Managers of conglomerates are hypothesized to effect firm-enlarging actions that yield greater remuneration for them but losses for shareholders. This hypothesis is tested by examining the gains and losses to senior managers and shareholders of twenty-nine large conglomerates from 1970 through 1975. The data reveal that the average manager's annual gains and losses from changes in stock returns far exceeded his remuneration. Furthermore, top managers of conglomerates where stock returns decreased left their positions more frequently than did the officers of the other conglomerates. These findings are inconsistent with the self-serving managerial hypothesis as it usually is stated.

This paper describes the equilibrium wage distribution and unemployment rate when firms recruit (search for) employees. A model in which firms' inability to distinguish workers who refuse job offers increases their expected recruiting costs, is contrasted with one in which indistinguishable low-productivity workers decrease firms' expected gains from hiring. In both, work force heterogeneity enhances search uncertainty, firms recruit less intensively than otherwise, and so the equilibrium unemployment rate rises. Heterogeneity reflects searchers' incomplete knowledge of desirable trading partners' locations and will likely be a confounding influence and source of unemployment in large economies with imperfectly observable sector-specific shocks.

The evidence that unions substantially increase productivity is contradicted by the evidence that the effect of unions on employment is small. It is shown in this paper that if the union is constrained by the firm's demand function, and it is the efficiency units of labor that are in the demand function, then essentially the only way to resolve this contradiction is for unions to raise the productivity of capital (and not of labor) under conditions where the substitutability between labor and capital is very limited. But estimates of the substitutability parameter are near unity, so that one of these effects must be wrong: either unions do not substantially increase productivity or they substantially reduce employment.

The Bayesian statistical inference model has been advocated by auditing researchers over the past two decades as a useful judgment aid to auditors. To quantify judgment, the Bayesian‐related audit research has completely relied on the elicitation techniques (ETs) and methodology used and recommended by Winkler (1967a). What have we learned from this literature? Are there any other promising ETs applicable to audit situations? What improvements can be made to the methodologies used in ET‐related audit research? This paper highlights the findings and methodologies of the existing literature, identifies promising ETs from related behavioral studies and draws some methodological suggestions for future research. Résumé. Des chercheurs dans le domaine de la vérification ont préconisé au cours des deux dernières décennies que le modèle d'inférence Baysien pouvait constituer une aide utile au jugement des vérificateurs. Pour quantifier le jugement, la recherche reliée au modèle Baysien s'est appuyée sur des techniques et une méthodologie utilisées et recommandées par Winkler (1967 a). Qu'a‐t‐on appris de ces recommandations? Peut‐on s'attendre à d'autres applications dans le domaine de la vérification? Quelles améliorations peuvent être apportées à la méthodologie? Cet article met en évidence les découvertes et la méthodologie sur le sujet, identifie les solutions prometteuses et présente certaines suggestions méthodologiques pour des recherches futures.

Research Methodology, Event studies, Multivariate regression model, Asset pricing

This paper attempts to provide a unified analysis of the effects of taxation on the equilibrium value of marginal q under alternative financial policies. It is shown that the q approach does not avoid all the specification problems associated with analyses based on the cost of capital. The (theoretically and empirically) crucial relationship between average and marginal q is also examined, and it is shown that, under UK and US tax rules, the possibility of winding up precludes persistent undervaluation in equilibrium.

Economic theories of efficient compensation predict a positive relationship between executive pay and corporate performance, and yet efforts to document this relationship have been largely unsuccessful. In this paper, we argue that previous cross-sectional studies have omitted important variables which seriously bias their results. Using data that focus on individual executives over time, we find that executive compensation is strongly positively related to corporate performance as measured by shareholder return and growth in firm sales. The results are robust to the stock market performance measure utilized.

In this paper we provide a model of the underwritten offerings of new shares of seasoned securities. Our purpose is to explain why the offering price chosen by the underwriter is lower than the market price of the firm's shares. Our model recognizes the interdependence between the markets surrounding the announcement and sale of the new issue and recognizes as well the effect which asymmetric information regarding investor demands has upon the prices in these markets.

This paper reexamines the empirical basis for two "facts" that seem to be found in most cross-section studies of immigrant earnings: (1) the earnings of immigrants grow rapidly as they assimilate into the United States; and (2) this rapid growth leads to many immigrants' overtaking the earnings of the natives within 10-15 years after immigration. Using the 1970 and 1980 U.S. censuses, this paper studies the earnings growth experienced by specific immigrant cohorts during the period 1970-80. It is found that within-cohort growth is significantly smaller than the growth predicted by cross-section regressions for most immigrant groups. This differential is consistent with the hypothesis that there has been a secular decline in the "quality" of immigrants admitted to the United States.