Countervailing Effects Research Articles

Estimating the safety benefit of separated cycling infrastructure adjusted for behavioral adaptation among drivers; an application of agent-based modelling

Separated cycling infrastructure is a key strategy employed by urban and transport planners to reduce car vs cyclist crashes.We constructed an agent-based model (ABM) to explore the potential effects of introducing progressively greater levels of saturation (e.g., more kms) of separated cycling infrastructure into a transport network in which drivers also demonstrated behavioral adaptation in response to increased exposure to cyclists as suggested by the safety in numbers (SiN) theory.The findings highlight that if behavioral adaptation among drivers is assumed to be a strong mechanism underpinning cyclist safety, the introduction of low levels of separated cycling infrastructure across a network (e.g., few kms) may provide little or no reduction in car vs cyclist crashes. This is due to the countervailing effects that separated infrastructure may have on drivers’ exposure to cyclists; a fundamental contributor to the concept of behavioral adaptation.This study demonstrates the utility of ABMs to explicitly define and model candidate behavioral mechanisms associated with cyclist and vehicle interaction when estimating the interaction of infrastructure and behavioral mechanisms proposed to underlie cyclist safety. Practically, it suggests that greater saturation of separated cycling infrastructure across transport networks may be required to reduce overall car vs cyclist crashes in circumstances where behavioral adaptation is also a strong mechanism contributing to cyclist safety.

The Globalization of Production and Income Inequality in Rich Democracies

Despite prominent and compelling theoretical arguments linking manufacturing imports from the global South to rising income inequality in the global North, the literature has produced decidedly mixed support for such arguments. We explain this mixed support by introducing intervening processes at the global and national levels. At the global level, evolving characteristics of global production networks (GPNs) amplify the effect of Southern imports. At the national level, wage coordination and welfare state generosity counteract the mechanisms by which Southern imports increase inequality, and thereby mitigate their effects. We conduct a time-series cross-section regression analyses of income inequality among eighteen advanced capitalist countries to test these propositions. Our analysis addresses alternative explanations, as well as validity threats related to model specification, sample composition, and measurement. We find substantial variation in the effect of Southern imports across global and national contexts. Southern imports have no systematic effect on income inequality until the magnitude of GPN activity surpasses its world-historical average, or in states with above-average levels of wage coordination and welfare state generosity. With counterfactual analyses, we show that Southern imports would have led to much different inequality trajectories in the North if there were fewer GPNs, and if the prevailing degrees of wage coordination and welfare state generosity were higher. The countervailing effects of GPNs and institutional context call for theories of inequality at the intersection of the global and the national, and raise important questions about distributional politics in the years to come.

A Double‐Edged Sword: The Countervailing Effects of Religion on Cross‐National Violent Crime

ObjectiveThere has been a growing interest in the relationship between culture and crime in recent years, but there is little research investigating the role of religion. To clarify this empirical cleavage, we propose a Durkheimian model of the countervailing effects of religion on violent crime.MethodsWe test our propositions with robust linear models and a large country sample (N = 100).ResultsWe show that religious intensity and belief in an active God are not significantly associated with intentional homicide. However, religious intensity is positively and significantly associated with assault. We also find that belief in an active God is negatively and significantly associated with assault and has a stronger effect than several structural variables.ConclusionThe findings provide partial support for our Durkheimian model and suggest that cultural factors are important for predicting certain types of violent crime.

A Multi-regional Economic Impact Analysis of Alaska Salmon Fishery Failures

Recently, the harvest of Chinook salmon (Oncorhynchus tshawytscha) in some areas of Alaska was severely curtailed due to a significant reduction in the salmon runs. This generated adverse economic impacts in the areas. Unlike previous studies of impacts of changes in fisheries, which often rely on single-region economic impact models, this study uses a multi-regional social accounting matrix (MRSAM) model of three US regions – Alaska, West Coast, and the rest of US – to calculate the multi-regional economic impacts of the Chinook salmon fishery failures, considering the countervailing effects of federal disaster funds paid to commercial salmon fishermen. To estimate the negative effects of the reduced salmon harvest, this study uses “adjusted demand-driven MRSAM model”, which avoids the double-counting problem encountered when a demand-driven model is used to compute the effects of exogenous output change, and overcomes the weakness of Ghosh (1958) approach in estimating the forward-linkage effects. To calculate the positive effects of federal relief payments, this study uses a Leontief demand-driven MRSAM model. Results indicate that the salmon fishery failures have significant adverse economic impacts including both intra-regional (Alaska) and inter-regional (West Coast and the rest of US) impacts, and that the disaster relief mitigates only a small portion of the adverse impacts.

