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This paper discusses the potential long‐run effects of large‐scale unemployment during the COVID‐19 crisis in the labour market on vulnerable job losers and labour market entrants in the United States. The paper begins by contrasting measures of the scale of job loss during the crisis. These measures are paired with estimates from past recessions indicating that the costs of job loss and unemployment can reduce workers' earnings and raise their mortality for several decades. Focusing only on a subset of vulnerable job losers, the potential lifetime earnings losses from job loss related to the COVID‐19 pandemic are predicted to be up to $2 trillion. Related losses in employment could imply a lasting reduction in the overall employment–population ratio. For these workers, losses in potential life years could be up to 24 million. Even at the low range, the resulting estimates are substantially larger than losses in potential life years from deaths directly due to COVID‐19. New labour market entrants are at risk to suffer long‐term losses in earnings and mortality as well. Based partly on experiences in other countries, the paper discusses potential reforms to short‐time compensation programmes and unemployment insurance, which could help limit the short‐ and long‐term harm from layoffs going forward. [ABSTRACT FROM AUTHOR]

The article comments on the paper "High-Technology Intangibles and Analysts' Forecasts," by Orie E. Barron, Donal Byard, Charles Kile and Edward J. Riedl, presented at the 2001 Journal of Accounting Research Conference. The paper looks at the association between firms' intangible assets and properties of the information contained in analysts' earnings forecasts. It is assumed that earnings forecasts for firms with greater intangible assets will contain more private information on future earnings. The author notes the idea that current earnings may not be as useful in predicting future earnings for high intangibles firms is pivotal to this study. The author also admits the possibility that the uncertainty associated with intangible assets may lead to a higher incidence of mismatched revenues and expenses being reported.

Benchmark replacement rates are a key parameter for retirement plans. Often, a pension level of around 70 per cent of net income during working life is considered as an adequate choice. However, this heuristic value is left unjustified, and data‐based benchmarks are limited. In this paper, we propose to estimate a pension‐level benchmark based on keeping the living standard achieved during working life constant after retirement. Applying parametric, semi‐parametric and non‐parametric estimation methods to data from the United States and Germany, we find that a net pension income of around 100 per cent of the last net working‐life income, plus or minus 10 percentage points, is required to keep the living standard constant. However, we also find that the outcome of the exercise can depend on how 'living standards' are measured. [ABSTRACT FROM AUTHOR]

The article discusses the use of geographical segment disclosures by U.S. business enterprises, as required under the Financial Accounting Standard Board's Statement of Financial Accounting Standards No. 14: Financial Reporting for Segments of a Business Enterprise. Also discussed is whether or not equity valuations of firms are affected by these geographical segment disclosures. It was found that there is no real additional information gained in the use of geographical segment disclosures relating to foreign and domestic earnings because both are so similar.

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This paper analyzes the opportunities of American multinationals to reallocate their profits into tax havens. In contrast to previous papers, a comprehensive look on the profit-shifting process is undertaken by proposing three different tests. Multinationals in high-tax countries have a lower equity ratio than affiliates in tax havens, indicating that income is shifted by extensively financing subsidiaries in high-tax countries with debt. Furthermore, the share of retained earnings is lower in high-tax countries owing to the unattractiveness of tax deferral. When testing for the outcomes of profit shifting, the results show that the pre-tax profitability of American multinationals is higher in tax havens. This relationship is consistent with the opportunities of multinationals to shift income outside high-tax jurisdictions. Finally, the paper shows that profit shifting largely takes place into tax havens, whereas other countries do not benefit from profit-shifting activities. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This paper provides evidence that firms signal their private information about future earnings by their choice of split factor. Split factors are increasing in earnings forecast errors, after controlling for differences in pre-split price and firm size. Furthermore, price changes at stock dividend and split announcements are significantly correlated with split factors, holding other factors constant, and with earnings forecast errors. These correlations suggest that management's choice of split factor signals private information about future earnings and that investors revise their beliefs about firm value accordingly. The analysis also suggests, however, that announcement returns are significantly correlated with split factors after controlling for earnings forecast errors. This suggests that earnings forecast errors measure management's private information about future earnings with error, that split factors signal other valuation-relevant attributes, or that a signaling explanation is incomplete. [ABSTRACT FROM AUTHOR]

