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 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 pricing and lot sizing under conditions of perishability finite production and partial backordering and lost sale abstract perishable products constitute a sizable component of inventories common questions in a production and selling situation involving a perishable or a non perishable product are what should be the price and what should be the size of the replenishment when demand for the product is price sensitive pricing and lot sizing decisions are interdependent similarly when a product is highly perishable the demand may need to be backlogged to avoid costs due to deterioration i e perishability and backlogging are complementary conditions in this paper we consider the pricing and lot sizing problem for a perishable good under finite production exponential decay and partial backordering and lost sale the backlogging phenomenon in the literature is often modeled using backordering and lost sale costs these cost parameters however are not easy to estimate in practice in this paper we use a new approach to model backlogging of demand in this approach customers are viewed to be impatient the backlogging option gets used only when it is economic to do so we extend the analysis presented for a perishable product to the case in which the product is non perishable

advanced supply chain planning with mixtures of backorders lost sales and lost contract abstract this paper investigates a supply chain system in which a supplier prepares for the selling season by building stock levels prior to the beginning of the season and shortages realized at the beginning of the season are represented as mixtures of backorders and lost sales backlogged items are replenished as soon as possible through an emergency procurement as opposed to waiting until the next scheduled delivery as in many continuous review scenarios and the backorder rate is modeled as a piecewise linear function of the magnitude of the shortage the often intangible cost associated with lost sales and customer goodwill is also quantified in particular the buyer and supplier are engaged in a contractual agreement and the loss of customer goodwill from the supplier s perspective is represented as the expected cost associated with violating the conditions of the contract the likelihood of contract cancellation is also represented as a function of the magnitude of shortage the optimal solution is derived in closed form for the case of exponential demand distribution and an example problem is illustrated with numerical data in order to demonstrate calculation of the optimal solution and corresponding sensitivity analysis for demand distributions in which the solution cannot be expressed in closed form

the predictability of interim earnings over alternative quarters this study examines the predictability of earnings per share for the first second third and fourth quarterly reporting periods forecasts of quarterly earnings per share both by security analysts and time series models are analyzed the next section of the paper deals with the question of whether there is a significant difference in the accuracy with which each quarter can be forecasted the data in this section strongly indicate that such a difference exists the third section explores explanations for the findings of section 2 these include the relationship between fourthquarter variability and the integral versus discrete reporting methods section 4 contains the summary and conclusions

discretionary accounting choices and the predictive ability of accruals with respect to future cash flows using a sample of restatement firms and a meet or beat model to classify firms as making discretionary accounting choices for opportunistic meet or beat op mb reasons we show that originally reported earnings and accrual components are less predictive of future cash flows relative to the restated numbers we find the opposite is true for firms classified as making discretionary accounting choices for non op mb reasons we consider a number of competing explanations for these latter results our findings are most consistent with the informational hypothesis weakly consistent with conservative motivated efficient contracting hypotheses but inconsistent with opportunistic contracting and misapplication errors of gaap explanations

productivity in public services abstract this paper discusses issues arising in the measurement of productivity in public services compared to measuring productivity in the private sector difficulties arise because the output of public services is often unpriced and because some public services are consumed collectively a key problem is measuring the full range of outputs and quality improvements delivered by public sector organizations that are valued by society without comprehensive measures of output productivity statistics may be misleading i outline methods used in the measurement of both private and public sector productivity and discuss the measurement of public sector productivity in practice finally i discuss studies that examine factors underlying productivity differences and productivity growth in public and private sector organizations public sector reforms and the use of pilot schemes in public sector organizations present opportunities for research to identify causal effects on productivity

