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Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We study a newsvendor problem with capital constraint and demand forecast update. The newsvendor has two instants to order from a supplier prior to a single selling season. While the demand is uncertain, the newsvendor can improve the forecast by utilizing the market signal observed between the first and second instants. We analyze the newsvendor’s optimal ordering policy in two cases: risk-neutrality and risk-aversion. Our analysis suggests that the optimal policy in each case is characterized by a critical value: a target safety capital. Under this policy, part of capital is left to use at instant 2 if and only if the initial capital is above the target safety capital. When this happens, the order quantity at instant 1 decreases as the initial capital increases. We further analyze the effect of information update on the newsvendor’s ordering policy. Our results indicate that more capital should be left to use at instant 2 when the correlation coefficient between market information and demand becomes large or when the newsvendor is more risk-averse. [ABSTRACT FROM PUBLISHER]

Previous studies identify predetermined variables that predict stock and bond returns through time. This paper shows that loadings on the same variables provide significant cross-sectional explanatory power for stock portfolio returns. The loadings are significant given the three factors advocated by Fama and French (1993) and the four factors of Elton, Gruber, and Blake (1995). The explanatory power of the loadings on lagged variables is robust to various portfolio grouping procedures and other considerations. The results carry implications for risk analysis, performance measurement, cost-of-capital calculations, and other applications. [ABSTRACT FROM AUTHOR]

Economics has long taken precedence over the environment in both governmental and business decision making, with the System of National Accounts and the indicator GDP coming to represent much that is wrong with the current environmental conditions. Increasing recognition of the environmental damage human activity causes and that human well-being depends on biodiversity and ecosystems means that new systems to measure and sustainably manage the world are needed. Integrating the environment into national accounts has been suggested as a way to improve information but so far impact on decision making is limited. This outlook needs to change. Using examples from Australia and Botswana, we show how integrating information on biodiversity, resource use and the economy via accounting can help create a new decision-making paradigm and enable a new policy framing with spending on biodiversity conservation and sustainability seen as an investment, not a cost. [ABSTRACT FROM AUTHOR]

A growing number of countries is setting up natural capital accounts (NCA) based on the system of environmental-economic accounting (SEEA); however, actually using them for better policy making turns out to be complex. This paper synthesises lessons on the institutional mainstreaming of the SEEA and its use in improving policy decisions affecting natural capital. It draws on discussions held at two Policy Forums organised by the World Bank Wealth Accounting and Valuation of Ecosystem Services program and the United Nations Statistical Division. Practical examples of how the SEEA helps to improve policy making are explored. Emerging from the Forums were ten principles for making NCA fit for policy. These principles promote a comprehensive NCA organisation, a purposeful use of accounts, trustworthy methods and institutionalisation of NCA mechanisms in government. To put these principles into practice, six strategies are outlined: (1) assure credibility of the accounts; (2) align supply and demand for NCA; (3) assure high level support for NCA; (4) encourage cooperation between institutions so NCA and policy are mutually constructive; (5) provide evidence that natural capital is economically important and; (6) assure policy-relevant communication of NCA results. [ABSTRACT FROM AUTHOR]

• Account the natural capital (NC) of India. • Link the pro-environmental behavior with NC growths of India. • Identify the determinants of pro-environmental behavior in India. • Identify potential relation of environmental knowledge and green growth. • Relate the green growth and pro-environmental behavior. The natural capital (NC) of India and its management system are essential conditions of the welfare path to the sustainable development of the country. We conduct an accounting process for India's NC to measure sustainability to ensure that future generations will have the equal total wealth per capita accessible to them as that available to the present generation. We then describe the combination of the renewable and non-renewable NC that is relevant within the concepts of welfare and sustainability. First, we note that India has successful forestation, which has enhanced welfare for its residents. However, the other renewables (e.g., cropland, fishery) and non-renewables (e.g., fossil fuels, minerals) are continuously degraded as a result of economic development and population growth. Second, we discuss the correlation between sustainable resource management and pro-environmental behavior (PEB) and explain the importance of considering these factors to achieve green growth. Third, to provide practitioners with useful information on how to promote PEB and to discover the determinants of PEB, we analyze the survey data of 5,200 respondents from all Indian states. We identify that environmental knowledge is an important determinant of individuals' PEB in India. In the policy analysis, we evaluate the challenges to achieving sustainable development goals (SDGs) using NC accounting in India. We recommend several policy implications to maintain NC at a sustainable level and to achieve SDGs. [ABSTRACT FROM AUTHOR]