In exploring why innovators often do not profit from their innovations, researchers concentrate on innovators versus imitators and the extent to which owners of complementary assets capture profits from innovations. The literature provides scant attention to factors that sap profits from innovations. This paper argues that an innovator's positioning vis-à-vis customers, suppliers, complementors, and other co-opetitors plays a critical role in the innovator's profitability. The article explores how an innovator can use new game strategies to better positioning, thus capturing rents from innovations and enabling further innovations in the future. The study examines the case of Lipitor, one of the world's best-selling drug, to illustrate how positioning can play in a firm's ability to profit from its innovations. [ABSTRACT FROM AUTHOR]

Prior research suggests that loss firms are valued based on their abandonment/adaptation option values, while profit firms are valued as going concerns. However, conservative accounting treatment of expensing of R&D leads many R&D-intensive firms to report losses even though they are not in financial distress. In this paper we investigate the difference in valuation of profit and loss firms that invest in intangibles, either through internal development (R&D) or purchases. The accounting treatment for internally developed intangibles is conservative in that US GAAP requires immediate expensing. Yet, it allows recognition of purchased intangibles. We find that in valuation of firms with high recognized-intangible assets, book value has more prominence in loss firms than profit firms, while that is not the case for firms with high R&D expenditures. This suggests that their abandonment/adaptation option explains the difference in valuation between profit and loss firms with high recognized-intangibles, while conservative accounting explains the valuation difference between profit and loss firms with high R&D intensity. This result suggests that recognition of intangibles in financial statements might mitigate the conservative bias in accounting numbers. [ABSTRACT FROM AUTHOR]

Capital budgeting in multidivisional firms depends on the external assessment of the whole firm, as well as on headquarters' assessment of the divisions. While corporate headquarters may create value by directly monitoring divisions, the external assessment of the firm is a public good for division managers who, consequently, are tempted to free ride. As the number of divisions increases, the free-rider problem is aggravated, and internal capital markets substitute for external capital markets in the provision of managerial incentives. The analysis relates the value of diversification to characteristics of the firm, the industry, and the capital market. [ABSTRACT FROM AUTHOR]

This article presents a critique of the work of Myron Scholes, G. Peter Wilson and Mark Wolfson regarding firm behavior towards the 1986 tax laws. They intended to discover if, and how, firms managed their 1986 and 1987 earnings to reduce their tax liabilities. The change in tax rates created an incentive to shift income to 1986 from 1987 to avoid the 20% tax rate on alternative minimum taxable income (AMT). The author raises questions over their use of the time-series model, the veracity of their data, and some elements of their methodology.

This paper demonstrates how, by introducing a generic version of its previously patented product, a branded firm can influence the equilibrium in the generic segment of the market for the product. This in turn can increase the firm's profits from selling the branded version. We then use structural estimates from previous literature to calculate the magnitude of the effects in the generic and branded segments. Copyright © 2007 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The longstanding concerted attacks on unions from multiple fronts in the United States have threatened to undermine labour's institutional security. Though much has been written on the nature and scope of labour's declining membership, less research exists on unions' financial state. We have addressed this void in several ways through an analysis of the finances of 53 major national unions in the United States over the years between 2006 and 2019. Our study has reported on the financial resources and performance of these 53 national unions on aggregated and disaggregated bases. Building from relevant theory, we have analysed an exploratory model to identify the determinants of variation in union financial resources and performance. We have shown that the unions' net worth over the 2006–2019 span deteriorated, though, in aggregation, their member‐based income grew. The unions have maintained high levels of liquidity and resilience in their capacity to fund their operating budgets. Business Income has fallen as a share of overall net revenues. Disaggregated data have shown vast variation in financial resources and performance across unions and over time. Multivariate analyses suggest differences correlated with selected organizational and environmental factors, such as union density, earnings and membership levels. [ABSTRACT FROM AUTHOR]

