Abstract ABSTRACT: This study explores the linkages among job standard tightness, type of compensation scheme, and performance. It postulates that job standard tightness and type of compensation scheme affect not only workers' effort, but also their self-selection among employment contracts, and through these, job performance. A laboratory experiment yielded the following results: among subjects with assigned treatments, job standard tightness and type of compensation scheme had significant independent, but insignificant interactive effects on performance. Subjects who were permitted to choose their own compensation schemes (given an assigned job standard) self-selected among these by skill. There was also some indication that being able to select one's own compensation scheme, per se, enhanced performance. If supported by future studies, these results suggest that job standards and compensation schemes may affect performance not just by motivating a given set of employees, but also by affecting the type of employees an organization attracts from the labor market.

Abstract ABSTRACT: This study shows that the 1933 and 1934 Securities Acts significantly, and unexpectedly, increased firms' required financial disclosure while curtailing their accounting alternatives. These constraints are postulated to have affected the nature of outstanding bondholder-shareholder contracts and the future costs of entering into such contracts. These changes are hypothesized to have affected bondholder and shareholder wealth through shareholder-to-bondholder wealth transfers, modifying firms' investment, financing, and production opportunity sets, reducing shareholder-bondholder contracting costs, and through wealth transfers across firms. Empirical tests were performed on daily stock and bond returns during the deliberation period of each Act. The sample consisted of New York Stock Exchange stocks and bonds, and over-the-counter stocks. The evidence is consistent with the '33 Act having reduced shareholder wealth through interfirm wealth transfers, out-of-pocket compliance costs, and reduced opportunity sets. The evidence weakly suggests that the '33 Act enhanced bondholder wealth. However, this effect does not appear to have been due to a wealth transfer from shareholders. There is no evidence of a significant effect due to the '34 Act.

Abstract ABSTRACT: This study uses an agency theory framework to analyze firms' incentives to hire external auditing. It postulates that a major reason for firms to hire this service is to help control the conflict of interests among firm managers, shareholders, and bond-holders. Firm characteristics which affect the severity of this conflict or the marginal cost of external auditing are expected to influence a firm's demand for this service. Based on this analysis, leverage, firm size, and number of accounting-based debt covenants are predicted to increase the probability that a firm will voluntarily hire external auditing. The firm manager's ownership share is predicted to have the opposite effect. Univariate and multivariate tests were conducted on a sample of 165 NYSE and OTC firms from the year 1926. The results generally supported the hypothesized effects of leverage and accounting-based debt covenants, and moderately supported the predicted role of firm size. Manager ownership effects could not be tested due to data problems.

Abstract ABSTRACT: This paper reports on voluntary financial disclosure practices of Mexican corporations and relates the extent of disclosure to firm size, financial leverage, and proportion of assets in place. Studying the voluntary disclosure of Mexican firms yields additional insights into factors behind voluntary disclosure choices, and enhances our understanding of the accounting institutions and practices of non-Anglo-American nations. Voluntary disclosure varies widely within a sample of 52 Mexican Stock Exchange-listed firms, and the extent of disclosure is significantly and positively related to firm size but not to financial leverage and assets in place.

[This paper reports on voluntary financial disclosure practices of Mexican corporations and relates the extent of disclosure to firm size, financial leverage, and proportion of assets in place. Studying the voluntary disclosure of Mexican firms yields additional insights into factors behind voluntary disclosure choices, and enhances our understanding of the accounting institutions and practices of non-Anglo-American nations. Voluntary disclosure varies widely within a sample of 52 Mexican Stock Exchange-listed firms, and the extent of disclosure is significantly and positively related to firm size but not to financial leverage and assets in place.]

Abstract Reviews the book "Modern Accounting Research: History, Survey, and Guide," by Richard Mattessich.

Abstract ABSTRACT: Revenues of hospitals in the state of Washington are constrained by an upper bound that is a function of budgeted costs, budgeted volume, and actual volume. Basically, allowable revenue is the hospital's total budgeted cost, with an adjustment for the difference between actual and budgeted volume. A hospital can increase its allowable revenue by biasing the budget data reported to the Washington State Hospital Commission. For example, when a hospital budgets for an increase in volume, it is to the hospital's advantage to overstate the impact of the increase in volume on the hospital's total budgeted cost. Conversely, when a hospital budgets for a decrease in volume, the constraint on revenues can be relaxed by understating the impact: of the decrease in volume on the hospital's total budgeted cost. Empirical evidence is consistent with hospitals biasing, in certain predictable ways, budget data reported to the regulatory commission.

[Revenues of hospitals in the state of Washington are constrained by an upper bound that is a function of budgeted costs, budgeted volume, and actual volume. Basically, allowable revenue is the hospital's total budgeted cost, with an adjustment for the difference between actual and budgeted volume. A hospital can increase its allowable revenue by biasing the budget data reported to the Washington State Hospital Commission. For example, when a hospital budgets for an increase in volume, it is to the hospital's advantage to overstate the impact of the increase in volume on the hospital's total budgeted cost. Conversely, when a hospital budgets for a decrease in volume, the constraint on revenues can be relaxed by understating the impact of the decrease in volume on the hospital's total budgeted cost. Empirical evidence is consistent with hospitals biasing, in certain predictable ways, budget data reported to the regulatory commission.]

[This paper provides empirical evidence on a truth-inducing pay scheme widely discussed and analyzed in the incentive contracting literature. An experiment was conducted in which subjects acted as subordinates who performed a production task. Budgets were participatively set under either a truth-inducing or slack-inducing pay scheme and either the presence or absence of a superior-subordinate information asymmetry about subordinate performance capability. Slack was defined as expected performance minus the participatively set budget. The results showed that, when the information asymmetry was absent, slack did not differ significantly between the pay schemes. However, when the information asymmetry was present, slack was significantly lower under the truth-inducing scheme. Similarly, the pay scheme and information asymmetry variables interacted to affect performance.]