Abstract P094: Genetic Risk, Incident Coronary Heart Disease Events, and the Benefits of a Healthy Lifestyle: Joint and Interacting Effects Across Four US Cohorts

Background: Recent GWAS revealed single nucleotide polymorphisms (SNPs) that cumulatively increase risk of CHD in those of European ancestry. We quantified the magnitude of preventive effects of healthy lifestyle against the countervailing effects of genetic risk on incident CHD, and assessed potential interactions. Methods: We extracted SNPs of genome-wide significance (<5 x 10 -8 ) for CHD from CARDIoGRAMplusC4 GWAS, and created a weighted 57-SNP genetic risk score (GRS). Baseline covariates, healthy lifestyle score (including diet pattern, physical activity, smoking and BMI), and incident CHD were harmonized across 4 US cohorts (WHI, ARIC, CHS, and MESA) using dbGaP data. Pooled analyses were run using one-step individual participant data multivariate regressions in Caucasians without prevalent CVD. Results: Among 22,412 adults, the GRS was associated with incident CHD (n = 3001 cases) across each cohort (pooled GRS quintile (Q)5 vs Q1, RR (95% CI): 1.59 (1.41-1.79)), independent of all demographic and lifestyle variables. The lifestyle score was more strongly associated with CHD (pooled Q1 vs Q5, RR: 1.94 (1.71-2.20)) than the GRS, and better discriminated those who had a CHD event ( P =0.025 for difference in AUROC curves). When compared to population-level analysis, joint effects analysis revealed significant heterogeneity within quartiles of lifestyle score on risk of incident CHD ( Table ). Interactions between the GRS and diet pattern ( P =0.022) and trans fats ( P =0.046) were observed. Effects of trans fats on CHD risk appear to be concentrated in those with a higher GRS: for trans fats >2.4% of energy, RRs for increasing GRS quartiles are 0.92 (0.62-1.36), 1.13 (0.79-1.62), 1.43 (1.01-2.01), and 1.84 (1.30-2.61), compared to those in the lowest quartile of trans fat (<1.3% of energy) and lowest GRS quartile. Conclusion: A joint effects approach reveals significant inter-individual variability in lifestyle on CHD risk by underlying genetic risk that is obscured by a conventional population-level effects approach.

Impacts of Migration and Remittances on Ethnic Income Inequality in Rural China

Summary Migration is often viewed as the best option for poor rural households to exit out of poverty, although the distributional effects of migrants’ remittances tend to be ambiguous in the literature. Given that increasing income inequality is a major concern and policy issue, this paper examines the impacts of migration and migrants’ remittances on income inequality in China’s rural minority areas using recent proprietary household data. Treating migrants’ remittances as a potential substitute for income, the results reveal that migration significantly boosts income for all ethnic groups, although the returns to ethnic minority households tend to be less than for Han households. Decomposition analyses further reveal that migration increases inequality between ethnic groups despite reducing spatial inequality. These countervailing effects imply that the continual transfer of rural–urban migrants will likely lead to spatial convergence despite reinforcing ethnic inequalities in rural minority areas. Importantly, the percentage contribution of ethnic inequality to total inequality is larger than that of spatial inequality across sampled rural locations, thus highlighting the fact that the ethnic dimension is an important, yet often overlooked component of inequality in China.

Greenhouse gas emissions, carbon leakage and net carbon sequestration from afforestation and forest management: A review.

