a quantile regression analysis of china s provincial co2 emissions where does the difference lie abstract china is already the largest carbon dioxide emitter in the world this paper adopts provincial panel data from 1990 to 2014 and employs quantile regression model to investigate the influencing factors of china s co 2 emissions the results show that economic growth plays a dominant role in the growth of co 2 emissions due to massive fixed asset investment and export trade the influences of energy intensity on the lower 10th and upper 90th quantile provinces are stronger than those in the 25th 50th quantile provinces because of big differences in r d expenditure and human resources distribution the impact of urbanization increases continuously from the lower 10th quantile provinces to the 10th 25th 25th 50th 50th 75th 75th 90th and upper 90th quantile provinces owing to the differences in r d personnel real estate development and motor vehicle ownership the effect of industrialization on the upper 90th quantile provinces is greater than those on other quantile provinces on account of the differences in the industrial scale and the development of the building industry thus the heterogeneity effects of influencing factors on different quantile provinces should be taken into consideration when discussing the mitigation of co 2 emissions in china

dollar depreciation and us industry performance abstract this study analyzes the effects of the real exchange rate and the real interest rate on domestic sales exports and imports for 19 manufacturing industries and selected non merchandise sectors in the usa the estimates are combined with a simulation of an exogenous dollar depreciation to infer net industry effects of a non policy induced drop in the value of the dollar the results indicate that the direct impacts of the depreciation are concentrated in net exports with only limited effects on home sales hoewver the indirect effects of the depreciation which work through the domestic interest rate and foreign and domestic income and prices have a significant impact on domestic sales as well as net trade in both merchandise and non merchandise sectors

evaluating the reliability of current value estimates abstract the papers by muller and abk aboody barth and kasznik provide evidence on the reliability of estimates of assets current or market values muller finds that the decision to capitalize estimates of acquired brand values is influenced by contracting incentives suggesting that the reliability of these estimates is compromised by managerial manipulation abk find that estimates of fixed asset revaluations have a statistically significant association with both contemporaneous stock prices and future operating performance it is difficult to assess the implications of abk s results for the reliability of the revaluations because stock prices and operating performance are influenced by many other factors

empirical evidence on the relation between stock option compensation and risk taking abstract we examine whether executive stock options esos provide managers with incentives to invest in risky projects for a sample of oil and gas producers we examine whether the coefficient of variation of future cash flows from exploration activity our proxy for exploration risk increases with the sensitivity of the value of the ceo s options to stock return volatility eso risk incentives both eso risk incentives and exploration risk are treated as endogenous variables by adopting a simultaneous equations approach we find evidence that eso risk incentives has a positive relation with future exploration risk taking additional tests indicate that eso risk incentives exhibits a negative relation with oil price hedging in a system of equations where eso risk incentives and hedging are allowed to be endogenously determined overall our results are consistent with esos providing managers with incentives to mitigate risk related incentive problems

the economic consequences of extending the use of fair value accounting in regulatory capital calculations a discussion abstract when the federal reserve following basel iii proposed removing the accumulated other comprehensive income aoci filter that shields regulatory capital from unrealized gains and losses on available for sale afs debt securities it triggered fierce opposition the topic is at the heart of the debate about the role of fair value accounting for financial stability chircop and novotny farkas 2016 investigate banks stock price reaction and investment behavior around news events up to the announcement of the final decision i focus on the question of whether their evidence is sufficiently strong to convince either side in the debate

why is electricity consumption inconsistent with economic growth in china studies have indicated that there exists a relatively stable and positive correlation between electricity consumption and economic growth and there should not be a large deviation between them however the deviation between electricity consumption and economic growth in china during the asian financial crisis and global economic crisis sparks intense debates we attempt to explain the deviation from the perspective of inventory investment adjustment in the business cycle using the svar model in this paper the results show that the effects of inventory investment adjustment shock and electricity consumption structure shock on the deviation are positive but tend to be negative for electricity efficiency shock the results of historical decomposition of these shocks also show that the inventory investment adjustment shock is the main factor that influences the deviation during the global economic crisis economic fluctuation in the short term can not change the economic development pattern and the characteristics of electricity demand once the economy returns to stable growth the deviation between electricity consumption and economic growth will shrink and disappear soon

panacea pandora s box or placebo feedback in bank mortgage backed security holdings and fair value accounting we examine the relation between bank holdings of mortgage backed securities mbs and mbs prices theory suggests feedback between mbs holdings and underlying asset markets can be aggravated by mark to market accounting we measure feedback by the relation between asset returns and the changes in bank mbs holdings consistent with the existence of feedback effects related to mark to market we find that for banks with high mbs more nonperforming loans and lower total capital ratio changes in bank mbs positions are positively associated with changes in mbs prices and that this relation is reduced after the april 2009 mark to market rule clarification to assess the effect of feedback on shareholder value we test whether the stock price response of banks to the announcement of the mark to market accounting rule clarification is associated with the intensity of feedback behavior we find that the stock market reaction to the rule change is more positive for banks with more mbs higher nonperforming loans and higher pre rule change feedback we also find positive bond price reactions to the rule change overall our results suggest feedback related to mark to market accounting had a measurable effect on shareholder value 2011 published by elsevier b v

hedging speculation and shareholder value abstract we document that gold mining firms have consistently realized economically significant cash flow gains from their derivatives transactions we conclude that these cash flows have increased shareholder value since there is no evidence of an offsetting adjustment in firms systematic risk this finding contradicts a central assumption in the risk management literature that derivatives transactions have zero net present value and highlights an important motive for firms to use derivatives that the literature has hitherto ignored although we find considerable evidence of selective hedging in our sample the cash flow gains from selective hedging appear to be small at best

effect of derivative accounting rules on corporate risk management behavior abstract i examine the effect of the accounting standard for derivative instruments sfas no 133 on corporate risk management behavior i classify a derivative user as an effective hedger eh firm if its risk exposures decreased after the initiation of the derivatives program and as an ineffective hedger speculator is firm otherwise i find that volatility of cash flows and risk exposures related to interest rate foreign exchange rate and commodity price decrease significantly for is firms but not for eh firms suggesting that is firms engaged in more prudent risk management activities after the adoption of sfas no 133

the role of foreign institutional investors in restraining earnings management activities across countries this study investigates the role of foreign institutional investors fiis in restraining earnings management activities of firms under varying levels of investor protection firms manage their earnings less when independent fiis are among their shareholders especially for firms in which monitoring is more valuable firms in weak investor protection countries and when firms have greater growth opportunities these effects are robust to a quasi exogenous shock to fiis shareholdings unobserved firm heterogeneity and alternative earning management measures fiis are associated with an increase in foreign director presence on corporate boards and audit committees

