Reviews the book "Financial Accounting: A Canadian Casebook With Multiple-Subject Cases," by L.S. Rosen.

The article presents a case study on the effect of risk on the use of financial statements by investment decision-makers. The results of a study supported the hypothesis of a positive relationship between the declared use of financial reports by investors, as well as an assumed, theoretical, partial ordering of investments according to risk. Broad ranking in terms of major types of investments were found, including the highest degree of use which occurred with securities and loans not guaranteed by the government and not traded on the stock exchange.

[This article relates the efficiency of nonprofit organizations to the composition of their board of trustees. Following arguments by Fama and Jensen (1983a, 1983b) and Williamson (1983), we conjecture that nonprofit organizations are more efficient if their board of trustees have a larger proportion of outsider trustees rather than insider (employee) trustees since the former are presumed to have a greater incentive to monitor the organization and the latter are presumed to have a greater incentive to consume perquisites. This conjecture is tested empirically for a sample of 72 charities with a specific health focus, with respect to both the technical and allocative efficiency of the organization. Technical efficiency indices were derived by using data envelopment analysis (DEA) under various assumptions concerning the industry production technology, including the assumption that charity outputs are not substitutable for each other. These indices are reasonably well measured since the data included information on volunteer labor, a necessary input for charity services. To test the conjecture that the technical efficiency of the organization is affected by the composition of the board of trustees, the estimated indices of technical efficiency were regressed on the board's proportion of insider trustees and the organization's debt-value ratio. The conjectured relationship was not confirmed by the data. As an additional test, the proportion of insider trustees was replaced by the ratio of insider-trustee remuneration to total labor remuneration, the argument being that the greater the relative remuneration received by the insider trustees, the more capable they might be in appropriating perquisites of all types. As before, the results did not confirm the conjectured relationship, leading us to conclude that the technical efficiency of nonprofits is not affected by the composition of the board of trustees. To determine the relationship, if any, between the allocative efficiency of the organization and the composition of the board of trustees, charity costs were multiplied by the technical efficiency index so that any remaining cost inefficiencies are allocative in nature. This adjusted cost was then regressed on the proportion of insider trustees on the board (or the proportion of insider-trustee remuneration) and the organization's debt-value ratio. The conjectured relationship between allocative efficiency and the composition of the board of trustees was also not confirmed by the data.]

This paper presents the results of a mail questionnaire survey of 500 university chief financial officers. The survey attempted to assess the demand for and importance of nine social items of information to universities as investors. Despite the available literature which suggests a growing demand by universities for external corporate social responsibility reporting, the authors advance the tentative conclusion, based on their analysis of 292 usable returns, that university investors may not be a strong source of demand for information about social responsibility.

B & C have raised a number of important points regarding our original paper. Many of the issues were addressed in the original paper so that our response to them here necessarily has been some- what repetitious of the previous discussion. Nevertheless, we are grateful to B & C for pointing out some potential difficulties in applying the technique, for emphasizing the need for validation before the technique can be of practical value, and for giving us the opportunity to clarify and expand upon numerous issues which possibly were not dealt with satisfactorily in the original paper.

In a recent comment on Haim Falk and James A. Heintz's paper, Edward Blocher and Kung H. Chen re-emphasized the need for validation of the Falk and Heintz (F&H) proposed model and the application of Guttman's scalogram technique for risk analysis of equity securities. The purpose of this paper is to assess empirically the validity of F&H's model. Thus, 459 corporations were graded according to F&H's composite risk measure. This grading was then compared with three market-based risk measures. The market-based risk measures were derived by utilizing Sharpe's capital asset pricing model. The Standard and Poor 400 industrial index served as the basis for calculating the return on all capital assets in the market. In light of the additional effort and resources needed to adjust a traditional market price index for dividends, some researchers have ignored the dividend figures in measuring the market risk. While F&H's model gained substantial support on the company dimension, the usefulness of the industry factor has been found effective only if weak monotonic relationships are acceptable.

The purpose of this article is to demonstrate a technique for scaling industries according to degree of risk. In recent years a considerable amount of research has been performed examining the relationship between financial ratios and company risk. The bulk of this research has concentrated on company factors. In spite of the apparent interest by researchers in the industry element of company risk, research dealing directly with the classification of industries according to risk or other characteristics has been limited. Risk is affected both by the characteristics of the corporation itself and by the fact that the corporation is part of a given industry with characteristics of its own. The authors deal primarily with the second aspect of company risk--the industry factor. More specifically, they develop a ranking of industries according to degree of risk based on particular industry characteristics as reflected in industry financial ratios. Such a ranking has potential value to investors in evaluating opportunities and to researchers in studying the relationships among company and industry risk, and security ranking and performance.

Relates the efficiency of nonprofit organizations to the composition of their board of trustees. Derivations of technical and allocative efficiency of charities; Background and motivation of the board of trustees; Indications that nonprofit organizations are more efficient if their board of trustees have a larger proportion of outsider trustees.