Jurnal Akuntansi dan Keuangan - Accounting and Finance Journal

The World Distribution of Income: Falling Poverty and… Convergence, Period

noreply@blogger.com (Johnny HS) — Sun, 24 Jan 2010 07:50:00 +0000

Abstract We estimate the world distribution of income by integrating individual income distributions for 139 countries between 1970 and 2000. Country distributions are constructed by combining two widely-used data sets: the PPP-Adjusted National Accounts data of the Penn World Tables is used to anchor the mean and Deininger and Squire (1996) and World Bank microeconomic surveys are used to pin down the dispersion. The WDI is used to estimate poverty rates and headcounts. The CDF for 1990 stochastically dominates that of 1970, which means that poverty rates declined for all conceivable...

A Century of Work and Leisure

noreply@blogger.com (Johnny HS) — Thu, 21 Jan 2010 07:47:00 +0000

Abstract Has leisure increased over the last century? Standard measures of hours worked suggest that it has. In this paper, we develop a comprehensive measure of non-leisure hours that includes market work, home production, commuting and schooling for the last 105 years. We also present empirical and theoretical arguments for a definition of “per capita” that encompasses the entire population. The new measures reveal a number of interesting 20th Century trends. First, 70 percent of the decline in hours worked has been offset by an increase in hours spent in school. Second, contrary to...

WHY DO AMERICANS WORK SO MUCH MORE THAN EUROPEANS?

noreply@blogger.com (Johnny HS) — Mon, 18 Jan 2010 07:45:00 +0000

Abstract Americans now work 50 percent more than do the Germans, French, and Italians. This was not the case in the early 1970s when the Western Europeans worked more than Americans. In this paper, I examine the role of taxes in accounting for the differences in labor supply across time and across countries, in particular, the effect of the marginal tax rate on labor income. The population of countries considered is that of the G-7 countries, which are the major advanced industrial countries. The surprising finding is that this marginal tax rate accounts for the predominance of the...

Asset Prices and the Measurement of Wealth and Saving

noreply@blogger.com (Johnny HS) — Fri, 15 Jan 2010 07:42:00 +0000

Abstract The paper defines concepts of real wealth and saving which take into account the intertemporal index number problem that results from changing interest rates. Unlike conventional measures of real wealth, which are based on the market value of assets and ignore the index number problem, the new measure correctly reflects the changes in the welfare of households over time. An empirically operational approximation to the theoretical measure is provided and applied to US data. A major empirical finding is that US real financial wealth increased strongly in the 1980s, much more than...

The Three Horsemen of Growth: Plague, War and Urbanization in Early Modern Europe

noreply@blogger.com (Johnny HS) — Tue, 12 Jan 2010 07:40:00 +0000

Abstract How did Europe overtake China? We construct a simple Malthusian model with two sectors, and use it to explain how European per capita incomes and urbanization rates could surge ahead of Chinese ones. Those living standards could exceed subsistence levels at all in a Malthusian setting should be surprising. Rising fertility and falling mortality ought to have reversed any gains. We show that productivity growth in Europe can only explain a small fraction of rising living standards. Population dynamics – changes of the birth and death schedules – were far more important drivers of...

The Role of Mexico in the First Oil Shortage: 1918-1922, an International Perspective

noreply@blogger.com (Johnny HS) — Sat, 09 Jan 2010 07:36:00 +0000

Abstract In 1921 Mexico produced a quarter of world’s petroleum, making the country the second largest producer in the world, but by 1930 it only accounted for 3 per cent of world’s production. To date the discussion has mostly relied on events taking place in Mexico for explaining the decline of the industry. Very little attention has been placed to developments in petroleum industry elsewhere, except Venezuela. Practically no attention has been paid to the reasons for the rise of oil output in Mexico. This neglects the massive changes taking place in the petroleum industry worldwide...

The Quasi-Judicial Role of Large Retailers: An Efficiency Hypothesis of their Relation with Suppliers

noreply@blogger.com (Johnny HS) — Wed, 06 Jan 2010 07:33:00 +0000

Abstract The paper explores an efficiency hypothesis regarding the contractual process between large retailers, such as Wal-Mart and Carrefour, and their suppliers. The empirical evidence presented supports the idea that large retailers play a quasi-judicial role, acting as “courts of first instance” in their relationships with suppliers. In this role, large retailers adjust the terms of trade to on-going changes and sanction performance failures, sometimes delaying payments. A potential abuse of their position is limited by the need for re-contracting and preserving their reputations....

An Investigation of the Relationship between Job Characteristics and the Gender Wage Gap

noreply@blogger.com (Johnny HS) — Sun, 03 Jan 2010 07:31:00 +0000

Abstract This paper re-examines gender wage differences, taking into account not only worker characteristics but also job characteristics. Consideration of a wide set of “job quality” indicators can explain a fraction of the wage gap that would otherwise be attributed to pure wage discrimination. In any case, the fraction of the wage gap that remains associated to differential rewards for identical factors across sexes is still substantial. Our results suggest that in order to avoid overestimation of the fraction of the wage gap attributable to discrimination, it is necessary to control...

