between debt holders and equity claimants we show how optimal covenants vary with the degree of conservatism and de rive an efficiency metric that depends on the degree of conservatism we find that accounting conservatism actually decreases the efficiency of debt contracts contrary to the suggestions of watts 2003 and contrary to the hypothesis in numerous empirical studies

health insurance and the demand for medical care evidence from a randomized experiment we estimate how cost sharing the portion of the bill the patient pays affects the demand for medical services the data come from a randomized experiment a catastrophic insurance plan reduces expenditures 31 percent relative to zero out of pocket price the price elasticity is approximately 0 2 we reject the hypothesis that less favorable coverage of outpatient services increases total expenditure for example by deterring preventive care or inducing hospitalization

estimating price elasticities when there is smuggling the sensitivity of smoking to price in canada a central parameter for evaluating tax policies is the price elasticity of demand for cigarettes but in many countries this parameter is difficult to estimate reliably due to widespread smuggling which significantly biases estimates using legal sales data an excellent example is canada where widespread smuggling in the early 1990s in response to large tax increases biases upwards the response of legal cigarette sales to price we surmount this problem through two approaches excluding the provinces and years where smuggling was greatest and using household level expenditure data on smoking these two approaches yield a tightly estimated elasticity in the range of 0 45 to 0 47 we also show that the sensitivity of smoking to price is much larger among lower income canadians in the context of recent behavioral models of smoking whereby higher taxes reduce unwanted smoking among price sensitive populations this finding suggests that cigarette taxes may not be as regressive as previously suggested finally we show that price increases on cigarettes do not increase and may actually decrease consumption of alcohol as a result smuggling of cigarettes may have raised consumption of alcohol as well

rising cigarette prices and rising obesity coincidence or unintended consequence economists have begun to debate if the rise in cigarette prices in the u s in recent decades has contributed to the nation s rise in obesity reaching conclusions that are surprisingly sensitive to specification i show that allowing for the effect to occur gradually over several years leads to the conclusion that a rise in cigarette prices is actually associated with a long run reduction in body mass index and obesity this result is robust to the different methodologies used in the literature i also provide evidence that indirect effects on exercise and food consumption may explain the counterintuitive result

optimal impairment rules abstract we study the optimal accounting policy of a financially constrained firm that pledges assets to raise debt capital for financing a risky project the accounting system provides information about the value of the collateral absent accounting regulation the optimal accounting system is conditionally conservative it recognizes an impairment loss if the asset value is below a certain threshold but never reports unrealized gains we describe the optimal impairment rule and the optimal precision of the accounting information and we provide comparative static results that lead to testable predictions on the determinants of impairment rules

bid preference programs and participation in highway procurement auctions we use data from highway procurement auctions subject to california s small business preference program to study the effect of bid preferences on auction outcomes our analysis is based on an estimated model of firms bidding and participation decisions which allows us to evaluate the effects of current and alternative policy designs we show that incorporating participation responses significantly alters the assessment of preferential treatment policies

excise tax avoidance the case of state cigarette taxes we conduct an applied welfare economics analysis of cigarette tax avoidance we develop an extension of the standard formula for the optimal pigouvian corrective tax to incorporate the possibility that consumers avoid the tax by making purchases in nearby lower tax jurisdictions to provide a key parameter for our formula we estimate a structural endogenous switching regression model of border crossing and cigarette prices in illustrative calculations we find that for many states after taking into account tax avoidance the optimal tax is at least 20 smaller than the standard pigouvian tax that simply internalizes external costs our empirical estimate that tax avoidance strongly responds to the price differential is the main reason for this result we also use our results to examine the benefits of replacing avoidable state excise taxes with a harder to avoid federal excise tax on cigarettes

integrated quantile based estimation for first price auction models this article considers nonparametric estimation of first price auction models under the monotonicity restriction on the bidding strategy based on an integrated quantile representation of the first

the effects of excise taxes and regulations on cigarette smoking abstract we estimate a generalized linear model to examine adult and teenage cigarette demand our analysis focuses on the extent to which exice taxes and regulations restricting smoking in public places affect cigarette consumption the adult results indicate that the price elasticity of demand is unstable over time ranging from 0 06 in 1970 to 0 23 in 1985 these estimates are lower than most found in previous studies the teenage price elasticity does not differ statistically from the estimates for adults additionally regulations restricting smoking in public places have a significant effect on both adult and teenage cigarette demand