This article explores the valuation of natural capital by critically analysing alternative approaches to it. It considers the problems associated with applying economic values to natural capital and the limitations of such exercises. It examines different methods that are more familiar to accountants than economists of using what is sometimes termed 'an engineering approach' to estimating the costs of maintaining and restoring existing assets. It considers the arguments that are used to justify the two. In particular, it addresses the question of what we are seeking to do by determining the value of natural capital—what is the question to which valuation is supposed to be the answer? [ABSTRACT FROM AUTHOR]

Accounting is an important practical mechanism by which corporations are held to account for their performance and impact. This is consequential for corporate responsibility for the conservation of natural capital. While there is clear evidence of increasing corporate accounting and reporting with respect to aspects of natural capital, however, such efforts are at best nascent. This is in part because the purpose and meaning of corporate natural capital accounting is not in itself well established, and in part because existing institutional structures and incentives do not lend themselves to giving a full account of natural capital impact. In this context, the paper argues that there is essentially a need for natural capital accounting and reporting systems that serve two distinct purposes. The first, which is the more likely to be satisfied by existing market structures, is oriented towards the informational needs of shareholders and is concerned with supporting a transition towards environmentally sustainable business models. The second, in contrast, acknowledges that a shareholder-oriented perspective constrains natural capital to be important if, and only if, its conservation privately affects shareholders, which is unlikely to ensure an accounting that contributes to the conservation of natural capital as an end in itself. This second purpose of strengthening corporate natural capital accountability is unlikely to be satisfied within existing market structures; instead, it stands in need of a regulatory solution. [ABSTRACT FROM AUTHOR]

Natural capital is increasingly widely discussed and included in corporate and governmental accounts, using a variety of different approaches and metrics. Here I argue that natural capital is fundamentally an emergent feature of structures and functions of the natural environment. Therefore its valuation and metrics for reporting on its condition and the way that it is represented in accounts need to reflect these defining features and not rest solely on measurable flows of goods and services. Natural capital is an asset, and its many contributions to the economy and society, often called ecosystem services, are both malleable and adaptable. Their value changes with time and context as they become more or less important and relevant for particular purposes. Unlike most produced assets, natural assets are multifunctional, adaptable, and resilient, and within limits they have the capacity to regrow or reorganize themselves. Maintaining this capacity is therefore the key priority for a responsible owner or manager of natural assets. Currently most metrics for natural capital are based on the quality or quantity of flows of goods and services, on the geographical distribution of particular ecosystems or land/sea uses, and by reference to ecosystem services delivered by particular ecosystems. The advantages and disadvantages of these different approaches are discussed, but I propose instead using the quality of fundamental ecological processes and functions which properly represent the functioning and capabilities of the natural capital system upon which society and the economy depend. [ABSTRACT FROM AUTHOR]

The main prospective of this research is to analysis the industrial development (IDV) nexus for a sample of Pre Brexit Polling and After Brexit Polling in the economy of United Kingdom. The prevalence of structural, political and institutional instabilities in the region under study makes it important to study from a policy perspective. The specific objective of the current study is to check the nature of relationship between capital account openness, trade openness, equity openness and IDV for Pre Brexit Polling and After Brexit Polling in United Kingdom. The current study utilized time series data set for Pre-Brexit analysis data from May 1, 2014 to June 23, 2016 and Post-Brexit analysis data from June 24, 2016 to May 1, 2018. Initially multiple regression methods was applied and in next step VAR, Impulse response function and Variance decomposition has been applied for describing shocks, quantifying shocks and explaining intra and inter dependencies respectively. Results showed that Financial openness policies and macroeconomic policies should be totally reformulated and redesigned as the previously followed policies does not contributed in IDV in Pre Brexit Polling and Post Brexit Polling in United Kingdom. [ABSTRACT FROM AUTHOR]

The article presents the discussion on the work of South African economist Karl Mittermaier. Topics include employment of capital coinciding with the most beneficial employment from a societal point of view; Adam Smith using the invisible hand as a fiction with the intention of revealing the effects of certain policies and institutions; and decline of feudalism and the emergence of a commercial society.