Strategy Communication and Measurement Systems

noreply@blogger.com (Johnny HS) — Wed, 30 Dec 2009 07:30:00 +0000

Abstract Organizations often face the challenge of communicating their strategies to local decision makers. The difficulty presents itself in finding a way to measure performance which meaningfully conveys how to implement the organization's strategy at local levels. I show that organizations solve this communication problem by combining performance measures in such a way that performance gains come closest to mimicking value-added as defined by the organization's strategy. I further show how organizations rebalance performance measures in response to changes in their strategies....

SPATIAL MARKET EXPANSION THROUGH MERGERS

noreply@blogger.com (Johnny HS) — Sun, 27 Dec 2009 07:28:00 +0000

Abstract In this paper we present a model that studies firm mergers in a spatial setting. A new model is formulated that addresses the issue of finding the number of branches that have to be eliminated by a firm after merging with another one, in order to maximize profits. The model is then applied to an example of bank mergers in the city of Barcelona. Finally, a variant of the formulation that introduces competition is presented together with some conclusions. Several studies have analyzed the economic and financial consequences of bank mergers. Rhoades (1998) looked at nine large...

SECURITIES ANALYSTS AS FRAME-MAKERS

noreply@blogger.com (Johnny HS) — Thu, 24 Dec 2009 07:26:00 +0000

Abstract In this paper we explore the mechanisms that allow securities analysts to value companies in contexts of Knightian uncertainty, that is, in the face of information that is unclear, subject to unforeseeable contingencies or to multiple interpretations. We address this question with a grounded-theory analysis of the reports written on Amazon.com by securities analyst Henry Blodget and rival analysts during the years 1998-2000. Our core finding is that analysts’ reports are structured by internally consistent associations that include categorizations, key metrics and analogies. We...

The Importance of Relative Performance Feedback Information: Evidence from a Natural Experiment using High School Students

noreply@blogger.com (Johnny HS) — Mon, 21 Dec 2009 07:24:00 +0000

Abstract We study the effect of providing relative performance feedback information on performance under piece-rate incentives. A natural experiment that took place in a high school offers an unusual opportunity to test this effect in a real-effort setting. For one year only, students received information that allowed them to know whether they were above (below) the class average as well as the distance from this average. We exploit a rich panel data set and find that the provision of this information led to an increase of 5% in students’ grades. Moreover, the effect was significant for...

The challenge of representative design in psychology and economics

noreply@blogger.com (Johnny HS) — Fri, 18 Dec 2009 07:22:00 +0000

Abstract The demands of representative design, as formulated by Egon Brunswik (1956), set a high methodological standard. Both experimental participants and the situations with which they are faced should be representative of the populations to which researchers claim to generalize results. Failure to observe the latter has led to notable experimental failures in psychology from which economics could learn. It also raises questions about the meaning of testing economic theories in “abstract” environments. Logically, abstract tests can only be generalized to “abstract realities” and these...

Psychological Pressure in Competitive Environments: Evidence from a Randomized Natural Experiment

noreply@blogger.com (Johnny HS) — Tue, 15 Dec 2009 07:19:00 +0000

Abstract Much like cognitive abilities, emotional skills can have major effects on performance and economic outcomes. This paper studies the behavior of professional subjects involved in a dynamic competition in their own natural environment. The setting is a penalty shoot-out in soccer where two teams compete in a tournament framework taking turns in a sequence of five penalty kicks each. As the kicking order is determined by the random outcome of a coin flip, the treatment and control groups are determined via explicit randomization. Therefore, absent any psychological effects, both...

PROMISING FAILURE: Political and Company Rhetoric as a Determinant of Success

noreply@blogger.com (Johnny HS) — Sat, 12 Dec 2009 07:17:00 +0000

Abstract I show that firms that make sparing use of the future tense in their annual reports significantly outperform those that use it more. Similarly, in all of the U.S. presidential elections from 1960 through 2004, the candidate who made less use of the future tense during the televised debates won the popular vote. I show that the frequency of using future-tense sentences is strongly correlated with the frequency of making promises and that the latter can be modeled within a game-theoretic framework. What’s a promise worth? At the start of Shakespeare’s Love’s Labour’s Lost, four...

Optimal Contracts, Adverse Selection, and Social Preferences: An Experiment

noreply@blogger.com (Johnny HS) — Wed, 09 Dec 2009 07:16:00 +0000

Abstract It has long been standard in agency theory to search for incentive compatible mechanisms on the assumption that people care only about their own material wealth. However, this assumption is clearly refuted by numerous experiments, and we feel that it may be useful to consider nonpecuniary utility in mechanism design and contract theory. Accordingly, we devise an experiment to explore optimal contracts in an adverse-selection context. A principal proposes one of three contract menus, each of which offers a choice of two incentive-compatible contracts, to two agents whose types are...

ON COMMERCIAL MEDIA BIAS

noreply@blogger.com (Johnny HS) — Sun, 06 Dec 2009 07:13:00 +0000

Abstract Within the spokes model of Chen and Riordan (2007) that allows for non-localized competition among arbitrary numbers of media outlets, we quantify the effect of concentration of ownership on quality and bias of media content. A main result shows that too few commercial outlets, or better, too few separate owners of commercial outlets can lead to substantial bias in equilibrium. Increasing the number of outlets (commercial and non-commercial) tends to bring down this bias; but the strongest effect occurs when the number of owners is increased. Allowing for free entry provides...