optimal incentive contracts in the presence of career concerns theory and evidence this paper studies optimal incentive contracts when workers have career concerns concerns about the effects of current performance on future compensation we show that the optimal compensation contract optimizes total incentives the combination of the implicit incentives from career concerns and the explicit incentives from the compensation contract thus the explicit incentives from the optimal compensation contract should be strongest for workers close to retirement because career concerns are weakest for these workers we find empirical support for this prediction in the relation between chief executive compensation and stock market performance

debt covenant violation and manipulation of accruals abstract this paper examines the abnormal accruals of a sample of 94 firms that reported debt covenant violations in annual reports we expect debt covenant restrictions to influence accounting choices in the year preceding and the year of violation time series and cross sectional models are used to estimate normal accruals in the year prior to violation both models indicate that abnormal total and working capital accruals are significantly positive in the year of violation there is evidence of positive abnormal working capital accruals after controlling for management changes and auditor going concern qualifications

performance pricing in bank debt contracts abstract performance pricing links bank debt interest rate spreads to a borrower s performance via two options interest decreasing performance pricing reduces spreads if credit quality improves it is more common when prepayment is more likely or costly and when adverse selection costs are higher and is less common when multiple performance measures better predict credit quality interest increasing performance pricing increases spreads if credit quality deteriorates it is more common when lenders reduce interest rates to add this provision when downgrades are more likely and when moral hazard costs are higher we find lower spreads for contracts with interest increasing performance pricing

discussion of revalued financial tangible and intangible assets association with share prices and non market based value estimates barth and clinch 1998 henceforth bc like easton eddey and harris 1993 henceforth eeh examine the relation between asset revaluation data in the financial statements of australian firms and various value metrics a principal difference between the two studies is the choice of value metrics and the formulation of the regression models relating the revaluation data and these metrics the value metrics used by bc are price per share and a measure of intrinsic value per share most of this discussion will focus on the possible effects of scale in regressions that have price or value per share as the dependent variable my main point is that statistical associations between price balance sheet data and income statement data in these regressions may be a spurious effect of scale other issues raised at the conference included the expected magnitudes of the coefficient estimates from the regression analyses management motives for asset revaluations econometric issues associated with pooling a time series and cross section of data and reasons for use of independent valuations versus valuations by company directors since these issues were addressed in eeh and in the discussion of eeh by bernard 1993 i pay less attention to them in this discussion

the impact of derivatives on firm risk an empirical examination of new derivative users abstract the appropriateness of financial reporting rules for derivative securities depends on corporations reasons for using the instruments empirically little is documented about how the instruments affect firms risk exposures this study examines derivatives roles in firms initiating derivatives use the results are consistent with firms using derivatives to hedge and not to increase entity risk firm risk measured several ways declines following derivatives use realized risk reductions and decisions to initiate derivatives programs vary across firms with the expected benefits from hedging the findings emphasize the importance of hedge accounting rules that incorporate the impact of derivatives and hedged items simultaneously

estimating the value of employee stock option portfolios and their sensitivities to price and volatility the costs associated with compiling data on employee stock option portfolios is a substantial obstacle in investigating the impact of stock options on managerial incentives accounting choice financing decisions and the valuation of equity we present an accurate method of estimating option portfolio value and the sensitivities of option portfolio value to stock price and stock return volatility that is easily implemented using data from only the current year s proxy statement or annual report this method can be applied to either executive stock option portfolios or to firm wide option plans in broad samples of actual and simulated ceo option portfolios we show that these proxies capture more than 99 of the variation in option portfolio value and sensitivities sensitivity analysis indicates that the degree of bias in these proxies varies with option portfolio characteristics and is most severe in samples of ceos with a large proportion of out of the money options however the proxies explanatory power remains above 95 in all subsamples

tax incentives to hedge for corporations facing tax function convexity hedging lowers expected tax liabilities thereby providing an incentive to hedge we use simulation methods to investigate convexity induced by tax code provisions on average the tax function is convex although in approximately 25 percent of cases it is concave carrybacks and carryforwards increase the range of income with incentives to hedge other tax code provisions have minor impacts among firms facing convex tax functions average tax savings from a five percent reduction in the volatility of taxable income are about 5 4 percent of expected tax liabilities in extreme cases these savings exceed 40 percent if a firm faces a convex tax function then hedging that reduces the volatility of taxable income reduces the firm s expected tax liability for a firm facing some form of tax progressivity when taxable income is low its effective marginal tax rate will be low but when income is high its tax rate will be high if such a firm hedges the tax increase in circumstances where income would have been low is smaller than the tax reduction in circumstances where income would have been high thus lowering expected taxes in examining the importance of various motives to hedge researchers have employed two general methods survey and regression analysis there are potential problems with each for example some managers might view the information requested in a survey as proprietary or might hesitate to admit that they employ derivatives to speculate rather than hedge to employ regression methods researchers must generate proxies for tax status in addition to other firm characteristics to the extent that a tax variable e g whether the firm has a net operating loss carryforward proxies for factors such as financial distress as well as tax circumstances analysts face an identification problem in interpreting the results

corporate risk management integrating liquidity hedging and operating policies we analyze the value created by a dynamic integrated risk management strategy involving liquidity management derivatives hedging and operating flexibility in the presence of several frictions we show that liquidity serves a critical and distinct role in risk management justifying high levels of cash we find that the marginal value associated with derivatives hedging is likely to be low though we explain why some empirical studies find a higher value we explore the complex interactions between operating flexibility and financial risk management finding that substitution effects are nonmonotonic and are affected by operating leverage the nature of operating flexibility and the effectiveness of the hedging instrument this paper was accepted by jerome detemple finance

does basel ii affect the market valuation of discretionary loan loss provisions we use a sample of banks from 24 european countries to investigate whether the adoption of the basel ii capital accord in 2008 affects the market valuation of discretionary loan loss provisions dllps although basel ii lowers the incentives of internal ratings based irb banks to recognize income increasing dllps in an opportunistic manner it has no such impact on the remaining banks which adopt the standardized methodology we use this setup in a difference in difference did design where standardized banks act as a control group our evidence supports the three hypotheses that for irb relative to standardized banks basel ii is associated with i less income increasing dllps and ii less income smoothing via dllps which enhances the informational content of dllps about future loan losses and leads to iii higher market valuation of dllps our findings are timely and have policy implications for future regulatory developments in the banking industry

