International differences in the demand for accounting income predictably affect the way it incorporates economic income (change in market value) over time. We characterize the `shareholder’ and `stakeholder’ corporate governance models of common and code law countries respectively as resolving information asymmetry by public disclosure and private communication. Also, code law directly links accounting income to current payouts (to employees, managers, shareholders and governments). Consequently, code law accounting income is less timely, particularly in incorporating economic losses. Regulation, taxation and litigation cause variation among common law countries. The results have implications for security analysts, standard-setters, regulators, and corporate governance.

Perhaps one might be forgiven for supposing that, after thirty years of continuing inflation in the United Kingdom, a clear consensus would have emerged among economists, politicians, and men of business as to the causes of that inflation and the steps necessary for its cure. Unfortunately, this is not the case, although the disagreements are often exaggerated for political purposes and the arguments polarized in the sharpness of academic debate. The latest trend in the United Kingdom is to divide the participants into Keynesians and to do battle like mediaeval knights jousting at the tournament. The explanation of prevailing disagreements is in itself complex. It is partly ascribable to the usual difficulties of adequately testing alternative hypotheses against limited sets of time-series data when it is not always possible to reject particular hypotheses against the statistical facts. It must also be said that differences arise that are not so much closely allied to analytical arguments, but which reflect the taste or persuasion of individuals with regard to prescriptions for policy. It is not unknown for positions to be rationalized by subsequent analysis rather than the logical development proceeding in the opposite direction.' In this paper, we argue that the inflationary process in the U.K. economy cannot be simply fitted into either a so-called monetary or a Keynesian framework. The process is a more complicated one that cannot be described simply in terms of the behavior of the money supply on the one hand or the behavior of organized labor on the other. In agreement with the monetarists, it is important to differentiate between the inflationary process under fixed and floating exchange rate regimes, while in opposition to them, we assign a more important role to price and wage inflexibilities in the analysis of imported inflation and the process of adjustment to monetary change.

We show that, contrary to popular belief, initial public offering (IPO) firms report more conservatively. We attribute this to the higher quality reporting demanded of public firms by financial statement users and consequentially higher monitoring by auditors, boards, analysts, rating agencies, press, and litigants, and to greater regulatory scrutiny [Ball, R., Shivakumar, L., 2005. Earnings quality in UK private firms: comparative loss recognition timeliness. Journal of Accounting and Economics 39, 83–128]. We also question the evidence of Teoh et al. [1998b. Earnings management and the subsequent market performance of initial public offerings. Journal of Finance 53, 1935–1974] supporting the alternative hypothesis that managers opportunistically inflate earnings to influence IPO pricing. We conjecture that upward-biased estimates of “discretionary” accruals occur in a broad genre of studies on earnings management around similar large transactions and events.

UK private and public companies face substantially equivalent regulation on auditing, accounting standards and taxes. We hypothesize that private company financial reporting nevertheless is of lower quality due to different market demand, regulation notwithstanding. A large UK sample supports this hypothesis. Quality is operationalized using Basu's (1997) time-series measure of timely loss recognition and a new accruals-based method. The result is not affected by controls for size, leverage, industry membership and auditor size, or by allowing endogenous listing choice. The result enhances understanding of private companies, which are predominant in the economy. It also provides insight into the economics of accounting standards.

Examines risk, return and abnormal return behavior in the days around quarterly earnings announcements, using a research design that allows risk to vary daily in event time. Result of the tests conducted on several hypotheses concerning the effect on security prices of earnings announcements; Investigation whether cross-sectional variation in announcement-period risks and returns is a function of firm size.

Reviews the book "Management Decision Making Under Uncertainty: An Introduction to Probability and Statistical Decision," by T.R. Dyckman, S. Smidt and A.K. McAdams.