Auditing, Auditor Judgment, Dilution effect, Non diagnostic information

We investigate the role of peer pressure in influencing the optimal incentive scheme offered to workers engaged in team production. We develop an agency model of peer policing to identify factors that affect the extent of mutual monitoring. As the principal must compensate workers for their monitoring efforts and the costs that peer pressure imposes on workers, introducing peer pressure alters the optimal compensation package. We establish conditions under which the principal reduces the marginal compensation rule to reduce monitoring efforts. As such, peer pressure provides a rationale for a reduced link between compensation and output in a team setting.

Raymond M. Brooks, Tie Su, A Simple Cost Reduction Strategy for Small Liquidity Traders: Trade at the Opening, The Journal of Financial and Quantitative Analysis, Vol. 32, No. 4 (Dec., 1997), pp. 525-540

This article reviews the evidence on cross-national comparisons of earnings and income inequality in OECD countries. It begins with a series of stylized facts which are then examined and supported by recent studies in the field. Economic, demographic, institutional and policy-related influences on earnings and income distribution are reviewed. The paper concludes with a call for more work on empirically testable structural models of household income distribution.

Jane F. Mutchler, William Hopwood, James M. McKeown, The Influence of Contrary Information and Mitigating Factors on Audit Opinion Decisions on Bankrupt Companies, Journal of Accounting Research, Vol. 35, No. 2 (Autumn, 1997), pp. 295-310

Lawrence M. Benveniste, Walid Y. Busaba, Bookbuilding vs. Fixed Price: An Analysis of Competing Strategies for Marketing IPOs, The Journal of Financial and Quantitative Analysis, Vol. 32, No. 4 (Dec., 1997), pp. 383-403

This study evaluates the impact of variations in regulation, ownership, and market structure in the U.S. electric utility industry during the period surrounding the New Deal, when considerable institutional variation provided a natural experiment for analysis. A simultaneous-equations model of electricity supply and demand is developed and estimated for the years 1930 and 1942 with firm- and market-level data collected on utilities serving cities of population 50,000 or more. The paper offers evidence that regulation, public ownership, and competition served to reduce electricity prices and enhance allocative efficiency during the period under examination.