Forests play an important role in climate change mitigation and concentration of CO2 reduction in the atmosphere. Forest management, especially afforestation and forest protection, could increase carbon stock of forests significantly. Carbon sequestration rate of afforestation ranges from 0.04 to 7.52 t C·hm-2·a-1, while that of forest protection is 0.33-5.20 t C·hm-2·a-1. At the same time, greenhouse gas (GHG) is generated within management boundary due to the production and transportation of the materials consumed in relevant activities of afforestation and forest management. In addition, carbon leakage is also generated outside boundary from activity shifting, market effects and change of environments induced by forest management. In this review, we summarized the definition of emission sources of GHG, monitoring methods, quantity and rate of greenhouse gas emissions within boundary of afforestation and forest management. In addition, types, monitoring methods and quantity of carbon leakage outside boundary of forest management were also analyzed. Based on the reviewed results of carbon sequestration, we introduced greenhouse gas emissions within boundary and carbon leakage, net carbon sequestration as well as the countervailing effects of greenhouse gas emissions and carbon leakage to carbon sequestration. Greenhouse gas emissions within management boundary counteract 0.01%-19.3% of carbon sequestration, and such counteraction could increase to as high as 95% considering carbon leakage. Afforestation and forest management have substantial net carbon sequestration benefits, when only taking direct greenhouse gas emissions within boundary and measurable carbon leakage from activity shifting into consideration. Compared with soil carbon sequestration measures in croplands, afforestation and forest management is more advantageous in net carbon sequestration and has better prospects for application in terms of net mitigation potential. Along with the implementation of the new stage of key ecological stewardship projects in China as well as the concern on carbon benefits brought by projects, it is necessary to make efforts to increase net carbon sequestration via reducing greenhouse gas emissions and carbon leakage. Rational planning before start-up of the projects should be promoted to avoid carbon emissions due to unnecessary consumption of materials and energy. Additionally, strengthening the control and monitoring on greenhouse gas emissions and carbon leakage during the implementation of projects are also advocated.

Far from the Tree? Do Private Entrepreneurs Agglomerate Around Public Sector Incumbents During Economic Transition?

While it is well known that state enterprises in transition economies were displaced by private enterprises at a macro level, little is known about whether private entrepreneurs emerged in a way that helped preserve or shift preexisting agglomerations of industrial activity at a microgeographic level. To address this question, we integrate competing perspectives on the role of large, bureaucratic incumbents in spawning entrepreneurs. We conceptualize a trade-off between two countervailing effects of large incumbents on potential entrepreneurs: bureaucratic socialization and exposure to capabilities. This yields novel predictions about how different kinds of startups agglomerate around different kinds of incumbents. We test these predictions using fine-grained geographic data on founding rates by private entrepreneurs in China’s bicycle manufacturing industry. Consistent with our theorized trade-off, we find evidence of a nonmonotonic effect of incumbent size on local founding rates by private entrepreneurs. Additional moderating effects are consistent with boundary conditions on the hypothesized mechanisms. Our results provide the first empirical investigation of the extent to which entrepreneurial activity agglomerated around public sector incumbents during economic transition. We discuss how these insights add to the understanding of economic transition as well as how the context of economic transition adds to the understanding of entrepreneurial spawning.

Multiobjective Evaluation in Countermeasure Selection at Two-Way Stop-Controlled Intersections: Considering Traffic Operation, Safety, and Environment

This study developed a procedure to conduct multiobjective evaluations in the traffic countermeasure (CM) selection process at two-way stop-controlled (TWSC) intersections. The economic benefits of three vehicle safety–related CMs were calculated considering not only safety impacts, but also operational and environmental impacts. First, for each CM, VISSIM simulation models were developed to obtain the average delay, vehicle emissions, and fuel consumption for the intersection before and after the treatment. The traffic operational impacts were calculated as the change in delay costs. The environmental impacts were calculated as the change in vehicle emissions and fuel consumption costs. Next, safety performance functions and crash modification factors were used to calculate the safety impacts as the crash reduction benefits for various CMs. Finally, the life-cycle cost method was used to combine the different components into the total benefit. The Monte Carlo simulation method was used to conduct uncertainty analysis through random sampling from probability descriptions of uncertain input variables to generate a probabilistic description of results. The findings showed, first, that the operational and environmental impacts accounted for a large proportion of the total impacts, which can significantly affect the selection of CMs. Second, the rankings of the CMs differ depending on whether the safety impacts alone are considered or different impacts are considered together. The study illustrates the detailed process of evaluating projects considering multiple objectives. The findings also explain how different objectives can have countervailing effects in improving motorist safety at TWSC intersections.