taxation smuggling and demand for cigarettes in canada evidence from time series data abstract this study analyzes canadian cigarette consumption and taxation between 1980 and 1994 a period in which there have been large price rises and declines and a dramatic increase in the consumption of contraband tobacco products we examine elasticities of legal cigarette sales and total sales including contraband with respect to the price of legal cigarettes and various other factors the growth of the contraband market since 1987 appears to have created two classes of cigarette taxed and untaxed with responses to changes in the legal price that are respectively higher and lower than was previously the case the sensitivity of total cigarette sales to the taxation instrument is much lower than it would appear from sales of taxed cigarettes alone

performance measures in earnings based financial covenants in debt contracts this paper examines how performance measures are defined in major earnings based financial covenants in loan contracts to shed light on the economic rationales underlying the contractual use of performance measures i find an earnings based covenant is typically based on a performance measure close to earnings before interest tax amortization and depreciation expenses ebitda however my empirical analyses show that ebitda is less useful in explaining credit risk than earnings before interest and tax expenses ebit and even the bottom line net income thus measuring credit risk cannot fully explain the choice of accounting performance measures in earnings based covenants i conjecture that contracting parties choose an ebitda related measure instead of a measure calculated after depreciation and amortization expenses e g ebit to make the performance measure less sensitive to investment activities which can be controlled through other contractual terms such as a restriction on capital expenditure and provide empirical evidence consistent with this conjecture

smoke free air laws cigarette prices and adult cigarette demand i introduction according to the centers for disease control and prevention cdc 2002a cigarette smoking is responsible for more than 430 000 premature deaths each year in the united states as such it represents the single largest cause of preventable deaths in the united states the cdc 2002b estimates that more than 46 million adults in the united states were current smokers in 2000 representing nearly one quarter of the total u s adult population a goal of a major health initiative healthy people 2010 is to reduce smoking prevalence among adults to 12 by 2010 if that goal is to be met a better understanding of the impact public policy plays on adult cigarette demand is needed adult per capita consumption of cigarettes in the united states reached a peak of 4 345 in 1963 and began declining in 1964 the year in which the first surgeon general s report on the health consequences of cigarette smoking was published u s department of health and human services dhhs 1991 at the same time substantial progress was made in reducing the prevalence of adult smoking in the united states according to the national health interview surveys the prevalence of current smoking declined from 42 4 in 1964 to 23 5 in 1999 however the decline in prevalence was much more modest in the 1990s than it was in the previous two and a half decades between 1990 and 1999 the prevalence of cigarette smoking among adults declined by only 2 percentage points much of the progress in curtailing cigarette smoking in the united states can be attributed to the campaign to reduce tobacco use u s dhhs 1991 the public health campaign to reduce tobacco related death and disease in the united states began in the mid 1960s following the release of the first surgeon general s report which causally linked cigarette smoking to lung cancer and a host of other detrimental diseases although consumer education and information dissemination where the mainstay early in the campaign against tobacco the arena shifted to public policy interventions by the 1980s both state and federal governments began increasing cigarette excise taxes and imposing restrictions on smoking in public places and other worksites the implementation of higher excise taxes and stronger smoke free air restrictions continues at all levels of government into the mid 2000s since january 1 2002 37 states and the district of columbia have implemented or passed higher cigarette excise tax rates as of march 18 2005 state excise tax rates on cigarettes ranged from a low of 0 03 per pack in the state of kentucky to 2 46 in rhode island in addition since 1998 when california became the first state to ban smoking in all restaurants and bars numerous other states have followed suit new york massachusetts delaware and rhode island have banned smoking in workplaces restaurants and bars whereas connecticut and maine have banned smoking in all bars and restaurants this article examines the impact of enacting stronger smoke free air restrictions and increasing cigarette prices which will occur as a consequence of cigarette excise tax increases on adult smoking propensity and intensity in the united states unlike previous studies however this article employs a modified two part model of demand in which a generalized linear model glm is employed to yield unbiased elasticity estimates for conditional cigarette demand while controlling for the possibility that smoking sentiment at the state level influences both antismoking policy enactment and changes in smoking behavior as such it provides among the most accurate estimates of the impact of cigarette prices and smoke free air laws on the demand for cigarettes among adults in the united states ii brief review of previous studies numerous econometric studies on the determinants of adult cigarette demand have been published over the past three decades

