The current theoretical analysis of labor market search and matching is dominated by two rather separate literatures. In the first of these one typically assumes firm wage posting. Wage dispersion may then result from either on-the-job worker search (Burdett and Mortensen (1998), Burdett and Coles (2003)), or from nonsequential search whereby workers find it advantageous to search for more than one firm simultaneously. Wilde (1977) and Burdett and Judd (1983) provide product market applications of the latter type of models; more recently, Acemoglu and Shimer (2000) (hereafter AS) and Mortensen (1998) have studied labor market applications. In AS, wage dispersion among identical workers can result from firms’ endogenous capital choices, whereby some firms invest more capital than others, and offer a higher wage, in return for greater probability of employing a worker.
The other main branch of this literature assumes bilateral matching and bargaining between individual firms and workers, and builds on the work of Mortensen and Pissarides and followers (e.g. Mortensen and Pissarides (1999), Pissarides (2000); see also Acemoglu and Shimer (1999)). This model framework assumes continuous time, unlimited decision horizon and sequential search. Firms’ capital choices and wages are here typically identical.
This paper provides comparative evidence on corporate earnings management across 31 countries. At a descriptive level, we find large international differences across several earnings management measures, including loss avoidance and earnings smoothing. Our descriptive evidence suggests that firms in countries with developed equity markets, dispersed ownership structures, strong investor rights, and legal enforcement engage in less earnings management. We then delve deeper and present an incentives-based explanation for these patterns.
Based on prior research that identifies investor protection as a key institutional factor affecting corporate policy choices (see Shleifer and Vishny, 1997; La Porta, Lopez-de-Silanes, Shleifer, and Vishny, 2000), we focus on investor protection as a significant determinant of earnings management activity around the world. We argue that strong and well-enforced outsider rights limit insiders’ acquisition of private control benefits, and consequently, mitigate insiders’ incentives to manage accounting earnings because they have little to conceal from outsiders. This insight suggests that the pervasiveness of earnings management is increasing in private control benefits and decreasing in outside investor protection. Our empirical results are consistent with this prediction and suggest that investor protection plays an important role in influencing international differences in corporate earnings management.
Primary CNS neoplasms of adults affect approximately 8.2/100,000 population annually in the USA (Walker et al, 1985). About half of these tumours are highly aggressive malignant gliomas, and are associated with a median survival of four to twelve months following diagnosis (Jubelirer, 1996; Lopez Gonzalez and Sotelo, 2000).
Treatment is palliative; despite recent advances in surgery, radiotherapy and chemotherapy, little impact has been made on the poor prognosis associated with this malignancy (West et al, 1983; Kelly et al, 1984; Jubelirer, 1996; Lang et al, 1999; Lopez Gonzalez and Sotelo, 2000). Exploration of novel treatment strategies is therefore of importance.
