Governmental accounting, State government, Disclosures, Auditor selection

This paper provided a pure financial explanation for the existence of trade credit and for the values of the credit terms offered to customers. Two motives for extending trade credit were identified. The pure operating flexibility motive arises because the opportunity to change credit policy provides the seller an efficient way to respond to fluctuations in demand. This motive was eliminated from consideration in this paper by assuming constant demand. The seller must hold a liquid reserve when the financial markets are imperfect and the desire to earn an excess rate of return on this reserve explains the pure financial intermediary motive for trade credit.The pure financial incentive to lend this liquid reserve to customers was examined by viewing a market borrowing rate of interest that exceeds the market lending rate of interest as a hindrance to trade or, equivalently, as a financial market tariff. This tariff imposes a wedge between the market prices paid and received for the product plus a loan and thereby inflicts a loss of surplus on the seller and buyers. Trade credit lending enables the seller and/or the buyers to recapture at least part of this loss when the source of the tariff does not apply to direct loans to customers. Financial market tariffs caused by transactions costs fulfill this requirement because the trade credit lender's familiarity with its customers and product provide it with information and collection cost advantages over financial intermediaries. Tariffs caused by financial intermediary rents fulfill this requirement as well because the parties to a trade credit loan do not employ the services of a financial intermediary.Increasing opportunity costs and financial market imperfections in addition to the ones described above establish the limits of credit policy. The optimal amount of accounts receivable is derived from the condition that the marginal revenue of trade credit lending is equal to the marginal cost. This condition combined with factoring costs produces a unique, finite optimal credit period. Accrual accounting for income tax purposes imposes an additional restriction because the firm is taxed on the recovery of its opportunity costs. These limitations on credit policy were examined separately in this paper for clarity but they are in effect simultaneously in practice.

Evidence of weekend effects on the distribution of security returns suggests that returns are generated by a process operating closer to trading time rather than calendar time. In contrast, accumulation of interest over the weekend follows a calendar-time process. Since both the variance of returns and the interest rate are important parameters of the Black-Scholes option pricing model, this paper suggests that the model be stated to account for this by utilizing a trading-time variance and a calendar-time interest rate. Empirical evidence indicates that this allows the model to better explain market option prices.

The problem of expanding food supply has been made more complex and more dependent on technological progress by the encroachment of a burgeoning population on a limited land area. Rapid growth in the rural labor force in the low-income developing countries not only increases the problem of providing adequate employment, particularly in the face of diminishing scope for expanding the land area, but also reduces the possibility of solving poverty problems simply by a redistribution of assets and income flows. Section II reviews past trends and current levels of food production, trade, and consumption. Section III discusses a controversial issue: the extent and seriousness of food deprivation. These sections lead to the same conclusion: the choice of development strategy is decisive in determining the level at which the food equation balances. An examination of contrasting development strategies and their implications for food production (Section IV) is followed by an exploration of the emerging consensus on the complex and difficult task of implementing a unimodal pattern of accelerated agricultural development, consistent with a high rate of growth in employment and food consumption. Interacting health-, nutrition-, and family-planning programs are viewed as important claimants of organizational and other resources. The review leadsmore » to the conclusion that reduction of malnutrition and related manifestations of poverty requires a set of interacting forces, characterized as a ring, that link nutritional need, generation of effective demand for food on the part of the poor, increased employment, a strategy of development that structures demand towards goods and services that have a high employment content, production of wage goods, and an emphasis on growth in agriculture. 183 references, 4 tables.« less

Quarterly earnings, Nonseasonal earnings, Time-series model, Forecasting content

In the mid-1970s several authors studied models of markets with asymmetric information in which equilibria do not exist. Although those authors focused on models of insurance and education, it was recognized that similar nonexistence problems arise in a wide class of models with asymmetric information. Recently, Dasgupta and Maskin have demonstrated that for a game-theoretic version of at least one of those models, although no equilibria may exist in pure strategies, equilibria exist in mixed strategies. In the present paper we construct a mixed-strategy equilibrium for one member of the class—Spence's signalling model of education. Qualitative features of the equilibrium are explored.

[This paper reports the results of an investigation into the relationships between certain CPA examination candidates' attributes and these subjects' performance for 280 first-time candidates writing the November 1977 and May 1978 examinations in Texas. Findings indicate that scholastic aptitude test scores, accounting GPA, accounting hours completed, school attended, hours of self-study, and completion of a CPA review course have consistently significant associations with examination performance. Attributes lacking significant associations with examination performance include candidates' work experience, age, and completion of an audit course.]

Katherine Beal Frazier, Robert W. Ingram, B. Mack Tennyson, A Methodology for the Analysis of Narrative Accounting Disclosures, Journal of Accounting Research, Vol. 22, No. 1 (Spring, 1984), pp. 318-331