does tax increment financing raise urban industrial property values the paper examines the impact of tax increment financing tif on the value of industrial properties in chicago because tif designation may be self selected a two stage procedure is used to estimate the influence of tif the authors find that the value of industrial parcels located in mixed use tif districts i e those that also contain commercial or residential properties is higher than that of similar parcels that are not located in a tif district however the value of industrial parcels that are located in homogeneous industrial use tif districts is no higher and in some specifications is lower than that of similar parcels not located in a tif district these divergent results may be best explained by industrial parcel owners desire to convert their properties to non industrial uses

how does the stock market value corporate social performance when behavioral theories interact with stakeholder theory this study examines how the reference point effect and sunk cost fallacy interact with stakeholder theory and influence how investors evaluate corporate social performance we propose that ex ante pre ipo corporate social performance influences ex post post ipo perceived riskiness and that this relationship is u shaped we also evaluate how ceo duality and company age moderate this u shaped relationship using young and newly public entrepreneurial firms in china and focusing on stock returns in the secondary market empirical results and robustness tests provide strong support for our hypotheses

burr under the saddle how media coverage influences strategic change in this paper we introduce a new antecedent to the strategic change literature by examining the effect of media coverage on the extent of strategic change specifically we examine how negative media coverage may prompt firms to make changes to their resource allocations and then explore how the makeup of the board and firm performance can moderate this relationship we develop a theoretical framework to explain why media coverage may affect strategic change and then test our theory with a longitudinal analysis of 250 firms over a four year period the empirical results lend support to our theory of media influence on strategic change and suggest that the evaluations of firms by outside constituents may influence the decision making of executives

management ownership and market valuation an empirical analysis we investigate the relationship between management ownership and market valuation of the firm as measured by tobin s q in a 1980 cross section of 371 fortune 500 firms we find evidence of a significant nonmonotonic relationship tobin s q first increases then declines and finally rises slightly as ownership by the board of directors rises for older firms there is evidence that q is lower when the firm is run by a member of the founding family than when it is run by an officer unrelated to the founder

agency relationships in family firms theory and evidence does owner management necessarily eliminate the agency costs of ownership drawing on agency literature and on the economic theory of the household we argue that private ownership and owner management expose privately held owner managed firms to agency threats ignored by jensen s and meckling s 1976 agency model private ownership and owner management not only reduce the effectiveness of external control mechanisms they also expose firms to a self control problem created by incentives that cause owners to take actions which harm themselves as well as those around them jensen 1994 p 43 thus shareholders have incentive to invest resources in curbing both managerialand owner opportunism we extend this thesis to the domain of the family firm after developing hypotheses which describe how family dynamics and specifically altruism exacerbate agency problems experienced by these privately held owner managed firms we use data obtained from a large scale survey of family businesses to field test our hypotheses and find evidence which suggests support for our proposed theory finally we discuss the implications of our theory for research on family and other types of privately held owner managed firms

the effects of tax increment financing on economic development abstract local governments attempt to influence business location decisions and economic development through use of the property tax tax increment financing tif earmarks property tax revenues that result from growth in assessed valuation the tif revenues are to be used for economic development projects but may also be diverted for other purposes using data for the chicago metropolitan area that includes information on property value growth before and after tif adoption we find evidence that cities that adopt tif grow more slowly than those that do not we test for and reject sample selection bias as an explanation of this finding

dependability and organizational bankruptcy an application of agency and prospect theory this paper proposes and tests a new model of organizational bankruptcy based on agency and prospect theory the paper argues that debtors with unprestigious top managers low liquidity and high leverage signal that they will be undependable exchange partners the model proposes that survival is contingent on maintaining an acceptable minimum level of these financial and managerial assets if a firm falls below that threshold level it has a higher probability of bankruptcy because creditors withdraw their financial support from the debtor consistent with agency theory this implies that bankruptcy can be viewed as the legal resolution of severe shareholder creditor conflicts about the levels of financial and managerial assets that the debtor should maintain this new model proposes that maintaining a minimum level of these assets is a necessary but not sufficient condition for bankruptcy some undependable firms delay bankruptcy by using strategies that create the hope that they will become dependable in the future according to prospect theory these strategies work because creditors wish to avoid recognizing significant losses and thus take on more risk than they might otherwise assume

