Lawrence B. Smith, Comment: Brueggeman-Peiser and Noland Papers, The Journal of Financial and Quantitative Analysis, Vol. 14, No. 4, Proceedings of 14th Annual Conference of the Western Finance Association, June 21-23, 1979 (Nov., 1979), pp. 801-803

Statistical analysis is used to evaluate trends in the relative prices of natural resource commodity aggregates and to predict the adequacy of natural resource supplies. The model incorporates the Brown-Durbin custom test and Quandt's log-liklihood ratio. The results indicate that a relative price series is not stable enough to predict a consistent pattern of change and it would be unwise to base materials and extraction policies on this framework. This conclusion is reached, in part, because of the significant changes in the US economy and institutions in recent years. 22 references.

This article focuses on the effect of the separation of ownership from control on accounting policy decisions. Theories of managerial control argue that managers in manager firms frequently will adjust the income number to minimize outside intervention in the affairs of the affairs of the corporation by stockholders. The adjustments to smooth income are frequent since the management has no significant stock holding and must therefore maintain its position by presenting the results of operations in a favorable and defensible way. The issue how much stock an individual must own before one exerts significant influence on a corporation is a matter of much controversy. The contradiction that Shu S. Liao has pointed out should not resist if an owner had absolute control of his firm in the sense that take over bids etc., would not be possible. In such firms, manipulative smoothing as a defensive mechanism would unnecessary. Firms which manipulate more often are more likely to show a negative average smoothing difference due to lack of a good smoothing vehicle than firms that manipulate less often.

With risky debt outstanding, stockholder actions aimed at maximizing the value of their equity claim can result in a reduction in the value of both the firm and its outstanding bonds. We examine ways in which debt contracts are written to control the conflict between bondholders and stockholders. We find that extensive direct restrictions on production/investment policy would be expensive to employ and are not observed. However, dividend and financing policy restrictions are written to give stockholders incentives to follow a firm-value-maximizing production/investment policy. Taking into account how contracts control the bondholder- stockholder conflict leads to a number of testable propositions about the specific form of the debt contract that a firm will choose.

This paper investigates the influence of wives' earnings on the distribution of family earnings. In the process, some differences in the manner in which family earnings are distributed within racial groups are highlighted. Earnings of wives equalize income distributions in white families but increase dispersion among blacks. Because they have conflicting effects, covariances between spouses in their wage rates and labor supply are isolated. Male and female wage functions are adjusted for sample censoring to fill out the true population variances and covariances in wages across all families. Due to the larger positive correlation in wages of black spouses, black family earnings would be distributed more unequally even if all individuals worked the same amount. Our labor supply analysis indicates that white families attempt to stabilize family earnings with some family members increasing their labor supply in response to a decline in participation of other family members. This compensatory function of wives' earnings is much less prevalent in black families.

This paper investigates the influence of wives' earnings on the distribution of family earnings. In the process, some differences in the manner in which family earnings are distributed within racial groups are highlighted. Earnings of wives equalize income distributions in white families but increase dispersion among blacks. Because they have conflicting effects, covariances between spouses in their wage rates and labor supply are isolated. Male and female wage functions are adjusted for sample censoring to fill out the true population variances and covariances in wages across all families. Due to the larger positive correlation in wages of black spouses, black family earnings would be distributed more unequally even if all individuals worked the same amount. Our labor supply analysis indicates that white families attempt to stabilize family earnings with some family members increasing their labor supply in response to a decline in participation of other family members. This compensatory function of wives' earnings is much less prevalent in black families.