Abstract Presents evidence on the cross-sectional multivariate distribution properties of financial ratios for manufacturing companies. Multivariate outlier detection and transformation methods that can be used to approximate multivariate normality; Analysis of financial ratio data.
[Accounting research that uses financial ratio data often assumes that sets of ratios have multivariate normal distributions. Multivariate distributional properties, multivariate outliers, and modified power transformations were examined to determine whether multivariate normality could be approximated for cross-sectional samples of financial ratios. The results were that the joint distribution of the financial ratios differed appreciably from multivariate normality and the financial ratio data contained multivariate outliers. Approximate multivariate normality was obtained by deleting multivariate outliers and applying modified power transformations to the ratios. Consequently, it would be possible to use multivariate outlier detection and transformation methods in accounting research to enhance statistical conclusion validity and to improve the effectiveness of decision models when multivariate methods that assume normality are used with financial ratios.]
Abstract The article says that it is good educational psychology to explain difficult topics by simple diagrams. Diagrams in economics books have long explained the forces of supply and demand. Diagrams have frequently showed the circulation of money. There is, in fact, no value in keeping a thing difficult that might he made simple and easily understood by a diagram. The article further says that annuities constitute the axis of the entire field of actuarial science. Innumerable business problems are entirely or in part annuities and they are found in accounting and insurance, and even in corporation finance and public finance. The article presents a diagram to reveal their exact nature and which can be remembered much longer than any well-worded page. The graphic method of showing annuities can be used for many types of annuities and kinds of problems. The horizontal scale gives the time in periods from left to right. The vertical scale is used only to show the sequence of rents of the annuity, the first at the top and the last at the bottom. The interest is shown as an addition to the rents in order to give the final amount or as an addition to the initial present worth in order to give the rents.
Abstract The article focuses on interpreting the two principal annuity formulas. It is assumed that the student already understands the formulas for compound interest and compound discount and recognizes them in the said formulas. For calculating annuity, most of the students employ the formula for the sum of a geometric progression. However, the two principal annuity formulas can be explained without reference to a geometric progression and in terms that a student can understand and remember. Without referring to a geometric progression, the author attempts to show why the first formula is compound interest on one divided by the interest rate per period and why the second formula is compound discount on one divided by the interest rate per period. The author believes that the explanations presented in the article are preferable to the usual textbook discussion because the student can see why the annuity formulas are as they are; namely, compound interest on one divided by the interest rate per period and compound discount on one divided by the interest rate per period.
We develop a theory of labor contracting in which negative productivity shocks lead to costly job loss, despite unlimited possibilities for renegotiating wage contracts. Such fragile contracts emerge from firms' trade-offs between robustness of incentives in ongoing employment relationships and costly specific investment. Contractual fragility can serve as a powerful mechanism for propagating underlying productivity shocks: in a simulated matching market equilibrium, i.i.d. shocks are greatly magnified in their effect on market output, and the effect is highly persistent. We also explore novel motivations for government policies that strengthen employment relationships.
Abstract The fundamental importance and relevance of the behavioral sciences to accounting is exemplified by the number of recent behaviorally oriented accounting research studies, as of April 1975. A subset of these studies has been concerned with organizational and social psychological aspects of accounting firms. These studies seem to have the potential for contributing to both the accounting profession and the behavioral sciences. Within this trend, the purpose of this article is to explore the organization of public accounting firms using a behavioral science theory of organization. An organization can be modeled as a cycle consisting of three basic units, namely, an input unit, a transformation process, and lastly, an output unit. An audit engagement is not a completely standardized input. Different client organizations have different accounting systems. Accounting systems either are tailored to an organization or they evolve as the organization evolves. Consequently, each accounting system has some idiosyncracies representing the particular characteristics and information requirements of the organization.
Abstract This article presents a comment on the study of behavioral business utilizing students as surrogates in the U.S. The question of the relationship between individual attitudes and individual behavior is far from settled in psychology. It appears to be nondemonstrative, for it seems perfectly possible for the conclusion to be false even if the premises or the statistical results are true, since it seems possible to find some students that would be good surrogates. A valid surrogation is dependent upon certain properties of the object not necessarily the objects in total.
Abstract This article presents a behavioral approach to transfer pricing problems. Since the transfer pricing problem only arises within a recognizable social system, be it an organization or a socialist economy, this article considers the solutions in a social system context. The paradigm developed can then be used to evaluate the usefulness and limitations of the various proposed solutions. Decentralization is one approach to organizational design. Implicit in this approach is the segmentation of the organization into various specialities. Numerous reasons are provided in the transfer price literature for decentralization. Decentralization, however, does not quite explain the process involved. A consequence of the segmentation of the organization into parts is that the behavior of organizational members will be influenced by the segmentation. Therefore, the term "differentiation" is used to include not only the segmentation of the organization into specialized parts, but also to include the consequent differences in attitudes and behavior of organizational members.