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This study aims to validate the link between production manipulation and a firm’s performance variability (fundamentals and stock returns). It explores whether executives' risk-taking incentives encourage production deviations around the normal level during uncertainty.

Utilizing panel data of manufacturing firms from Compustat over three decades, the study investigates production management practices during economic uncertainty. The Economic Policy Uncertainty Index (EPU) is employed as a key metric. The empirical strategy involves documenting the effect of economic uncertainty on overproduction and underproduction, examining the role of executive compensation and assessing the impact on risk.

The research finds that risk-taking incentives increase over/underproduction, particularly amplifying the extent of underproduction during uncertainty. Production deviation rises, indicating that firms take greater risk by engaging in abnormal business operations. The study’s results are robust against various econometric methods, emphasizing the influence of risk-taking incentives on corporate production decisions.

While providing valuable insights, the study acknowledges inherent limitations, including factors influencing production decisions beyond risk-taking incentives. Further research could explore additional determinants for a comprehensive understanding.

The findings highlight the potential dark side of executive compensation that motivates suboptimal risk-taking decisions, impacting risk, cost of capital and firm performance. Policymakers and compensation committees can use these insights to design efficient systems that mitigate moral hazard problems associated with productivity changes.

The study emphasizes the broader social implications of production manipulation under uncertainty. It prompts discussions on the ethical considerations of managerial opportunism, its potential consequences for stakeholders and market dynamics.

This study contributes to the literature by examining the role of economic uncertainty on production manipulation and the influence of risk-taking incentives. It extends the earnings management literature by considering real activity manipulation and emphasizing the importance of decomposing production deviation into positive and negative values.

This is the first English version of Karl Kautsky’s essay “Theories of Crises,” originally published in 1902 in Die neue Zeit, the theoretical organ of the Social Democratic Party of Germany. Kautsky’s essay was a review of Michael von Tugan-Baranowsky, Studien zur Theorie und Geschichte der Handelskrisen in England (Studies on the Theory and History of Commercial Crises in England), published in 1901. Kautsky’s review of Tugan-Baranovsky’s book is divided into five sections: (1) “Introductory Remarks”; (2) “The Decreasing Tendency of the Rate of Profit”; (3) The Explanation of Crises by Underconsumption; (4) Tugan-Baranovsky’s Theory of Crises; and (5) The Changes in the Character of Crises. We have translated in full the Sections 3 to 5.

This paper aims to present a lean management approach to reduce waste generated by overproduction within a global supply chain setting. Statistics register a considerable increase in inventories which has increased waste because of the overproduction/oversupply throughout the global supply chain, and there has been insufficient research targeting on it.

This study develops a conceptual approach based on the practices of Toyota Production System (TPS). The analysis is performed on four segments of a business: “R&D”, “Production”, “Logistics” and “Service/retailers”. The proposed approach adopts the pull-based lean management system by two modules, “Intra-lean management” and “Inter-lean management”.

A case study is conducted to demonstrate how the proposed approach can be used in a real situation. The ideas and benefits of the proposed approach are also discussed.

The proposed solution can be applied in manufacturing and service industries, as well as in industries where production and R&D are interconnected.

The paper provides a conceptual approach that explains how intra- and inter-lean management can be effectively integrated to achieve a smooth flow in the business. This paper innovates in developing a pull-based driven flow relationship among the four segments of a business, as a response to the lack of integration among them and the increase of inventory in the hands of businesses.

This study examines the relation between internal control material weakness (ICMW) under Section 404 of the Sarbanes-Oxley Act (SOX) and real earnings management. Our measures of real earnings management are abnormal cash flow from operations (ABCFOs), abnormal discretionary expenses (ABDISEXP), and abnormal production cost (ABPROD). We use a sample of 1,824 manufacturing firms over the period 2004–2011 to run regressions of ABCFO, ABDISEXP, and ABPROD on ICMW and other independent variables. We find that ICMW is negatively associated with ABCFOs. Another result that emerges from this study is a positive relation between ICMW and ABPROD. Our results imply that manufacturing firms with materially weak internal controls predominantly use overproduction and excessive price discounts to manage operational activities to achieve earnings targets. As SOX Section 404 is designed to reduce the instances of firms having ICMW, our finding that ICMW firms engage in real earnings management suggests that the use of real earnings management could be reduced as SOX Section 404 succeeds in reducing ICMW.

This study aims to analyze lean wastes for the poultry sector in Turkey and link lean tools to this study, focusing on identifying each lean waste that affects poultry production and proposing solutions for preventing these lean wastes in the sector. The proposed solutions aim to improve processes by suggesting different lean tools and their applications for the poultry sector.