The present paper attempts a more direct test of the growth and profit maximizing theories of the firm, than previously presented. The approach is to estimate directly the marginal rates of return on investment for individual firms and individual years, over time, for a sample of large U.S. industrial corporations. The marginal rate of return estimates are then statistically compared to several cost of capital series, on a year-by-year basis. Substantial, prolonged, and statistically significant overinvestment is discovered, casting doubt on the profit maximizing conditions but supporting the growth theory of the firm. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to specify and test the relationship between profitability, firm size, and other structural variables using a data set which covers a wide range of firm sizes for the years 1966 and 1975. In the following sections, we develop the conceptual framework and state the hypotheses to be tested, describe the data and estimating equations, and present the empirical results. The concluding section relates our findings to those of previous studies. The motivation for this study originally stemmed from an interest in the firm size-profit rate relationship and our belief that most of the recent empirical study in industrial organization has overlooked the effect of absolute firm size on profit. Our study of the profit-size relationship, however, is also pertinent to the issue of the relative importance of concentration and market share. Our conclusion, that there is no relationship between firm size and profit rate, is contrary to many of the earlier studies which have found a positive relationship. We believe that the primary factors which distinguish our findings from those of earlier works are more recent and more extensive data and a more complete specification. Unlike earlier studies which have typically covered only large firms, our sample covers a very broad range of firm sizes. Moreover, our methodology focuses directly upon the firm size-profitability relationship and tests this relationship in quadratic as well as linear form and also provides for the important interactions. Our finding of no firm size effect extends similar findings by Smyth [22] and Shepherd [21] for the largest 500 firms to a much larger range of firm sizes in the manufacturing sector. (The range of average firm size in our sample is from 640 thousand dollars to more than 2 billion dollars in assets.) This finding contradicts the conventional wisdom both among laymen and in parts of the economics literature that large firms are inherently more profitable than... [ABSTRACT FROM AUTHOR]

The growth of exports and direct foreign investments by U.S. corporations since 1950 has stimulated research analyses by economists in several fields. Dunning's [6] review article distinguishes five major areas of research: (1) surveys that seek to identify factors influencing the direct investment decision; (2) the development of new explanations in trade theory that include international flows of factor inputs, capital and technology; (3) the evaluation of specific factors affecting the country location of overseas investment; (4) capital theory rationales for the allocation of direct foreign investments; and (5) industrial organization research that focuses on the transfer of capital, knowledge and entrepreneurship to foreign production affiliates. This paper takes an industrial organization viewpoint in recognizing that firm size is an important variable and that the major investing firms operate under conditions of imperfect competition. However, the model tested here arises from the capital theory field, specifically a micro-level portfolio model of the type that Dunning described as highly promising [6, 295]. [ABSTRACT FROM AUTHOR]

This article presents some major policy multipliers implicit in the structure of the Bureau of Economic Analysis Quarterly Econometric Model of the U.S. economy (BEA Model) [l]. Such multipliers are a convenient indicator of the probable response of GNP and other economic aggregates to changes in Federal economic policy instruments. Key multipliers are given in this paper for five Federal Policy instruments: purchases; transfers; personal income tax; corporate profits tax; and nonborrowed bank reserves.
Section II briefly outlines the BEA model; Section III gives some major findings concerning effects of policy changes; Section IV explains a multiplier estimation method; and Section V discusses multiplier results. [ABSTRACT FROM AUTHOR]