a generalized quantity discount pricing model to increase supplier s profits in this paper the joint problem of ordering and offering price discount by a supplier to his sole major buyer is analyzed the objective is to induce the buyer to alter his order schedule and size so that the supplier can benefit from lower set up ordering and inventory holding costs we generalize the quantity discount pricing model of monahan monahan j p 1984 a quantity discount pricing model to increase vendor profits management sci 30 6 720 726 to 1 explicitly incorporate constraints imposed on the amount of discount that can be offered and 2 relax the implicit assumption of a lot for lot or order for order policy adopted by the supplier an algorithm is developed to solve the supplier s joint ordering and price discount problem

intra year shifts in the earnings distribution and their implications for earnings management abstract previous findings that upward earnings management causes a kink in the distribution of annual earnings cannot be verified without a well specified benchmark for pre managed annual earnings we model shifts in the cumulative earnings distribution during the fourth quarter to explain the kink s formation logistic regression results show that compared to a control group a high proportion of firms with small cumulative profits or losses at the beginning of the fourth quarter report small annual profits rather than small annual losses this suggests that upward earnings management causes the kink and indicates which firms are likely to manage earnings upward

earnings skewness and analyst forecast bias abstract we argue that if analysts objective is to provide the most accurate forecast by minimizing the mean absolute forecast error then the optimal forecast is the median instead of the mean earnings forecast bias is observed when the median is different from the mean in a skewed earnings distribution thus part of the observed analyst forecast bias could be a result of analysts efforts to improve forecast accuracy when the earnings distribution is skewed we find that earnings skewness is significantly related to analyst forecast bias we also provide evidence that the market adjusts for part of the skewness induced bias

some two echelon supply chain games improving from deterministic symmetric information to stochastic asymmetric information models abstract many supply chain and inventory models use the following two echelon symmetric information and deterministic gaming structure a manufacturer wholesales a product to a retailer who in turn retails it to the consumer the retail market demand varies with the retail price according to a deterministic demand function that is known to both the manufacturer and the retailer it is then assumed that the players the manufacturer and the retailer arrive at their pricing and batch size decisions through a stackelberg game or a fixed markup percentage game the first part of this paper reveals many implausible effects of demand curve forms on the behavior of these gaming models however we do not merely conclude that two echelon gaming results obtained via assuming one convenient demand curve form can often become invalid under other demand curve forms more importantly we argue in the second part of the paper that the various implausible effects revealed here suggest a different but more fundamental conclusion the assumed non cooperative games are themselves flawed because gaming is meaningless and logically circular in a deterministic and symmetrical information system we then present an introductory illustration on how the introduction of stochasticity and information a symmetry leads to more plausible two echelon supply chain gaming models together the two parts demonstrate the necessity and practicality of using a stochastic and asymmetric information instead of the prevalent deterministic symmetric information approach in many supply chain models

factors associated with the year end decline in working capital working capital is an important indicator of firm operational efficiency all else being equal lower levels signal greater efficiency managers are thus likely to be motivated to report lower levels of working capital at times of greater external attention we find that working capital levels decrease in the fourth fiscal quarter significantly more than expected conditional on seasonal changes in economic activity the decrease subsequently reverses in the following first fiscal quarter evidence indicates that firms manage down year end working capital through transactions that increase year end operating cash flow and that firms spread this activity over all working capital accounts finally the temporary decrease in year end working capital is correlated with compensation benchmarks and analysts annual cash flow forecasts the temporary drop is also more pronounced for firms with industry dominance this paper was accepted by mary barth accounting

the effect of audit adjustments on earnings quality evidence from china we examine how adjustments to earnings during year end audits affect measures of earnings quality there are four key findings first audit adjustments cause earnings to become smoother and more persistent second the adjustments result in higher accrual quality third audit adjustments have a larger negative effect on signed accruals than absolute accruals fourth the adjustments do not reduce the discontinuity in the earnings distribution around zero these findings are of interest to researchers who use earnings properties as proxies for earnings quality and audit quality however we caution that our findings for china may not generalize to other countries