What Drives the Consumer Credit Spread? An Explanation Based on Rare Event Risk and Belief Dispersion

What drives consumers borrowing/lending and the credit spread over their debt? This paper offers a novel explanation based on rare event risk and belief dispersion in a dynamic general equilibrium model. Heterogeneous beliefs drive consumers to borrow, but the market is incomplete and subject to rare event risk and thus default endogenously occurs in equilibrium. The paper derives the credit spread in closed form and yields a credit spread similar to real data when the model is calibrated. The model also well captures the relationship between belief dispersion, risk-free rate and credit spread. It shows that belief dispersion, rare event risk and wealth distribution together drive both credit spread and risk-free rate. An increase in either rare event risk or belief dispersion leads to a higher credit spread and a lower risk-free rate. However, the underlying mechanisms are quite different, as the former (rare event risk) is due to substitution effect while the latter (belief dispersion) is due to wealth effect. The paper also makes a contribution to the literature on rare disaster by endogenizing default and clarifies Barro(2006)'s argument on the countervailing effects of rare disasters on interest rates.

When should the Ask be a Nudge? The Effect of Default Amounts on Charitable Donations

How does setting a donation option as the default in a charitable appeal affect people's decisions? In eight studies, comprising 11,508 participants making 2,423 donation decisions in both experimental settings and a large-scale natural field experiment, the authors investigate the effect of “choice-option” defaults on the donation rate, average donation amount, and the resulting revenue. They find (1) a “scale-back” effect, in which low defaults reduce average donation amounts; (2) a “lower-bar” effect, in which defaulting a low amount increases donation rate; and (3) a “default-distraction” effect, in which introducing any defaults reduces the effect of other cues, such as positive charity information. Contrary to the view that setting defaults will backfire, defaults increased revenue in the field study. However, the findings suggest that defaults can sometimes be a “self-canceling” intervention, with countervailing effects of default option magnitude on decisions and resulting in no net effect on revenue. The authors discuss the implications of the findings for research on fundraising specifically, for choice architecture and behavioral interventions more generally, and for the use of “nudges” in policy decisions.

Constraints, competition, and competitiveness: explaining the non-linear effect of democratization on political budget cycles

The literature on political budget cycles (PBCs) does not offer a full-fledged theory about the effect of democratization. However, it does imply a non-linear effect along the regime spectrum: positive at the autocratic end, negative at the democratic end. We theoretically develop and empirically test this implication by pointing to two countervailing effects of democratization:executive constraintsandpolitical competition. While the former contains PBCs, the latter stimulates them. Because of their empirical covariation, PBCs occur primarily in hybrid regimes where the decision-making powers of the executive are relatively unrestricted and politics is relatively competitive. We also show that while executive constraints and political competition condition PBCs, what triggers the fluctuations iselectoral competitiveness. Only when incumbents fear electoral defeat, do they create PBCs. The study is based on novel data on public spending in 112 countries, covering the entire regime spectrum over the period from 1960 to 2006.

Copyright Enforcement: Evidence from Two Field Experiments

Effective dispute resolution is important for reducing private and social costs. We study how resolution responds to changes in price and communication using a new, extensive data set of copyright infringement incidences by firms. The data cover two field experiments run by a large stock‐photography agency. We find that substantially reducing the requested amount generates a small increase in the settlement rate. However, for the same reduced request, a message informing infringers of the price reduction and acknowledging the possible unintentionality generates a large increase in the settlement rate; including a deadline further increases response rate. The small price effect, compared to the large message effect, can be explained by two countervailing effects of a lower price: an inducement to settle early, but a lower threat of escalation. Furthermore, acknowledging possible unintentionality may encourage settlement due to the typically inadvertent nature of these incidences. The resulting higher settlement rate prevents additional legal action and significantly reduces social costs.

Countervailing effects of income, air pollution, smoking, and obesity on aging and life expectancy: population-based study of U.S. Counties.