did risk based capital allocate bank credit and cause a credit crunch in the united states this paper examines the reallocation of bank credit from loans to securities in the early 1990s using data on virtually all u s banks from 1979 to 1992 the authors investigate implementation of risk based capital and other regulatory and nonregulatory changes as possible causes of a supply driven credit crunch the main empirical implication of these credit crunch hypotheses that the reallocation of credit would be most associated with low capital high risk banks generally is not consistent with the data much of the reallocation is associated with demand side factors but it is difficult to differentiate cleanly among these factors copyright 1994 by ohio state university press

compensation incentives and the duality of risk aversion and riskiness the common folklore that giving options to agents will make them more willing to take risks is false in fact no incentive schedule will make all expected utility maximizers more or less risk averse this paper finds simple intuitive necessary and sufficient conditions under which incentive schedules make agents more or less risk averse the paper uses these to examine the incentive effects of some common structures such as puts and calls and it briefly explores the duality between a fee schedule that makes an agent more or less risk averse and gambles that increase or decrease risk with the growing interest in executive compensation and agency problems

the two sides of derivatives usage hedging and speculating with interest rate swaps existing cross sectional findings on nonfinancial firms use of derivatives that are usually interpreted as the result of hedging may alternatively be due to speculation panel data examinations can distinguish between derivatives practices that endure over time and are therefore more likely to result from hedging and those that are more transient thus more consistent with speculation our decomposition results indicate that hedging of interest rate risk is concentrated among high investment firms consistent with costly external finance simultaneously firms appear to use interest rate swaps to manage earnings and to speculate when their executive compensation contracts are more performance sensitive

additional evidence on bonus plans and income management abstract we extend healy 1985 by examining the relation between discretionary accruals and bonus plan bounds for a sample of 102 firms for the 1980 1990 period contrary to healy we find that when earnings before discretionary accruals fall below the lower bound managers select income increasing discretionary accruals and vice versa we believe that our results are more consistent with the income smoothing hypothesis than with healy s bonus hypothesis however mechanical selection bias in portfolio formation cannot be entirely ruled out as an alternative explanation for our results

smoothing income in anticipation of future earnings abstract recent theory argues that concern about job security creates an incentive for managers to smooth earnings in consideration of both current and future relative performance we find support for this theory our evidence suggests that when current earnings are poor and expected future earnings are good managers borrow earnings from the future for use in the current period conversely when current earnings are good and expected future earnings are poor managers save current earnings for possible use in the future however sensitivity analysis indicates that we cannot rule out selection bias as a potential alternative explanation for our findings

household carbon inequality in urban china its sources and determinants designing mitigation policies for households requires knowledge of household carbon distributions this study surveys the household carbon inequality in urban china and analyzes its sources and determinants using weighted household survey data different from existing literatures studying carbon inequality on the international or regional level we focus on the household aspect and first survey its characteristics by some comparisons by ascribing household carbon emissions calculated by the consumer lifestyle approach to several consumption categories with the method of gini coefficient decomposition we find that residential consumption with high carbon intensity is the most important source of household carbon inequality in urban china food consumption and the consumption of educational cultural and recreational services are the next largest sources because of the consumed quantities or carbon intensity the application of shapley decomposition shows the determinants of household carbon inequality in urban china and their contributions which are household demographic characteristics 59 74 household employment and income 24 31 household burdens 8 00 and household assets and financial plans 7 95 the policy implications of these results are also discussed

evidence on corporate hedging policy this paper provides empirical evidence on the determinants of corporate hedging decisions the paper examines the evidence in light of currently mandated financial reporting require ments and in particular the constraints placed on anticipatory hedging data on hedging are obtained from 1992 annual reports for a sample of 3 022 firms out of the 771 firms classified as hedgers 543 firms disclose information in their annual reports on their hedging activities the remaining 228 firms report use of derivatives but no information on hedging activities based on the evidence i draw the following conclusions with respect to the models of hedging evidence is inconsistent with financial distress cost models evidence is mixed with respect to contracting cost capital market imperfections and tax based models and evidence uniformly supports the hypothesis that hedging activities exhibit economies of scale

hedging and liquidity this article develops a model for evaluating alternative hedging strategies for financially constrained firms a key advantage of the model is the ability to capture the intertemporal effects of hedging on the firm s financial situation we characterize the optimal hedge a wide range of alternative hedging strategies can be specified and the model allows us to determine in each case if the hedging strategy raises or lowers firm value and by how much we show that hedging firm value hedging cash flow from operations and hedging sales revenue are not optimal the article highlights the fact that every hedging strategy comes packaged with a borrowing strategy which requires careful consideration futures markets often provide the most liquid and convenient instruments for managing risk however because futures contracts are marked to market it is often impossible to simultaneously hedge cash flows and values for example a futures contract that locked in the value of gold that a corporation planned to extract in one year would generate an uncertain cash flow pattern over the year this article examines how liquidity and cash flow timing problems associated with different hedging strategies can affect a firm s value in our model the objective for hedging is to increase the firm s financial flexibility an optimal hedge maximizes the firm s liquidityslack in the form of excess cash or unused debt capacitywhen liquidity is most valuable this lowers the danger of costly financial distress reduces the effective cost of external financial constraints and makes value maximizing investments affordable a firm with no financial constraints does not gain from hedging and the higher the firm s financial constraints the greater the potential value of hedging the value of hedging depends critically on the design of the hedging strategy we show that the optimal hedge minimizes the variability in the marginal value of the firm s cash balances such a hedge efficiently redistributes cash balances across different states and periods taking cash from those states for which the marginal cost of the financial constraint is low and giving cash to those states for which the marginal

determinants of international trade flows this paper models and estimates import demand and demand for export functions for 19 industrial countries although primary emphasis is placed on the period of generalized floating exchange rates 1972 through 1980 estimates are also provided for the fixed exchange rate years 1957 1970 thus making possible a comparison between the two eras aside from the conventional income and price variables the paper assesses the effect of variations in the exchange rate and in the expected exchange rate on real trade flows additionally it estimates an unrestricted lag structure of the effect of price and exchange rate variations on imports

estimating the marginal abatement cost curve of co2 emissions in china provincial panel data analysis abstract this paper estimates the marginal abatement cost curve macc of co2 emissions in china based on a provincial panel for the period of 2001 2010 the provincial marginal abatement cost mac of co2 emissions is estimated using a parameterized directional output distance function four types of model specifications are applied to fit the mac carbon intensity pairs the optimal specification controlling for various covariates is identified econometrically a scenario simulation of china s 40 45 carbon intensity reduction based on our macc is illustrated our simulation results show that china would incur a 559 623 yuan t roughly 51 57 increase in marginal abatement cost to achieve a corresponding 40 45 reduction in carbon intensity compared to its 2005 level