Common omissions of human capital in valuation sheets have led to numerous evaluations of their causes and effects. Of even more value, however, is an example of human resource accounting in action and its implications. [ABSTRACT FROM AUTHOR]

Human assets of people at work consist of knowledge, skills, health, availability, and attitudes. This model differs from previous models primarily by emphasizing attitudes as a key reflection of the other assets, and by presenting a method for assigning financial values to attitudes in an organization. [ABSTRACT FROM AUTHOR]

The article discusses the challenges in computing the cost of capital. The article suggests that the effort that cost of capital requires might be better used in other financial pursuits. The article describes how the cost of capital is plays out in financial decision making. Cost of capital drives financial decisions, investment decisions, and serves as a link between the two, particularly in terms of the rate of return on investment. The article addresses the cost of capital and firm financial structure, as well as cost of capital and investment policy. The author suggests that consideration of the cost of capital is both inefficient and misleading, as realistic and complex situations put its usefulness into question.

Hidden capital exists whenever the accounting measure of a firm's net worth diverges from its economic value. Such unbooked capital has on-balance-sheet and off-balance-sheet sources. This paper develops a model to estimate both forms of hidden capital and to test hypotheses about their determinants. In effect, the analysis expands the two-index model by endogenizing the market and interest-rate sensitivities of any stock and decomposing each sensitivity into on-balance-sheet and off-balance-sheet elements. For a sample of banks during 1975-1985, the model finds considerable variation in both forms of hidden capital. [ABSTRACT FROM AUTHOR]

Discrete-time models of asset pricing have hitherto generally avoided studying the relationship between the underlying technology inherent in the economy and the determinants of the price of capital. A fully articulated economy is constructed in which there is a nontrivial technology for producing capital. The existence of adjustment costs in augmenting the quantity of capital has interesting implications for the stochastic properties of asset prices, as well as other macroeconomic variables. Examples of such economies are used to illustrate this point. [ABSTRACT FROM AUTHOR]

This paper seeks to explain the dramatic decline in capital to asset ratios in U.S. commercial banks during the last two decades. It is hypothesized that the rise in nominal interest rates during this period might have contributed substantially to the fall in capital ratios. Time series-cross section estimation supports the hypothesis regarding the interest rate. [ABSTRACT FROM AUTHOR]

The article examines the use of financial ratios as predictors of business financial difficulty. Researchers looked at financial ratios at a macro level for broad industry classes seeking a correspondence between the accounting numbers and basic industry attributes. They found that cluster analysis groupings of the ratio data corresponded highly with both the judgmental classifications of economists and with numerous qualitatively expressed economic conditions in the industries studied. The greater the specialization of the assets involved in the ratio the clearer the correspondence.

The article discusses ways for firms to measure the cost of capital. Economic theory views capital as a broad class of productive factors. This includes nearly every accounting asset including land, building, machine or equipment, inventories, receivables, and cash. Economic capital also includes intangible assets including patents, franchises, good will, and organizational structure. The cost of capital remains an imperfect tool for decision making. Experts say the imperfections may be offset by managerial caution in calculation, tempering measurement with judgment, and accepting the responsibility for the risks that must be taken.

An accurate price forecast is crucial when deciding on a new investment proposal for capital intensive commodities. In such industries as metals, plastics, and fertilizers, the sale price is the key profitability factor. New investments are too often based on specious forecasts which use historical price trends to predict the future. Another way to forecast prices which can provide more meaningful results is presented in the article. [ABSTRACT FROM AUTHOR]

Whether advertising is an investment and so should be treated like other parts of the capital budget is a question of moment to marketing managers. Viewing promotion as an investment could bring dramatic changes in decision-making, market-testing, measurements of effectiveness, and value judgments that are required in determining how much to spend on promotion. The economic case for an investment approach to the advertising budget is the theme of this article by a distinguished economist. [ABSTRACT FROM AUTHOR]

