Agricultural and Food Policy, Research Methods/Statistical Methods

Journal Article Import Substitution Policies: A Two-Sector, Fix-Price Model Get access John T. Cuddington John T. Cuddington Stanford University Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 48, Issue 2, April 1981, Pages 327–342, https://doi.org/10.2307/2296889 Published: 01 April 1981 Article history Received: 01 November 1979 Accepted: 01 September 1980 Published: 01 April 1981

This study reports an empirical investigation of whether the SEC-mandated replacement cost disclosures, as set forth in ASR 190, had any effect on weekly transaction volumes of common stock shares. Using the standard t testing procedure, no evidence of the volume effect being investigated was found. This result appears to imply that the replacement cost accounting data made public under ASR 190 did not contain information important to investors as asserted by the SEC, if the revision of common stock portfolio holdings is a criterion.

The paper reports the results of a study of the information that four types of audit reports convey to Chartered Financial Analysts about the sources of both financial-statement and audit-report messages. Four hypotheses are tested, two of which concern the perceived identity of the source of specific financial-statement messages. Two others concern the effect of the audit reports on analysts' perceptions of the credibility of the source of financial-statement messages and of the auditor. The study indicates that auditors are perceived to be much more involved in the communication of financial-statement messages than many people realize. This perceived involvement and the information that audit reports convey about the auditor's credibility combine to produce some unsuspected credibility effects.

The article presents a reply by Byung T. Ro to a comment on his paper "The Effect of the Disclosure of Replacement Cost Accounting Data on Transaction Volumes," which was published in one of the previous issues of the periodical "The Accounting Review." Ro says that specifically, the comment pointed about two problems regarding his paper. Firstly, the invalidity of pairing treatment and control firms with different size, and secondly, the lack of a control for noise in the volume data. Ro admitted the existence of size difference between paired firms as a potential problem. Because of the $100-million materiality standard, the size difference' problem would necessarily arise if one used firms not complying with ASR 190 as a control group in investigating the impact of ASR 190. He reveals that this fact is also recognized in the papers of accountants like J. Boatsman and K. Gheyara. He says that despite the potential problem of size difference, a matched- pair design similar to that in his study is used by, for example in the papers of Gheyara and Boatsman. Ro stated that in general, the hypothesized size difference problem could exist in cases where accounting disclosure requirements are conditional upon a materiality standard based on firm size.