optimal production purchasing and pricing a differential game approach abstract this paper deals with a problem of determining optimal production and pricing policies of a manufacturing firm which is supplying a retailer the latter faces a price dependent demand function towards the final consumers and wishes to determine optimal purchasing and pricing policies both firms carry inventories and backlogging is permitted the problem is modelled as a two player nonzero sum differential game with the inventory levels as the state variables the controls are the rates of production and purchasing as well as the prices assuming linear production costs but convex ordering and holding costs open loop nash controls are characterized by using switching point analysis as well as phase diagrams

on the suboptimality of s 1 s lost sales inventory policies abstract this paper considers replenishment policies for the continuous review inventory model with poisson demand a fixed lead time on replenishment and lost sales during a stockout there is a time dependent stockholding cost and a cost per unit of sale lost but there is no or negligible cost associated with placing a replenishment order the standard policy is to specify a maximum stock level s and place a replenishment order whenever a demand occurs and is met this is commonly referred to as an s 1 s policy it is shown that there are other replenishment policies which give lower cost solutions in fact it is demonstrated that an s 1 s policy can never be optimal if s 2

an approach for developing an optimal discount pricing policy this paper addresses the problem of why and how a seller should develop a discount pricing structure even if such a pricing structure does not alter ultimate demand the situation modeled is most appropriate where the seller s product does not represent a major component of the buyer s final product where the demand for the product is derived or where the price is only one of many factors considered in making a purchase decision a model of buyer reaction to any given pricing scheme is developed to show that there exists a unified pricing policy which motivates the buyer to increase its ordering quantity per order thereby reducing the joint buyer and seller ordering and holding costs as a result the seller is able to reduce its costs while leaving the buyer no worse off and often better off the model is extended to handle variable ordering and shipping costs and situations where the seller faces numerous groups of buyers each having different ordering policies finally a case study is presented explicitly showing how the proposed pricing policy can be applied to the situation of a large seller selling to a number of different buyer groups

game theoretical perspectives on dual channel supply chain competition with price discounts and pricing schemes abstract this paper evaluates the impact of price discount contracts and pricing schemes on the dual channel supply chain competition channel conflict occurs when the supplier enters the online direct channel traditional contracts normally require tedious administrational participation full information of the cost structures and other factors the introduction of simple price discount contracts aims at providing easy implementation and effective coordination results from supplier stackelberg retailer stackelberg and nash game theoretic perspectives we show that the scenarios with price discount contracts can outperform the non contract scenarios in addition we show consistent pricing scheme can reduce the channel conflict by inducing more profit to the retailer the leader in the games might but is not guaranteed to have advantages

earnings management and accounting income aggregation quarterly earnings allow aggregation into annual earnings in four different ways fiscal year earnings is one measure of annual earnings the others being earnings for annual periods ending at interim quarter ends we investigate earnings management in fiscal year earnings relative to these alternative measures of firms annual earnings we confirm prior findings in burgstahler and dichev 1997 earnings management to avoid earnings decreases and losses journal of accounting and economics 24 99 126 of discontinuities around zero and prior year earnings in histograms of earnings subsequent research questions whether these discontinuities are evidence of earnings management using histograms of our alternative annual earnings measures we offer evidence suggesting earnings management is responsible for the discontinuities

evidence that the zero earnings discontinuity has disappeared abstract discontinuities in earnings distributions at zero have been widely cited as evidence of earnings management but not without controversy recent research suggests discontinuities may be mere artifacts of certain research design choices we find that the well known zero earnings discontinuity disappears soon after passage of the sarbanes oxley act sox and has not returned we also find that neither the discontinuity nor its disappearance require the effects of widely cited alternative non earnings management explanations for the zero earnings discontinuity

