Bond rating, Municipal bonds, Financial reporting, Credit risk

Aggregation, Valuation accuracy, Price indices, Historic costs

Full-information maximum likelihood (FIML) estimates of the simultaneous probit-Tobit (SPT) model suggest that effects of campaign contributions on voting are smaller than single equation probit estimates would indicate. The author has generally unable to conclude that contributions have a significant impact on voting decisions, apparently votes are most often decided on the basis of personal ideology or preferences of constituents. These findings differ markedly from earlier results of economists Gary C. Durden and Jonathan J. Silberman, whose single equation models showed a substantial impact of contributions on voting decisions. Despite the lack of significance according to model SPT, it would not, however, be appropriate to unambiguously conclude that contributions have no effects on voting. For six of eight coefficients the anticipated positive sign resulted and one coefficient remained marginally significant. The article also shows that the lack of significance is attributable not only to smaller coefficient size, but also to larger standard errors. The FIML estimates of the contribution coefficients are not very precise.

Fewings [5] and Myers and Turnbull [13] have arrived at diametrically conflicting conclusions regarding the effect of growth on risk as measured by beta, the relative systematic risk in the Sharpe-Lintner-Mossin (SLM) capital asset pricing model. Fewings states his result in an unequivocal way: “…systematic capitalization risk of common stocks is undoubtedly a positive function of the rate of growth of expected corporate earnings” ([5, p. 53]) Myers and Turnbull, on the other hand, state their result in a more conditional form, making the result depend on the nature of market expectations revisions but conclude that “increasing the growth rate decreases B …” ([13], P. 327).

As an extension of previous works, we develop a theoretical framework for the relationship between monetary changes and market risk premia. The wealth effect and the return variability effect of money are shown to be the two important channels of the monetary impact on the market risk premium for three representative classes of utility functions. The theory also states that the market risk premium will be an increasing function of monetary changes given that the two component effects of money are positive.

Gary C. Biddle, Frederick W. Lindahl, Stock Price Reactions to LIFO Adoptions: The Association between Excess Returns and LIFO Tax Savings, Journal of Accounting Research, Vol. 20, No. 2, Part II (Autumn, 1982), pp. 551-588

The expected value of information is an important concept in cost and managerial accounting. Quite often students have difficulty integrating and applying statistical techniques to accounting problems. Contributing to this difficulty is the occasional lack of standardization of terms in the two disciplines. This article describes an approach which introduces information economics to managerial and cost accounting classes, Included is an Appendix which can serve as the basis for a classroom presentation by the instructor or which can be reproduced and distributed to students.

This study uses an agency theory framework to analyze firms' incentives to hire external auditing. It postulates that a major reason for firms to hire this service is to help control the conflict of interests among firm managers, shareholders, and bond-holders. Firm characteristics which affect the severity of this conflict or the marginal cost of external auditing are expected to influence a firm's demand for this service. Based on this analysis, leverage, firm size, and number of accounting-based debt covenants are predicted to increase the probability that a firm will voluntarily hire external auditing. The firm manager's ownership share is predicted to have the opposite effect. Univariate and multivariate tests were conducted on a sample of 165 NYSE and OTC firms from the year 1926. The results generally supported the hypothesized effects of leverage and accounting-based debt covenants, and moderately supported the predicted role of firm size. Manager ownership effects could not be tested due to data problems.