This paper tests the hypothesis that the profit performance of the firm is directly correlated with the financial rewards arising from executive ownership interests. A widely used model of the determinants of profitability is extended to include, on the basis of the preceding discussion, average executive stockholdings as a measure of managerial profit motivation.
An unmistakable positive relationship between profit rates among the largest U. S. corporations and executive stock interests has emerged. For example, from equation (4) of Table I, an increase in executive stockholdings from $100,000 to $2 million will increase firm profitability by a sizeable 2.2 percentage points.
Differences in management ownership interests account for a substantial part of the higher rate of return for the nonmanagement-controlled firms in equation (4). The mean rate of return for this group of firms is 12.8 percent with average executive stockholdings of $3,330,000. The corresponding figures for the management-controlled firms are 11.1 percent and $1,251,000 respectively. The substantially larger executive ownership holdings for the former group of firms account for 0.9 percent of their 1.7 percent greater profitability. Nonmanagement-controlled corporations are also $141 million larger, on the average, than their management-controlled counterparts. But, this accounts for less than 0.1 percent of the profitability difference. There is some evidence that the remainder of the difference is attributable to the nature of corporate control, though, the significance of the management-control dummy could not be clearly confirmed in this study. [ABSTRACT FROM AUTHOR]

The article examines the effect of customer service variables on customer satisfaction and in turn on profitability for United States airlines, a service sector industry. The airline industry was chosen for the study because of the availability of an excellent stream of government-collected data on customer service, customer satisfaction, and corporate performance. This research differs from previous research on customer service, customer satisfaction, and corporate performance as it focuses on service response logistics, rather than on the more traditional topic, value chain logistics. In addition, the empirical results from the study are used to quantify the effect of increasing customer service levels on the level of customer satisfaction and on profitability in the airline industry. The article ends with the note that this study represents a preliminary effort on the examination of the links between customer service, customer satisfaction, and corporate performance in the service sector. The results strongly supported the hypotheses that increasing customer service raises customer satisfaction and that increasing customer satisfaction improves corporate performance.

We present experimental evidence on the effects of four U.S. reemployment programs for youth unemployment insurance (UI) recipients during the Great Recession. The three programs that emphasized monitoring and service referrals reduced UI receipt but had minimal effects on employment and earnings; these programs mainly induced the early exit of participants. The fourth program, which combined mandatory job counseling with monitoring, caused the largest reductions in UI receipt and clearly increased employment and earnings. Both early participant exits and effective job counseling underlie these impacts. We conclude that policymakers should require job counseling for youth UI recipients during recessions. [ABSTRACT FROM AUTHOR]

We examine trends in employment, earnings and incomes over the last two decades in the United States, and how the safety net has responded to changing fortunes, including the shutdown of the economy in response to the COVID‐19 pandemic. The US safety net is a patchwork of different programmes providing in‐kind as well as cash benefits, and it had many holes prior to the pandemic. In addition, few of the programmes are designed explicitly as automatic stabilisers. We show that the safety net response to employment losses in the COVID‐19 pandemic largely consists only of increased support from unemployment insurance and food assistance programmes, an inadequate response compared with the magnitude of the downturn. We discuss options to reform social assistance in the United States to provide more robust income floors in times of economic downturns. [ABSTRACT FROM AUTHOR]

We investigate the relation between founding-family ownership and firm performance. We find that family ownership is both prevalent and substantial; families are present in one-third of the S&P 500 and account for 18 percent of outstanding equity. Contrary to our conjecture, we find family firms perform better than nonfamily firms. Additional analysis reveals that the relation between family holdings and firm performance is nonlinear and that when family members serve as CEO, performance is better than with outside CEOs. Overall, our results are inconsistent with the hypothesis that minority shareholders are adversely affected by family ownership, suggesting that family ownership is an effective organizational structure. [ABSTRACT FROM AUTHOR]

The article discusses the reaction of analysts to qualitative warnings of adverse earnings in the United States. The article attempts to reconcile analysts' more negative forecast revisions and the apparently conflicting anecdotal evidence that suggests more positive responses to firms that warn. It is suggested in the article that two possible causes for negative reactions to warnings are; market particpants' believing that warning firms may cause a more permanent earnings decline, and an overreaction may occur.

