Thomas A. Buchman, John A. Tracy, Obtaining Responses to Sensitive Questions: Conventional Questionnaire versus Randomized Response Technique, Journal of Accounting Research, Vol. 20, No. 1 (Spring, 1982), pp. 263-271

Segment reporting, Simulated mergers, Consolidated earnings, Aggregated subentity data

Internal control, Auditing, Uncertainty, Evidential integration model

Audit opinion, Abnormal returns, Uncertainty, Subject to opinion

This paper examines the relation between the variance of equity returns and several explanatory variables. It is found that equity variances have a strong positive association with both financial leverage and, contrary to the predictions of the options literature, interest rates. To a substantial degree, the negative elasticity of variance with respect to value of equity that is part of market folklore is found to be attributable to financial leverage. A maximum likehood estimator is developed for this elasticity that is substantially more efficient than extant estimation procedures.

Auditing, Statistical auditing, Jackknifed ratio estimation, Accounting population

Using a simple search technology and the Nash bargaining solution, the paper derives the steady state equilibrium negotiated wage as a function of the equilibrium unemployment and vacancy rates. For this wage, the lifetime expected present discounted value of earnings of a new worker is compared with the social marginal product of a new worker. These are not generally equal implying inefficient incentives for labour mobility.

The paper considers the properties a decision tree needs to guarantee that there are no preferences such that the sophisticated equilibrium is Pareto dominated when all agents act completely myopically. It shows that the only decision trees with this property are the most trivial problems. The analysis is generalized to agents who are not completely myopic and gives an example of union and shareholder conflict to illustrate the results.