Earnings management using estimates and the timing of adoption of accounting standards: An empirical examination of pensions

This study investigates the relationship between adoption timing of Statement of Financial Accounting Standards 87 and earnings management after adoption. Earnings management, defined consistent with Schipper (1989), is tested through hypotheses using (1) a portfolio approach and (2) pension rates. One Hypothesis uses a Modified Jones (1991) Model as a proxy for discretionary accruals and the other uses pension rate estimates.^ Statistically significant relationships are found between adoption timing and (1) discretionary accruals and (2) estimated rate-of-return (ROR) on pension plan assets. Early adopting firms tend to have lower discretionary accruals after adoption than on-time adopters. They also tend to use higher ROR estimates which are not supported by higher actual returns. Thus, while early adopters may be using ROR to manage income, this tends to not result in higher discretionary accruals. ^

Education, earnings, and rates of return: The case of Taiwan

Educational planners and economists have long recognized the importance of education as a form of productive investment in both advanced countries and developing countries. In the case of Taiwan, along with impressive economic growth, there was an even faster rate of growth of the government's investment in education. This leads some to question whether education has any role in economic development. ^ The purpose of this study is to provide a broad overview of the role of education, in terms of private rates of return to education, in Taiwan. In the process, a variety of hypotheses about human capital theory are examined and an empirical study of Taiwan's earnings functions are tested to show that education can be an important instrument to increase private rate of return, even under conditions of scarcity of natural and physical resources. Data was collected using the Manpower Survey and Manpower Utilization Survey, conducted by the government. Research questions were analyzed using descriptive statistics, frequencies, and regression analysis. ^ Results indicated that the Manpower Development Plans have been the decisive influence in allowing Taiwan to develop its human resources and achieve success in meeting the needs of Taiwan's economy. The structure of age-earnings profiles showed a strong relationship between earnings and education, and the profiles that successively shift upward are associated with higher levels of education. In the cross-sectional results of the rate of return in 1997, each additional year of schooling leads to a 6.2% increase in income. As to the private rates of return to different levels of education, the results found that the private rates of return are 2.88%, 4.85% and 10.05% for primary, secondary and higher education respectively. In an intertemporal comparison for 1980, 1985, 1990 and 1997, the results showed no significant trend except the private rates of return for primary education have been falling from 3.9% to 2.88%. ^ On the basis of this study, for individual student or family in Taiwan, there is likely to be a strong demand for education, particularly at the higher level. Therefore, a well-developed higher educational level becomes essential and the content of curriculum in higher education becomes another crucial question facing planners in Taiwan if they are going to use education as a means to foster economic development. ^

Essays on the determinants of private investment: The effects of relative price uncertainty and political instability

The objective of this study was to provide empirical evidence on the effects of relative price uncertainty and political instability on private investment. My effort is expressed in a single-equation model using macroeconomic and socio-political data from eight Latin American countries for the period 1970–1996. Relative price uncertainty is measured by the implied volatility of the exchange rate and political instability is measured by using indicators of social unrest and political violence. ^ I found that, after controlling for other variables, relative price uncertainty and political instability are negatively associated with private investment. Macroeconomic and political stability are key ingredients for the achievement of a strong investment response. This highlights the need to develop the state and build a civil society in which citizens can participate in decision-making and express consent without generating social turmoil. At the same time the government needs to implement structural policies along with relative price adjustments to eliminate excess volatility in price movements in order to provide a stable environment for investment. ^

Instability of CTG Repeats is Governed by the Position of a DNA Base Lesion through Base Excision Repair

Trinucleotide repeat (TNR) expansions and deletions are associated with human neurodegeneration and cancer. However, their underlying mechanisms remain to be elucidated. Recent studies have demonstrated that CAG repeat expansions can be initiated by oxidative DNA base damage and fulfilled by base excision repair (BER), suggesting active roles for oxidative DNA damage and BER in TNR instability. Here, we provide the first evidence that oxidative DNA damage can induce CTG repeat deletions along with limited expansions in human cells. Biochemical characterization of BER in the context of (CTG)20 repeats further revealed that repeat instability correlated with the position of a base lesion in the repeat tract. A lesion located at the 59-end of CTG repeats resulted in expansion, whereas a lesion located either in the middle or the 39-end of the repeats led to deletions only. The positioning effects appeared to be determined by the formation of hairpins at various locations on the template and the damaged strands that were bypassed by DNA polymerase b and processed by flap endonuclease 1 with different efficiency. Our study indicates that the position of a DNA base lesion governs whether TNR is expanded or deleted through BER.

Oxidative DNA Damage Modulates Trinucleotide Repeat Instability Via DNA Base Excision Repair

Trinucleotide repeat (TNR) expansion is the cause of more than 40 types of human neurodegenerative diseases such as Huntington’s disease. Recent studies have linked TNR expansion with oxidative DNA damage and base excision repair (BER). In this research, we provided the first evidence that oxidative DNA damage can induce CAG repeat deletion/contraction via BER. We found that BER of an oxidized DNA base lesion, 8-oxoguanine in a CAG repeat tract, resulted in the formation of a CTG hairpin at the template strand. DNA polymerase β (pol b) then skipped over the hairpin creating a 5’-flap that was cleaved by flap endonuclease 1 (FEN1) leading to CAG repeat deletion. To further investigate whether BER may help to shorten an expanded TNR tract, we examined BER in a CAG repeat hairpin loop. We found that 8-oxoguanine DNA glycosylase removed the oxidized base located in the loop region of the hairpin leaving an abasic site. Apurinic/apyrimidinic (AP) endonuclease 1 then incised the 5’-end of the abasic site leaving a nick in the loop. This further converted the hairpin into an intermediate with a 3’-flap and a 5’-flap. As a 5’-3’ endonuclease, FEN1 cleaved the 5’-flap, whereas a 3’-5’ endonuclease, Mus81/Eme1, removed the 3’-flap. The coordination between FEN1 and Mus81/Eme1 ultimately resulted in removal of a CAG repeat hairpin attenuating or preventing TNR expansion. To further explore if pol β bypass of an oxidized base lesion, 5’,8-cyclodeoxyadenosine, may affect TNR instability, we examined pol β DNA synthesis in bypassing this base lesion and found that the lesion preferentially induced TNR deletion during BER and Okazaki fragment maturation. The repeat deletion was mediated by the formation of a loop in the template strand induced specifically by the damage. Pol β then skipped over the loop structure creating a 5’-flap that was efficiently removed by FEN1 leading to repeat deletion. Our study demonstrates that pol β-mediated BER plays an important role in mediating TNR deletion and removing a TNR hairpin to prevent TNR expansion. Our research provides a molecular basis for further developing BER as a target for prevention and treatment of neurodegenerative diseases caused by TNR expansion.