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

an eoq model with noninstantaneous receipt and exponentially deteriorating items under two level trade credit abstract this paper considers the impact of the trade credit policy on the classical economic production quantity epq model for an item subject to exponential decays essentially this study focuses on an exponentially deteriorating item under the conditions of the retailer receiving the supplier trade credit and providing the customer trade credit simultaneously so as to minimize the average total cost a theorem is developed to determine the optimal replenishment policies the main contribution to literature is the inclusion of the latter type of payment delay finally through numerical examples sensitive analysis shows the influence of key model parameters

note on inventory model with a mixture of back orders and lost sales abstract competitiveness is an important means of determining whether a company will prosper business organizations compete with one another in a variety of ways among these competitive methods are time and cost factors the purpose of this paper is to examine the inventory models presented by padmanabhan and vrat international journal of systems sciences 21 1990 1721 with a mixture of back orders and lost sales we develop the criterion for the optimal solution for the total cost function if the criterion is not satisfied this model will degenerate into one cycle inventory model with a finite inventory period this implies an extension of shortage period as long as possible to produce lower cost however we know that time is another important factor in company competitiveness customers will not indefinitely wait for back orders a tradeoff will be made between the two most important factors time and cost the minimum total cost is evaluated under the diversity cycle time and illustrations are applied to explain the calculation process this work provides a reference for decision makers

lost sales problems with stochastic lead times convexity results for base stock policies we consider a single location inventory system with periodic review and stochastic demand it places replenishment orders to raise the inventory position that is inventory on hand plus inventory in transit to exactly s at the beginning of every period the lead time associated with each of these orders is random however the lead time process is such that these orders do not cross demand that cannot be met with inventory available on hand is lost permanently we state and prove some sample path properties of lost sales inventory on hand at the end of a period and inventory position at the end of a period as functions of s the main result is the convexity of the expected discounted sum of holding and lost sales costs as a function of s this result justifies the use of common search procedures or linear programming methods to determine optimal base stock levels for inventory systems with lost sales and stochastic lead times it should be noted that the class of base stock policies is suboptimal for such systems and we are primarily interested in them because of their widespread use

earnings management erroneous inferences based on earnings frequency distributions a vast literature following hayn 1995 and burgstahler and dichev 1997 attributed the so called discontinuities in earnings distributions around zero to earnings management despite recent evidence that these discontinuities are likely caused by other factors researchers and teachers continue to point to the shapes of these distributions as evidence of earnings management we provide three sets of further evidence that these discontinuities are likely caused by factors other than earnings management 1 we provide as an example a detailed analysis of the severe effects of sample selection in a recent study this study erroneously concludes that the shape of an earnings distribution is evidence of earnings management 2 we provide a simple explanation for the shape of the earnings distribution that is most often cited as evidence of earnings management the relation between earnings and prices differs with the magnitude and the sign of earnings and 3 we provide further examples that support the main point of our paper evidence beyond the mere shape of a distribution must be brought to bear before researchers can draw conclusions regarding the presence absence of earnings management

a stackelberg game and its improvement in a vmi system with a manufacturing vendor vendor managed inventory vmi is an inventory management strategy to let a vendor manage his retailers inventories which makes the vendor have the opportunity to obtain some inventory and market related information of his retailers this paper discusses how the vendor can take advantage of this information for increasing his own profit by using a stackelberg game in a vmi system the vendor here is a manufacturer who procures raw materials to produce a finished product and supplies it at the same wholesale price to multiple retailers the retailers then sell the product in independent markets at retail prices solution procedures are developed to find the stackelberg game equilibrium that each enterprise is not willing to deviate from for maximizing his own profit the equilibrium makes the manufacturer benefited and the retailers profits maximized the equilibrium can then be improved for further benefiting the manufacturer and his retailers if the retailers are willing to cooperate with the manufacturer by using a cooperative contract finally a numerical example and the corresponding sensitivity analysis are given to illustrate that 1 the manufacturer can benefit from his leadership and monopolize the added profit of the vmi system in some cases 2 the manufacturer can further improve his own profit and then the retailers profits by the cooperative contract as compared to the stackelberg equilibrium 3 market and raw material related parameters have significant influence on every enterprise s net profit

