A laboratory market examination of the consumer price response to information about producers' costs and profits

Article Abstract:

Consumer price response to market events was examined using laboratory market information. Predicted information effects were investigated using financial information structures in nine laboratory markets. Various responses were generated depending on the data reported on the event. Economically forecasted price increases brought about rapid response due to data reporting increased marginal costs for sellers, while data reporting increased profits for sellers brought about resistance to price increase. The principle of dual entitlements forms the basis for these information effects. Results of the study indicate that consumer behavior in competitive financial markets can be influenced by financial disclosures.

Economic aspects, Prices, Financial markets, Consumer behavior

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The phantom federal income taxes of General Dynamics Corporation

Article Abstract:

The annual reports and tax returns filed by General Dynamics Corp. for the period from 1973 to 1984 are examined, since there is an alleged possibility that the company has underpaid its federal taxes (according to an article printed in the New York Times on February 1, 1985, page 27). It is reported that General Dynamics has not paid taxes since 1972, and that during the same period has distributed more than $200 million to shareholders. (Shareholder distributions are most often tied to corporate profitability.) The research dramatically demonstrates the difference between financial statement accounting (book methods) and tax return accounting (tax methods). Book-tax differences are identified and analyzed.

Case studies, Tax accounting, Accounting and auditing, Financial statements, Corporation reports, Company reports, General Dynamics Corp., GD

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Relative measurement errors among alternative pension asset and liability measures

Article Abstract:

The measures of pension assets and liabilities disclosed under Statement of Financial Accounting Standards No. 87 (SFAS 87) are studied to find out which reflect most accurately those that investors implicitly assess when they value the firm. No single measure is seen to be most appropriate among the many methods said to have conceptual merit among those disclosed under SFAS 87, but the controversies concerning the Financial Accounting Standards Board (FASB) deliberations on these three asset and five liability measurement choices are considered in the research. Two primary accounting choice characteristics favored by the FASB were used: reliability and relevance.

Liabilities (Accounting), Measurement, Pensions, Financial Accounting Standards Board, Assets (Accounting)

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