During the latter half of the 1930s Australian taxation law changes induced companies to adopt a holding company legal structure which increased agency costs associated with external financing. This paper argues that contracting practices designed to minimize these costs played an important part in the evolution of consolidated financial reporting. Consistent with this view the likelihood of consolidation is found to be a function of the presence of cross-guarantees, management's share of a firm's equity, and the number and type of subsidiaries

This paper examines the effect of earnings taxes on wage variability over time. We estimate a "hedonic wage locus," which indicates how the market allows individuals to substitute the mean level of the wage for its variability across jobs. Information from this locus is used to estimate the parameters of individuals' indifference curves between the mean and temporal variation of hourly wages. On the basis of these utility-function parameters, we predict that lowering the rate of taxation on earnings would on average lead workers to choose jobs with slightly lower pretax mean wages and with less pretax wage variation

Recent developments in the theory of strategic bargaining demonstrate how informational asymmetries can lead to prolonged and costly bargaining. These models can be applied to contract negotiations, yielding an economic theory of strikes. To date, however, few empirical tests of these models have been carried out. In this paper, a set of predictions concerning the incidence and unconditional duration of strikes is derived from a simple bargaining model in which the union is uncertain about the firm's future profitability. These predictions are then tested on a micro data set of major U.S. contract negotiations that took place from 1973 to 1977

This study experimentally tests some implications of psychological diagnostic inference theories and begins to extend these theories into a performance evaluation context. Subjects, who were required to assume the role of a manufacturing division manager, were asked to estimate the likelihoods of four potential causes of an assembly department's labor efficiency variance. The subjects were asked to reevaluate their causal likelihoods following: 1) evidence concerning the magnitude of the labor variance and the deviations of the four potential causes from their normal levels (similarity evidence) and 2) evidence concerning the covariation of a potential cause, and labor efficiency variances over the past five years (covariation evidence). The results generally confirmed a set of hypotheses predicting the effects of cause/event similarity and covariation upon individuals' causal inferences. Implications of these results for accounting information systems design are discussed in a concluding section. Résumé. Cette étude teste, au moyen d'une expérience, quelques‐unes des conclusions des théories d'inférence diagnostique psychologique et amorce l'application de ces théories dans un contexte d'évaluation de la performance. Les sujets, qui devaient assumer le rôle de directeur d'une division de fabrication, ont été invités à estimer les probabilités de quatre causes possibles de l'écart de rendement sur main‐d'œuvre d'un atelier d'assemblage. Les sujets furent invités à réévaluer leurs probabilités causales selon: 1) des informations relatives à l'ampleur de l'écart sur main‐d'œuvre et à la dispersion des quatre causes potentielles par rapport à leur niveau normal (preuve de similitude) et 2) des informations relatives à la co‐variation d'une cause potentielle, et aux écarts de rendement sur maind'œuvre des cinq dernières années (preuve de co‐variation). De façon générale, les résultats confirment l'ensemble des hypothèses prévoyant les effets de similitude et de co‐variation cause/événement sur les inférences causales des individus. Les conséquences de ces résultats sur la conception des systèmes d'information comptable sont examinées dans la conclusion.

This paper is concerned with situations where firms not only recognize the dependence of quality on price (of productivity on wages, of default probability on the interest rate charged), but also attempt to use what control they have over price (wages, interest rates) to increase their profits. The recognition of this possibility has important implications for economic theory, which have recently been explored in a large number of papers in several disparate fields. The objective of this paper is to survey these papers and to draw out the central themes of this literature. This paper is divided into four parts, In Part I, we discuss the most important implications of the dependence of quality on price for competitive equilibrium theory--the repeal of the law of supply and demand (Part I.1), the repeal of the law of the single price (Part I.2), the existence of discriminatory equilibria (Part I.3), the comparative static consequences (Part I.4), and the inefficiency of market equilibria (Part I.5). Part II discusses alternative explanations for the dependence of quality on price in labor, capital, and product markets

Lawrence D. Brown, Gordon D. Richardson, Steven J. Schwager, An Information Interpretation of Financial Analyst Superiority in Forecasting Earnings, Journal of Accounting Research, Vol. 25, No. 1 (Spring, 1987), pp. 49-67

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