The impact of corporate governance on auditor choice: evidence from Germany

Statutory audits are only beneficial if the appropriate audit quality is both provided and perceived by the users of audited financial statements. On the one hand, Big 4 audit firms are commonly viewed as producing high quality audits. On the other hand, regulators complain about the high market share of Big 4 audit firms. In this context, it is of interest to examine the drivers of a Big 4 audit firm selection. Despite extensive prior research, there is still a lack of findings form Continental European countries and on the impact of corporate governance on auditor choice. This paper on hand is intended to fill the related research gap. Thus, our study identifies variables that determine the auditor choice of large German listed companies. Based on a sample of 432 firm-year observations for the period 2010–2014, our logistic regression analysis suggests that the corporate governance structure influences auditor choice significantly. Notably, the annual meeting frequency of the audit committee and the size of the supervisory board are positively associated with the engagement of a Big 4 audit firm. However, the meeting frequency of the supervisory board and the compliance to the German corporate governance code are negatively related to the choice of a Big 4 auditor. Additionally, the proportion of female supervisory board members does not exert a significant impact. The results remain stable when the DAX30 observations, for which statutory audits are exclusively performed by Big 4 audit firms, are excluded. The main contribution of our paper is, that it sheds light on the impact of corporate governance variables not analyzed by prior research, like supervisory board characteristics, deviations from a corporate governance code, or the female quota, in a Continental European setting, and that it mainly indicates a complementary relationship. Despite the peculiarities of the German setting, the two-tier corporate governance system and the low level of investor protection, the findings of our study are not only relevant for Germany, since many other Continental European countries are characterized by a similar environment. The study’s findings are of particular interest for regulators when addressing audit market structure problems.     

TO DETER OR TO MODERATE? ALLIANCE FORMATION IN CONTESTS WITH INCOMPLETE INFORMATION

We consider two players' choice about the formation of an alliance ahead of conflict in a framework with incomplete information about the strength of the potential ally. When deciding on alliance formation, players anticipate the self‐selection of other players and the informational value of own and other players' choices. In the absence of these signaling effects, strong players have an incentive to stand alone, which leads to a separating equilibrium. This separating equilibrium can be destabilized by deception incentives if beliefs are updated on the basis of endogenous alliance formation choices. Weak players may find it attractive to appear strong in order to deter competitors from positive effort choices. Strong players may find it attractive to appear weak in order to give their competitors a false sense of security and then beat them with little effort. Moreover, appearing weak allows players to free‐ride when alliances are formed. (JEL D72, D74)     

Firms' (non)responses: The role of ambivalence in the case of population aging in Japan

The literature supports and recommends that firms be responsive to external environments for prosperity and survival. However, many firms do not seem to heed this advice when it comes to important but uncontrollable environmental forces such as population aging. We investigate firms' (non)responses to population aging, one of the grand challenges of our time. While theoretical explanations for firms' responses to external environments abound, surprisingly, we lack concrete empirical evidence about why some companies do not respond to population aging while others do. Building on the cognition–response framework and utilizing a sample of 545 Japanese corporations, we investigate the magnitude and extent of organizations' corporate-level responses to population aging in Japan, the world's most aged society. While controlling for the firms' resource dependence and slack resources, we find robust, positive effects of perceived state certainty on organizational responses. Specifically, we find that perceived state certainty takes both direct and indirect routes (Daft and Weick 1984) to increasing firm response to population aging. We also find that firms' self-perceived controllability has a direct effect on firm response. Most intriguingly, the organization's ambivalence toward the implications of population aging on their business does not directly reduce firm response. Instead, it is found to be a quasi-moderator that interacts with perceived state certainty and negatively affects the responses to population aging. Ambivalence is an important factor that has been largely overlooked and warrants more research attention to address not only this particular grand challenge but also others (e.g., climate change).     

多层Logit结构多模式变量需求网络平衡模型

探讨了多类别多模式变量需求网络平衡模型,模式选择模型采用多层ｌｏｇｉｔ结构,终点选择特定为一个多比例熵出行分配模型,公交车辆的出行时间与同一路网的其他车辆另行时间密切相关,采用变分不等式方法将模型的全部组元集合于一个模型中,并运用基于ＢｌｏｃｋＧａｕｓｓ－Ｓｅｉｄｅｌ分解算法有效地解决了固定需求和多维出行分布网络平衡模型的计算,论文给出了根据智利圣地亚哥市数据由ＥＭＭＥ／２软件包所得到的数值结果。     

Aircraft seating comfort: the influence of seat pitch on passengers' well-being

One of the most important factors influencing aircraft seating comfort in economy class, is legroom. In an airline interior mock up, with the ability to adjust the seat pitch in a range of 28 inches to 43 inches, a study to investigate the influence of seat pitch on passengers' well-being was conducted. In a pre-study, aspects of subjective postural sensations and spatial perception were identified, and a questionnaire was developed. In the main study, 30 subjects rated at different seat pitch settings the spatial perception and the ability of adopting and changing sitting postures. As a result a functional relationship between overall well-being, the subjects' anthropometry and seat pitch was developed. Furthermore it was identified, that there is a maximum overall well-being at a seat pitch of 34 inches to 40 inches, depending on the passengers' anthropometry. A further enlargement of seat pitch, led to a reduction of well-being.     