the economic consequences of extending the use of fair value accounting in regulatory capital calculations we investigate the economic consequences of the basel iii requirement to include unrealized fair value gains and losses on available for sale afs securities in regulatory capital using data for u s banks we find negative market reactions around news indicating an increased likelihood of this regulatory change being implemented consistent with increased regulatory costs we also find that banks affected by this regulation reduce their investment in risky afs securities relative to unaffected banks this result suggests that extending the use of fair values for regulatory purposes reduces ex ante risk taking

does hometown advantage matter the case of institutional blockholder monitoring on earnings management in korea this study uses a large sample of korean firms to examine institutional blockholders influence on corporate earnings management the korean market is an interesting setting to study institutional monitoring because it is dominated by chaebols which are characterized by ineffective internal governance mechanisms we find evidence that institutional blockholders deter opportunistic financial reporting and such activities are the most evident among domestic institutional blockholders foreign institutional blockholders especially those with short term investment objectives lead to more discretionary reporting our findings are robust to various empirical models and endogeneity checks moreover this study offers new insight into the proximity advantage of domestic institutional investors with regard to monitoring information it also highlights institutional investors roles in shaping corporate governance in emerging markets in which sound corporate governance has become increasingly important for firms long term sustainability one important policy implication is that regulatory authorities should aim to promote institutional investors participation in these markets

why do firms smooth earnings we explain why a firm may smooth reported earnings greater earnings volatility leads to a bigger informational advantage for informed investors over uninformed investors if sufficiently many current shareholders are uninformed and may need to trade in the future for liquidity reasons an increase in the volatility of reported earnings will magnify these shareholders trading losses they will therefore want the manager to smooth reported earnings as much as possible empirical implications are drawn out that link earnings smoothing to managerial compensation contracts uncertainty about the volatility of earnings and ownership structure

the empirical modelling of nie exports an evaluation of different approaches this article investigates the current debate regarding the robustness of estimates of export demand and supply elasticities for ldcs and nies obtained by recent empirical studies the empirical findings reported in the article suggest that price elasticities of demand are indeed low and that there are strong and significant income effects on export demand furthermore using a variety of modelling approaches we demonstrate that the choice of estimation method and normalisation need not lead to drastically different conclusions regarding the size of the price elasticity of demand for nie exports whilst this points against the small country assumption usually made regarding ldc nie exports we argue that the preferred development strategy for ldcs need not necessarily be an inward oriented one this is because the large estimated income market growth elasticities in the demand equations may be due to the presence of supply side influences which have been the focus of attention of the new theories of i

the reliability of investment property fair value estimates abstract we investigate the reliability of mandatory annual fair value estimates for uk investment property we find that appraisal estimates understate actual selling prices and are considerably less biased and more accurate measures of selling price than respective historical costs investigations of managerial discretion over fair value reporting reveal that managers select among permissible accounting methods to report higher earnings time asset sales to smooth reported earnings changes smooth reported net asset changes and boost fair values prior to raising new debt finally we find that the reliability of appraisal estimates increases when monitored by external appraisers and big 6 auditors

rational expectations and risk premia in forward markets primary metals at the london metals exchange this paper tests whether forward prices equal the traders expectations of the future spot prices at maturity under two different models of expectations formation full information rational expectations and incomplete information mechanical forecasting rule the tests are performed over the period january 1970 through september 1980 on the forward markets for the primary metals copper tin lead and zinc traded in the london metals exchange we find evidence consistent with the existence of time varying risk premia the way in which traders form expectations about future price is of great interest to economists as well as to market participants and forward prices have often been used as indicators of these otherwise unobservable expectations forward prices however include not only the expectation of future spot prices but also a component reflecting the riskiness of the contract therefore the risk premium can be defined as the difference between the forward price and the expected future spot at the maturity date of the forward contract there is a longstanding debate on the nature of this risk premium the hickskeynes view2 is that in futures markets speculators provide insurance against the risk of fluctuations in the price of the spot commodity and hedgers pay a premium for this risk transfer in the way of a forward price that is higher than the expected spot price in other words the risk premium should be positive 3 hardy 11 has suggested however that a future market is merely a casino in which speculators can participate in a legalized form of gambling for this privilege they have to pay a price in the form of a negative expected return thus resulting in a negative risk premium 4

does hedging affect firm value evidence from a natural experiment we exploit an exogenous change in basis risk in the oil and gas industry to analyze the channels through which hedging affects firm value using a difference in differences framework we find that firms affected by a basis risk shock reduce investment have lower valuations sell assets and reduce debt our findings are driven by firms with ex ante high leverage overall our results provide evidence that reducing the probability of financial distress and underinvestment risk are first order channels through which hedging affects firm value received october 5 2015 editorial decision december 22 2016 by editor david denis

prices activity and machinery exports an analysis based on new pricedata new data for the export prices of the united states germany and japan produced price elasticities for exports of machinery and transport equipment that were highest for the united states and lowest well below 1 for germany the effects of price changes on exports lasted at least two years in all three countries and possibly four years in the united states only in germany would most effects of price changes take place in the year of the change u s export income in foreign currency would not exceed its pre depreciation level until the third year after a depreciation

empirical research on accounting choice abstract we review research from the 1990s that examines the determinants and consequences of accounting choice structuring our analysis around the three types of market imperfections that influence managers choices agency costs information asymmetries and externalities affecting non contracting parties we conclude that research in the 1990s made limited progress in expanding our understanding of accounting choice because of limitations in research design and a focus on replication rather than extension of current knowledge we discuss opportunities for future research recommending the exploration of the economic implications of accounting choice by addressing the three different reasons why accounting matters

financial intermediation and delegated monitoring this paper develops a theory of financial intermediation based on minimizing the cost of monitoring information which is useful for resolving incentive problems between borrowers and lenders it presents a characterization of the costs of providing incentives for delegated monitoring by a financial intermediary diversification within an intermediary serves to reduce these costs even in a risk neutral economy the paper presents some more general analysis of the effect of diversification on resolving incentive problems in the environment assumed in the model debt contracts with costly bankruptcy are shown to be optimal the analysis has implications for the portfolio structure and capital structure of intermediaries

do analysts understand the economic and reporting complexities of derivatives we investigate whether and how the complexity of derivatives influences analysts earnings forecast properties using a difference in differences design we find that relative to a matched control sample of non users analysts earnings forecasts for new derivatives users are less accurate and more dispersed after derivatives initiation these results do not appear to be driven by the economic complexity of derivatives but rather the financial reporting of such economic complexity overall despite their financial expertise analysts routinely misjudge the earnings implications of firms derivatives activity however we find evidence that a series of derivatives accounting standards has helped analysts improve their forecasts over time

