This paper considers the effects of different rules regarding research and development (R&D) costs on competition in oligopolistic industries. It is shown that the consequences of those regimes on equilibrium levels of R&D spending depend on the impact of R&D on marginal costs and the risk...

In this paper, we assess the relative performance of the direct valuation method and industry multiplier models using 41,435 firm-quarter Value Line observations over an 11-year (1990-2000) period. Results from both pricing-error and return-prediction analyses indicate that direct valuation...

The 1991 amendment to the auditor appointment requirement of Section 86 of the Ontario Municipal Act removes certain barriers to entry into the Ontario municipal audit market. The purpose of this study is to provide evidence that the amendment has enhanced competition in this market. The results...

Recently, Penman and Sougiannis (1998) and Francis, Olsson and Oswald (1999) compared the bias and accuracy of the dividend discount model (DDM), discounted cash flow model (DCF), and Edwards-Bell-Ohlson residual income model (RIM) in explaining the relation between value estimates and observed...

The objective of this article is to revisit the literature on Big-N audit fee premiums in the municipal setting using a methodology that controls for self-selection bias. Because auditor choices can be predicted based on certain client characteristics, using standard one-stage ordinary least...

In this study, we examine whether government regulatory initiatives in China involving IPO by SOEs may have contributed to opportunistic behaviors by the issuer. We focus on two sets of IPO regulations issued between January 1, 1996 and February 11, 1999: pricing regulations, which stipulate...

Financial executives of firms engaged in forward contracting have raised concerns that mandated disclosure of those contracts would reveal proprietary information to rival firms. This paper considers the basis for those concerns in the framework of a duopoly in which one privately informed...

This study conducts a local analysis of the relation between market structure and audit fees. The research question of interest to us is how audit fees are determined by each practicing local office, after taking into account the auditor's own position in a local market and the influence exerted...

Suppose that rival downstream producers of a final good contract with the same upstream supplier of an input and, in the process, reveal private information. A vertical merger between the upstream supplier and one of the downstream firms may dissipate the information advantage of the remaining...

For the past 20 years, researchers have viewed the pricing of audit services as a function of supply and demand, much like other commodities or services traded in the marketplace. The audit-pricing model, originally proposed by Dan Simunic (1980), has been used to explore various aspects of...