Price-Earnings Ratio, Information content, Transitory component of earnings, Forecasting

The simplest economic theories of crime predict that profit-maximizing firms should follow strategies of minimal monitoring with large penalties for employee crime. We investigate possible reasons why firms actually spend considerable resources trying to detect employee malfeasance. We find that the most plausible explanations for firms' large outlays on monitoring of employees-legal restrictions on penalty clauses in contracts and the adverse impact of harsh punishment schemes on worker morale-are also consistent with the payment of premium (rent-generating) wages by cost-minimizing firms.

We examine the determinants of “audit delay,” the number of calendar days from fiscal year‐end to the audit report date. A descriptive model of audit delay is tested on a sample of 465 companies listed on the Toronto Stock Exchange from 1977 to 1982. Although several variables included in the model are statistically significant, the proportion of variability in audit delay explained by the variables is low. Descriptive data are presented for variables consistently associated with audit delay over the six‐year period — auditor size, industry classification, existence of extraordinary items, and sign of net income. Some directions for future research are also suggested. Résumé. Les auteurs examinent les déterminants du «délai de vérification», soit le nombre de jours francs qui s'écoulent entre la fin de l'exercice financier et la publication du rapport des vérificateurs. Ils vérifient un modèle descriptif du délai de vérification sur un échantillon de 465 entreprises cotées à la bourse de Toronto, de 1977 à 1982. Bien que plusieurs variables incluses dans le modèle soient statistiquement significatives, la proportion de la variation du délai de vérification expliquée par ces variables est mince. Les auteurs présentent des données descriptives pour les variables associées de façon uniforme au délai de vérification, sur la période de six ans — la taille du cabinet de vérification, la classification du secteur, l'existence de postes extraordinaires et le caractère positif ou négatif du résultat net. Ils suggèrent également certaines pistes de recherche à envisager.

The test score decline between 1967 and 1980 was large (about 1.25 grade-level equivalents) and historically unprecedented. New estimates of trends in academic achievement, of the effect of academic achievement on productivity and of trends in the quality of the work force are developed. They imply that if test scores had continued to grow after 1967 at the rate that prevailed in the previous quarter century, labor quality would now be 2.9 percent higher and 1987 GNP $86 billion higher.

Suppose a consumer sets consumption equal to income each period, rather than follow the optimal permanent income decision rule. How much utility does he lose? This paper finds that the answer is typically less than 10-$1 per quarter in environments specified by popular tests on aggregate data, and concludes that the theory does not make predictions in those environments that are robust to small costs of information, transactions, etc.

This paper estimates and evaluates monetary policy rules within the context of a structural open economy macroeconomic model of the United States under flexible exchange rates. The major result is that a monetary policy rule which stabilizes the rate of growth of nominal GNP receives considerable empirical support. The rule provides a better fit than a number of alternatives, including strict inflation stability, strict output stability, and real exchange rate stabilization.