FISCAL FORESIGHT AND INFORMATION FLOWS Leeper, Eric M.; Walker, Todd B.; Yang, Shu-Chun Susan
Econometrica,
20/May , Letnik:
81, Številka:
3
Journal Article
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News—or foresight—about future economic fundamentals can create rational expectations equilibria with non-fundamental representations that pose substantial challenges to econometric efforts to ...recover the structural shocks to which economic agents react. Using tax policies as a leading example of foresight, simple theory makes transparent the economic behavior and information structures that generate non-fundamental equilibria. Econometric analyses that fail to model foresight will obtain biased estimates of output multipliers for taxes; biases are quantitatively important when two canonical theoretical models are taken as data generating processes. Both the nature of equilibria and the inferences about the effects of anticipated tax changes hinge critically on hypothesized information flows. Different methods for extracting or hypothesizing the information flows are discussed and shown to be alternative techniques for resolving a non-uniqueness problem endemic to moving average representations.
We examine how corporate social media affects the capital market consequences of firms' disclosure in the context of consumer product recalls. Product recalls constitute a "product crisis" exposing ...the firm to reputational damage, loss of future sales, and legal liability. During such a crisis it is crucial for the firm to quickly and directly communicate its intended message to a wide network of stakeholders, which, in turn, renders corporate social media a potentially useful channel of disclosure. While we document that corporate social media, on average, attenuates the negative price reaction to recall announcements, the attenuation benefits of corporate social media vary with the level of control the firm has over its social media content. In particular, with the arrival of Facebook and Twitter, firms relinquished complete control over their social media content, and the attenuation benefits of corporate social media, while still significant, lessened. Detailed Twitter analysis confirms that the moderating effect of social media varies with the level of firm involvement and with the amount of control exerted by other users: the negative price reaction to a recall is attenuated by the frequency of tweets by the firm, while exacerbated by the frequency of tweets by other users.
We examine the relative accuracy of management and analyst forecasts of annual EPS. We predict and find that analysts' information advantage resides at the macroeconomic level. They provide more ...accurate earnings forecasts than management when a firm's fortunes move in concert with macroeconomic factors such as Gross Domestic Product and energy costs. In contrast, we predict and find that management's information advantage resides at the firm level. Their forecasts are more accurate than analysts' when management's actions, which affect reported earnings, are difficult to anticipate by outsiders, such as when the firm's inventories are abnormally high or the firm has excess capacity or is experiencing a loss. Although analysts are commonly viewed as industry specialists, we fail to find evidence that analysts have an information advantage over managers at the industry level. The two have comparable abilities to forecast earnings for firms with revenues or earnings that are more synchronous with their industries.
Do Managers Withhold Bad News? KOTHARI, S. P.; SHU, SUSAN; WYSOCKI, PETER D.
Journal of accounting research,
March 2009, Letnik:
47, Številka:
1
Journal Article
Recenzirano
In this study, we examine whether managers delay disclosure of bad news relative to good news. If managers accumulate and withhold bad news up to a certain threshold, but leak and immediately reveal ...good news to investors, then we expect the magnitude of the negative stock price reaction to bad news disclosures to be greater than the magnitude of the positive stock price reaction to good news disclosures. We present evidence consistent with this prediction. Our analysis suggests that management, on average, delays the release of bad news to investors.
PurposeIn drawing on the conservation of resources theory and the broaden-and-build theory, the present research investigates the dynamic of social resources (i.e. servant leadership) and personal ...resources (i.e. psychological empowerment and positive affect) in the determination of the nurses' optimal performance (i.e. deep acting).Design/methodology/approachThe research involved collecting three waves of data on 481 frontline nurses at a large hospital in Taiwan, each a month apart. The hypotheses were tested using PROCESS mediation and moderated mediation regression models.FindingsThe results supported the indirect relationship between servant leadership and deep acting through psychological empowerment as well as the moderating effect of positive affect on the mediation model.Originality/valueThe findings shed new light on the interplay of different resources and also provide practical implications for the development of frontline supervisors and nursing staff to be compatible with a serious orientation toward the quality of their professional functioning.