top managerial prestige and organizational bankruptcy this paper extends earlier work on an alternative view of bankruptcy suggesting that bankruptcy occurs when creditors withdraw then support from a firm s top management team it further proposes that support for the top team depends upon the team s prestige five characteristics measuring the relative status of top teams were tested for their association with bankruptcy three of the characteristics focused on items commonly associated with membership in economic elites elite educational backgrounds board memberships and previous employment as officers in other corporations the fourth and fifth characteristics focused on membership in political and military elites the results indicated that political and board connections were negatively associated with bankruptcy in the year of failure even when financial factors and cooptive board linkages were controlled the results also showed that failing firms attempted to improve their managerial prestige three to four years before they failed they were how

economic and psychological perspectives on ceo compensation a review and synthesis to many the principal agent model is the obvious lens through which executive pay should be viewed such a sentiment sits uncomfortably with a large number of empirical studies suggesting that the process of determining executive pay seems to be more readily explained by recourse to arguments of managerial power and influence this article investigates the micro underpinnings of boardroom behavior in order to explain this departure from principal agency theory s argument that executive compensation serves to align interests between the owners of the company and its senior managers we find that there are strong interaction effects among social influence variables and the social setting of boardroom activity generous pay awards bearing only a weak connection to corporate performance are explained in the context of the social psychology of the boardroom these results and a review of the empirical research suggest the need for a more comprehensive model of executive compensation that incorporates both economic and psychological determinants copyright 2010 the author 2010 published by oxford university press on behalf of associazione icc all rights reserved oxford university press

tax policy and urban development evidence from the indiana enterprise zone program abstract this paper analyzes the effect of the indiana enterprise zone ez program on local employment and investment using a panel of local taxing jurisdictions as in other ez programs indiana s incentives favor capital relative to labor but the target of the capital incentive is unusual the stock of inventories using various estimation methods i estimate that zone designation initially reduces the value of depreciable personal property by about 13 percent but also reduces unemployment claims in the zone and surrounding community by 19 percent the value of inventories in indiana zones is 8 percent higher than it would be without the program

countering decline of industrial sites do local economic development policies target the neediest places local economic development is a much used tool for the regeneration of urban areas although the designation and effectiveness of local economic development policies has been studied extensively in

the effects of location based tax policies on the distribution of household income evidence from the federal empowerment zone program abstract location based tax policies are redistributive as evidenced by their placement in distressed areas however the previous literature has focused on mean effects which can mask important effects that the program has on the distribution of households therefore we extend the literature by studying changes in the entire household income distribution in the context of the federal empowerment zone ez program we do not find evidence that the impoverished residents benefited from the program our findings are consistent with the areas becoming more attractive to high income households the improvements in the areas were concentrated in those portions of each zone that were relatively better off prior to ez designation the results confirm the prior literature findings that the areas on average became more attractive but also suggest that the benefits of the program likely did not accrue to the lower income residents of the ez areas

substitutes or complements a configurational examination of corporate governance mechanisms we conduct an exploratory qualitative comparative case analysis of the s p 1500 firms with the aim of elaborating theory on how corporate governance mechanisms work together effectively to do so we integrate extant theory and research to specify the bundle of mechanisms that operate to mitigate the agency problem among publicly traded corporations and review what previous research has said about how these mechanisms combine we then use the fuzzy set approach to qualitative comparitive analysis qca to explore the combinations of governance mechanisms that exist among the s p 1500 firms that achieve high and not high profitability our findings suggest that high profits result when ceo incentive alignment and monitoring mechanisms work together as complements rather than as substitutes furthermore they show that high profits are obtained when both internal and external monitoring mechanisms are present at the same time however monitoring mechanisms evidently combine in complex ways such that the