BackgroundIncome, air pollution, obesity, and smoking are primary factors associated with human health and longevity in population-based studies. These four factors may have countervailing impacts on longevity. This analysis investigates longevity trade-offs between air pollution and income, and explores how relative effects of income and air pollution on human longevity are potentially influenced by accounting for smoking and obesity.MethodsCounty-level data from 2,996 U.S. counties were analyzed in a cross-sectional analysis to investigate relationships between longevity and the four factors of interest: air pollution (mean 1999–2008 PM2.5), median income, smoking, and obesity. Two longevity measures were used: life expectancy (LE) and an exceptional aging (EA) index. Linear regression, generalized additive regression models, and bivariate thin-plate smoothing splines were used to estimate the benefits of living in counties with higher incomes or lower PM2.5. Models were estimated with and without controls for smoking, obesity, and other factors.ResultsModels which account for smoking and obesity result in substantially smaller estimates of the effects of income and pollution on longevity. Linear regression models without these two variables estimate that a $1,000 increase in median income (1 μg/m3 decrease in PM2.5) corresponds to a 27.39 (33.68) increase in EA and a 0.14 (0.12) increase in LE, whereas models that control for smoking and obesity estimate only a 12.32 (20.22) increase in EA and a 0.07 (0.05) increase in LE. Nonlinear models and thin-plate smoothing splines also illustrate that, at higher levels of income, the relative benefits of the income-pollution tradeoff changed—the benefit of higher incomes diminished relative to the benefit of lower air pollution exposure.ConclusionsHigher incomes and lower levels of air pollution both correspond with increased human longevity. Adjusting for smoking and obesity reduces estimates of the benefits of higher income and lower air pollution exposure. This adjustment also alters the tradeoff between income and pollution: increases in income become less beneficial relative to a fixed reduction in air pollution—especially at higher levels of income.

Combining traffic efficiency and traffic safety in countermeasure selection to improve pedestrian safety at two-way stop controlled intersections

Decision makers are encouraged to consider multiple objectives (such as traffic efficiency, safety, and environment) together to make decisions. Although there are methods to evaluate each objective respectively, there are few reports or research papers showing how to incorporate these objectives and put it in practice. Thus, this study aims to develop a procedure to incorporate traffic efficiency into the traffic safety countermeasure (CM) selection process. To illustrate the procedure, the economic benefits of four pedestrian safety improvements at crosswalks of major-streets at two-way stop controlled intersections (TWSC) were calculated, considering not only the safety benefits but also the efficiency impacts. First, for each countermeasure the efficiency impacts were calculated as the average delay reduction for both pedestrians and motorists. Sensitivity analysis was conducted to examine how the crucial parameters, including vehicular volume, pedestrian volume, and motorist yield rate, offset the average vehicle and pedestrian delay. Next, the safety impacts were calculated as the crash reduction benefits for different CMs using safety performance functions (SPFs) and crash modification factors (CMFs). Finally, the equivalent uniform annual return (EUAR) method was used to combine the countervailing effects of efficiency and safety by evaluating the economic effectiveness of different CMs. The Monte Carlo (MC) simulation method was used to conduct uncertainty analysis by using random sampling from probability descriptions of uncertain input variables to generate a probabilistic description of results. The findings showed that, first, CMs can have tradeoff impacts for pedestrians and motorists. Second, the efficiency impacts accounted for a large proportion of the total impacts, which can significantly affect the selection of CMs. Third, the rankings of the CMs differ depending on whether the safety impacts alone are considered, or whether both safety and efficiency impacts are integrated. The study illustrates the detailed process of evaluating projects considering multiple objectives for multiple road users. This process offers policy and decision makers a solid and practical reference using existing guidebooks. The findings also explain how safety and efficiency objectives can countervail with each other in improving pedestrian safety at TWSC.

The Dark Side of Tight Financial Control: Causes and Remedies of Dysfunctional Employee Behaviors

Following recent corporate accounting scandals and governance failures, there has been a renewed interest in dysfunctional employee behaviors as potential drawbacks of financial goal-setting. Our study therefore assesses the impact of tight financial results controls as a cause for common behavioral displacements like information manipulation or gaming behavior in combination with countervailing effects of informal controls and management accountants’ business orientation as potential remedies. Based on a cross-sectional survey among 295 large- and medium-sized companies, our results show that even though a strong emphasis on financial results controls is associated with dysfunctional behaviors, higher levels of informal means of control and a more intense business orientation of management accountants are associated with a decrease of behavioral displacements. Our paper contributes to literature in a twofold way. First, it adds to the extant management accounting and control literature by providing comprehensive insights into the interplay between tight financial controls, informal controls, and management accountants’ role-taking behaviors. Second, by using a large-scale survey design, our results reflect a broad array of organizations and control situations.

