A fundamental role of financial reporting is to provide information useful in forecasting future cash flows. Applying up-to-date time series modelling techniques, this study provides direct evidence on the usefulness of quarterly data in predicting future operating cash flows. Moreover, we show that the predictive gain from using quarterly data is larger for asset-heavy industries and industries with higher levels of earnings smoothness. This study contributes to the accounting literature by examining the usefulness of quarterly financial statements in predicting the realization of future cash flows. Our results help fill the gap in knowledge on quarterly financial statements and provide new insights on why the frequency of financial reporting matters. In addition, our findings have important policy implications for the ongoing debate over interim reporting requirements in multiple jurisdictions around the world.

For high‐profile positions, should applicant identities be made public within the organisation (“open search”) or kept confidential (“secret search”)? We construct a model where an organisation seeks to hire, but where candidates' abilities are private information unless it uses open search. Rejected applicants, under open search, suffer disutility. We find: salaries are lower under secret search, the expected ability of applicants decreases as the posted (open search) salary increases, secret search is preferred by organisations where quality of candidate is relatively unimportant, and organisations will, for some parameter values, choose secret search even when open search is more efficient.

CONTEXT: When errors occur in clinical settings, it is important that they are recognised without defensiveness so that prompt corrective action can be taken and learning can occur. Cognitive dissonance - the uncomfortable tension we experience when we hold two or more inconsistent beliefs - can hinder our ability to respond optimally to error. OBJECTIVES: The aim of this paper is to describe the effects of cognitive dissonance, a construct developed and tested in social psychology. We discuss the circumstances under which dissonance is most likely to occur, provide examples of how it may influence clinical practice, discuss potential remedies and suggest future research to test these remedies in the clinical context. METHODS: We apply research on cognitive dissonance from social psychology to clinical settings. We examine the factors that make dissonance most likely to occur. We illustrate the power of cognitive dissonance through two medical examples: one from history and one that is ongoing. Finally, we explore moderators at various stages of the dissonance process to identify potential remedies. RESULTS: We show that there is great opportunity for cognitive dissonance to distort judgements, delay optimal responses and hinder learning in clinical settings. We present a model of the phases of cognitive dissonance, and suggestions for preventing dissonance, reducing the distortions that can arise from dissonance and inhibiting dissonance-induced escalation of commitment. CONCLUSIONS: Cognitive dissonance has been studied for decades in social psychology but has not had much influence on medical education research. We argue that the construct of cognitive dissonance is very relevant to the clinical context and to medical education. Dissonance has the potential to interfere with learning, to hinder the process of coping effectively with error, and to make the accepting of change difficult. Fortunately, there is the potential to reduce the negative impact of cognitive dissonance in clinical practice.

There is much education and training devoted to the avoidance, early detection and mitigation of errors in the ED. Despite this, errors remain a common occurrence and at times contribute to adverse events. Patients bear the bulk of this burden, but staff also suffer. This article provides 12 tips to help trainees cope in a productive way after making an error.

Applied statisticians and pharmaceutical researchers are frequently involved in the design and analysis of clinical trials where at least one of the outcomes is binary. Treatments are judged by the probability of a positive binary response. A typical example is the noninferiority trial, where it is tested whether a new experimental treatment is practically not inferior to an active comparator with a prespecified margin δ. Except for the special case of δ = 0, no exact conditional test is available although approximate conditional methods (also called second‐order methods) can be applied. However, in some situations, the approximation can be poor and the logical argument for approximate conditioning is not compelling. The alternative is to consider an unconditional approach. Standard methods like the pooled z‐test are already unconditional although approximate. In this article, we review and illustrate unconditional methods with a heavy emphasis on modern methods that can deliver exact, or near exact, results. For noninferiority trials based on either rate difference or rate ratio, our recommendation is to use the so‐called E‐procedure, based on either the score or likelihood ratio statistic. This test is effectively exact, computationally efficient, and respects monotonicity constraints in practice. We support our assertions with a numerical study, and we illustrate the concepts developed in theory with a clinical example in pulmonary oncology; R code to conduct all these analyses is available from the authors.

