The SEC currently requires that firms disclose recent disagreements with their auditors over accounting or auditing matters when a change in auditor is reported. The effectiveness and usefulness of requirements to disclose disagreements have been questioned, and previous empirical research on the issue has been inconclusive. This study investigates the information content of disclosure of the auditor-firm disagreements. The analysis indicates a significant negative market reaction in the week that the Form 8-K is filed with the SEC. This finding is consistent with the position that the disclosure provides information useful to investors.

A regulated firm that can make decisions both before and after uncertainty is resolved with respect to input use cannot be led to competitive solutions by regulatory price ceilings. Whether those ceilings are imposed before or after the resolution of uncertainty, they present incentives for undercapitalized production, contrary to usual AJ assertions. Under these conditions the Fair Return objective is neither a sufficient nor an unambiguous regulatory target.

The point of this paper is that inventory adjustment attenuates downward pressure on price when realized demand is low because firms accumulate inventory hold-overs, speculating that demand will be stronger in the succeeding period. When realized demand is high the firm draws down its inventories until a "stock-out" occurs and price rises to clear the market.

Aggregation, Decision making, Information systems, Communication theory

Economic goods are frequently sold according to a price per unit where the quantity characteristic does not measure all the economically important characteristics of the good. Milk is sold by the quart, automobiles rented by the mile, physicians' services bought by the visit, and tennis lessons by the hour. In all cases, heterogeneous units are available in the market and the price per unit quantity depends upon the amount of the unpriced characteristic contained in each unit. The per quart price of depends upon the butterfat content, the mileage costs of automobile rentals on the cars' make, and the price per unit time for personal services on the providers' skill and training. The common distinction made between these variants of the same good is that they differ in quality, where refers to the amounts of the unpriced attributes contained in each unit of the priced attribute.' Thus, is packaged according to the attribute milk liquid and the of refers to the ratio of butterfat per unit of liquid.2 This paper considers some of the unique aspects of the economics of supply and demand under this situation where products contain (at least) two desired attributes, only one of which is quantified and measured prior to purchase. Product is here defined by the ratio of the second quality attribute per unit of the measured quantity attribute.3 This simple specification of allows a direct link between standard economic models of related products and the economics of variable product quality. Previous analyses which treat simply as a shift parameter in the demand function are shown to obscure the actual subtleties of supply and demand with variable, endogenous quality.4 The paper proceeds by first examining the efficient and quantity, and the competitive equilibrium. The market equilibrium under monopoly is then contrasted in the second section. The general theme of the