The article provides evidence on the relevance of earnings for valuation of common stocks on the New York Stock Exchange from 1927 to 1993. The article investigates whether earnings relevance is higher following the empowerment of the Committee on Accounting Procedure as the first U.S. accounting standard-setting body in 1939, and subsequent reorganizations of the standard-setting process leading to creation of the Accounting Principles Board in 1959 and the Financial Accounting Standards Board in 1973.

This article presents information about a study which investigates the extent to which American multinational enterprises (MNEs) engage in tax-motivated income shifting between the United States and foreign jurisdictions and whether investors differentially capitalize the shifted income. In this study, researchers examined U.S. multinational manufacturing corporations from 1984 to 1992 to determine the cross-sectional relation between firm-level foreign profit margins and average foreign tax rates. The results of the study show that U.S. MNEs with average foreign tax rates in excess of the U.S. tax rate (and thus likely facing foreign tax credit limitations) have lower pretax foreign profit margins than other U.S. MNEs. This evidence is consistent with, income shifting from high-tax foreign jurisdictions into the United States and indicates that tax policymakers' efforts to further constrain income-shifting opportunities could result in a U.S. tax revenue decrease from some taxpayers. Results also indicate that investors seem to factor in the true geographic income source in capitalizing foreign earnings shifted to the U.S.

This article examines the relation between analysts' information about a stock's future prospects, their decisions to issue investment recommendations and earnings forecasts for that stock, and the implications of this relation for the observed distribution of recommendations and earnings forecast errors. The authors examine an alternative response to disincentives to disclose negative information, which is that analysts are more likely to report on stocks about which they have favorable views. They find that the ratings analysts assign to stocks they have just added to their lists of followed stocks are heavily weighted toward "Strong Buy" recommendations, compared with ratings of stocks with previous recommendations.

This article examines whether the decision to issue a management earnings forecast is related to information asymmetry in the market for the firm's stock and whether the forecasts reduce the information asymmetry. The authors analyze the bid-ask spreads over twelve-month and nine-day windows prior to management earnings forecasts to determine whether forecasting firms have more information asymmetry prior to the forecast than a matched sample of nonforecasting firms. The study showed that the spreads of forecasting firms are significantly larger over both pre-forecast windows. The authors also analyze bid-ask spreads for forecasting firms around the management forecast date. The evidence on bid-ask spreads helps explain why managers issue forecasts.

This article presents information related to the tax reform act of 1986 and the firms' responses to anticipated reductions in tax rates in the U.S. Changes in the tax laws made rates for fiscal years ending in 1987 and 1988 a mixture of the older and newer rates. There were various ways firms could defer income in anticipation of these tax rate declines: postponing sales, accelerating research and development expenditures, accelerating advertising campaigns and accelerating pension contributions.

The article focuses on the earnings management policy adopted by firms during import relief investigations carried out by the U.S. International Trade Commission. The author uses several types of models to measure discretionary and nondiscretionary accruals. The results of the author's empirical tests reinforce the concept that, during import relief investigations, managers make income-decreasing accruals. This research may be of value to the International Trade Commission during its investigations.

The article presents simulated mergers of extent autonomous, single-product firms used to render evidence on the differences in predictive ability between income forecasts based on consolidated earnings and corresponding forecasts based on segmented earnings, in the United States. The simulated merger approach offers the possibility to evade problems of inter-segment transfers and common costs, which also allows the use of quarterly net income as prediction variable. Based on the studies conducted, the segmented earnings may be less useful in making predictions of enterprise profits.