Legal Enforcement, Public Supply of Liquidity and Sovereign Risk

noreply@blogger.com (Johnny HS) — Thu, 03 Dec 2009 07:11:00 +0000

Abstract Sovereign debt crises in emerging markets are usually associated with liquidity and banking crises within the economy. This connection is suggested by both anecdotical and empirical evidence. The conventional view is that the domestic financial turmoil is caused by foreign creditors' retaliation. Yet, there is no clear-cut evidence supporting the existence of \classic" default penalties (e.g., trade sanctions or exclusion from international capital markets). This paper then proposes a novel mechanism linking sovereign defaults with liquidity and banking crises without any...

On the Accuracy of Latin American Trade Statistics: a Nonparametric Test for 1925

noreply@blogger.com (Johnny HS) — Mon, 30 Nov 2009 07:08:00 +0000

Abstract This paper proposes a nonparametric test in order to establish the level of accuracy of the foreign trade statistics of 17 Latin American countries when contrasted with the trade statistics of the main partners in 1925. The Wilcoxon Matched-Pairs Ranks test is used to determine whether the differences between the data registered by exporters and importers are meaningful, and if so, whether the differences are systematic in any direction. The paper tests for the reliability of the data registered for two homogeneous products, petroleum and coal, both in volume and value. The...

Labor Market Information Acquisition and Downsizing

noreply@blogger.com (Johnny HS) — Sat, 28 Nov 2009 07:06:00 +0000

Abstract We study the optimal mechanism for downsizing the public sector which takes into account different informational constraints (complete versus asymmetric information on each worker’s efficiency) and political constraints (mandatory versus voluntary downsizing). Under complete information, the optimal structure of downsizing (who is laid-off and who is not) does not depend on the political constraint and is determined by the (marginal) cost of retaining a worker in the public sector. Since this cost includes his opportunity cost in the private sector, information acquisition on...

Insurance and safety after September 11, 2001: Coming to grips with the costs and threats of terrorism

noreply@blogger.com (Johnny HS) — Wed, 25 Nov 2009 07:02:00 +0000

Abstract This chapter, originally written as a consequence of the terrorist attacks of September 11, 2001, provides an elementary, everyday introduction to the concepts of risk and insurance. Conceptually, risk has two dimensions: a potential loss, and the chance of that loss being realized. People can, however, transfer risk to insurance companies against the payment of so called premiums. In practice, however, one needs accurate assessments of both losses and probabilities to judge whether premiums are appropriate. For many risks, this poses little problem (e.g., life insurance);...

How does product market competition shape incentive contracts?

noreply@blogger.com (Johnny HS) — Sun, 22 Nov 2009 02:00:00 +0000

Abstract This paper studies the effects of product market competition on the explicit compensation packages that firms offer to their CEOs, executives and workers. We use a large sample of both traded and non-traded UK firms and exploit a quasi-natural experiment associated to an increase in competition. The sudden appreciation of the pound in 1996 implied different changes in competition for sectors with different degrees of openness. We provide difference in differences estimates and our results show that a higher level of product market competition increases the performance pay...

How Costly is Diversity? Affirmative Action in Light of Gender Differences in Competitiveness

noreply@blogger.com (Johnny HS) — Thu, 19 Nov 2009 02:00:00 +0000

Abstract Recent research documents that while men are eager to compete, women often shy away from competitive environments. A consequence is that few women enter and win competitions. Using experimental methods we examine how affirmative action affects competitive entry. We find that when women are guaranteed equal representation among winners, more women and fewer men enter competitions, and the response exceeds that predicted by changes in the probability of winning. An explanation for this response is that under affirmative action the probability of winning depends not only on one’s...

Testing Calibrated General Equilibrium Models

noreply@blogger.com (Johnny HS) — Mon, 16 Nov 2009 02:00:00 +0000

Abstract This paper illustrates the philosophy which forms the basis of calibration exercises in general equilibrium macroeconomic models and the details of the procedure, the advantages and the disadvantages of the approach, with particular reference to the issue of testing "false" economic models. We provide an overview of the most recent simulation-based approaches to the testing problem and compare them to standard econometric methods used to test the fit of non-linear dynamic general equilibrium models. We illustrate how simulation-based techniques can be used to formally evaluate...

FOREIGN OWNERSHIP AND PRODUCTIVITY DYNAMICS

noreply@blogger.com (Johnny HS) — Fri, 13 Nov 2009 02:00:00 +0000

Abstract In analyzing the distinctive contribution of foreign subsidiaries and domestic firms to productivity growth in aggregate Belgian manufacturing, this paper shows that foreign ownership is an important source of firm heterogeneity affecting productivity dynamics. Foreign firms have contributed disproportionately large to aggregate productivity growth, but more importantly reallocation processes differ significantly between the groups of foreign subsidiaries and domestic firms. In recent years a large number of studies have demonstrated the importance of firm heterogeneity for...