Intangible assets, R&D, Advertising expenses, Amortization

Chris Olsen, J. Richard Dietrich, Vertical Information Transfers: The Association between Retailers' Sales Announcements and Suppliers' Security Returns, Journal of Accounting Research, Vol. 23, Studies on Accounting Earnings and Security Valuation: Current Research Issues (1985), pp. 144-166

This study builds on recent research giving the notion of capacity utilization clearer economic foundations. In this research optimal output Y* is defined as the minimum point on the firm's short-run average total cost curve, and capacity utilization is then computed as CU=Y/Y*, where Y is actual output. Here I extend these concepts to include adjustment costs due to changes in the stock of capital, and nonstatic expectations of future output demand and input prices. The more general notion of CU is shown to depend on the shadow values of the firm's quasifixed inputs, and is decomposed to isolate the effects of anticipatory expectations. An empirical comparison is then made between traditional indices and alternative economic CU measures, using annual U.S. manufacturing data 1954-80. The calculated indices exhibit plausible patterns, which can be interpreted as the effects of nonstatic expectations and adjustment costs.

The failure of many divorced fathers to comply with court-mandated child support awards has been identified as a major reason why a growing number of children live in poverty in female-headed households. This paper presents a model that seeks to explain why so many divorced fathers allow their children's welfare to suffer as a consequence of divorce. The point of departure is the recognition that children are collective consumption goods from the point of view of the father and mother. Within marriage, proximity and altruism serve to overcome the "free-rider" problem associated with the provision of public goods. However, on divorce the noncustodial parent suffers a loss of control over the allocative decisions of the custodial parent and it is not feasible for the couple to achieve a Pareto-optimal allocation of their joint resources. A model of optimal marriage contracts is constructed in which a couple decides on the allocation of resources within marriage and on the terms of a settlement in the event of divorce. The settlement consists of the determination of custody and transfer of income to the custodial parent. Divorce is endogenous in our model and its occurrence depends on a random variable introduced into the family budget constraint that measures the quality of the marriage match. The analysis yields several useful insights. In addition to explaining the apparently insufficient support by custodians we explain why custody rights and alimony transfers often go in the same direction, most commonly to the wife, and why uneven distribution of income between the spouses increases the probability of divorce.

This paper summarizes results from a validation study in which administrative records from a large manufacturing company are used to validate survey responses of a sample of workers from that company. Relatively little evidence of bias is found in reports of prior-year earnings and unemployment, the more salient fringe benefits, and union status. Quite diverse amounts of error variance are found in the survey reports, ranging from very small for reports of job tenure, annual earnings, and annual unemployment to very large for work hours and especially for a measure of hourly earnings constructed by dividing annual earnings by annual work hours. Furthermore, it is found that the conventional assumptions regarding measurement error in earnings models are not justified. In particular, there appears to be an important correlation between the measurement error in the reports of earnings and the level of job tenure, producing a bias in the estimated payoff to job tenure of roughly 30%. This result suggests a need for a greater understanding of the correlates of survey response errors.

A multiperiod, general equilibrium model of the labor market is developed in which risk-averse workers are faced with job-related uncertainty and labor turnover is costly. If a worker is unlucky and suffers a bad job match, he quits and joins another firm, hoping that he will like its work environment more. Because the quality of a job match is unobservable, workers cannot insure against the risk of a bad match. The firm provides implicit insurance against job dissatisfaction, typically by paying workers more than their net marginal products in their early years with the firm and less subsequently. Since the probabilities of the insured-against events (the quit rates over time) are affected by the amount of such insurance provided, this implicit insurance is characterized by moral hazard. Individuals quit when in the absence of insurance they would not. The equilibrium contract balances out efficiency in risk bearing with efficiency in turnover incentives. We show that the equilibrium contract is not (constrained) efficient and indicate why.

Decision making, Verbal protocol analysis, Decision processes

This paper presents an analysis of the audit risk consequences of PPD ex- tremeness deficiencies and miscalibration.While there is empirical evidence that auditors, like many other decision makers, assess miscalibrated PPDs , the attendant inferential risk consequences of such deficiencies have not been addressed in the extant literature.The comparative statics analysis performed in this study indicates that the risk effects of miscalibration and extremeness deficiencies on the auditor's (substantive testing) evaluation decision are complex and cannot be predicted from an examination of the planning (sampling size) decision.

This paper tests hypotheses regarding the parameters in investors' asset-demand functions. The hypothesis that federal bonds are closer substitutes for equity than for money implies “portfolio crowding out” by federal borrowing. Regression studies of asset-demand functions have needed to impose prior beliefs to obtain precise and plausible estimates for the parameters. This paper uses a MLE technique that dominates regression in that it makes full use of the constraint that the parameters are not determined arbitrarily but rather are determined by mean-variance optimization on the part of the investor. The striking conclusion is that portfolio effects are close to zero.

In Britain, female labor force participation rose steadily from the Second World War to 1977. To explain this, we estimate a pooled time-series, cross-section supply function for single-year age groups of women. The life-cycle pattern is explained quite well by the presence of children. At a second stage we try to explain the rising level of the cohort intercepts estimated at the first stage. Real wage growth may be an explanatory factor, as cross-section evidence suggests it should be. Finally, we point to the 15% rise in the relative pay of women in the mid-1970s caused by the Equal Pay Act. This did not cause the expected decline in the relative demand for female employees.