the failure of input based schooling policies in an effort to improve the quality of schools governments around the world have dramatically increased the resources devoted to them by concentrating on inputs and ignoring the incentives within schools the resources have yielded little in the way of general improvement in student achievement this paper provides a review of the us and international evidence on the effectiveness of such input policies it then contrasts the impact of resources with that of variations in teacher quality that are not systematically related to school resources finally alternative performance incentive policies are described

gdp management to meet or beat growth targets abstract we apply the discontinuity methodology from the accounting literature to a political economy setting of gdp reporting and examine whether chinese local governments manage regional gdp numbers we find strong evidence of discontinuities around zero in the distribution of actual minus target gdp growth rates the frequencies of just meeting or beating gdp growth targets are about five four times the frequencies of just missing targets at the prefecture province level the results are stronger for governors with longer tenures and those without political connections to higher level officials as well as for local governments with more resources under their control

joint pricing and inventory control for non instantaneous deteriorating items with partial backlogging and time and price dependent demand abstract in this paper a joint pricing and inventory control for non instantaneous deteriorating items is developed we adopt a price and time dependent demand function shortages is allowed and partially backlogged the major objective is to determine the optimal selling price the optimal replenishment schedule and the optimal order quantity simultaneously such that the total profit is maximized we first show that for any given selling price optimal replenishment schedule exists and unique then we show that the total profit is a concave function of price next we present a simple algorithm to find the optimal solution finally we solve a numerical example to illustrate the solution procedure and the algorithm

comments on the eoq model under retailer partial trade credit policy in the supply chain abstract huang and hsu 2007 an eoq model under retailer partial trade credit policy in supply chain international journal of production economics doi 10 1016 j ijpe 2007 05 014 investigate the inventory system as a cost minimization problem to determine the retailer s optimal inventory policy under the supply chain they develop two easy to use theorems to locate the optimal inventory policy for the retailer although their inventory models are correct and interesting processes of arguments to derive those theorems to find the optimal inventory policy are not complete so the main purpose of this paper is to overcome these shortcomings and present complete proofs for huang and hsu 2007

the marketization of new zealand schools assessing fiske and ladd edward fiske and helen ladd s review of market based educational reforms in new zealand are assessed in light of recent developments we agree that predicted benefits were overstated that there were both losers and winners and that educational nirvana did not result in our view however the main impact was to make schools problems more transparent creating discomforting pressures and attempts to undermine this transparency we examine responses to changes in zoning laws the effects of socioeconomic status on observed outcomes signalling and value added behavior and school accountability we find that educational reforms produce substantial short term changes largely on the demand side

do scaling and selection explain earnings discontinuities abstract earnings distributions commonly exhibit statistically significant discontinuities at zero earnings which are widely interpreted as evidence of earnings management to avoid a loss in contrast durtschi and easton 2005 durtschi and easton 2009 assert that discontinuities are instead explained by some combination of prior researchers choice s of scaling and sample selection as well as a scaling related effect due to a systematic relation between the sign of earnings and market prices resolution of the conflicting interpretations of discontinuities is important because 1 it affects how investors regulators and scholars view earnings management and 2 it demonstrates the importance of a close linkage between theory and research design choices we point out that de provide no evidence that scaling or selection create discontinuities but only evidence showing that changes in scaling or selection eliminate discontinuities we demonstrate why the research designs used by de eliminate discontinuities and why alternative designs using the same data yield statistically significant discontinuities that cannot be attributed to either scaling or selection

