Thomas W. Hall

The value of voice in participative decision making.

Relying on concepts found in prospect theory (D. Kahneman & A. Tversky, 1979), the value function of voice-based participation (i.e., the relationship between the amount of voice received and the value attached to that quantity) was examined. In keeping with tenets of prospect theory, the value function of voice exhibited a nonlinear pattern. Points were identified in which voice displayed significant improvements and diminishing marginal returns on response measures of process fairness, decision control, and outcome satisfaction. Task meaningfulness, a moderator of voice-based participation, did not change the general shape of the value function but did influence the intensity of participant reactions at low and high levels of voice. Voice influence, a second moderator of voice-based participation, had minimal impact on participant responses.

A field experiment examining the effects of membership in voting majority and minority subgroups and the ameliorating effects of postdecisional voice

This field study used 80 employees of a data-processing firm to examine the consequences of membership in voting majority and minority subgroups after implementation of a decision and the ability of postdecisional voice to ameliorate the negative consequences of membership in the voting minority. In the absence of postdecisional voice, employees in the minority subgroup perceived the decision process as less fair, were less satisfied with the decision outcome, reported lower levels of task commitment, and produced 41% less output than employees in the voting majority subgroup. Following postdecisional voice, employees in the voting minority subgroup reported improved perceptions of fairness and task commitment, and their output increased by 34%. Postdecisional voice had no detectable effect on employee satisfaction with the decision outcome.

An empirical test of the effect of asset aggregation on valuation accuracy

Significant increases in the general price level during the past two decades have precipitated an ongoing debate concerning possible inadequacies of financial reports and taxation laws based on historical costs. Many proposed solutions have centered on various methods of asset valuation. Two American Accounting Association committees [1964 and 1966] suggested that direct methods of valuation estimation (appraisal, market quotation) were theoretically preferred, but that adjustments by price indices could be used as surrogates. Regarding the latter, however, there is some uncertainty about how many price indices should be used in the valuation process. Some suggest that a number of price indices will be necessary to ensure reasonably accurate valuations (Arthur Andersen & Co. [1979]). In contrast, others suggest that the use of numerous indices may not significantly improve valuation accuracy (Boersema [1974]), and Sunders [1978] analysis shows that the use of additional indices sometimes results in less accurate valuation. The purpose of this paper is to offer empirical evidence concerning the effect of the number of price indices on the accuracy of valuation. In Section 1, I briefly review prior works that have addressed similar research questions. The methodology is described in Section 2, followed by the results and analysis in Section 3. Section 4 contains the limitations and conclusions of the study.

Firm-Specific Asset Valuation Accuracy Using A Composite Price-Index

One unresolved issue concerning how firms should report the effects of changing prices in their financial statements is whether accounts should be adjusted for changes in the general level of prices or changes in specific prices (i.e., replacement costs). In 1976, reacting to a perceived need of investors, the Securities and Exchange Commission imposed a requirement on large publicly held companies to disclose certain replacement cost data (SEC [1976]). Later, the Financial Accounting Standards Board issued a standard which requires certain large publicly held companies to disclose limited supplementary data on both a general pricelevel-adjusted basis (constant dollar) as well as a current cost basis (FASB [1979]). For current cost disclosures, the Board encouraged firms to experiment with alternative estimation techniques including the use of specific price indices. If specific indices are to be used to estimate current values, a second issue which arises is how many indices should be used? One possibility, which should yield a high degree of accuracy, would be to use a specific price index for each industry asset class.1 Another possibility, which has been explored in some fashion by several authors, would be to use varying numbers of broader indices (e.g., see Tritschler [1969], Hohl [1977],

The Estimation of Monetary Gains and Losses in Diverse International Economic Environments

Abstract This study provides empirical evidence about the accuracy of the shortcut techniques for estimating monetary gains and losses sanctioned by the UK and US standard-setting bodies. Our analysis is based on a sample of 300 firms diversified across 30 countries and three levels of inflation. We conclude that shortcut estimation techniques perform poorly, producing average errors five to 10 times as large as estimates based on the more sophisticated methodology of numerical mathematics. These results hold regardless of the rate of inflation incurred or the monetary base used. When judged relative to a revenue-based materiality measure, the economic significance of these errors is substantial in international economic environments exhibiting the highest levels of inflation, and may also be material for a subset of firms that operate in countries with intermediate and lower levels of inflation.