The regression phenomenon may seen simple to some technicians. Yet failure to grasp the underlying idea or to connect it to specific problems has led to frequent misinterpretation of data--the so-called "regression fallacy." Actually, while there is only one regression phenomenon, there are two distinguishable regression fallacies. This article explains the regression phenomenon and shows how the two fallacies can be identified and avoided. [ABSTRACT FROM AUTHOR]

Drawing from a macro perspective of social exchange theory, the current study aims to examine the relationships between shared leadership, collective psychological capital, organizational commitment, and creativity at a collective level in Taiwan’s hotel industry. We adopt three-stage time-lag design with a three-week in each stage to collect data. Data stem from 52 hotels and comprise 267 employees were used to test the hypotheses through structural equation modeling. We found that, the data fit the hypothesized model well, and collective PsyCap partially mediates the relationship between shared leadership and both organizational commitment and creativity. From these results, theoretical and practice implication are offered. We discuss the theoretical and practical implications of the findings and offer recommendations for future research. [ABSTRACT FROM AUTHOR]

Introduction. Effective and rational management of enterprise capital in economies of any type is impossible without objective, comprehensive and formalized accounting and reporting information. Taking into consideration this fact that in today's accounting there are numerous unresolved problems regarding the objective expression of the value of capital and its representation in the financial statements, research in this area is considered relevant. The hypothesis of this research is the assumption of the existence of important and relevant for modern theory and practice of ideas in past developments. The aim of the study is to generalize the genesis of views on the content of the study definition by representatives of economic and accounting schools, the critical analysis of accounting practices and the development of accounting theory and concepts evolved during the evolution, some aspects of which can be used to improve the modern accounting of enterprise capital. Methods. Methods of studying the evolution of theory and practice of accounting for capital are based on general scientific methods, which are used with the use of the dialectical approach - the methods of historiographical generalization and systematization, as well as with the use of scientific knowledge methods: observation - to clarify the essence of capital as an object of accounting in the context. general economic category; abstraction and concretization - to assess the historical accounting experience of capital and its components; methods of abstract-logical knowledge, as well as grouping, comparison, generalization - in the analysis and evaluation of the conceptual and methodological foundations of different accounting paradigms in the theory of capital. Results. According to the results of the study of the evolution of theoretical-methodological and organizational-practical principles of capital accounting, certain approaches identified in past experiences that could positively affect the development of modern capital accounting. The historiographical analysis systematized and evaluated the strengths and weaknesses of the main balance theory to the positioning of capital as a category of accounting, the problem of methodological principles regarding the objective expression and cost reflection in accounting and presentation in the financial statements of this object was determined. Some ideas of past work that are expedient to use in modern researches are formulated and substantiated. Discussion. The obtained theoretical and applied recommendations can be used to improve the existing approaches to capital accounting, in particular, a promising direction for improving capital accounting, the feasibility of using the ideas of the organic balance theory in relation to the construction of a balance format with an orientation on "reproductive cost of an enterprise" and econometric - with regard to accounting approaches to the estimation of "ideal values" and material assets in case of loss of productive capital power. [ABSTRACT FROM AUTHOR]

Using newly available investment data from the World Bank’s World Development Indicators database we provide an update and an extension of the aggregate capital stock estimations provided in (Berlemann, M. and J.-E. Wesselhöft (2014): Estimating Aggregate Capital Stocks Using the Perpetual Inventory Method: A Survey of Previous Implementations and New Empirical Evidence for 103 Countries, Review of Economics 65(1), 1–34). The new database contains comparable unbalanced panel data for 122 countries and the period of 1960 to 2016. [ABSTRACT FROM AUTHOR]

