We test the ability of analyst characteristics to explain relative forecast accuracy across legal origins (common law versus civil law). Common‐law countries generally have more effective corporate governance mechanisms, including stronger investor protection laws and inputs provided through higher‐quality financial reporting systems. In this type of environment, we predict that analysts with superior ability and resources in common‐law countries will more consistently outperform their peers because appropriate market‐based incentives exist. In civil‐law countries, where the demand for earnings information is reduced because of weaker corporate governance mechanisms and lower‐quality financial reporting, we predict that analysts with superior ability will less consistently provide superior forecasts. Results are consistent with our expectations and suggest an association between legal and financial reporting environments and analysts' forecast behavior.

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Activity‐based costing (ABC) is at the center of the larger management perspective known as activity‐based management, or ABM. Despite its popularity in the literature, relatively little is still known about the details of ABC, especially in government circles. There are many unanswered questions relating to the details of how to go about implementing ABC, its possible uses, and its costs and benefits. Indeed, it is still unclear to many whether it is even appropriate to use ABC in government, given the reality that many governmental programs do not sell their services This article attempts to address these concerns by presenting the conceptual underpinnings and details of ABC, contrasting the system with more traditional cost accounting systems, discussing the fit of ABC in government, and considering in some detail how one small city might benefit from implementing ABC.