[Much of the past research in accounting ethics has focused on whether accountants conform to prescribed codes of professional ethics. Other research has been normative in nature, recommending what constitutes appropriate ethical conduct or focusing on the accountant's responsibility in society. This study selects a different approach by testing a multivariate measure of how accountants make ethical judgments. Data were gathered with the assistance of the Institute of Certified Management Accountants and the Institute of Management Accountants (formerly the National Association of Accountants). Accountants were asked to respond on bipolar scales to realistic scenarios involving ethical decisions. Several tests for construct validity produced supportive results for the hypothesized three-dimensional measure, with the dimensions being moral equity, relativism, and contractualism. First, we developed a questionnaire with four scenarios concerning ethical issues. Each scenario ended in a particular action taken by an individual. Responses to that action were recorded on eight bipolar scales, representing the three dimensions above. The questionnaire was mailed to 500 randomly selected certified management accountants resulting in a 62.8 percent response rate. Second, the results from a factor analysis and a traditional reliability coefficient test suggest that a high degree of internal consistency exists for each dimension of the measure. The appropriate factor loadings ranged from a low of 0.68 to a high of 0.92, while the reliability coefficients varied from 0.75 to 0.92. Next, the content validity of the three-dimensional measure was checked by comparing it with a global ethical/unethical measure. Again, the results support the hypothesis that the multivariate measure captures the appropriate domain of content. Adjusted R2 -values ranged from 0.59 to 0.76 when the global measure was regressed against the multivariate measure. Finally, a sense of predictive validity was obtained by comparing the multivariate measure with a behavioral intention measure for the respondent. Adjusted R2 -values ranged from 0.45 to 0.76 for the four scenarios tested, indicating that the three-dimensional measure "explains" a respectable portion of the variance in the behavioral intention of the individual. The multidimensional measure developed in this study may be a guide for future research into how accountants make ethical judgments. Such knowledge can be used in turn to develop useful codes of conduct, create ethical organizational cultures, and direct ethical training for and by accountants.]

Properties of individual willingness to pay for changes in mortality probabilities are examined using a decision-theoretic model. There is no unique value per life saved. The willingness to pay for a mortality reduction depends not only on the amount of reduction but also on the initial probability level and on whether the valuation is ex ante (e.g., decisions regarding health insurance, preventive medicine, or environmental health) or ex post (e.g., acute medical care). Several inequalities relating the imputed willingness to pay in various paradigm decision contexts are derived from the model with the addition of few additional behavioral assumptions.

This paper examines the wealth effects of a decision by the Office of Thrift Supervision (OTS) to permit interstate branching for federally chartered savings and loan associations (SLAs). An event study of key OTS announcements in 1991 and 1992 is conducted based on samples of 38 federally chartered SLAs and 88 commercial banks. Large SLAs and commercial banks generally experienced significant positive wealth effects but little or no reaction was found for smaller depository institutions. These findings provide early evidence that interstate branching powers for depository institutions under the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 will tend to benefit large institutions accelerating the trend toward consolidation, though without necessarily compromising the viability of smaller institutions.

Although the economic literature has analyzed some components of the headship decision, study of household formation has been primarily in the realm of demography. The authors expand the demographic model to include economic determinants of the decision to remain with parents or not and to live with a group or separately. They focus on measuring the effect of spatial variations in rental costs on the probability of forming a household. The authors' results, based on a sample of 2, 573 youths in their twenties, indicate that the cost of housing and potential labor earnings are important variables in explaining this probability.

We provide a list of points to consider ( PTC s) to help researchers self‐assess whether they have addressed certain common issues that arise frequently in accounting research seminars and in reviewers’ and editors’ comments on papers submitted to journals. Anticipating and addressing such issues can help accounting researchers, especially doctoral students and junior faculty members, convert an initial empirical accounting research idea into a thoughtful and carefully designed study. Doing this also allows outside readers to provide more beneficial feedback rather than commenting on the common issues that could have been dealt with in advance. The list, provided in the appendix, consists of five sections: Research Question; Theory; Contribution; Research Design and Analysis; and Interpretation of Results and Conclusions. In each section, we include critical items that readers, journal referees, and seminar participants are likely to raise and offer suggestions for how to address them. The text elaborates on some of the more challenging items, such as how to increase a study's contribution, and provides examples of how such issues have been effectively addressed in previous accounting studies.

This paper provides evidence on the risk factors that are priced in bank equities. Alternative empirical models with precedent in the nonfinancial asset pricing literature are tested, including the single-factor CAPM, three-factor Fama–French model, and ICAPM. Our empirical results indicate that an unconditional two-factor ICAPM model that includes the stock market excess return and shocks to the slope of the yield curve is useful in explaining the cross-section of bank stock returns. However, we find no evidence that firm specific factors such as size and book-to-market ratios are priced in bank stock returns. These results have a number of important implications for the estimation of the banks’ cost of capital as well as regulatory initiatives to utilize market discipline to evaluate bank risk under Basel II.

We propose a new measure of price discovery, New Leadership Share (NLS), that attributes permanent information flow to individual markets using a uniquely identified structural moving average model. NLS quantifies each market’s contribution to permanent price innovations as a proportion of total informational leadership and offers key technical advantages, including uniqueness and adherence to standard statistical asymptotics. We derive closed-form solutions and analytical standard errors for bivariate markets and provide a framework that extends naturally to multiple markets without the variable ordering problem. Simulation results show that NLS consistently outperforms three widely used benchmarks. Empirical analysis of 2023 data finds that exchange-traded funds and front-month futures markets share equal leadership relative to the S&P 500 spot index.

This paper examines the potential impacts of artificial smoothing (abnormal accruals) and real smoothing (derivatives) on firm value. We find that the value of the firm decreases with the magnitude of abnormal accruals and increases with the level of derivative use. Moreover, the accrual discount is more pronounced in firms with weak investor protection and the hedging premium is greater for poorly governed firms. These results suggest that although managers can engage in real smoothing to improve the informativeness of firms’ earnings and thus reduce agency costs, they might use artificial techniques to cosmetically improve the income stream in order to expropriate minority shareholders. In further support of agency theories, we report that poor corporate governance motivates the use of abnormal accruals and discourages derivative use.

Optimal agency contracts pay the lowest wage necessary to induce profit-maximizing effort. Employees could view such contracts as violating reciprocity because, relative to more reciprocal contracts, they offer a lower wage in exchange for higher effort. Consequently, the profit-maximizing effectiveness of optimal contracts could be impaired if employees reject them or reduce their effort. We use experimental labor markets to examine (1) how employees respond to an optimal versus a suboptimal reciprocity-based contract when each contract is the only contract available, (2) how employees respond to these contracts when firms choose which one to offer, (3) whether the firms' contract offers depend on employees' reactions to those offers, and (4) how employees and firms react to a hybrid contract that incorporates features of both contracts. We find that the optimal contract is less effective than agency analysis predicts, the reciprocity-based contract can be equally effective, and the hybrid contract dominates a market in which all three contracts are available. Implications of these results are discussed.