cigarette taxes and illicit trade in europe cigarettes are highly taxed in europe but at higher prices some consumers substitute more toward illicit cigarettes the illicit retail trade in cigarettes irtc includes counterfeit untaxed and smuggled cigarettes some existing literature includes claims that taxes are not an important determinant of irtc using data from the european union we find the opposite raising prices leads to substantial increases in irtc a 1 increase in tax pack is expected to increase illicit market share by 5 to 12 percentage points and increase illicit cigarette sales by 29 to 95 the results are robust to alternative specifications and data jel i18 h26 k42

demand for cigarettes in the united states effects of prices in bordering states and contiguity with mexico and canada based on a cross section of us states for 2004 this article estimates a demand function for cigarettes after including a proxy for prices in the bordering states and simple proxies for contiguity with mexico and canada and for being a major tobacco producer one major point seems to be that the negative elasticity for within state price is similar in magnitude to the positive elasticity for the lowest price in bordering states several additional points also seem noteworthy first having a border with mexico lowers sales in the state sizably second the share of hispanic latino population in the state also lowers sales significantly third contiguity with canada appears to have no significant effect fourth partial impact of the state being a major tobacco producer appears minor even though consumption in these states is considerably higher fifth education shows the expected negative association with cigarette consumption but its statistical significance is low last income carries a weak negat

the duration of the smoking habit i introduction most smokers smoke out of habit once the habit is ended many of smoking s most harmful effects decline rather quickly preventing and ending cigarette addiction is therefore the straightest path toward preventing the health damage done by cigarette smoking consequently the related questions of why people start smoking and why they quit are central to formulating and evaluating effective antismoking policies duration or hazard models are designed to measure the probability of transition between states and are thus ideal for investigating the structural determinants of the transition between addiction and non addiction nevertheless most previous work in the economics literature uses the aggregate smoking participation rate defined as the percentage of people who currently smoke or an individual s probability of participation rather than a hazard rate to measure the attractiveness of habitual smoking this paper models the hazard rates of both starting and quitting the cigarette smoking habit the starting hazard rate is the probability that an individual will start smoking in a given time period conditional on being a nonsmoker until then the quitting hazard rate is the probability of quitting smoking in a given time period conditional on being a smoker since the starting date both of these rates should rise and fall in response to changes in the attractiveness of smoking the two rates will respond differently to different stimuli since the starting hazard reflects the point of view of nonsmokers and the quitting hazard reflects the point of view of smokers hazard or duration models possess several advantages over smoking participation models most obviously smoking participation rates cannot directly distinguish between increased starting rates and decreased quitting rates but the hazard models can also in a participation rate model it is difficult to control for the effect of the duration of the habit whereas duration models are designed specifically to allow for and measure the dependence of the hazard rate on duration another advantage is that the participation rate at any one time will oversample the number of long term smokers relative to those who had a short term habit whereas a duration model is designed to avoid this source of bias one drawback however is that because of their inherent panel nature the data requirements of duration models are somewhat more difficult to satisfy as shall be seen the only previous work in the economics literature that estimates the hazard rate of starting smoking is douglas and hariharan 1994 my paper improves upon douglas and hariharan in at least three important ways first it estimates the hazard rate of quitting smoking as well as that of starting second it takes into account variation in state level regulation third its time varying covariate model allows hazard rates to respond dynamically to changes in cigarette price regulation and information variables the use of time varying covariates is important because it brings the empirical model into much closer accord with theory the decision whether or not to start or quit smoking is an ongoing decision made one day at a time on the basis of current information the hazard of starting is greatest when the cost of the habit appears lowest and its benefit appears highest this comparison of cost and benefit changes through time as price information income and life cycle variables change while douglas and hariharan 1994 used price information from the potential smoker s most vulnerable age on the theory that its marginal effect is greatest at that time the model used in this paper allows each individual s hazard rate to respond to changes in price and public information as they occur the leading theoretical model of the decision to smoke is the rational addiction model of becker and murphy 1988 which assumes that consumers of addictive goods begin smoking only after fully weighing the costs and benefits of the habit

international differences in the timeliness conservatism and classification of earnings in this paper we analyze differences in the timeliness of income recognition between the u s and u k gaap financial reporting regimes building on previous work in the area we focus on the links between current reported earnings and current and past changes in market value in the light of basu 1997 we present a formal model in which the response of reported earnings to changes in market value varies according to whether the value change is good news or bad this model yields a number of insights with regard to the definition and measurement of earnings conservatism we also report evidence indicating that controlling for cross jurisdictional classification differences affects comparisons of earnings timeliness and earnings conservatism specifically we find that apparent differences in conservatism between the u s and u k accounting regimes are sensitive to the inclusion or exclusion of extraordinary items in u k accounting earnings recent research documents significant variation in the information content of earnings across international gaap regimes e g alford et al tlancaster university tuniversity of manchester the research support of the eco