Effect of 5-HT2A and 5-HT2C receptors on temporal discrimination by mice

Timing deficits are observed in patients with schizophrenia. Serotonergic hallucinogens can also alter the subjective experience of time. Characterizing the mechanism through which the serotonergic system regulates timing will increase our understanding of the linkage between serotonin (5-HT) and schizophrenia, and will provide insight into the mechanism of action of hallucinogens. We investigated whether interval timing in mice is altered by hallucinogens and other 5-HT2 receptor ligands. C57BL/6J mice were trained to perform a discrete-trials temporal discrimination task. In the discrete-trials task, mice were presented with two levers after a variable interval. Responding on lever A was reinforced if the interval was <6.5 s, and responding on lever B was reinforced if the interval was >6.5 s. A 2-parameter logistic function was fitted to the proportional choice for lever B (%B responding), yielding estimates of the indifference point (T50) and the Weber fraction (a measure of timing precision). The 5-HT2A antagonist M100907 increased T50, whereas the 5-HT2C antagonist SB-242,084 reduced T50. The results indicate that 5-HT2A and 5-HT2C receptors have countervailing effects on the speed of the internal pacemaker. The hallucinogen 2,5-dimethoxy-4-iodoamphetamine (DOI; 3 mg/kg IP), a 5-HT2 agonist, flattened the response curve at long stimulus intervals and shifted it to the right, causing both T50 and the Weber fraction to increase. The effect of DOI was antagonized by M100907 (0.03 mg/kg SC) but was unaffected by SB-242,084 (0.1 mg/kg SC). Similar to DOI, the selective 5-HT2A agonist 25CN-NBOH (6 mg/kg SC) reduced %B responding at long stimulus intervals, and increased T50 and the Weber fraction. These results demonstrate that hallucinogens alter temporal perception in mice, effects that are mediated by the 5-HT2A receptor. It appears that 5-HT regulates temporal perception, suggesting that altered serotonergic signaling may contribute to the timing deficits observed in schizophrenia and other psychiatric disorders.

Migration, Remittances and Nutrition Outcomes of Left-Behind Children: A National-Level Quantitative Assessment of Guatemala.

Historically, Guatemalans have suffered high rates of poverty and malnutrition while nearly ten percent of their population resides abroad. Many Guatemalan parents use economic migration, mainly international migration to the United States, as a means to improve the human capital prospects of their children. However, as this investigation shows, the timing of migration events in relation to left-behind children’s ages has important, often negative and likely permanent, repercussions on the physical development of their children. To illustrate these dynamics, this investigation uses an instrumental variables framework to disentangle the countervailing effects of Guatemalan fathers’ absences due to migration from concomitant remittances on left-behind children’s growth outcomes. Based on national-level data collected in 2000, the investigation reveals that the international migration of a father in the previous year is correlated with a 22.1% lower length/height-for-age z-score for the average left-behind child aged ≤ 3. In contrast, the receipt of remittance income has no influence on the physical stature of a child, which may indicate that migrant fathers with young children are not able to achieve economic success soon enough during their ventures abroad to fully ameliorate the harmful effects caused by their absences.

Copyright Enforcement: Evidence from Two Field Experiments

Effective dispute resolution is important for reducing private and social costs. We study how resolution responds to changes in price and communication using a new, extensive dataset of copyright infringement incidences by firms. The data cover two field experiments run by a large stock-photography agency. We find that substantially reducing the requested amount generates a small increase in the settlement rate. However, for the same reduced request, a message informing infringers of the price reduction and acknowledging the possible unintentionality generates a large increase in the settlement rate; including a deadline further increases the response. The small price effect, compared to the large message effect, can be explained by two countervailing effects of a lower price: an inducement to settle early, but a lower threat of escalation. Furthermore, acknowledging possible unintentionality may encourage settlement due to the typically inadvertent nature of these incidences. The resulting higher settlement rate prevents additional legal action and significantly reduces social costs.

Parameter estimation for employee stock ownerships preference experimental design

The experimental design method is a pivotal factor for the reliability of the parameters estimation in the discrete choice model. The traditional orthogonal design is used widely, but insufficient empirical research has been conducted on the effectiveness of these new design methods. Several new experimental design methods, such as D-efficient, Bayesian D-efficient, have been proposed recently. This study finds that the D-adoption has statistically insignificant effect on the growth of productivity. This study is motivated by the lack of documented evidence on the effect of Chinese ESOS. This study contributes to the body of knowledge by documenting evidence on the impact of ESOS on productivity enhancement and earnings management practices. The existing literature on productivity effect and earnings management effect of ESOS falls under two isolated strands of research. No documented studies have been done to investigate these two issues simultaneously using the same dataset. As a result, the existing literature fails to identify which of these two countervailing effects of ESOS is more dominant.