[This paper investigates whether replacing a standard that employs a vague, verbal disclosure threshold with a standard that employs a more stringent, numerical threshold mitigates the aggressiveness of reporting decisions. Two experiments were performed in a tax setting. The results indicate that (1) when a verbal standard is in place, tax practitioners use the latitude inherent in a verbal standard to support aggressive reporting decisions, and (2) when a numerical standard is in place, tax practitioners use instead the latitude available in assessing evidential support to justify an aggressive reporting decision. This shift in incentive effect is pronounced enough to render reporting decisions made under the numerical standard as aggressive as reporting decisions made under the verbal standard. These results indicate that replacing verbal thresholds with numerical thresholds may not diminish the aggressiveness of reporting decisions.]

[Oil and gas firms using the full cost method during 1985-1986 faced a choice between taking a write-down in oil and gas properties or changing to the successful efforts method. In a time-series analysis, the executive bonuses of firms switching to the successful efforts method are found to be associated with accounting income, suggesting the effects of bonus plans on the switch decision. We also show that the firms choosing write-down reported more losses before the write-down during the decision year, and that the bonuses of these firms' executives are not affected by the write-down.]

This paper uses micro-level historical data to examine the causes of bank failure.For statecharactered Kansas banks during 19 10-28, time-to-failure is explicitly modeled using a proportional hazards framework.In addition to standard financial ratios, this study includes membership in the voluntary state deposit insurance system and measures of technical efficiency to explain bank failure.The results indicate that deposit insurance system membership increased theprobability of failure and banks which were technically inefficient were more likely to fail than technically efficient banks.

This paper examines the effect of workers' compensation on time out of work. It introduces a "natural experiment" approach of comparing individuals injured before and after increases in the maximum weekly benefit amount. The increases examined in Kentucky and Michigan raised the benefit amount for high-earnings individuals by approximately 50 percent, while low-earnings individuals, who were unaffected by the benefit maximum, did not experience a change in their incentives. Time out of work increased for those eligible for the higher benefits and remained unchanged for those whose benefits were constant. The estimated duration elasticities are clustered around 0.3-0.4.

The use of dichotomous choice (DC) methods has become increasingly common in applications of the contingent-valuation method (CVM)1 to elicit the that an individual might have for nonmarket environmental goods.2 This hypothetical DC method involves a subject responding yes or no to a hypothetical question that asks whether or not he would be willing to make a commitment to pay some stated amount contingent upon the provision of an environmental good. The growing use of this method is primarily based on the assumption that the method yields incentive-compatible results. This implies that subjects will answer the CVM's hypothetical question in the same way as they would answer an identical question asking for a real economic commitment and that, therefore, the hypothetical DC method will result in accurate estimates of true willingness to pay. Explicit or implicit acceptance of this assumption is seen in a number of recent studies. For example, the use of the DC method in CVM studies is strongly recommended by a panel3 convened by the National Oceanic and Atmospheric Administration (NOAA) of the United States Department of Commerce to examine the use of hypothetical CVM survey questions (see NOAA, 1993 pp. 4608, 4608, 4612). The hypothetical DC method has been used by the Attorney General of the State of Alaska in a major application of the CVM to assess damages caused by the Exxon Valdez oil spill of 1989 (see Richard T. Carson et al., 1992). A major CVM study of potential environmental damages due to proposed mining activity in the Kakadu Conservation Zone of Australia employed the DC method with a similar rationale (see David Imber et al., 1991 p. vi). It is clear that if a subject perceives that his expected utility is affected by the possibility of the good actually being provided he has no incentive to misrepresent. We can presume that in an application of a real DC method, where payment and provision of * Cummings: Policy Research Center, College of Business Administration, Georgia State University, Atlanta, GA 30303-3083; Harrison and Rutstr6m: Department of Economics, College of Business Administration, University of South Carolina, Columbia, SC 29208. We are grateful to Peter Bohm, Bengt Kristr6m, and three referees for helpful comments. Ashley Abbott, Lloyd Brown, Colin Day, Tanga McDaniel, Helen Neill, and Melonie Williams provided excellent research assistance. We acknowledge financial support provided by the State of New Mexico's Waste Management Education and Research Consortium and Resources for the Future. We retain responsibility for all errors. 'For a critical review of the debate over the CVM, see Cummings and Harrison (1994) 2Homegrown is a term primarily used in experimental economics. It refers to a subject's value that is independent of the value which an experimenter might induce for the good (see Vernon L. Smith, 1976). The idea is that homegrown values are those that the subject brings to an experiment. 3Consisting of Kenneth Arrow (Co-chair), Robert Solow (Co-chair), Paul R. Portney, Edward E. Leamer, Roy Radner, and Howard Schuman.

Abstract Focuses on executive bonus plans and accounting trade-offs in the oil and gas industry during the years 1985-86. Executive bonuses of firms switching to the successful efforts method; Firms that opted for write-down method.