behind the scenes the corporate governance preferences of institutional investors we survey institutional investors to better understand their role in the corporate governance of firms consistent with a number of theories we document widespread behind the scenes intervention as well as governance motivated exit these governance mechanisms are viewed as complementary devices with intervention typically occurring prior to a potential exit we further find that long term investors and investors that are less concerned about stock liquidity intervene more intensively finally we find that most investors use proxy advisors and believe that the information provided by such advisors improves their own voting decisions

interest rate derivatives at commercial banks an empirical investigation abstract i analyze the effects of bank characteristics and macroeconomic shocks on interest rate risk management behavior of commercial banks my findings are consistent with hedging theories based on cost of financial distress and costly external financing banks with higher probability of financial distress manage their interest rate risk more aggressively both by means of on balance sheet and off balance sheet instruments as compared to the derivative users the derivative non user banks adopt conservative asset liability management policies in tighter monetary policy regimes finally i show that the derivative non user bank s lending volume declines significantly with the contraction in the money supply derivative users on the other hand remain immune to the monetary policy shocks my findings suggest that a potential benefit of derivatives usage is to minimize the effect of external shocks on a firm s operating policies

the effect of ethical orientation and professional commitment on earnings management behavior the purpose of this study is twofold the first objective is to examine the impact of an individual s ethical ideology and level of professional commitment on the earnings management decision the second objective is to observe whether the presence of a personal benefit affects an individual s ethical orientation or professional commitment within the context of an opportunity to manage earnings using a sample of 375 undergraduate business majors our results suggest a significant relationship between an individual s ethical orientation and decision making further participants with higher levels of professional commitment seem to be less likely to engage in earnings management behavior and less likely to behave opportunistically these results have the potential to add to our understanding of certain behaviors in entry level personnel and should be of interest to managers practitioners academicians and researchers

on interdependent supergames multimarket contact concavity and collusion abstract following bernheim and whinston 1990 this paper addresses the effects of multimarket contact on firms ability to collude real world imperfections tend to make firms objective function strictly concave and market supergames interdependent firms payoffs in each market depend on how they are doing in others then multimarket contact always facilitates collusion it may even make collusion sustainable in all markets when otherwise it would not be sustainable in any the effects of conglomeration are discussed multigame contact is shown to facilitate cooperation in supergames other than oligopolies as long as agents objective function is submodular in material payoffs journal of economic literature classification numbers c72 d43 l13 l21

a re examination of exposure to exchange rate risk the impact of earnings management and currency derivative usage abstract in an attempt to explain the weak evidence of priced exchange rate risk we hypothesize that in addition to currency derivative usages earnings management serves as another factor contributing to a reduction in exchange rate exposure our evidence reveals that earnings management activities particularly those undertaken for the purpose of income smoothing significantly reduce firm specific exchange rate exposure and that such role is particularly important if appropriate currency derivative instruments are limited these results complement prior attempts to explain the puzzle of unpriced exchange rate risk the investigation also highlights the importance of recognizing different managerial purposes behind discretionary accruals

does option compensation increase managerial risk appetite this paper solves the dynamic investment problem of a risk averse manager compensated with a call option on the assets he controls under the manager s optimal policy the option ends up either deep in or deep out of the money as the asset value goes to zero volatility goes to infinity however the option compensation does not strictly lead to greater risk seeking sometimes the manager s optimal volatility is less with the option than it would be if he were trading his own account furthermore giving the manager more options causes him to reduce volatility managers with convex compensation schemes play an important role in financial markets this paper solves for the optimal dynamic investment policy for a risk averse manager paid with a call option on the assets he controls the paper focuses on how the option compensation impacts the manager s appetite for risk when he cannot hedge the option position on one hand the convexity of the option makes the manager shun payoffs that are likely to be near the money under the optimal policy the manager either significantly outperforms his benchmark or else incurs severe losses furthermore in examples of optimal trading strategies asset volatility goes to infinity as asset value goes to zero yet option compensation does not strictly lead to greater risk seeking as asset value grows large or if the evaluation date is far away the manager moderates asset risk for example if the manager has constant relative risk aversion crra asset volatility converges to the merton constant as asset value goes to infinity in some situations the manager actually chooses a lower asset volatility than he would if he were investing on his own because the leverage inherent in his option magnifies his exposure to the asset volatility in addition with all constant or decreasing absolute risk averse utility functions from the hyperbolic absolute risk averse hara class giving the manager more options causes him to reduce asset volatility in the crra case for example the manager targets a fixed volatility for his personal

measuring the incentives to learn in colombia using new quantile regression approaches abstract this paper employs newly developed quantile regression techniques to investigate a policy that could differentially affect students performance the colombian vouchers were assigned using lotteries and were renewable as long as the students maintained satisfactory academic progress this second aspect of the program may provide incentives for low attainment students to work harder the evidence supports the hypothesis that incentives could account for the impact of the vouchers including lower repetition rate the effect of the vouchers is largest in the lower tail of the educational attainment distribution a possibility that was conjectured by others but has not yet been confirmed empirically the evidence suggests that the incentive effect of the program increases weak students test scores by at least 0 1 standard deviations roughly the score gain associated to a half year of school learning

the economic consequences of discrete recognition and continuous measurement abstract discrete recognition is a long standing and ubiquitous accounting practice but it has been widely criticized for suppressing information and inducing accounting motivated transactions we study a model to examine the economic consequences of shifting away from discrete recognition to a continuous measurement approach without manipulation discrete recognition is less informative than the continuous approach however the continuous regime induces more manipulation the equilibrium informativeness is determined by both the accounting standard and endogenous manipulation discrete recognition is more informative than its continuous counterpart precisely when manipulation is a severe threat we respond to the recent call in kothari ramanna and skinner 2010 for using positive accounting theory to explain certain long standing accounting practices we also discuss the model s implications for fair value accounting

business cycles and bank regulations what happens to bank provisioning a more comprehensive look at 49 countries numerous researchers provide evidence that many banks intend to increase their loan loss provisioning llp when the economy is in a downward trend however the answer whether banks provide sufficient provisions when the economy is in an upturn trend remains unsolved furthermore provisioning must be influenced not only by business cycles and bank earnings but also by the regulatory system nevertheless empirical research on this issue has been scarce thus this study intends to answer two questions shown above the evidence shows that with steady growth in both the economy and bank earnings the bank management will tend to increase llp whereas with a buoyant economy but negative growth in bank earnings the management will exhibit an inclination to reduce llp as regards the influence of bank regulation on provisions the evidence shows that under certain circumstances banks make more provision based on regulatory considerations this explains why bank regulations regarding llp across countries