The study consists of two different applications. First, the waste relationship matrix (WRM) was created to reveal the relationship between seven lean wastes and their importance order. Then, after determining lean tools for eliminating lean wastes, the optimum weight ranking and consistency ratio of the most suitable lean tools were calculated for these wastes and ranked with the best-worst method (BWM).

Results showed that overproduction is the most critical waste that impacts other wastes, followed by defect waste. Due to the nature of the sector, these wastes not only result in economic loss for the company but also in food waste and loss and issues related to animal welfare. Furthermore, the Kaizen approach and 5S implementation are the methods to eliminate these wastes. Detailed discussion on the link between lean tools and lean wastes is provided for the poultry sector.

This is the first study that theoretically and empirically identifies the potential lean waste affecting the poultry sector and provides lean tools for eliminating these wastes. Sector-specific explanations and discussions are presented in the study to show the applicability of lean approaches in the poultry sector to eliminate waste. In addition, this study is the first to integrate the WRM and BWM.

The purpose of this study is to refine what is characterized as real earnings management. Research on real earnings management (REM) has expressed concerns that firms deviating from normal business practices may endure a negative impact on future performance. Not all studies have, however, found a negative impact of REM on future performance. As a consequence, a new stream of research is emerging that examines whether actions that would mechanically be identified as REM are truly earnings management or are simply efficient business activities. The authors further this stream of inquiry by identifying factors, i.e. restructurings and expectations of future sales growth, that can be useful in making a distinction between earnings management and “just business”.

To measure REM, the authors rely on two of the proxies of Roychowdhury (2006), abnormal discretionary expenses and abnormal production costs, and regress interactions of these with measures of restructurings and expectations of future sales growth, on future performance.

The authors find that when they control for restructurings, reductions in discretionary expenses that would ordinarily be indicative of REM are instead associated with improved future return-on-assets and security returns. They further find that when they control for future sales growth, overproduction is also associated with improved return on sales as it is with future increases in cost of goods sold.

Together, the results may explain the contradictory results presented in prior research with respect to the impact of REM on future performance – that is, some of what has been identified as REM in prior studies may, in fact, be “just business”.

The use of models for detecting earnings management in the academic literature, using accrual and real manipulation, is commonplace. The purpose of the current study is to compare the power of these models in a United Kingdom (UK) sample of 19,424 firm-year observations during the period 1991–2018. The authors include artificially-induced manipulation of revenues and expenses between zero and ten percent of total assets to random samples of 500 firm-year observations within the full sample. The authors use two alternative samples, one with no reversal of manipulation (sample 1) and one with reversal in the following year (sample 2).

The authors include artificially induced manipulation of revenues and expenses between zero and ten percent of total assets to random samples of 500 firm-year observations within the full sample.

The authors find that real earnings manipulation models have lower power than accrual earnings manipulation models, when manipulating discretionary expenses and revenues. Furthermore, the real earnings manipulation model to detect overproduction has high misspecification, resulting in artificially inflating the power of the model. The authors examine an alternative model to detect discretionary expense manipulation that generates higher power than the Roychowdhury (2006) model. Modified real manipulation models (Srivastava, 2019) are used as robustness and the authors find these to be more misspecified in some cases but less in others. The authors extend the analysis to a setting in which earnings management is known to occur, i.e. around benchmark-beating and find consistent evidence of accrual and some forms of real manipulation in this sample using all models examined.

This study contributes to the literature by providing evidence of misspecification of currently used models to detect real accounts manipulation.

Based on the findings, the authors recommend caution in interpreting any findings when using these models in future research.

The findings address the earnings management literature, guided by the agency theory.

Folding cartons are used in myriad consumer products. For some products, such as hair dye kits, a very high-resolution printing is required. This is typically done using a technology known as Gravure printing. Gravure printing utilizes engraved cylinders which are very expensive. As a result, the printer often combines multiple products on one set of cylinders to minimize the total number of cylinders used. Since the demand between products varies, this can result in overproduction of the low demand products. This chapter presents an integer programming formulation that assigns products across multiple sets of cylinders in order to minimize this overproduction. Sample problems, their solutions and solution times are presented.

The importance of the market in the modern economic order. - Natural exchange. - The impossibility of a general overproduction within natural exchange. - The money-mediated exchange. - The possibility of general overproduction of commodities. - The market. - Simple commodity production. - The regulation of production by consumption. - Capitalist production. - The lack of relation between production and consumption. - Simple reproduction of capital. - Capital accumulation. - The principle of proportional distribution of production. - The two fundamental contradictions of capitalist economy. - Credit. - Dependency of crises on the contradictions of capitalist economy. - The necessity of crises. - Foreign trade.