We review and evaluate the methods commonly used in the accounting literature to correct for cross-sectional and time-series dependence. While much of the accounting literature studies settings in which variables are cross-sectionally and serially correlated, we find that the extant methods are not robust to both forms of dependence. Contrary to claims in the literature, we find that the Z2 statistic and Newey-West corrected Fama-MacBeth standard errors do not correct for both cross-sectional and time-series dependence. We show that extant methods produce misspecified test statistics in common accounting research settings, and that correcting for both forms of dependence substantially alters inferences reported in the literature. Specifically, several findings in the implied cost of equity capital literature, the cost of debt literature, and the conservatism literature appear not to be robust to the use of well-specified test statistics.

Topical photodynamic therapy (PDT) is effective in the treatment of certain non-melanoma skin cancers and is under evaluation in other dermatoses. Its development has been enhanced by a low rate of adverse events and good cosmesis. 5-Aminolaevulinic acid (ALA) is the main agent used, converted within cells into the photosensitizer protoporphyrin IX, with surface illumination then triggering the photodynamic reaction. Despite the relative simplicity of the technique, accurate dosimetry in PDT is complicated by multiple variables in drug formulation, delivery and duration of application, in addition to light-specific parameters. Several non-coherent and coherent light sources are effective in PDT. Optimal disease-specific irradiance, wavelength and total dose characteristics have yet to be established, and are compounded by difficulties comparing light sources. The carcinogenic risk of ALA-PDT appears to be low. Current evidence indicates topical PDT to be effective in actinic keratoses on the face and scalp, Bowen's disease and superficial basal cell carcinomas (BCCs). PDT may prove advantageous where size, site or number of lesions limits the efficacy and/or acceptability of conventional therapies. Topical ALA-PDT alone is a relatively poor option for both nodular BCCs and squamous cell carcinomas. Experience of the modality in other skin diseases remains limited; areas where there is potential benefit include viral warts, acne, psoriasis and cutaneous T-cell lymphoma. A recent British Photodermatology Group workshop considered published evidence on topical PDT in order to establish guidelines to promote the efficacy and safety of this increasingly practised treatment modality.

Background Financial incentive designs to increase physical activity have not been well-examined. Objective To test the effectiveness of 3 methods to frame financial incentives to increase physical activity among overweight and obese adults. Design Randomized, controlled trial. (ClinicalTrials.gov: NCT 02030119) Setting University of Pennsylvania. Participants 281 adult employees (body mass index ≥27 kg/m2). Intervention 13-week intervention. Participants had a goal of 7000 steps per day and were randomly assigned to a control group with daily feedback or 1 of 3 financial incentive programs with daily feedback: a gain incentive ($1.40 given each day the goal was achieved), lottery incentive (daily eligibility [expected value approximately $1.40] if goal was achieved), or loss incentive ($42 allocated monthly upfront and $1.40 removed each day the goal was not achieved). Participants were followed for another 13 weeks with daily performance feedback but no incentives. Measurements Primary outcome was the mean proportion of participant-days that the 7000-step goal was achieved during the intervention. Secondary outcomes included the mean proportion of participant-days achieving the goal during follow-up and the mean daily steps during intervention and follow-up. Results The mean proportion of participant-days achieving the goal was 0.30 (95% CI, 0.22 to 0.37) in the control group, 0.35 (CI, 0.28 to 0.42) in the gain-incentive group, 0.36 (CI, 0.29 to 0.43) in the lottery-incentive group, and 0.45 (CI, 0.38 to 0.52) in the loss-incentive group. In adjusted analyses, only the loss-incentive group had a significantly greater mean proportion of participant-days achieving the goal than control (adjusted difference, 0.16 [CI, 0.06 to 0.26]; P = 0.001), but the adjusted difference in mean daily steps was not significant (861 [CI, 24 to 1746]; P = 0.056). During follow-up, daily steps decreased for all incentive groups and were not different from control. Limitation Single employer. Conclusion Financial incentives framed as a loss were most effective for achieving physical activity goals. Primary Funding Source National Institute on Aging.

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Prior research argues that a manager whose wealth is more sensitive to changes in the firm‫׳‬s stock price has a greater incentive to misreport. However, if the manager is risk-averse and misreporting increases both equity values and equity risk, the sensitivity of the manager‫׳‬s wealth to changes in stock price (portfolio delta) will have two countervailing incentive effects: a positive "reward effect" and a negative "risk effect. " In contrast, the sensitivity of the manager‫׳‬s wealth to changes in risk (portfolio vega) will have an unambiguously positive incentive effect. We show that jointly considering the incentive effects of both portfolio delta and portfolio vega substantially alters inferences reported in prior literature. Using both regression and matching designs, and measuring misreporting using discretionary accruals, restatements, and enforcement actions, we find strong evidence of a positive relation between vega and misreporting and that the incentives provided by vega subsume those of delta. Collectively, our results suggest that equity portfolios provide managers with incentives to misreport when they make managers less averse to equity risk. The Relation Between Equity Incentives and Misreporting:The Role of Risk-Taking Incentives AbstractPrior research argues that a manager whose wealth is more sensitive to changes in the firm's stock price has a greater incentive to misreport. However, if the manager is risk-averse and misreporting increases both equity values and equity risk, the sensitivity of the manager's wealth to changes in stock price (portfolio delta) will have two countervailing incentive effects: a positive "reward effect" and a negative "risk effect." In contrast, the sensitivity of the manager's wealth to changes in risk (portfolio vega) will have an unambiguously positive incentive effect. We show that jointly considering the incentive effects of both portfolio delta and portfolio vega substantially alters inferences reported in prior literature. Using both regression and matching designs, and measuring misreporting using discretionary accruals, restatements, and enforcement actions, we find strong evidence of a positive relation between vega and misreporting and that the incentives provided by vega subsume those of delta. Collectively, our results suggest that equity portfolios provide managers with incentives to misreport when they make managers less averse to equity risk.