A large theoretical and empirical literature examines the role of the accounting information quality (Bushman and Smith, 2001, Bagaeva, 2008, Chan and Lee, 2009, Zhiying et al., 2012, Ran et al., 2015). One line of research (Biddle and Hilary, 2006, McNichols and Stubben, 2008, Biddle et al., 2009, Chen et al., 2011) suggests that higher quality information enables managers to identify better investment opportunities. Several studies also propose that auditor specialization can be used to reduce the information asymmetry problems (Almutairi et al., 2009, DeBoskey and Jiang, 2012, Yaghoobnezhada et al., 2014): A specialist’s knowledge of the industry can be developed through vast auditing experience, specialized staff training, and large investments in information technology. This industry-specific knowledge allows specialist auditors to provide higher quality audit service by reducing the information asymmetry through their greater ability to detect significant anomalies.

Theoretical models (Balsam et al., 2003, Lai, 2011) predict that, despite the limited evidence, a highly acquired audit quality is extremely useful for improving investment efficiencies, especially with respect to overinvestment. Based on these premises, the main purpose of this paper is to combine these two mechanisms and analyze the effect of the accounting information quality (AIQ) and the auditor specialization on investment efficiency.

Chen et al. (2011), who examines the relationship between the information quality and investment, find that financial reporting quality enhances investment in private firms in emerging countries. We also expect to find this association in a sample of industrial firms. In relation to the role of the auditor specialization in investment efficiency, to the best of our knowledge, this is the first study that empirically examines its effect on both underinvestment and overinvestment.

As an extension of our research, we examine how the auditor specialization moderates the AIQ effect on investment efficiency, i.e., whether such an AIQ effect on investment efficiency is increasing or decreasing with the presence of a specialist auditor. We could expect both effects:

On the one hand, the reduction of the information asymmetry and more reliable accounting numbers, due to higher AIQ, could lead to a more effective monitoring due to the specialist auditors and, consequently, the AIQ effect on investment efficiency would turn out to be higher for firms with greater AIQ and auditor specialization.

On the other hand, firms with higher accounting quality are likely to help the manager reduce the adverse selection and moral hazard and allow managers to better identify investment opportunities (Biddle and Hilary, 2006). So, under this assumption, we would expect that the importance of AIQ in reducing information asymmetries will be higher in firms whose auditor is an industry specialist than that with a company whose auditor is not a specialist.

Most studies use the discretionary portion as a measure of information quality. Gomariz and Bellesta (2014) consider different proxies for the quality of information: the model of discretionary accruals suggested by Kasznik (1999), the model of accruals quality suggested by Dechow and Dichev (2002) and the model of discretionary revenues developed by McNichols and Stubben (2008).

Our results show that the AIQ reduces overinvestment, while the specialist auditor reduces the underinvestment. Moreover, our results also reveal that the AIQ effect on investment efficiency is positive for the firms whose auditor is an industry specialist, highlighting the substitution role of AIQ and auditor specialization in reducing information asymmetries and monitoring manager’s behavior to such a way as expropriation can be greatly restricted.

Our paper contributes to a growing body of literature dealing with empirical evidence on AIQ and auditor specialization roles in improving investment efficiency. Our findings reveal that, in this context, the main concern of auditors is overinvestment, because it is through overinvestment that auditors expropriate managers, and that it is only through higher AIQ and auditor specialization could inefficiency be reduced.

Moreover, the present work constitutes the first study to analyze the interaction effect between the AIQ and the auditor specialization on improving investment efficiency, and our findings suggest that both mechanisms can play a substitution role in reducing overinvestment.

Questions:

Elaborate the research problems and the research questions

Navigate to the threaded discussion and respond to the following prompts: What empirical evidence supports the theoretical approach of the agency in which you are doing your practicum? What human rights does your agency commit to, and what social justice issues does it address? What client groups might feel positively or negatively toward your agency and why? How does the agency determine whether it is effective?

Empirical studies in Economics and Education have proven without a doubt that a college education is worth it, from a cost-benefit analysis. While obviously not all colleges and college degrees are created equal, earning a college degree significantly boosts annual wages, on average. The question is however, what are the exact channels through which college education improves earnings? I will offer you 3 "theories" and I will ask you to tell me which of the 3 you think are valid explanations (can be more than 1) and also which do you think is the most important one? There is no correct or wrong answer here. I simply want you to think about it and properly reason your answers.