This article examines the performance of 197 public companies that emerged from Chapter 11. Over 40 percent of the sample firms continue to experience operating losses in the three years following bankruptcy; 32 percent reenter bankruptcy or privately restructure their debt. The continued involvement of prebankruptcy management in the restructuring process is strongly associated with poor post-bankruptcy performance. The substantial number of firms emerging from Chapter 11 that are not viable or need further restructuring provides little evidence that the process effectively rehabilitates distressed firms and is consistent with the view that there are economically important biases toward continuation of unprofitable firms. [ABSTRACT FROM AUTHOR]

The time series behavior of corporate incomes has generated considerable interest. The early work of Little suggests that successive changes in corporate incomes in the U.K. are independent. Subsequent empirical work suggests that the same conclusion applies to corporate incomes in the U.S. This article applies different methods from those of previous researchers, but the conclusion is unchanged. We conclude that, in general, measured annual accounting incomes for U.S. corporations follow either a submartingale or some very similar process. Because of small sample problems this conclusion is based on mean and median results; no attempt has been made to determine whether specific firms are systematic outliers. The conclusion that corporate incomes are submartingales has important implications for forecasters and researchers in accounting and finance. For example, it implies that attempts to smooth corporate incomes in the manner suggested in the accounting and finance literatures are not successful. It also affects the interpretation of the growth and decline of firms. [ABSTRACT FROM AUTHOR]

The article considers the success of the U.S. consumer finance industry post World War II. The article presents an analysis of the composite earnings record of the principle units within that industry, compares this with the composite record of the major industrial enterprises, and presents a comparison with primary industries in manufacturing and trade industries. Among the conclusions, the article finds that the profitability of the consumer finance industry declined in the postwar period; the earnings decline in that industry was slightly less than in trade or manufacturing; and the composite return was more stable than for the other 33 industrial groups examined and growth was pronounced.

The article examines the significance of accounting reports on United States investors' comparison of income statements. It is suggested that it is difficult for top management reach sound policy decisions unless there is available a satisfactory means of reporting current information concerning a company's financial matters. The article explains that to provide this information, both the business community and government administrators have become dependent upon a variety of statistics embracing such important economic processes as pricing, production, distribution, and cost determination.

ABSTRACT: By relaxing the common efficiency wage assumption of exogenous shirking detection probabilities, we demonstrate how standards and efficiency wages are related. In a more general setting where the probability of detection depends upon the equilibrium effort level of non‐shirkers, we show that the uniformly positive (negative) supply‐side relationship between wages (unemployment insurance) and effort is no longer guaranteed. Profit maximization on the part of the firm, however, ensures that effort will depend positively (negatively) on wages (unemployment insurance) in equilibrium. [ABSTRACT FROM AUTHOR]

This article provides a quantitative analysis of how the recent boom in US oil production-largely a result of shale oil production-has impacted the domestic petroleum refining industry. We quantify how domestic crude prices are related to refiners' financial performance. The estimates suggest that since 2011 independent refiners' profitability rose by 3 per cent for a domestic crude oil price decrease of 1 per cent, while they were not associated with domestic crude prices before 2011. The relation between refinery profitability and domestic oil prices is consistent with the results of pass-through of relative domestic crude prices to relative refined product prices in the United States before and since the dramatic rise in shale oil production. [ABSTRACT FROM AUTHOR]

Presentation of multiple dimensions of current inequality in the United States, with some discussion of some causes and some policy issues. (JEL D3) [ABSTRACT FROM AUTHOR]

We investigate the relationship between long-term US stock market risks and the macroeconomic environment using a two-component GARCH-MIDAS model. Our results show that macroeconomic variables are important determinants of the secular component of stock market volatility. Among the various macro variables in our dataset the term spread, housing starts, corporate profits and the unemployment rate have the highest predictive ability for long-term stock market volatility. While the term spread and housing starts are leading variables with respect to stock market volatility, for industrial production and the unemployment rate expectations data from the Survey of Professional Forecasters regarding the future development are most informative. [ABSTRACT FROM AUTHOR]