managerial overconfidence and corporate risk management abstract we examine whether managerial overconfidence can help explain the observed discrepancies between the theory and practice of corporate risk management we use a unique dataset of corporate derivatives positions that enables us to directly observe managerial reactions to their speculative gains and losses from market timing when they use derivatives we find that managers increase their speculative activities using derivatives following speculative cash flow gains while they do not reduce their speculative activities following speculative losses this asymmetric response is consistent with the selective self attribution associated with overconfidence our time series approach to measuring overconfidence complements cross sectional approaches currently used in the literature our results show that managerial overconfidence which has been found to influence a number of corporate decisions also affects corporate risk management decisions

empirical tests of budget ratcheting and its effect on managers discretionary accrual choices abstract in this paper we investigate whether budgets ratchet using business unit data from a large multinational corporation we find evidence consistent with ratcheting where favorable budget variances result in performance budget increases that are larger than decreases associated with unfavorable variances of the same magnitude we argue that under ratcheting the cost of reporting positive transitory earnings surprises outweigh the short term benefits of the current period bonus consequently we hypothesize that managers make income decreasing discretionary accruals to offset transitory earnings surprises beyond the level expected under fixed budgets using a proxy for transitory earnings surprise we find evidence consistent with this hypothesis

the use of foreign currency derivatives corporate governance and firm value around the world abstract this paper examines the impact of currency derivatives on firm value using a broad sample of firms from thirty nine countries with significant exchange rate exposure derivatives can be used for managers self interest for hedging or for speculative purposes we hypothesize that investors can appeal to a firm s internal firm level and external country level corporate governance to draw inferences on a firm s motive behind the use of derivatives since well governed firms are more likely to use derivatives to hedge rather than to speculate or pursue managers self interest consistent with this explanation we find strong evidence that the use of currency derivatives for firms that have strong internal firm level or external country level governance is associated with a significant value premium

fair value accounting effects on banks earnings volatility regulatory capital and value of contractual cash flows abstract we investigate fair value accounting critics assertions by restating earnings and regulatory capital to reflect banks disclosed investment securities fair values we find 1 fair value based earnings are more volatile than historical cost earnings but share prices do not reflect the incremental volatility 2 banks violate regulatory capital requirements more frequently under under fair value than historical cost accounting fair value based violations help predict regulatory capital violations but share prices do not reflect this potential increased regulatory risk only historical cost violations are market information events 3 share prices reflect interest rates changes even though investment securities contractual cash flows are fixed

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

procyclicality of u s bank leverage procyclicality of u s bank leverage in light of the current debate about the link between accounting and financial stability we investigate the determinants of procyclical book leverage for us commercial and savings banks we find that total asset growth and gdp growth are both positively related to book leverage growth our evidence is not consistent with the notion that fair value accounting contributes to procyclical leverage or that historical cost accounting reduces procyclicality overall the business model of banks is more important for procyclical leverage than accounting or regulatory risk weights this article is protected by copyright all rights reserved

managerial incentives and collusive behavior abstract i characterize the effects of empirically observed managerial incentives on long run oligopolistic competition when managers have a preference for smooth time paths of profits as revealed by the empirical literature on income smoothing manager led firms can sustain collusive agreements at lower discount factors capped bonus plans and incumbency rents with termination threats make collusion supportable at any discount factor independent of contracts duration when managers have these preferences incentives and demand fluctuates price wars during booms need not occur the most collusive price may then be pro cyclical

managerial optimism and earnings smoothing abstract this paper empirically examines how ceo optimism affects earnings smoothing and earnings surprises the main finding is that optimistic managers smooth earnings more than rational managers and are associated with smaller in absolute value earnings surprises a possible theoretical explanation is offered for these results based on a combination of the torpedo effect the innate behavior of optimists and the risk of litigation prosecution for over reporting earnings

hedge disclosures future prices and production distortions in this paper we identify social benefits to hedge accounting disclosures that have not previously been examined we show that from the perspective of price efficiency in the futures market the key information that is provided by hedge accounting is information about firms underlying risk exposures without this information the futures price confounds information regarding firms hedge motivated trades with their speculative trades making the futures price inefficient our model shows that an inefficient futures price causes significant externalities by distorting the production choices of an entire industry in the presence of hedge disclosures the futures price appropriately informs production decisions in the whole industry in addition to distortion in production choices we also investigate the effect of an inefficient futures price on the risk sharing role of the futures market we find that arijit mukherji passed away in october 2000 he was our colleague mentor advisor and friend we dedicate this paper to his memory and his contributions to the field of accounting he will be missed university of minnesota tuniversity of minnesota and federal reserve bank of minneapolis university of chicago we thank workshop participants at the 1998 accounting mini conference at minnesota the 2000 journal of accounting research conference berkeley columbia chicago the lse financial markets group northwestern ohio state penn state stanford ucla and the european and american accounting association annual meetings in particular we have benefited from the comments of regina anctil stan baiman mary barth margaret bray robert bushman ron dye frank gigler dan gode charles goodhart rachel hayes thomas hemmer jack hughes jim jordan bjorn jorgensen young kwon richard leftwich nobu kiyotaki rick lambert maureen mcnichols nahum melumad john o brien jim patell jim peck madhav rajan abbie smith phil stocken brett trueman igor vaysman robert verrecchia amir ziv and an anonymous referee the views expressed herein are those of the authors and not necessarily those of the federal reserve bank of minneapolis or the federal reserve system

an explanation for accounting income smoothing it is widely believed that corporate managers often engage in income smoothing taking actions to dampen fluctuations in their firms publicly reported net income one reason given for this is that managers think that investors pay more for a firm with a smoother income stream see ronen and sadan 1981 while there have been many empirical studies attempting to document whether or not income smoothing actually occurs there has been little exploration of why a manager might rationally want to smooth his firm s income explaining why smoothing might be observed and how it can result in an increased stock price is the focus of this paper in two recent studies lambert 1984 and dye 1988 demonstrate in agency settings that a risk averse manager who is precluded from borrowing and lending in the capital markets has an incentive to smooth his firm s reported income in this paper in contrast it is shown that within a market setting an incentive exists for a manager to smooth income that is independent of either risk aversion or restricted access to capital markets the market setting is also useful in that it allows for the analysis of the effect of income smoothing on stock prices it is shown here that if a manager can choose which of two periods to recognize certain income he may prefer the choice that is expected to

