This study surveys the literature examining the privatization of state-owned enterprises (SOEs) We review the history of privatization, the theoretical and empirical evidence on the relative performance of state owned and privately owned firms, the types of privatization, if and by how much privatization has improved the performance of former SOEs in non-transition and transition countries, how investors in privatizations have fared, and the impact of privatization on the development of capital markets and corporate governance. In most settings privatization “works” in that the firms become more efficient, more profitable, and financially healthier, and reward investors.

By incorporating the probability distribution directly into the analysis, this paper proposes a new theoretical approach to resolving the perennial dilemma of being uncertain about what discount rate to use in cost-benefit analysis. A numerical example is constructed from the results of a survey based on the opinions of 2,160 economists. The main finding is that even if every individual believes in a constant discount rate, the wide spread of opinion on what it should be makes the effective social discount rate decline significantly over time. Implications and ramifications of this proposed “gamma-discounting” approach are discussed. (JEL H43)

The directional output distance function (Chambers, Chung, & Färe, 1996) is used to construct a Malmquist-Luenberger index of total factor productivity growth for manufacturing when both good and bad outputs are jointly produced. The index is constructed using information on good and bad output quantities and input quantities, circumventing the problem of recovering shadow price information for the bad output needed for the Fisher or Tornqvist type of productivity indices. Accounting for toxic releases in manufacturing, productivity growth averages 1.4% an-nually during 1988–1994. The findings also suggest that the failure to account for toxic releases in manufacturing results in a significant under-statement of total factor productivity growth.

Despite extensive research on the determinants of external audit fees, there is little empirical evidence on the effect of internal audit contribution on the external audit fee. Using a cross‐sectional regression model based on prior audit fee research, this study provides evidence that internal audit contribution is a significant determinant of the external audit fee. Further, a second model that provides evidence on the determinants of internal audit contribution is developed and tested. This second model indicates that internal audit contribution is influenced by internal audit quality and, conditional on the level of inherent risk, the availability of internal audit and the extent of coordination between internal and external auditors. These results are based on a unique data‐set comprised of publicly available data matched with survey responses from internal and external auditors affiliated with 70 non‐financial services Fortune 1000 firms. The sample includes all of the former “Big 6” international accounting firms and clients from twenty‐nine different industries.

We examine a market in which long-lived firms face a short-term incentive to exert low effort, but could earn higher profits if it were possible to commit to high effort. There are two types of firms, "inept" firms who can only exert low effort, and "competent" firms who have a choice between high and low effort. There is occasional exit, and competent and inept potential entrants compete for the right to inherit the departing firm's reputation. Consumers receive noisy signals of effort choice, and so competent firms choose high effort in an attempt to distinguish themselves from inept firms. A competent firm is most likely to enter the market by purchasing an average reputation, in the hopes of building it into a good reputation, than either a very low reputation or a very high reputation. Inept firms, in contrast, find it more profitable to either buy high reputations and deplete them or buy low reputations.

We examine the performance of 30 professional market timers during 1986–1994. Prior studies have analyzed implicit recommendations from mutual fund returns or explicit recommendations from newsletters. We analyze explicit recommendations executed in customer accounts. Using four tests, three benchmark portfolios, and daily data, we find significant unconditional and conditional ability that is robust with respect to transaction costs and survivorship bias. Relative ability persists and varies with the frequency of recommendation changes. When recommendations of successful timers are observed monthly instead of daily, significant ability generally disappears. Hence, the frequency with which recommendations are observed can change inferences regarding ability.

We study gender differences in altruism by examining a modified dictator game with varying incomes and prices. Our results indicate that the question “which is the fair sex?” has a complicated answer—when altruism is expensive, women are kinder, but when it is cheap, men are more altruistic. That is, we find that the male and female “demand curves for altruism” cross, and that men are more responsive to price changes. Furthermore, men are more likely to be either perfectly selfish or perfectly selfless, whereas women tend to be “equalitarians” who prefer to share evenly.

Recently, Penman and Sougiannis (1998) and Francis, Olsson, and Oswald (2000) compared the bias and accuracy of the discounted cash flow model (DCF) and Edwards‐Bell‐Ohlson residual income model (RIM) in explaining the relation between value estimates and observed stock prices. Both studies report that, with non‐price‐based terminal values, RIM outperforms DCF. Our first research objective is to explore the question whether, over a five‐year valuation horizon, DCF and RIM are empirically equivalent when Penman's (1997) theoretically “ideal” terminal value expressions are employed in each model. Using Value Line terminal stock price forecasts at the horizon to proxy for such values, we find empirical support for the prediction of equivalence between these valuation models. Thus, the apparent superiority of RIM does not hold in a level playing field comparison. Our second research objective is to demonstrate that, within each class of the DCF and RIM valuation models, the model that employs Value Line forecasted price in the terminal value expression generates the lowest prediction errors, compared with models that employ non‐price‐based terminal values under arbitrary growth assumptions. The results indicate that, for both DCF and RIM, price‐based valuation models outperform the corresponding non‐price‐based models by a wide margin. These results imply that researchers should exercise care in interpreting findings from models using ad hoc terminal value expressions.

We examine short-run impacts of changes in residential neighborhoods on the well-being of families residing in high-poverty public housing projects who received Section 8 housing vouchers through a random lottery. Households offered vouchers experienced improvements in multiple measures of well-being relative to a control group, including increased safety, improved health among household heads, and fewer behavior problems among boys. There were no significant short-run impacts of vouchers on the employment, earnings, or welfare receipt of household heads. Children in households offered vouchers valid only in low poverty neighborhoods also had reduced likelihood of injuries, asthma attacks, and victimizations by crime.

Firms that entered the stock market in the 1990s were younger than any earlier cohort since World War I. Surprisingly, however, firms that IPO'd at the close of the 19th century were just as young as the companies that are entering today. We argue here that the electrification-era and the IT-era firms came in young because the technologies that they brought in were too productive to be kept out very long. The model assumes that the stage before IPO is a learning period during which the firm refines the idea before committing to it at the IPO stage. The better the idea, the higher is the opportunity cost of a delay in its implementation, and the earlier the firm will have its IPO.