1. The human capital theory - by getting a college education, students acquire and develop skills that increase their productivity in the work force, which results in higher wages.

2. The college selection theory - people who go to college are overall smarter/harder working/more productive/etc. to begin with. These people would have gotten higher wages even if they hadn't gone to college. College attendance just happened to be there. This is essentially a story of a spurious correlation. This theory claims there is no causality between attending college and earnings, but simply that college attendance correlates well with certain innate abilities which are rewarded on the job market.

3. The signaling theory - people who earn college degrees are overall smarter/harder working/more productive/etc., but the reason they earn higher wages is that they earned a degree and that degree signals to employers that these students are overall better workers. This is an incomplete information story - employers do not know how productive you are but they can infer that from you having a degree. Unlike theory 2 states, these students would not have earned higher waged had they not gone to college simply because there wouldn't be anything to certify to employers that these students are truly more productive.

While this chapter discussed the many benefits of diversity, an alternative view suggests that no empirical evidence exists to show that a diverse workforce has a positive effect on organizational performance, employee commitment, and employee satisfaction. In fact, anecdotal evidence indicates that diversity can negatively affect business performance because of the possibility for internal conflict, dissension, and turnover. What is your reaction to this perspective in light of the content of this chapter? Do these arguments have merit? Why or why not?

1a. Empirical evidence regarding the effects of currency devaluation on the balance of trade indicates that

1b. By decreasing the relative production costs of U.S. companies, a dollar appreciation tends to lower U.S. export prices in foreign-currency terms, which induces an increase in the amount of U.S. goods exported abroad.

1c. Which approach considers the extent by which foreign and domestic prices adjust to a change in the exchange rate in the short run?

1d. According to the Absorption approach, a currency depreciation leads to an improvement in the balance of trade when a country

While this chapter discussed the many benefits of diversity, an alternative view suggests that no empirical evidence exists to show that a diverse workforce has a positive effect on organizational performance, employee commitment, and employee satisfaction. In fact, anecdotal evidence indicates that diversity can negatively affect business performance because of the possibility for internal conflict, dissension, and turnover. What is your reaction to this perspective in light of the content of this chapter? Do these arguments have merit? Why or why not?

You are informed that there is empirical evidence that developed countries have much higher rates of COVID-19 infection than developing countries. A researcher informs you that this is a very strong and significant evidence on the negative causal relationship between economic development and infection rates. a- Do you agree that this reflects a negative relation between economic development and infection rates? Explain. (hint: negative is referring to the direction of the relation or the slope if you were to graph it). [2.5 marks]

b- Do you agree that this evidence is significant? Explain [2.5 marks]

c- Do you agree that this is a causal relation? Support your answer by providing a reason

Given your answers to the empirical section of this problem set (the new policies are Fed cuts rate to zero, launches more bond purchases in historic moves to fight coronavirus), what should we expect to see with aggregate output in the U.S.? With unemployment? Inflation? Illustrate your answers using a graph.

Describe how the U.S. economy would go back to its medium run equilibrium once COVID-19 is controlled. Illustrate your answer using a graph

Given their performance record and based on empirical rule what would be the upper bound of the range of sales values that contains 68% of the monthly sales?

What exactly does it mean when a plant has a scientific name that specifies a vairety, for example Nothofagus solandri var. cliffortioides, or when the name includes an "x", as in Populus maximowiczii Henry x trichocarpa, Populus xcanadensis, or "Crataegus x macrocarpa"?

All of these species are in the USDA Plants database (of plants that occur in the US). There are > 6000 occurences of the string " var. " ~500 occurances of " ssp. " and only a handful occurences of " x " in the database,

• Does the x indicate that a plant is a hybrid, and are the varied uses indicate a different meaning?
• Does the use of " var " mean that the plant is a variety?
  • Does it mean that each of these species has been cultivated and/or bred by a human?
• Does "ssp" mean that the plant is distinct yet compatible with others in the species?
• is there a way to identify a that a plant is cultivated based on its scientific name?