on the determinants of corporate hedging finance theory indicates that hedging increases firm value by reducing expected taxes expected costs of financial distress or other agency costs this paper provides evidence on these hypotheses using survey data on firm s use of forwards futures swaps and options combined with computstat data on firm characteristics of 169 firms in the sample 104 firms use hedging instruments in 1986 the data suggest that firms which hedge face more convex tax functions have less coverage of fixed claims are larger have more growth options in their investment opportunity set and employ fewer hedging substitutes

are firms successful at selective hedging we analyze the corporate risk management policies of 44 companies in the gold mining industry firms tend to decrease hedging as prices move against them behavior contrary to that predicted by risk management theory these results along with new survey evidence suggest that firms attempt to time market prices so called selective hedging although estimates show a statistically significant ability of producers to favorably adjust hedge ratios this can be attributed to sample specific negative autocorrelation in gold prices economic gains to selective hedging are small and no evidence suggests that selective hedging leads to superior operating or financial performance

hedging and coordinated risk management evidence from thrift conversions we provide an explanation for hedging as a means of allocating rather than reducing risk we argue that when increases in total risk are costly firms optimally allocate risk by reducing increasing exposure to risks that provide zero positive economic rents our evidence shows that mutual thrifts that convert to stock institutions increase total risk following conversion consistent with their increased abilities and incentives for risk taking they achieve this increase by hedging interest rate risk and increasing credit risk we provide some evidence that risk management activities are related to growth capacity and management compensation structure attained at conversion

earnings management under price regulation empirical evidence from the spanish electricity industry abstract this paper analyses the effect of price regulation on the accounting policy of spanish electricity companies over the period 1991 2001 as predicted by the political costs hypothesis watts and zimmerman 1986 watts r l zimmerman j l 1986 positive accounting theory prentice hall englewood cliffs nj managers artificially reduce reported earnings when the government establishes tariff increases in this way companies attempt to diminish their political visibility and counteract social outcry arising from the government s decision several abnormal accruals models existent in the literature are used to obtain a proxy for managerial accounting discretion on earnings

interest rate risk management and the mix of fixed and floating rate debt we analyze the after swap mix of fixed and floating rate debt in a sample of non financial firms using hand collected data from a window of time when derivative positions were included in accounting disclosures to motivate the analyses we present a simple theoretical model that highlights the special features of interest rate risk consistent with the theory we find that firms that issue more fixed rate debt have higher liquidity ratios and lower operating income ratios we also document that individual firms actively vary the proportion of their fixed rate debt to a strikingly high extent there is a debate as to whether such variation should be interpreted as hedging or speculation we show that the firms more actively varying their debt mix respond to different hedging motives than those with low activity we then empirically motivate an alternative indicator of speculative activity co variation between ex post profitability of financial decisions and operating results

using an extended lmdi model to explore techno economic drivers of energy related industrial co2 emission changes a case study for shanghai china although investment and r d activities can exert significant effects on energy related industrial co2 emissions eice related factors have not been fairly uncovered in the existing index decomposition studies this paper extends the previous logarithmic mean divisia index lmdi decomposition model by introducing three novel factors r d intensity investment intensity and r d efficiency the extended model not only considers the conventional drivers of eice but also reflects the microeconomic effects of investment and r d behaviors on eice furthermore taking shanghai as an example which is the economic center and leading co2 emitter in china we use the extended model to decompose and explain eice changes also we incorporate renewable energy sources into the proposed model to carry out an alternative decomposition analysis at shanghai s entire industrial level the results show that among conventional macroeconomic factors expanding output scale is mainly responsible for the increase in eice and industrial structure adjustment is the most significant factor in mitigating eice regardless of renewable energy sources the emission reduction effect of energy intensity focused on by the chinese government is less than the expected due to the rebound effect but the introduction of renewable energy sources intensifies its mitigating effect partly resulting from the transmission from the abating effect of industrial structure adjustment the effect of energy structure is the weakest although all the three novel factors exert significant effects on eice they are more sensitive to policy interventions than conventional factors r d intensity presents an obvious mitigating effect while investment intensity and r d efficiency display an overall promotion effect with some volatility the introduction of renewable energy sources intensifies the promotion effect of r d efficiency as a result of the green paradox effect finally we propose that co2 mitigation efforts should be made by considering both macroeconomic and microeconomic factors in order to achieve a desirable emission reduction effect

regional energy efficiency carbon emission performance and technology gaps in china a meta frontier non radial directional distance function analysis abstract at present china is the largest primary energy consumer and carbon emitter in the world meantime china is a large transitional economy with significant regional gaps against such backgrounds the calculated results of energy and carbon performance indicators may be biased without considering heterogeneity across regions to this end after incorporating region heterogeneity this paper provides detailed information regarding energy efficiency carbon emission performance and the potential of carbon emission reductions from regional perspectives which may be important and useful for policy makers our main findings are as follows firstly there is significant group heterogeneity across regions in china in terms of energy efficiency and carbon emission performance secondly there are no considerable differences between total factor and single factor performance indices since there is limited substitutability between energy inputs and other production inputs finally significant carbon emission reductions can be made by catching up for regions with low energy efficiency and carbon emission performance looking ahead the chinese government should adopt measures to promote improvements in terms of energy efficiency and carbon emission performance in the short term

fair value accounting and managers hedging decisions real effect of fair value accounting we conduct two experiments with experienced accountants to investigate how fair value accounting affects managers real economic decisions in experiment 1 we find that participants are more likely to make suboptimal decisions e g forgo economically sound hedging opportunities when both the economic and fair value accounting impact information is presented than when only the economic impact information is presented or when both the economic and historical cost accounting impact information is presented this adverse effect of fair value accounting is more likely when the price volatility of the hedged asset is higher which is a situation where paradoxically hedging is more beneficial we find that the effect is mediated by participants relative considerations of economic factors versus accounting factors e g earnings volatility experiment 2 shows that enhancing salience of economic information or separately presenting net income not from fair value remeasurements reduces the adverse effect of fair value accounting our findings are informative to standard setters in their debate on the efficacy of fair value accounting

do artificial income smoothing and real income smoothing contribute to firm value equivalently abstract this paper examines the potential impacts of artificial smoothing abnormal accruals and real smoothing derivatives on firm value we find that the value of the firm decreases with the magnitude of abnormal accruals and increases with the level of derivative use moreover the accrual discount is more pronounced in firms with weak investor protection and the hedging premium is greater for poorly governed firms these results suggest that although managers can engage in real smoothing to improve the informativeness of firms earnings and thus reduce agency costs they might use artificial techniques to cosmetically improve the income stream in order to expropriate minority shareholders in further support of agency theories we report that poor corporate governance motivates the use of abnormal accruals and discourages derivative use

