More mothers engage in marketplace work today than ever before, with over 33% returning to work by the time their child is 3 months old. This article identifies the effects of maternal marketplace work in the initial months of an infant’s life on the child's cognitive development. Results suggest that such work in the first year of a child’s life has detrimental effects. Where significant, the results also indicate negative effects of maternal employment in the child’s first quarter of life. However, the negative effects of maternal marketplace work are partially offset by positive effects of increased family income.

We analyze the relationship between how long an employer has been in business (firm age) and wages. Using data from special supplements to the Survey Research Center’s monthly Survey of Consumers, we find that firms that have been in business longer pay higher wages (as previous studies found), but when we control for worker characteristics, the relationship becomes insignificant or negative. There is some evidence that the relationship is not monotonic, with wages falling and then rising with years in business. Established employers appear to make greater use of back‐loaded compensation, consistent with their higher probability of remaining in business.

Recent theoretical models show that irrational expectations can generate return predictability consistent with apparent violations of weak-form market efficiency documented in the empirical literature. These behavioral models constrain rational investors' ability toexploit inter-temporal predictability by assuming that rational agents face high transactions costs, are myopic, or are non-existent. This paper presents a model in which there are two types of irrational expectations, one that causes momentum and another that creates reversals. I investigate whether these types of predictability will persist in the presence of fully rational agents who face no transactions costs, are long lived, and trade dynamically to optimally exploit any predictability due to irrational mispricings. I show that weak-form market efficiency will be violated under two very weak conditions: rational investors are risk averse and the fundamental value of the asset is risky. The paper also investigates the accumulation of wealth by trader type and shows that irrational agents will survive under a large set of parameters.

The effects of competitive interactions on investment decisions and on the dynamics of the price of a nonstorable commodity are studied in a model of incremental investment with time to build and operating flexibility. I find that an increase in uncertainty may encourage firms to increase their capacity. Furthermore, I show that it may be optimal to invest in additional capacity during periods in which part of the operational capacity is not being utilized. The impact of competition on the properties of the endogenous output price is dramatic. For example, I find that price volatility may be increasing in the number of competitors in the industry. Copyright 2003, Oxford University Press.

The 1918–47 employee records of the Ford Motor Company provide a rare opportunity to study a firm willing to hire black workers when similar firms would not. The evidence suggests that Ford did profit from discrimination elsewhere, but not by paying blacks less than whites. An apparent “wage‐equity constraint” prevailed, resulting in virtually no racial variation in wages inside Ford. An implication was that blacks quit Ford jobs less often than whites, holding working conditions constant. Arbitrage profit came from exploiting this nonwage margin, as Ford placed blacks in hot, dangerous foundry jobs where quit rates were generally high.

This article provides a brief overview of the importance of market microstructure research and identifies existing areas of research that focus on links between microstructure and corporate finance. Each of the special issue articles is then summarized with particular attention given to the research contribution of the article and to the links explored between microstructure and corporate finance.

The block bootstrap is the best known bootstrap method for time-series data when the analyst does not have a parametric model that reduces the data generation process to simple random sampling. However, the errors made by the block bootstrap converge to zero only slightly faster than those made by first-order asymptotic approximations. This paper describes a bootstrap procedure for data that are generated by a Markov process or a process that can be approximated by a Markov process with sufficient accuracy. The procedure is based on estimating the Markov transition density nonparametrically. Bootstrap samples are obtained by sampling the process implied by the estimated transition density. Conditions are given under which the errors made by the Markov bootstrap converge to zero more rapidly than those made by the block bootstrap.

Value maximization requires either that knowledge is transferred to those with the right to make decisions, or that decision rights are transferred to those who have the knowledge. A tradeoff of knowledge transfer costs and control costs is required. Characteristics of firms' investment opportunity sets (IOSs) that affect knowledge transfer costs and control costs are identified. Testable predictions about the relations between these characteristics and firms' decentralization decisions are developed and tested. The evidence presented is consistent with our predictions and is robust to different ways of measuring variables.

This paper reassesses evidence of anticipatory income smoothing reported in DeFond and Park (DP) (J. Accounting Econom. 23 (1997) 115) in light of knowledge about measurement error in discretionary accrual estimates. We argue that the method DP use to measure un-managed earnings mechanically biases the evidence in a manner consistent with anticipatory income smoothing. Using an approximate randomization approach, we find that DP's results cannot be distinguished from those achieved when discretionary accruals are randomly assigned to firm-years in our sample. Overall, these results show that the ‘backing out’ approach to measuring un-managed earnings is ineffective in testing earnings management hypotheses.

This study investigates the recent trend in analysts disseminating operating cash flow forecasts. We find that analysts tend to forecast cash flows for firms where accounting, operating and financing characteristics suggest that cash flows are useful in interpreting earnings and assessing firm viability. Specifically, we find that analysts tend to forecast cash flows for firms with (1) large accruals, (2) more heterogeneous accounting choices relative to their industry peers, (3) high earnings volatility, (4) high capital intensity, and (5) poor financial health. These findings are consistent with financial analysts responding to market-based incentives to provide market participants with value-relevant information.