We analyze the effects of capital account regulations (CARs) across a large sample of emerging economies on a range of macroeconomic outcomes. We use composite indices of these regulations to capture their intensity in coverage and employ an instrumental variables strategy to overcome the endogeneity of regulations to outcomes. We estimate the effects of CARs on real exchange rate appreciation, foreign exchange pressure, crisis resilience, and post-crisis overheating using annual data from 1995 to 2011 for 51 emerging economies. We find that all CARs, except the financial sector-specific restrictions, reduce foreign exchange pressure and real exchange rate appreciation, contributing to greater macroeconomic stability. Our results further indicate that increasing the restrictiveness of CARs in the run-up to the crisis moderates the growth decline, thus enhancing crisis resilience, and that countries that used CARs experienced less overheating from capital inflow surges during post-crisis recovery. The latter two results imply that CARs are useful countercyclical policy instruments. Our estimates provide evidence in favor of models in which imperfect capital mobility can generate sustained effects on real exchange rates. [ABSTRACT FROM AUTHOR]

Capital efficiency measures like economic value added (EVA) and return on capital employed (ROCE) have been developed and are regularly used by many industrial companies to avoid short-term bias and provide stakeholders with valuable insight into the long-term ability of a company to create value. In recent years, new models have emerged (partly promoted by the financial industry), which in turn attract management teams to optimize those capital efficiency figures without appropriately considering both underlying risk and long-term benefit for the companies' stakeholders. This article highlights examples where this is practiced by shifting of financing sources in order to achieve an artificial improvement of those figures. It also provides suggestions to avoid such misleading results in the future. © 2017 Wiley Periodicals, Inc. [ABSTRACT FROM AUTHOR]

This paper uses the growth accounting approach to estimate total factor productivity in the Australian agriculture industry between 1949 and 2012. To shed light on an unresolved debate on quantifying the roles of capital and labor, we compare the 'ex-ante' and 'ex-post' approaches to the estimation of returns to capital and labor, and find the former performs better than the latter in the context of the agricultural production account. We also demonstrate how the measurement of agricultural productivity may be improved by accounting for heterogeneity in output and input quality. Finally, our estimates are distinct from existing statistics in both the time length and industry coverage and provide new information about the long-term trend of agriculture productivity in Australia. [ABSTRACT FROM AUTHOR]

The demand for higher education in Nigeria has been considered as not only an investment in human capital, but also a pre-requisite for economic development. Consequent upon the expansion of higher education in Nigeria, quite a number of institutions have suffered decay due to poor work environments, inadequate educational facilities and poor funding which have resulted into unabated brain drain, strike and turnover. However, the need to develop talents is no longer hidden, what remains controversial is knowing the best method for managing human capacity especially in Nigerian State owned universities. Thus, this study examined the relationship between human capital management and organizational success using three State owned universities in Southwest, Nigeria. These universities (Ekiti State University (EKSU), Lagos State University (LASU), Tai Solarin University of Education (TASUED)) were chosen for their uniqueness. Survey research design was adopted with 398 respondents (staff). Self-administered questionnaire was adopted and analyzed with the adoption of Structural Equation Modelling (SEM). However, the results indicated that adequate leadership practices; learning capacity; workforce optimization; knowledge accessibility; workplace culture and; mentorship are significant predictors of organizational success in higher education. [ABSTRACT FROM AUTHOR]

Target rate of return pricing is the predominant pricing strategy in use today. Target ROI pricing is popular because it is relatively easy and because, in general, it works. A target ROI model that simplifies this strategy even further has been suggested here. The benefits from such a model include speed, simplicity, and the fact that it is easily understood by lower-level managers. The few simplifying assumptions that are made regarding the nature of "fixed' costs are perhaps unrealistic, but in "real world" pricing problems their significance may not be important. In fact, there is reason to believe that such simplification may lead to even better pricing decisions by managers. In addition, the model outlined here provides the basis for rather easy solutions to fairly complex contract situations involving delays in payment, early buildup of material supplies, and risk analysis involving follow-on contract awards. As in any strategy formulation, it is not suggested that this approach leads to THE appropriate price. NO formalized strategy can legitimately claim to do that. But it CAN lead to a very good benchmark for what the price should be, based on a few easily understood assumptions. It is left to the managers to make whatever adjustments in specific programs they deem necessary and appropriate. [ABSTRACT FROM AUTHOR]

Apparently there are some basic misunderstandings of the concept of regression. This article attempts a reconciliation of divergent viewpoints, and also explains the statistical theory underlying this phenomenon. [ABSTRACT FROM AUTHOR]