discussion of an economic framework for conservative accounting and bushman and piotroski 2006 abstract we offer an economic framework for generating predictions about the demand for conservative accounting reports we define conservatism as more timely recognition of losses than gains as a result of the costs and benefits of reporting verifiable information by managers and or firms being asymmetric we also discuss bushman and piotroski s interpretation of the speeds of good news recognition and incremental bad news recognition in basu type regressions as separate signals about accounting conservatism finally we suggest avenues for future research that seeks to investigate the links between institutions and contracts and between contracts and conservatism

oligopoly structure and the incidence of cigarette excise taxes abstract a model of oligopoly price behavior and tax incidence for the u s cigarette industry for the period 1955 1990 is presented a cost function is estimated and shows manufacture to be subject to increasing returns to scale the mean price elasticity of demand is 0 71 the model indicates that competition among manufacturers has been decreasing since 1980 a simulation shows that an increase in the federal excise tax causes a greater increase in price and a greater decrease in consumption than does the same increase in the average of state and local tax rates

asymmetric timely loss recognition adverse shocks to external capital and underinvestment evidence from the collapse of the junk bond market abstract using the collapse of the junk bond market in the early 1990s as an exogenous shock to external capital i document in both difference in differences and triple difference designs that speculative grade firms that recognize economic losses in a timely manner experience a smaller reduction in investment following the collapse the effect is more pronounced for speculative grade firms with a low level of asset liquidation value using the excess bond premium as a proxy for fluctuations in the supply of capital i also extend the generalizability of my findings to a broader sample of 84 421 firm years over the 1972 2011 period

cash flow asymmetry causes and implications for conditional conservatism research earnings asymmetric timeliness captures both accrual and operating cash flow cfo asymmetric timeliness because recognition of operating cash flows does not reflect differential verification thresholds for recognizing unrealized gains versus losses cfo asymmetry adds noise or bias to tests of conditional conservatism we show that cfo asymmetry is predictable in the cross section and varies systematically with life cycle characteristics removing cfo from earnings and using accruals based measures of asymmetric timeliness eliminates several biases that prior studies have attributed to other sources moreover accrual asymmetric timeliness varies in the cross section as theory predicts going forward we recommend researchers use accruals based asymmetric timeliness measures when testing for conditional conservatism

a comparison of alternative models for the demand for medical care we have tested alternative models of the demand for medical care using experimental data the estimated response of demand to insurance plan is sensitive to the model used we therefore use a split sample analysis and find that a model that more closely approximates distributional assumptions and uses a nonparametric retransformation factor performs better in terms of mean squared forecast error simpler models are inferior either because they are not robust to outliers e g anova anocova or because they are inconsistent when strong distributional assumptions are violated e g a two parameter box cox transformation

the response by adults to increases in cigarette prices by sociodemographic characteristics cigarette excise taxes are widely viewed by health economists as an effective tool to reduce cigarette consumption however those opposed to increasing cigarette excise taxes often state that the taxes unfairly target certain segments of the population notably the poor and minorities some of this opposition may have been fueled by a lack of understanding of how the tax will affect the health and welfare of various demographic groups of interest this article provides guidance to policy makers by estimating price elasticities among adults by gender income age and race or ethnicity women adults with income at or below the median income young adults african americans and hispanics are most responsive to cigarette price increases for example adults with income at or below the median are more than four times as price responsive as those with income above the median

a nonparametric test for comparing valuation distributions in first price auctions this article proposes a nonparametric test for comparing valuation distributions in first price auctions our test is motivated by the fact that two valuation distributions are the same if and only if their integrated quantile functions are the same our method avoids estimating unobserved valuations and does not require smooth estimation of bid density we show that our test is consistent against all fixed alternatives and has nontrivial power against root n local alternatives monte carlo experiments show that our test performs well in finite samples we implement our method on data from u s forest service timber auctions

the demand for alcohol the differential response to price although several studies indicate that drinking is responsive to price little work has focused on whether prices have a differential effect on light moderate or heavy drinking this study examines the price responsiveness of the demand for alcohol whether heavy drinkers are less sensitive to price than light or moderate drinkers the study uses data on alcohol consumption on the 1983 national health interview survey the results indicate that both light and heavy drinkers are much less price elastic than moderate drinkers further we cannot reject the hypothesis that the very heaviest drinkers have perfectly price inelastic demands