Quantifying the Advantage of Secondary Mathematics Study for Accounting and Finance Undergraduates

Quantifying the Advantage of Secondary Mathematics Study for Accounting and Finance Undergraduates, We examine the role that secondary Mathematics plays in the performance of students in introductory Business courses. Students who pass more advanced secondary Mathematics subjects perform significantly better in introductory Business courses. This ‘Mathematics effect’ is significantly stronger than the effect of other business related secondary subjects, such as Economics or Accounting.

Our findings also confirm previous studies showing that secondary Accounting is beneficial for studying first year tertiary Accounting. Interestingly though, we find that studying secondary Economics can detract from a student’s introductory tertiary results in some courses. Our findings have implications for educators and administrators as well as current secondary students. More

Jamie Alcock
University of Queensland Business School; University of Cambridge – Department of Land Economy

Sophie Cockcroft
University of Queensland – Business School

Frank Finn
University of Queensland – Business School

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The Trade Performance of Asian Economies During and Following the 2008 Financial Crisis

The Trade Performance of Asian Economies During and Following the 2008 Financial Crisis, This paper documents and compares the trade performance of the major Asian economies both during and following the 2008 financial crisis. We consider China, India, Thailand, Malaysia, South Korea, Japan, Singapore  and Chinese Taiwan. We access separate country data files giving monthly trade performance for both the import and export sides throughout the crisis. We use these to compare the size, speed and acceleration of trade compression with the onset of the crisis, and the reverse effects on recovery.

We do this in aggregate and by product and bilateral trading partner. The data reported show considerable diversity of country experience. Among manufacture exporters China has seen a major decline in trade with a slow recovery, whereas Korea experienced smaller initial impact but a quick rebound. Import impacts are mildest for India and commodity exporters including Malaysia. On the import side, the falls in world oil prices impact sharply on import values.

We also compare trade impacts in the 2008 financial crisis with those in the 1930s and the Asian financial crisis. In the 1930s percentage impacts on trade in the first year were similar, but of much longer duration, reducing trade volumes in the US by nearly 80% by 1933, and placing Germany close to autarchy. In the 1998 Asian crisis trade impacts were much smaller since export markets in the OECD were not affected, but negative growth impacts on affected countries were greater. More

Jing Wang, John Whalley

NBER Working Paper No. 16142
Issued in June 2010

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Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service

Death by Market Power: Reform, Competition and Patient Outcomes in the National Health Service, The effect of competition on the quality of health care remains a contested issue. Most empirical estimates rely on inference from non experimental data. In contrast, this paper exploits a pro-competitive policy reform to provide estimates of the impact of competition on hospital outcomes. The English government introduced a policy in 2006 to promote competition between hospitals.

Patients were given choice of location for hospital care and provided information on the quality and timeliness of care. Prices, previously negotiated between buyer and seller, were set centrally under a DRG type system. Using this policy to implement a difference-in-differences research design we estimate the impact of the introduction of competition on not only clinical outcomes but also productivity and expenditure. Our data set is large, containing information on approximately 68,000 discharges per year per hospital from 162 hospitals.

We find that the effect of competition is to save lives without raising costs. Patients discharged from hospitals located in markets where competition was more feasible were less likely to die, had shorter length of stay and were treated at the same cost. More

Martin Gaynor, Rodrigo Moreno-Serra, Carol Propper

NBER Working Paper No. 16164
Issued in July 2010

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Stock Returns, Aggregate Earnings Surprises, and Behavioral Finance

Abstract:
First, returns are unrelated to past earnings, suggesting that prices neither underreact nor overreact to aggregate earnings news. Second, aggregate returns are negatively correlated with concurrent earnings; over the last 30 years, stock prices increased 6.5% in quarters with negative earnings growth and only 1.9% otherwise.

This finding suggests that earnings and discount rates move together over time, and provides new evidence that discount-rate shocks explain a significant fraction of aggregate stock returns. More

Jonathan Lewellen
Dartmouth College – Tuck School of Business; National Bureau of Economic Research (NBER)

S.P. Kothari
Massachusetts Institute of Technology (MIT) – Sloan School of Management

Jerold B. Warner
Simon Graduate School of Business, University of Rochester

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A Risk Perception Primer: A Narrative Research Review of the Risk Perception Literature in Behavioral Accounting and Behavioral Finance

Within the last section of this paper, the author reveals the first of its kind thorough review of the academic research studies on perceived risk/risk perception from the disciplines of behavioral accounting since 1975 and behavioral finance since the late 1960s. This literature review incorporates 12 works from behavioral accounting and 71 endeavors from behavioral finance. In addition, the behavioral finance literature review section also includes approximately 10 narrative research reviews from risk perception studies in behavioral economics. A major facet of this paper was to bring together all the previous studies in the risk perception literature for the purpose of conducting a study based on the academic foundation of the main themes, research approaches, and findings from this collection of studies.
A significant topic within the behavioral finance literature is the notion of perceived risk pertaining to novice investors (i.e. individuals, finance students) and investment professionals (i.e. financial planners, security analysts). The author provides an overview of the concepts of risk, perception, and risk perception with the financial scholar in mind. There is also a presentation on the behavioral finance concepts and themes that might influence an individual’s perception of risk for different types of financial services and investment products. The next section presents a discussion of the significant risk perception research in the social sciences namely from psychology. This research work from psychology (i.e., risk perception studies in risky situations and hazardous activities) is the behavioral foundation for a substantial amount of the current contributions within the behavioral accounting and behavioral finance literature. In particular, the work of the Decision Research scholars including Paul Slovic and his co-authors on risk perception studies that have crossed over from psychology to the disciplines of behavioral accounting and behavioral finance (i.e. behavioral risk characteristics from psychology that are applied within a financial/investment decision making context).

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