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

pricing in revenue management for multiple firms competing for customers abstract we consider the pricing strategies of multiple firms providing the same service in competition for a common pool of customers in a revenue management context the firms have finite capacity and the demand at each firm depends on the selling prices charged by all firms each of which satisfies demand up to a given capacity limit we use game theory to analyze the systems when firms face either a deterministic demand or a general stochastic demand the existence and uniqueness conditions of a nash equilibrium are derived and we calculate the explicit nash equilibrium point when the demand at each firm is a linear function of price we also conduct sensitivity analysis of the equilibrium prices with respect to cost and capacity parameters

operating characteristics of the s 1 s inventory system with partial backorders and constant resupply times in this paper we consider an s 1 s inventory system with poisson demand and constant resupply times an arriving customer facing stockout will either backorder or withdraw its order expressions describing steady state operating characteristics of the system and the expected total cost rate are developed furthermore the behavior of the expected total cost rate as the function of the relevant parameters is explored

effects of a demand curve s shape on the optimal solutions of a multi echelon inventory pricing model abstract when a price demand relationship is needed in inventory pricing models very often a convenient typically linear function is arbitrarily chosen the common wisdom implication is that any downward sloping demand curve would lead to similar conclusions this paper applies different demand curve functions to a simple inventory pricing model and shows that while the common wisdom implication is valid for a single echelon system assuming different demand curve functions can lead to very different results in a multi echelon system in some situations a very small change in the demand curve appearance leads to very large changes in the model s optimal solutions other significant but counter intuitive effects of the demand curve form are also revealed this paper does not completely resolve the difficulties revealed by the counter intuitive effects reported here but establishing the existence of these effects represents a first step towards developing procedures to handle such effects these procedures will be necessary to ensure the reliability of many multi echelon models for products having price sensitive demands

note on a quantity discount pricing model to increase vendor profits monahan monahan james p 1984 a quantity discount pricing model to increase vendor profits management sci 30 june 720 726 develops a model for establishing an optimal quantity discount schedule from a vendor s viewpoint in this note we show that this model is limited to the case where the vendor buys from another supplier incorporating vendor s inventory carrying costs we develop a generalized version of monahan s model and demonstrate its equivalence with the joint economic lot size approach suggested by banerjee banerjee avijit 1986 a joint economic lot size model for purchaser and vendor decision sci 17 summer 292 311

equilibrium pricing and lead time decisions in a competitive industry pricing and lead time are two crucial decisions to a success in today s competitive markets this paper examines the equilibrium pricing and lead time decisions in a duopoly industry consisting of two large and several smaller firms with competition we solve the sufficient karush kuhn tucker kkt optimality conditions for the nash equilibrium solution we characterize the existence and uniqueness of the nash equilibrium solution of pricing and lead time decisions for both homogenous and heterogeneous firms our case study provides important managerial insights about firms behavior under price and lead time competition in a semiconductor manufacturing industry

optimal pricing and ordering policy under permissible delay in payments abstract many researchers have assumed that the selling price is the same as the purchase cost and developed various eoq models for a retailer when the supplier offers a permissible delay in payments in this paper we complement the shortcoming of their models by considering the difference between the selling price and the purchase cost we then develop an algorithm for a retailer to determine its optimal price and lot size simultaneously when the supplier offers a permissible delay in payments our theoretical result contradicts to their conclusion that the economic replenishment interval and order quantity generally increases marginally under the permissible delay in payments

how do nonprofit hospitals manage earnings abstract we hypothesize that unlike for profit firms nonprofit hospitals have incentives to manage earnings to a range just above zero we consider two ways managers can achieve this they can adjust discretionary spending hoerger t j 1991 profit variability in for profit and not for profit hospitals journal of health economics 10 259 289 and or they can adjust accounting accruals using the flexibility inherent in generally accepted accounting principles gaap to test our hypothesis we use regressions as well as tests of the distribution of earnings by burgstahler and dichev burgstahler d dichev i 1997 earnings management to avoid earnings decreases and losses journal of accounting and economics 24 99 126 on a sample of 1 204 hospitals and 8 179 hospital year observations our tests support the use of discretionary spending and accounting accrual management like hoerger 1991 we find evidence that nonprofit hospitals adjust discretionary spending to manage earnings however we also find significant use of discretionary accruals e g adjustments to the third party allowance and allowance for doubtful accounts to meet earnings objectives these findings have two important implications first the previous evidence by hoerger that nonprofit hospitals show less variation in income may at least partly be explained by an accounting phenomenon second our findings provide guidance to users of these financial statements in predicting the direction of likely bias in reported earnings