American corporations are inverting, or moving their tax domicile, to escape having their consolidated group earnings ensnared in the globally oriented IRS tax system. Inversions require tricky legal steps that may necessitate changing the headquarters location, concentrating certain operations outside of the United States, and complying with any number of foreign rules, including tax rules. The decision to invert requires planning and effort. Two things are evident: from the inversion steps to the secondary effects, the devil is in the details; and brilliant moves at inversion today may appear shortsighted and expensive if the United States changes the IRS tax regimes that provoke so many American corporations to consider the strategy. © 2015 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]

We examine whether the informativeness of sell-side analyst reports depends on the strength of the regulatory environment of a country and the regulatory background of the institutional investors of a company. Based on both measures that we use to proxy the informativeness of analyst research (i.e., short-term market reaction and forecast errors with respect to corporate earnings), our results show that the information value of research increases as the level of investor protection increases. This result is robust to different specifications of investor protection. We further demonstrate that analyst forecasts are more (less) valuable when the majority of institutional investors are from strong (weak) investor protection countries. [ABSTRACT FROM AUTHOR]

The number of financial statement restatements practically doubled from 1998 to 2002 (Huron Consulting Group, ). Approximately 37% of these restatements are related to revenue recognition, with most of these resulting in an original overstatement of earnings. From 2000 to 2009, the Securities and Exchange Commission (SEC), on average, issued 200 Accounting and Auditing Enforcement Releases (AAERs) each year (see SEC.gov). Most AAERs lead to restatements. While prior literature focused on the negative consequences to firms from reporting a restatement, the authors' study looks for a mitigating effect from reporting good news along with the bad. [ABSTRACT FROM AUTHOR]

Faced with declining economic bases, many non-metropolitan areas find themselves balancing the need to be cost-competitive in terms of lower taxes against the need for provision of valued government services. Using a spatial equilibrium framework, this study econometrically examines the nexus between US state and local fiscal policies and non-metropolitan county growth in earnings and housing rents during the 1990s. The results suggest that state and local fiscal characteristics significantly influenced firm and household location. Some characteristics could be clearly identified as having dominant firm profit effects, while numerous others were identified as having household amenity effects. [ABSTRACT FROM AUTHOR]

ABSTRACT Using more than 25 000 corporate profit forecasts for Canada, the United Kingdom and the United States, we find strong evidence of an anti-herding behaviour. Apparently, corporate profit forecaster intentionally scatter their forecasts around the consensus forecast. We also document that the cross-sectional heterogeneity of forecasts with regard to anti-herding translates into cross-sectional heterogeneity with regard to forecast accuracy. Forecasters who anti-herd have a substantially higher forecast accuracy that may help to explain the rational bias in macroeconomic forecasting. Copyright © 2012 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

This study examines the relationships between firm and industry characteristics and firms' abnormal stock market returns accompanying the announcement of technology licensing deals. In particular, I examine the fit among firms' licensing activities, their resource endowments, and their industry context, and develop hypotheses on its impact on abnormal stock market returns after licensing deals. Analyzing 11 years of inward and outward licensing transactions in the US computer and pharmaceutical industries between 1990 and 2000, I find support for my argument that while firms profit from both inward and outward licensing, the magnitude of such profits is determined by licensing firms' resource endowments, and that these determinants have a different impact in different industry contexts. Understanding these relationships helps explain when firms should use licensing to exploit their proprietary technologies and make better predictions about the impact of licensing transactions on firm performance. [ABSTRACT FROM AUTHOR]

We derive a structural model of firm behavior that is composed of the Generalized Quadratic Almost Ideal Demand System to represent both consumers’ milk preferences and firm profit maximization conditions that allow for a range of competitive scenarios. The importance of this specification is found in its fuller representation of consumer preferences, as opposed to the Linear Approximate Almost Ideal Demand System used in previous analyses. We apply this structural framework to investigate retailer conduct in the sale of beverage milk in a U.S. market using product-level data. Our Lerner Index estimates show that retailers are not perfectly competitive. However, this deviation is small. [ABSTRACT FROM AUTHOR]

