Auditing, Bankruptcy, Market reaction, Audit quality

This paper demonstrates that differences in managerial ownership data cannot explain contradictory empirical evidence on the relation between equity ownership and the entrenchment of managers. Three commonly used sources of managerial equity ownership data are described and contrasted. The Value Line Investment Survey is shown to be a relatively low-cost substitute for the data on beneficial ownership by officers and directors found in corporate proxy statements.

This paper presents the results of 32 experimental markets designed to test hypotheses based on Wagenhofer's (1990) disclosure model. The model predicts the existence of multiple disclosure equilibria in cases where a manager balances the effects that disclosures can have on two sets of external agents: investors and an opponent. The experimental results support the partial-disclosure equilibrium over the full-disclosure option. Additionally, a lower level of disclosure was observed in those markets in which the discloser repeatedly interacted with information receivers. Lower disclosure reduces the level of proprietary costs which is beneficial to the information sender.

Standard models of public education provision predict an implicit transfer of resources from higher-income individuals toward lower-income individuals. Many studies have documented that public higher education involves a transfer in the reverse direction. We show that this pattern of redistribution is an equilibrium outcome in a model in which education is only partially publicly provided and individuals vote over the extent to which it is subsidized. We characterize economies in which poorer individuals are effectively excluded from obtaining an education and their tax payments help offset the cost of education obtained by others. We show that increased inequality in the income distribution makes this outcome more likely and that the efficiency implications of this exclusion depend on the wealth of the economy.

Interim reporting, Expectation-formation guidance, Auditing, Interim reviews

Using a real-options approach to endogenously derive the entire term structure of lease rates, I develop a unified framework for pricing a wide variety of leasing contracts. The structure of the model is analogous to traditional models of the term structure of interest rates. I show how the model is flexible enough to determine equilibrium lease rates for leases of any term and practically any structure, including forward leases, leases with options to renew or cancel, lease insurance contracts, adjustable-rate leases, and leases with payments contingent on asset usage.

[The emergence of new equity markets in Europe, Latin America, Asia, the Mideast and Africa provides a new menu of opportunities for investors. These markets exhibit high expected returns as well as high volatility. Importantly, the low correlations with developed countries' equity markets significantly reduces the unconditional portfolio risk of a world investor. However, standard global asset pricing models, which assume complete integration of capital markets, fail to explain the cross section of average returns in emerging countries. An analysis of the predictability of the returns reveals that emerging market returns are more likely than developed countries to be influenced by local information.]

Linda S. McDaniel, William R. Kinney, Jr., Expectation-Formation Guidance in the Auditor's Review of Interim Financial Information, Journal of Accounting Research, Vol. 33, No. 1 (Spring, 1995), pp. 59-76

This article presents the results of an experimental study investigating the problem of allocating heterogeneous indivisible objects using market-like mechanisms. The object of study is the market for professional baseball players in their free-agent year. We investigate both the current free-agency system and a variant of the current system instituted informally by the teams and ruled illegal by arbitrators. We then propose and test a new alternative matching mechanism, which proves to have quite a few desirable characteristics.