bidding for firms recently toyota sought a plant location in the united states the 800 million plant will employ 3000 workers and numerous states offered toyota generous investment incentives hoping this would induce toyota to select their state the commonwealth of kentucky won this competition but the price was high the present value of the payments exceeds 125 million the payment of investment incentives for the toyota plant is not unique in 1976 pennsylvania paid 75 million to attract a volkswagen plan nissan honda and mazda received generous investment incentives when locating plants in the united states and this bidding is not limited to states to attract the headquarters of the presbyterian church usa with its 1300 jobs and 38 million annual payroll civic leaders in louisville kentucky offered the church a warehouse and 6 2 million for renovation of the structure bidding the church away from kansas city missouri in this paper we contend that this competition may result from the average cost pricing of publicly provided goods and services 2 when the marginal cost of providing a firm and its workers with public services is less than the tax revenue they generate a government may offer the firm subsidies that reduce the distortions the average cost pricing of the public service creates thus this competition for industry is not a zero sum game where the subsidies are only transfers from the government to the firm rather these subsidies may facilitate the efficient location of industry

agency models in different stages of ceo tenure the effects of stock options and board independence on r d investment this study examines how r d investment is shaped by governance devices combining the two agency models of limited competence and managerial opportunism it suggests that governance devices exert differing effects in early vs later stages of ceo tenure early in ceo tenure r d investment is reduced by stock options and board independence whereas in later stages these effects reverse r d investment is enhanced by stock options and board independence an empirical test on a sample of u s companies provides support for the hypothesized effects for policy makers this study implies that r d investment can be enhanced by setting rules and standards of good governance that take into account ceo time in office and firm context

does chicago s tax increment financing tif programme pass the but for test job creation and economic development impacts using time series data chicago uses tax increment financing tif to promote economic development to a greater extent than any other large american city this paper conducts a comprehensive assessment of the effectiveness of chicago s tif programme in creating economic opportunities and catalysing real estate investments at the neighbourhood scale this paper uses a unique panel dataset at the block group level to analyse the impact of tif designation and investments on employment change business creation and building permit activity after controlling for potential selection bias in tif assignment this paper shows that tif ultimately fails the but for test and shows no evidence of increasing tangible economic development benefits for local residents implications for policy are considered

ceo duality as a double edged sword how boards of directors balance entrenchment avoidance and unity of command when a firm s chief executive officer is also the chairperson of its board directors have opposing objectives according to organization theory such ceo duality establishes strong unambiguous le

chasing a dream the use of tax abatements to spur urban economic development in this paper i develop a systematic framework for assessing the effectiveness of granting tax abatements to encourage urban economic development this approach focuses upon the abatement s effect upon the firm s decision to invest and the impact of the investment upon the community current policy fails to take these considerations into account adequately i use this framework to evaluate the potential revenue gain to the city of detroit of offering variable abatement awards and suggest a set of proposals to improve program performance

who offers tax based business development incentives abstract many american communities seek to attract or retain businesses with tax abatements tax credits or tax increment financing of infrastructure projects tifs the evidence for 1999 indicates that communities are most likely to offer one or more of these business development incentives if their residents have low incomes if they are located close to state borders and if their states have troubled political cultures ten percent greater median household income is associated with a 3 2 lower probability of offering incentives 10 greater distance from a state border is associated with a 1 0 lower probability of offering incentives and a 10 higher rate at which government officials are convicted of federal corruption crimes is associated with a 1 2 greater probability of offering business incentives tifs are the preferred incentive of communities whose residents have household incomes between 25 000 and 75 000 whereas tifs are much less commonly offered by communities whose residents have household incomes below 25 000 the need to finance tifs out of incremental tax revenues may make it infeasible for many of the poorest of communities to use tifs for local business development