We investigate 239 firms cited in the SEC's Accounting and Auditing Enforcement Releases (AAERs). We document significantly negative abnormal operating performance (measured using both cash-flow-based and earnings-based metrics) in the second and third years following AAERs. We also detect significantly negative abnormal stock returns in up to three years following AAERs. We further find that AAER firms are more likely to fail in the post-AAER period. Taken together, our findings suggest that the negative implications of an AAER citation resulting from egregious financial reporting violations can be long lasting and influence various facets of firm performance and survivability. [ABSTRACT FROM AUTHOR]

We determine empirically how automakers accommodate shocks to demand. Using data on production, sales, and transaction prices, we estimate a dynamic profit maximization model of the firm. We demonstrate that when an automaker is hit with a vehicle-specific demand shock, sales respond immediately and prices respond very modestly. Further, when accounting for non-convexities in the cost function, production responds with a delay. Over time, shocks are absorbed almost entirely through adjustments in sales and production rather than prices. We examine two recent demand shocks: the Ford Explorer/Firestone tire recall of 2000, and the 11 September 2001 terrorist attacks. Copyright © 2009 John Wiley & Sons, Ltd. [ABSTRACT FROM AUTHOR]

The authors start by showing that six factors—responsibility (i.e., position and company size), industry, pay inflation, business risk, performance and company pay policy—explain over 75% of the variation in the pay of top-five U.S. executives for a sample of 75,000 cases during the years 1997–2008. They also show that the current structure of top-executive pay creates a stronger incentive for revenue growth than for shareholder value growth, and that a 10% increase in shareholder value increases incentive compensation by only 3%. Moreover, their research suggests that the “value incentive” of the average U.S. executive is only one third as strong as the incentive that would be provided by simple “sharing” concepts, such as those provided by plans that give executives a fixed percentage of economic profit or annual grants of a fixed number of shares of stock. The article concludes by reviewing some recent research on incentives and company performance and offering suggestions to help investors identify companies with strong and cost-efficient shareholder value incentives. [ABSTRACT FROM AUTHOR]

The article discusses the mandatory fiduciary responsibilities of limited liability companies (LLCs) as social entities operating to make profits for members under the privilege to do business within public policy constraints in the U.S. It states that it is important to retain mandatory duties as they foster trustworthiness, efficient management and remove illegitimacy. It also protects the third parties that are not safe under the LLC operating agreement and also supports less sophisticated business communities. It is mentioned that the fiduciary duties help in removing repeat player advantages, information asymmetries and inequalities in education, sophistication and legal presentation.

The practice of reporting manager-adjusted ‘pro forma’ earnings numbers in quarterly earnings press releases has attracted considerable attention in recent years in the United States. Prior research suggests that while some managers report these adjusted numbers to better reflect core earnings, others may use these earnings adjustments to meet strategic earnings targets on a pro forma basis when they fall short based on GAAP reporting standards. Assuming the latter motivation could potentially mislead investors, the difficulty lies in distinguishing the ‘good guys’ from the ‘bad guys.’ Using hand-collected pro forma earnings data, we investigate the extent to which different types of earnings adjustments affect the spread between pro forma earnings and GAAP earnings from continuing operations. Moreover, we investigate which types of adjustments managers use to meet strategic earnings targets. In addition to the exclusion of one-time items like restructuring charges, the results indicate that managers often exclude recurring expenses such as depreciation, research and development, and stock-based compensation to meet these strategic targets. The exclusion of recurring items is especially indicative of aggressive pro forma reporting. Finally, we find that firms that report adjusted earnings numbers only sporadically are more likely than firms that adjust earnings figures on a regular basis to use pro forma reporting to achieve strategic earnings targets by excluding recurring items. [ABSTRACT FROM AUTHOR]