We examine whether more sophisticated accounting methods (in the form of accrual accounting) interact with other information sources to reduce information asymmetries between small business borrowers and lenders, thereby lowering borrowers׳ probability of loan denial and cost of debt. We find that higher third party credit scores, but not the use of accrual accounting, decrease the likelihood of loan denial. However, firms using accrual accounting exhibit statistically lower interest rates after controlling for many factors associated with the cost of debt. Further, the interest rate benefits from accrual accounting are greatest when the borrower׳s credit score is low and/or the length of its banking relationship with the lender is short. This evidence indicates that accrual accounting can benefit small business borrowers, but that the information contained in third-party credit scores and obtained through ongoing banking relationships can substitute for the incremental information provided by accrual accounting.

The paper examines the determinants and performance consequences of equity grants to senior-level executives, lower-level managers, and non-exempt employees of “new economy” firms. We find that the determinants of equity grants are significantly different in new versus old economy firms. We also find that employee retention objectives, which new economy firms rank as the most important goal of their equity grant programs, have a significant impact on new hire grants, but not subsequent grants. Our exploratory performance tests indicate that lower than expected grants and/or existing holdings of options are associated with poorer performance in subsequent years.

This study examines the association between activity‐based costing and manufacturing performance. Results using a cross‐sectional sample of manufacturing plants indicates that extensive ABC use is associated with higher quality levels and greater improvements in cycle time and quality, and is indirectly associated with manufacturing cost reductions through quality and cycle time improvements. However, on average, extensive ABC use has no significant association with return on assets. Instead, we find weak evidence that the association between ABC and accounting profitability is contingent on the plant’s operational characteristics.

Governmental agencies, Cost allocation, External Competition, Efficiency

We examine the importance of agency considerations for the mix of salary and performance-based compensation in member-owned medical practices. Performance-based pay increases with the informativeness of clinical productivity measures, and declines with greater reimbursement from capitation contracts. Inexperienced physicians receive more compensation from salary, but compensation mix does not change as physicians near retirement. Larger practices and practices using outside management companies place more weight on performance-based compensation. However, when more physicians in the group practice the same specialty, less emphasis is placed on performance-based compensation. Finally, the presence of an executive partner has no influence on compensation mix.

We examine the relation between board risk oversight and environmental and social (E&S) performance. Our study is motivated by heightened awareness of E&S risks and growing calls for their inclusion in the purview of board risk oversight. Using a novel proprietary dataset on board risk oversight for an international sample, we find that firms with more extensive board risk oversight are more likely to institute E&S compensation, set environmental (but not social) targets, adopt policies that address E&S risks and opportunities, and issue an E&S report. Our exploratory evidence also shows that more extensive board risk oversight is associated with better environmental outcomes, specifically lower monetized environmental costs, but worse social outcomes, namely lower monetized employee benefits and a higher likelihood of social risk incidents. Our results suggest that risk oversight is analogous to a constrained optimization problem whereby risk exposures are prioritized and receive different degrees of oversight consideration by the board.