tax increment financing a theoretical inquiry abstract this paper offers an analysis of tax increment financing tif adding to a small theoretical literature on this important fiscal instrument the analysis exploits the theoretical connection between property values and public good levels which is the subject of a large literature in local public finance using this approach the paper shows that localized public improvements are likely to be opposed by property owners outside the affected area who pay higher property taxes with no offsetting benefits by using tax revenue captured from overlapping jurisdictions tif may circumvent this opposition allowing the city to implement the public improvement without an increase in its tax rate tif is not always viable as a financing method however because it may not generate enough additional revenue the analysis shows that tif s viability is ensured only when the public good is at least moderately underprovided relative to the socially optimal level in the case where the public good is slightly underprovided a public improvement is desirable but tif is not viable finally the analysis shows that the public good level ultimately chosen under tif need not be efficient with both under and overprovision being possible outcomes thus while tif may allow a city to carry out needed public improvements the stimulus it provides may be excessive

variations in development subsidies under tax increment financing in the face of increasingly scarce federal community development grants and in an effort to encourage the renewal of deteriorated sections of many urban areas states have become interested in tax increment financing tif as a way of providing development incentives to their local units of government 1 tax increment financing laws typically allow cities or local development authorities to recover certain development expenditures that they make in specially created districts from a portion of the property tax revenues realized by the county school district and other local taxing jurisdictions 2 states are attracted to tif largely because of their concern that cities will not engage in socially desirable development or redevelopment efforts such as slum clearance or blight elimination when faced with the incentives inherent in the existing property tax system without tif cities often bear the cost of development alone while several local taxing jurisdictions share the development benefit narrowly defined as increased property tax revenues the resultant distribution of costs and benefits leads to perceptions of inequities and disincentives for development as reflected by the legislative declaration for the wisconsin tif legislation

can local incentives alter a metropolitan city s economic development cities in the us and europe have chosen increasingly to offer incentives designed to attract and retain local economic development the increased use of local incentives has occurred with little or

management and ownership effects evidence from five countries despite the growing recognition in the corporate governance literature that the relationship between ownership concentration and profitability is context dependent this issue has not yet been subjected to direct empirical investigation using a single cross national sample this study empirically examines the ownership concentration performance relationship across the nations of canada france germany the united kingdom and the united states essentially we argue that the correlation if any between ownership concentration and firm profitability differs across countries in a systematic way determined by the national system of corporate governance results indicate that important and statistically significant differences do in fact exist across the countries studied 1998 john wiley sons ltd

volunteering to be taxed business improvement districts and the extra governmental provision of public safety abstract when the median voter s preference sets the level of local public goods some voters are left unsatisfied is there an institution by which subsets of voters can resolve the collective action problem and increase the local provision of public goods if so what are the consequences in response to problems such as crime and vandalism neighborhood property owners have established business improvement districts bids to provide local public goods when a bid is approved by a majority of property owners in a neighborhood state law makes contributions to the bid budget mandatory this resolution of the neighborhood s collective action problem reduces crime bids in the city of los angeles are robustly associated with crime declines of 6 to 10 indeed crime falls regardless of estimation technique fixed effects comparing bids to neighborhoods that considered but did not adopt bids using propensity score matching and comparing bids to their neighbors strikingly these declines are purchased cheaply attributing all bid expenditure to violent crime reduction and thus ignoring the impact of bid expenditure on many quality of life crimes bids spend 21 000 to avert one violent crime this higher bound estimate is substantially lower than the 57 000 social cost of a violent crime

paying the price the impact of controversial governance practices on managerial reputation this study directly examines the reputational penalties that managers pay when they engage in controversial governance practices that raise questions about managerial self interest these penalties

