Charles R. Enis

The impact of current-valued data on the predictive judgments of investors

Abstract This research employed a human information processing experiment to study the impact of replacement cost (RC) on the predictive judgments of investors. Sophisticated and unsophisticated investors were provided with either historic cost (HC) or both HC and RC data and were asked to predict the share price performance of chemical and drug stocks. The RC data were associated with lower accuracy and consensus among those who were relatively high users of it as determined by their response models.

Expert-novive judgments and new cue sets: Process versus outcome

Abstract This paper reports on an experiment that investigated the influence of a new cue set on the decision-behavior of actual expert and novice investors. Both subject groups were provided with financial cues constructed from both traditional and inflation-adjusted accounting data compiled from annual reports. The task required the subjects to make recommendations concerning the attractiveness of forty stocks from the chemical and drug industries. A regression model that controlled for predecisional influences and artifacts associated with simple decision-processes was used to analyze the data. The experts relative to the novices made recommendations that were more consistent with the normative prescription of the new cue set.

Leveling the Informational Playing Field

This study uses experimental data to compare the information generated by professional and nonprofessional investors when both groups receive access to the same financial disclosures. We also manipulate the disclosure level for both subject groups. Using the method developed by Barron, Kim, Lim and Stevens (1998), we then analyze the information contained in stock price forecasts that were made by the experimental subjects. Professionals generally possessed more information than nonprofessionals. The higher level of disclosure did not affect the information possessed by the professional investors. However, we find that a higher level of disclosure is associated with more private information being produced (or inferred) by nonprofessional investors. As a result, these subjects realized a significant improvement in the accuracy of their mean forecasts relative to their individual forecasts. This finding suggests that the enhanced capacity of firms to widely disclose information to all market participants via the Internet, together with the SEC’s new “Fair Disclosure (FD)” regulation, has the potential to produce a significant increase in privately inferred information for on-line nonprofessionals, potentially resulting in the aggregation of more diverse information into share prices.

Infrastructure taxes, investment policy, and intermodal competition for the transportation industries

Abstract Recent deficit reduction proposals have included the suggestion that infrastructure taxes be substantially increased to finance the deficits as well as to rehabilitate the nations deteriorating transportation infrastructure. As such, the economic consequences of changes in tax policy involving transportation infrastructure are important managerial and public policy considerations. Governmental promotion, subsidies, and user taxes are also generally thought to be important determinants of intermodal competition and resource allocation. The present study provides a market-based methodology to empirically determine the net economic effects of a major highway user tax-infrastructure improvement “package” on the competitive balance between the trucking and rail industries and on the competitiveness of different types of motor carriers. Based on the findings, the economic implications for management and future public policy actions are presented.

Income Reporting and the Phaseout of Exemptions

This study investigates taxpayer behavior in response to the phaseout of exemptions. This provision implicitly creates fifty

The Impact of the 1986 Tax Reform Act on Income Shifting from Corporate to Shareholder Tax Bases: Evidence from the Motor Carrier Industry

2,500 intervals based on the adjusted gross income (AGI) of high-income taxpayers. Certain individuals can save taxes by adjusting AGI to fall near the top of the previous interval. Thus, the distribution of their reported AGI is hypothesized to be disproportionately greater near the top of these intervals. This study uses tax return data with univariate tests to detect this “bunching effect” and logit models to profile taxpayer attributes that are associated with this behavior. Revenue and efficiency estimates are also addressed. Understanding responses to phaseouts is important as the tax system uses such to unobtrusively raise revenues and target incentives. This bunching effect was observed for the third and fourth years following enactment.However, no bunching was observed for the first two years or for the fifth year following enactment.