a cooperative game theory model of quantity discounts quantity discounts offered by a monopolist are considered in the context of a bargaining problem in which the buyer and the seller negotiate over the order quantity and the average unit price all units and incremental quantity discounts that permit transaction at a negotiated outcome are described the effects of risk sensitivity and bargaining power on quantity discounts are discussed for alternative bargaining models

pure and modified base stock policies for the lost sales inventory system with negligible set up costs and constant lead times abstract the studied inventory system with continuous review has an easily computed optimal s 1 s policy when unsatisfied demands are backlogged we assume that unsatisfied demands are lost and then it is also easy to compute the best s 1 s policy but as demonstrated by roger hill at the isir symposium in 1996 this pure base stock policy can never be optimal if s 2 our focus is on periodic review we use erlang s loss formula to derive approximate expressions for the stockout probability and the average cost these expressions are used to approximate the average cost and to compute a good base stock we formulate and implement a markov decision model to find the optimal replenishment policy the model is solved by a policy iteration algorithm because the optimal policy is often rather complicated we introduce modified base stock policies they are specified by a pair s t where s is the base stock and t is a lower bound for the number of review periods between review epochs in which placing a replenishment order is permitted a simple one has s equal to the base stock computed from erlang s formula and fixes t as the largest integer which is less than or equal to the ratio of the number of review periods per delivery period and s our numerical examples show that the simple modified base stock policy provides most of the cost reduction which can be obtained by replacing the best pure base stock policy by the optimal policy

incorporating quantity discounts to the eoq model with transportation costs abstract this article extends a previous economic order quantity eoq model with two modes of transportation namely truckload tl and less than truckload ltl carriers by introducing all units and incremental quantity discount structures into the analysis exact algorithms are developed for each quantity discount structure to compute optimal policies for single stage models over an infinite planning horizon

managing inventory with multiple products lags in delivery resource constraints and lost sales a mathematical programming approach this paper develops an order up tos inventory model that is designed to handle multiple items resource constraints lags in delivery and lost sales without sacrificing computational simplicity mild conditions are shown to ensure that the expected average holding cost and the expected average shortage cost are separable convex functions of the order up to levels we develop nonparametric estimates of these costs and use them in conjunction with linear programming to produce what is termed the lp policy the lp policy has two major advantages over traditional methods first it can be computed in complex environments such as the one described above and second it does not require an explicit functional form of demand something that is difficult to specify accurately in practice in two numerical experiments designed so that optimal policies could be computed the lp policy fared well differing from the optimal profit by an average of 2 20 and 1 84 respectively these results compare quite favorably with the errors incurred in traditional methods when a correctly specified distribution uses estimated parameters our findings support the effectiveness of this mathematical programming technique for approximating complex real world inventory control problems

the decline of schooling productivity in oecd countries based on baumol s cost disease model we develop two alternative measures of the change in the productivity of schooling both productivity measures are based on changes in the relative price of schooling we find that in most oecd countries the price of schooling has increased faster in 1970 94 than would be compatible with constant schooling productivity in addition we show that the average performance of pupils has remained constant at best in most oecd countries our results imply a larger decline in the productivity of schooling in many oecd countries than in the united states

the ambiguity of earnings announcements we study the consequences of misreporting in settings where ambiguity averse investors face uncertainty about two aspects of the firm its productivity and the weakness of its reporting system we

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

game theoretic pricing and ordering decisions with partial lost sales in two stage supply chains abstract few papers have studied the optimal pricing and ordering with partial lost sales from a two stage game theoretic perspective this paper considers a supply chain game with a buyer and a seller through pricing and ordering models with partial lost sales we evaluate the optimal solutions for the buyer and the seller and provide insights into both the deterministic and stochastic demand models we also propose search algorithms to obtain the global optimum when convexity and concavity conditions are not satisfied