Guanxi social networks are part of the fabric of Chinese society and central to every aspect of Chinese life including work. The relationship between guanxi and cronyism has been researched and discussed by scholars in supervisor–subordinate guanxi (SSG) studies. However, SSG cannot explain the full extent of cronyism in Chinese management, which usually encompasses a network of actors including a supervisor, a subordinate, a third party (called ‘leader’) who has a higher ranking than a subordinate, and possibly an intermediary between a leader and a supervisor in the same organization. Consequently, this paper develops a new construct leader–follower guanxi (LFG) to explain cronyism in Chinese management. LFG is defined as the existence of direct particularistic (ingroup) ties associated with a particular set of differentiated behavioral obligations based on social norms between a leader and a follower in the same organization. We examine the relationship between LFG and cronyism in Chinese organizations and propose that LFG will be positively associated with cronyism. We then use Chinese ‘face’ theory (mianzi and lian) to illustrate how LFG engenders cronyism in Chinese management. We assert that LFG serves as an invisible hand of cronyism in Chinese organizations. Finally, we consider how to develop leadership and HR practices that prevent cronyism in Chinese organizations.

Baumeister and Kilian (Journal of Business and Economic Statistics, 2015, 33(3), 338–351) combine forecasts from six empirical models to predict real oil prices. In this paper, we broadly reproduce their main economic findings, employing their preferred measures of the real oil price and other real-time variables. Mindful of the importance of Brent crude oil as a global price benchmark, we extend consideration to the North Sea-based measure and update the evaluation sample to 2017:12. We model the oil price futures curve using a factor-based Nelson–Siegel specification estimated in real time to fill in missing values for oil price futures in the raw data. We find that the combined forecasts for Brent are as effective as for other oil price measures. The extended sample using the oil price measures adopted by Baumeister and Kilian yields similar results to those reported in their paper. Also, the futures-based model improves forecast accuracy at longer horizons.

The consequences of reduced fertility and mortality on the age distribution are an issue for most developed countries, but especially for the ‘Asian tiger’ economies. We use functional data analysis forecasting techniques to project the population of Hong Kong. Our projections include error estimates that allow for forecasting error as well as exogenous variations of fertility and migration numbers. We separate out the effects of pure demographic shifts from projected behavioural changes in labour force participation.This enables us to look at the kinds of changes in labour force participation that would be required to offset the aging effects that we estimate.

Bivariate copula regression allows for the flexible combination of two arbitrary, continuous marginal distributions with regression effects being placed on potentially all parameters of the resulting bivariate joint response distribution. Motivated by the risk factors for adverse birth outcomes, many of which are dichotomous, we consider mixed binary‐continuous responses that extend the bivariate continuous framework to the situation where one response variable is discrete (more precisely, binary) whereas the other response remains continuous. Utilizing the latent continuous representation of binary regression models, we implement a penalized likelihood–based approach for the resulting class of copula regression models and employ it in the context of modeling gestational age and the presence/absence of low birth weight. The analysis demonstrates the advantage of the flexible specification of regression impacts including nonlinear effects of continuous covariates and spatial effects. Our results imply that racial and spatial inequalities in the risk factors for infant mortality are even greater than previously suggested.

This study explores the relationship between corporate social responsibility (CSR), financial misstatements and SEC enforcement actions. We find that firms with higher CSR are less likely to receive SEC enforcement actions for financial misstatements. Drawing on insights from stakeholder theory and the reputational literature, we identify two channels underpinning this relationship: (i) firms with higher CSR are less likely to engage in financial misstatements and (ii) the reputational effect of CSR reduces the likelihood of SEC enforcement actions. We find empirical evidence consistent with both channels.