taking a view corporate speculation governance and compensation using responses to a well known confidential survey we study corporations use of derivatives to take a view on interest rate and currency movements characteristics of speculators suggest that perceived information and cost advantages lead them to take positions actively that is they do not speculate to increase risk by betting the ranch speculating firms encourage managers to speculate through incentive aligning compensation arrangements and bonding contracts and they use derivatives specific internal controls to manage potential abuse finally we examine whether investors reading public corporate disclosures are able to identify firms that indicate speculating in the confidential survey they are not derivative instruments can be used to hedge market risk exposures or to spec ulate on movements in the value of the underlying asset to hedge generally implies that the derivative position is taken with the intention of reducing risk to speculate generally implies that the derivative position is undertaken with the primary intention of making a profit or increasing risk speculation has a pejorative connotation in the financial press yet it is not clear that this repu tation is deserved in this paper we explore whether speculation is an activity that is optimal ex ante but for which we should expect to observe some large negative outcomes ex post or whether it is an activity that will decrease ex pected shareholder value to the benefit of agents of the firm that is whether it is evidence of an agency problem and governance failure the extant theoretical and empirical literature presents an abundance of ev idence about why firms should and do use derivatives to hedge 1 we know

financial constraints competition and hedging in industry equilibrium we analyze the hedging decisions of firms within an equilibrium setting that allows us to examine how a firm s hedging choice depends on the hedging choices of its competitors within this equilibrium some firms hedge while others do not even though all firms are ex ante identical the fraction of firms that hedge depends on industry characteristics such as the number of firms in the industry the elasticity of demand and the convexity of production costs consistent with prior empirical findings the model predicts that there is more heterogeneity in the decision to hedge in the most competitive industries

examining the influencing factors of co2 emissions at city level via panel quantile regression evidence from 102 chinese cities ascertaining the influencing factors of carbon dioxide emissions in chinese cities is an important issue for policy makers this paper investigates the effect of several determinants on carbon emis

do baths muddy the waters or clear the air we examine the information environments of firms following large non recurring charges baths we test competing hypotheses about the consequences of a bath a bath either improves the information environment the transparency hypothesis or degrades it the opacity hypothesis difference in differences analysis suggests that after a bath 1 earnings become smoother 2 firm level information asymmetry decreases and 3 stock returns become more responsive to unexpected earnings we interpret these findings as supportive of the transparency hypothesis we also document that the relative improvement in the information environment is greater for baths that are not voluntary consistent with managerial obfuscation prior to the bath

determinants of export performance in east and southeast asia this paper examines the determinants of exports in eight east and southeast asian economies with an emphasis on the increasing importance of parts and components in total exports to see whether exports in parts and components are special and to allow comparisons export equations are estimated for three different export categories total merchandise exports manufacturing exports and exports of machinery and transport equipment sitc 7 the analysis is based on data for 1993 2008 a period over which parts and components trade burgeoned the estimations indicate that the growing importance in the export composition of parts and components within vertically integrated cross border production processes has tended to weaken the nexus of real exchange rate and export performance world demand and supply side factors including foreign direct investment tend to become more crucial in determining export performance

does fair value accounting exacerbate the procyclicality of bank lending this study investigates whether fair value accounting contributes to the procyclicality of bank lending using banks approval denial decisions on residential mortgage applications to capture banks supply of credit i find no evidence that fair value accounting has procyclical effects on bank lending over the past two business cycles i further identify two reasons for this result first the main accounting item distinguishing fair value accounting from historical cost accounting unrealized gains and losses on available for sale securities does not affect lending decisions second unrealized gains and losses on available for sale securities are not procyclical as the risk free interest rate rises during some expansionary periods resulting in unrealized losses while the risk free interest rate and sometimes the default spread falls during some recessionary periods resulting in unrealized gains

anticipatory income smoothing a re examination abstract this paper reassesses evidence of anticipatory income smoothing reported in defond and park dp j accounting econom 23 1997 115 in light of knowledge about measurement error in discretionary accrual estimates we argue that the method dp use to measure un managed earnings mechanically biases the evidence in a manner consistent with anticipatory income smoothing using an approximate randomization approach we find that dp s results cannot be distinguished from those achieved when discretionary accruals are randomly assigned to firm years in our sample overall these results show that the backing out approach to measuring un managed earnings is ineffective in testing earnings management hypotheses

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

alternative mechanisms for corporate control we examine performance and management characteristics of fortune 500 firms experiencing one of three types of control change internally precipitated management turnover hostile takeover and friendly takeover we find that firms experiencing internally precipitated management turnover perform poorly relative to other firms in their industries but are not concentrated in poorly performing industries in contrast targets of hostile takeovers are concentrated in troubled industries there is also weaker evidence that hostile takeover targets underperform their industry peers we interpret this evidence as consistent with the idea that the board of directors is capable of firing managers whose leadership leads to poor performance relative to industry but that an external challenge in the form of a hostile takeover is often required when the whole industry is in decline the evidence also indicates that firms run by a member of the founding family are less likely to experience either internally precipitated top management turnover or a hostile takeover on the other hand firms whose top management team is dominated by a single relatively young top executive while lacking in internal discipline are more likely to experience a hostile takeover this abstract was borrowed from another version of this item this abstract was borrowed from another version of this item

analysis of energy efficiency and energy savings potential in china s provincial industrial sectors abstract because industrial sectors in china are energy intensive improving energy efficiency and promoting energy savings in these sectors are of great importance for the further sustainable development of china s economy using a proposed meta frontier data envelopment analysis dea this paper analyzes the total factor energy efficiency and energy savings potential in china s provincial industrial sectors for the years 2000 2014 from three perspectives namely the technology gap management and scale the results indicate that 1 driven by technological progress energy efficiency during the sample period was greatly improved though the expansion of technology gaps between regions and the decline in scale efficiency represented two significant handicaps 2 the current energy efficiency in china s industrial sectors remains extremely low indicating that there is considerable potential for energy efficiency improvement and energy savings and 3 the sources of energy inefficiency and energy savings potential in china s industrial sectors exhibit spatially distinct characteristics accordingly it is determined that most of china s eastern provinces should focus on improving scale and management efficiency whereas most of its central and western provinces should concentrate on three factors narrowing the regional technology gap improving management efficiency and optimizing the industrial scale