This paper examines the role of seniority in two interrelated phenomena-rising age-earnings profiles and the use of layoffs rather than wage adjustments during economic decline. The results suggest that rehiring based on a seniority-first criterion is not inconsistent with an approach that maximizes worker productivity within a heterogeneous labor force. Moreover, assessment of worker reliability based on the upward portion of the wage-productivity cum seniority locus is appropriate since it reduces subsequent turnover. Thus, an approach that combines human capital accumulation with Lazear-type deferred payments schemes explains much of long-term worker-firm attachment.

Abstract. Empirical research into corporate cash recovery rates has, in part, relied on arguments leading to the assumption that these rates are reasonably stable over time. Equivalently, the process generating firms' cash recovery rates is assumed to be mean reverting. Empirical findings of this study on the time series properties of corporate cash recovery rates failed to validate this assumption. In particular, the results indicate that the overall processes generating levels and first differences of cash recovery rates can adequately be described by a first‐order autoregressive process and a first‐order moving average, respectively. The paper discusses some implications of these results for the theoretical modeling of the internal rate of return/cash recovery rate relationship and the empirical research based thereon. Résumé. Les recherches empiriques en matière de taux de recouvrement de trésorerie des sociétés ont été fondées en partie sur une augmentation menant à l'hypothèse d'une stabilité raisonnable de ces taux dans le temps. Autrement dit, le processus générateur des taux de recouvrement de trésorerie pour les firmes est supposé de type moyenne mobile. Les résultats empiriques de cette étude sur les propriétés des séries chronologiques de taux de recouvrement de trésorerie n'ont pas permis de valider cette hypothèse. En particulier, les résultats indiquent que les processus générateurs globaux et les différences d'ordre un des taux de recouvrement de trésorerie peuvent être adéquatement décrits, respectivement par un processus autorégressif d'ordre un et un processus de moyenne mobile d'ordre un. L'article discute de quelques conséquences de ces résultats quant à la modélisation théorique de la relation entre le taux de rendement effectif et le taux de recouvrement de trésorerie, et quant à la recherche empirique fondée sur celle‐ci.

Auditing, Sampling, Qualified opinion

The aggregate probability of ending a career interruption that begins at childbirth is shown to diminish rapidly with the length of the interruption. The empirical models estimated suggest that the decline can be explained by a combination of structural duration dependence, unobserved heterogeneity, and differences in observed characteristics. The probability of returning to employment for a group of women with identical observed characteristics is found to have an L-shaped distribution for the majority of the sample, suggesting that many women have a very low probability of returning.

Abstract. This study examines audit managers' review time effort (as reflected in their time estimates for working paper review) and the extent to which this effort is directed by another important audit manager activity: initial audit planning. Initial audit planning is manipulated by identifying certain audit areas as critical in the planning memo. Time pressure and individual auditor characteristics also are examined because auditing literature suggests that they may affect managers' review. The analysis is based on the responses, to an audit case, of 73 audit managers from ten large accounting firms. The results indicate that: 1) the managers exhibit reasonable agreement in budgeting over half of audit management time to review, 2) the initial audit plan directs their subsequent review, 3) time pressure does not significantly affect their estimated review times, and 4) firm affiliation, auditor experience level, and initial planning effort are associated with differences in managers' review practices and perceptions. The paper concludes with a discussion of the implications of these results for practice and further research.

Abstract. This paper empirically examines whether labor strikes affect the forecasting and information content of quarterly earnings numbers. We address two issues regarding financial analyst forecast (FAF) superiority: whether FAF superiority increases when a strike occurs and if so, whether the increase in FAF superiority is sustained immediately after the strike ends. We also examine two issues regarding information content: whether strikes affect the coefficient mapping unexpected earnings into stock prices and whether strikes affect the variance of stock price changes. We suggest that strikes affect both the forecasting and information content of quarterly earnings numbers. Résumé. Cet article examine de façon empirique si les grèves des travailleurs influencent la prévision et le contenu informatif des résultats trimestriels. Nous abordons deux questions relatives à la supériorité des prévisions d'analystes financiers (PAF): à savoir si la supériorité des PAF s'accroît lorsqu'une grève se produit et, dans l'affirmative, si l'accroissement de cette supériorité se maintient immédiatement après la fin de la grève. Nous étudions également deux questions relatives au contenu informatif: à savoir si les grèves influencent le coefficient incorporant l'impact des bénéfices imprévus sur le cours des actions et si les grèves affectent la variance des fluctuations du cours des actions. Les grèves affecteraient donc à la fois la prévision et le contenu informatif des résultats trimestriels.

Résumé. Cette étude se penche sur l'effort en terme de temps de révision des chefs de groupe en vérification (tel que reflété par leurs estimations du temps requis pour la révision du dossier de vérification) et la mesure dans laquelle cet effort est orienté par une autre activité importante du chef de groupe: la planification initiale de la mission de vérification. La planification initiale de la vérification est conditionnée par l'identification de certaines zones critiques dans la note de planification. Les pressions temporelles et les caractéristiques individuelles du vérificateur sont également étudiées, car les recherches antérieures en vérification semblent indiquer qu'elles sont susceptibles d'influencer la révision du chef de groupe. Cette analyse est fondée sur les réponses, provenant de soixante‐treize chefs de groupe de dix grands cabinets d'experts‐comptables, à un cas de vérification. Les résultats indiquent que: 1) les chefs de groupe font preuve d'un consensus raisonnable en budgétisant plus de la moitié du temps de vérification pour la révision, 2) le plan initial de vérification oriente leur révision ultérieure, 3) les pressions au niveau du temps n'influencent pas de façon significative leurs estimations relatives au temps de révision, et 4) l'appartenance à un cabinet, le niveau d'expérience de vérificateur, et l'effort de planification initiale sont reliés aux différences des pratiques et des perceptions de la révision par le chef de groupe. La fin de cet article comporte une discussion des conséquences de ces résultats en regard de la pratique et des recherches ultérieures.

William N. Lanen, Robert E. Verrecchia, Operating Decisions and the Disclosure of Management Accounting Information, Journal of Accounting Research, Vol. 25, Studies on Stewardship Uses of Accounting Information (1987), pp. 165-189

This paper is concerned with situations where firms not only recognize the dependence of quality on price (of productivity on wages, of default probability on the interest rate charged), but also attempt to use what control they have over price (wages, interest rates) to increase their profits. The recognition of this possibility has important implications for economic theory, which have recently been explored in a large number of papers in several disparate fields. The objective of this paper is to survey these papers and to draw out the central themes of this literature. This paper is divided into four parts, In Part I, we discuss the most important implications of the dependence of quality on price for competitive equilibrium theory--the repeal of the law of supply and demand (Part I.1), the repeal of the law of the single price (Part I.2), the existence of discriminatory equilibria (Part I.3), the comparative static consequences (Part I.4), and the inefficiency of market equilibria (Part I.5). Part II discusses alternative explanations for the dependence of quality on price in labor, capital, and product markets.

The purpose of this paper is to illustrate how a two-part compensation system composed of a rigid base salary and a flexible bonus can reduce turnover. It is shown that bonus pay is an effective retention device if it is risk reducing and is correlated with outside contract offers. For the first time, to the best of our knowledge, a model of bonus payments is tested with U.S. instead of Japanese data. The empirical results are suggestive of the conditions that give bonuses an important, even dominant, role in worker retention.