I examine two hypotheses of auditor resignation: litigation risk and clientele adjustment. I find resignation is positively related to increased client legal exposure, and to occurrence of clientele ...mismatch. The summary-measure approach allows me to distinguish clientele mismatch caused by changes in auditor (supply-side) characteristics vs. changes in client (demand-side) characteristics. Evidence suggests resignation is likely driven by supply-side changes. I also find investors react negatively to resignations, and the price drop varies cross-sectionally with litigation risk. Further, the tendency of dropped firms to engage small auditors is positively related to increased litigation risk, and to mismatch with large auditors.
We evaluate the influence of measurement error in analysts’ forecasts on the accuracy of implied cost of capital estimates from various implementations of the ‘implied cost of capital’ approach, and ...develop corrections for the measurement error. The implied cost of capital approach relies on analysts’ short- and long-term earnings forecasts as proxies for the market’s expectation of future earnings, and solves for the implied discount rate that equates the present value of the expected future payoffs to the current stock price. We document predictable error in the implied cost of capital estimates resulting from analysts’ forecasts that are sluggish with respect to information in past stock returns. We propose two methods to mitigate the influence of sluggish forecasts on the implied cost of capital estimates. These methods substantially improve the ability of the implied cost of capital estimates to explain cross-sectional variation in future stock returns, which is consistent with the corrections being effective in mitigating the error in the estimates due to analysts’ sluggishness.
Background:
Informed consent is essential for the ethical conduct of clinical research and is a culturally sensitive issue. But, a measurable Chinese version of the scale to evaluate the informed ...consent process has not yet been explored in the existing literature.
Research objectives:
This study aimed to develop and psychometrically test the Chinese version of the Informed Consent Process Scale.
Research design:
Back-translation was conducted to develop the Chinese version of the questionnaire. A cross-sectional survey was administered, after which an exploratory factor analysis was conducted.
Participants:
We recruited a total of 375 participants who had experience in signing an informed consent form within the previous 3 years in Taiwan.
Ethical considerations:
This study was approved by two Institutional Review Boards and the autonomy of the participants was respected.
Findings:
The Chinese version of the Informed Consent Process Scale is composed of three factors with 23 items showing evidence of acceptable reliability and validity. Three major factors were extracted and labeled: Factor 1 – ‘Understanding of the research’, Factor 2 – ‘Trust and confidence’ and Factor 3 – ‘Doubt and uncertainty’. The three factors accounted for is 52.954 of the total variance with Cronbach’s α of .917.
Discussion and conclusion:
The finding corroborates previous studies showing that participants had too little understanding on the informed consent forms they signed and implied the need to clarify the critical points in clinical research. The psychometric results indicated good internal consistency and validity for this newly constructed instrument, and it was found worthy of conducting further testing and application.
Studies of tax effects make the conventional information assumption that changes in period-
t taxes become known at
t. Legislative lags, however, imply that news arrives before tax changes take ...place. Under policy foreknowledge, the conventional information structure is therefore misspecified. Simulations of a standard neoclassical growth model suggest that foresight of only one quarter can distort substantially the estimates of tax effects obtained under the no-foresight assumption. Also, it is crucial to model capital and labor taxes separately: anticipated changes in these two tax policies have opposite effects on consumption, investment, labor, and output before policy realization.
Does enhanced regulatory transparency facilitate alignment of private and public enforcement? Utilizing the SEC's 2004 decision to publicly disclose its comment letters, we explore the actions of the ...SEC and shareholder litigants. We find the two parties converge more on enforcement targets after the public disclosure. The increased alignment is attributable to public scrutiny of SEC oversight enhancing regulator incentives and reducing regulatory capture, and to shareholder plaintiffs gaining information previously accessible only by regulators, enabling litigants to identify cases with “merit.” These findings suggest regulatory transparency enhances the complementarity of public and private enforcement, potentially improving enforcement outcomes.
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