The effect of framing on the choice of co-payment policies, reducing moral hazard and post-choice-evaluation

This study analyses the impact of two financially equivalent frames of a co-payment policy on the choice between a co-payment policy and one with full cost recovery. It also examines the incentive effect of the co-payment and the post-choice evaluation on the pay-offs in case of unexpected losses, using the example of health insurance. Two experimental studies form the context for an empirical investigation of the theoretical considerations. We examine the framing-related effects of a rebate compared to a premium reduction frame of a co-payment policy. The results confirm that a rebate frame has a positive effect on the intention to choose a co-payment policy. The intention to avoid claims in the premium reduction frame is greater than in the rebate frame. In case of unexpected losses because of high insurance claims, the rebate frame results in less dissatisfaction and causes fewer regret effects. The results support the theoretical considerations that insurance companies should account for these differences and design their co-payment policies according their priorities, either with a rebate or a premium reduction frame.     

Which Inequality Makes People Dissatisfied with Their Lives? Evidence of the Link Between Life Satisfaction and Inequalities

This paper aims at establishing a clear link between different types of inequality and life satisfaction in Europe. We analyse the relationship between life satisfaction and both income inequality and inequality of opportunity using seven waves of the European Social Survey. The results show that in Europe both income inequality and inequality of opportunity reduce people’s life satisfaction. Our main results suggest that all socio-economic groups are dissatisfied with income inequality, whereas primarily low socio-economic individuals worry about inequality of opportunity. We find that expected mobility is very important in explaining the link between inequality and life satisfaction for all socio-economic groups in Europe. We advance the hypothesis that life satisfaction is conditioned by a mix of normative arguments against inequality and by the fear/possibility to lose/gain a good social position. This result complements findings on the mediating role of social mobility in the relationship with subjective well-being.     

The importance of peer relatedness at school for affective well‐being in children: Between‐ and within‐person associations

Two intensive longitudinal studies examining the association between children's feeling of relatedness to peers at school and their affective well‐being were performed. In Study 1, 110 third and fourth graders reported on their positive affect (PA) and negative affect (NA) 4 times daily and on their peer relatedness once a day over 4 weeks. Multilevel analyses revealed that children who reported higher peer relatedness on average also reported higher PA and lower NA (between‐person associations). Moreover, on days when children reported higher peer relatedness than usual, they also reported higher PA, but they did not necessarily report lower NA (within‐person associations). In Study 2, 55 fourth, fifth, and sixth graders indicated their PA, NA, and peer relatedness once a day over 2 weeks. We replicated the findings of Study 1 on both levels. The studies showed that feeling related to peers is associated with high PA at school and at home on a daily basis, illustrating the function of peer relatedness in promoting positive well‐being. The findings further demonstrated the necessity of intensive longitudinal studies focusing on within‐person associations and the importance of measuring both PA and NA in order to capture effects on affective well‐being thoroughly.     

Skilling and deskilling: technological change in classical economic theory and its empirical evidence

This article reviews and brings together two literatures: classical political economists’ views on the skilling or deskilling nature of technological change in England, during the eighteenth and nineteenth centuries when they wrote, are compared with the empirical evidence about the skill effects of technological change that emerges from studies of economic historians. In both literatures, we look at both the skill impacts of technological change and at the “inducement mechanisms” that are envisaged for the introduction of new technologies. Adam Smith and Karl Marx both regarded the deskilling of the labour force as the predominant form of biased technical change, but other authors such as Charles Babbage also took account of capital-skill complementarities and skill-enhancing effects of technological change. For Smith, the deskilling bias was an unintended by-product of the increasing division of labour, which in his view “naturally” led to ever more simplification of workers’ tasks. As opposed to Smith, Marx considered unskilled-biased technical change as a bourgeois weapon in the class struggle for impairing the workers’ bargaining position. Studies of economic historians lend support to Marx’s hypothesis about the inducement mechanisms for the introduction of unskilled-biased innovations, but have produced no clear-cut empirical evidence for a deskilling tendency of eighteenth- and nineteenth-century technological change as a whole. Industrialization in the eighteenth and nineteenth centuries rather led to labour polarization, by simultaneously deskilling a large part of the workforce and raising the demand for some (but fewer) high-skilled workers.