tax increment financing interaction between two overlapping jurisdictions abstract this paper analyzes the interaction between two overlapping jurisdictions a school district and a city when one of them the city uses tif tax increment financing to finance an improvement in the provision of its public good both jurisdictions levy taxes on property and they provide different public goods the city is not allowed to raise its tax rate to increase public good provision but since the increment in the public good causes property values to increase the city s revenue is higher with the new level of public good however if this new revenue is not enough to finance the new public good level then tif allows the city to capture for a limited period of time all extra revenues the school district obtains due to the increase in property values then the city and the school district choose the public good level to satisfy their budget constraints with the goal of maximizing total property values two different results regarding efficiency of public good provision are obtained depending on the equilibrium concept used with nash behavior the result is underprovision of the public good provided by the school district the second and more interesting case is when the school district takes into account that its decisions affect the provision of the city s public good in this leader follower equilibrium where the school district plays the role of the leader the results show that the provision of the school district public good depends on how the city s public good is provided if the city s public good is underprovided overprovided then the school district s public good is overprovided underprovided

the relationship between tax increment finance and municipal land annexation we use detailed information from wisconsin municipalities on annexation and tax increment finance tif activity over the period 1990 2003 to determine whether tif has encouraged annexation declaring a recently annexed area a tif district increases the fiscal benefit of annexation since it allows the municipality to direct the incremental revenue increases from overlying governments to economic development activities within the newly formed tif district our analysis suggests that tif is responsible for as much as 119 square miles or 54 of all the land area annexed over the 1990 2003 period in wisconsin

composition and ceo duality in boards of directors an international perspective this paper provides an empirical assessment comparing board composition proportion of outside nonmanagement board members and ceo duality role of ceo and chairperson held simultaneously between samples n 150 of japanese united kingdom and united states industrial firms results indicate marked differences in these corporate governance dimensions implications regarding board independence and differences in corporate governance internationally are discussed

neighborhood characteristics and the targeting of tax increment financing in chicago abstract tax increment financing tif is a local economic development tool that funds improvements in an area designated as a tif district with property tax revenues generated from the growth in property values in the district this paper tests a number of explanations for the location of tif districts within a city by estimating weibull duration models of the time to inclusion in a tif district for neighborhoods in chicago the results suggest that a neighborhood s hazard of inclusion in a tif district is positively related to neighborhood distress the presence of empowerment zones and the passage of time and negatively related to a neighborhood s political influence

the implications of debt heterogeneity for r d investment and firm performance an assumption in prior research is that debt is homogeneous and provides inappropriate governance for r d investments we argue that debt is heterogeneous although transactional debt does indeed impose strict contractual constraints that provide inappropriate governance for r d investments relational debt has very different characteristics that provide more appropriate governance using a sample of japanese firms we find that firms that align their debt structures with their r d investments perform better than those that are misaligned furthermore firms tend to align their debt structure with r d investments but only after deregulation permits relatively free access to various types of debt

large redevelopment initiatives housing values and gentrification the case of the atlanta beltline this paper examines the announcement effects on property values of a large multipurpose development initiative in atlanta georgia called the beltline which has received substantial public attention the project involves the redevelopment of an abandoned rail line that encircles the central area of atlanta the 6500 acre project will be funded by tax increment financing bonds and will include the development of light rail greenspace and real estate projects by examining home sales from 2000 to 2006 the paper identifies changes in price premiums for locations in various geographical buffers around the beltline and compares the timing of such changes with coverage in the local newspaper it is found that there are large increases in premiums for homes near the lower income southside parts of the beltline tif district between 2003 and 2005 which corresponds to the initial media coverage of the planning process the findings suggest that planning for the beltline induced substantial speculation and ge

apprentice departure and demotion an examination of the three types of ceo board chair separation past research has consistently shown that separation of ceo and board chair roles has no systematic effect on firm performance in this study we introduce the different forms of such separation apprentice departure and demotion in a study of standard poor s s p 1500 and fortune 1000 firms we find that separation of the two leadership roles positively impacts future firm performance when current performance is poor but negatively impacts future firm performance when current performance is high we find that this effect is most dramatic for demotion separations finally we test theory about the permanency of ceo board chair separation our results show that the different types of ceo board chair separation have very distinct consequences abstract from author

managerial risk taking behavior a too big to fail story we examine the implications of the us government s too big to fail tbtf policy as it has been applied to banks using alternative measures of risk we compare the risk taking behavior of 11 tbtf banks identified by the comptroller of the currency in 1984 to a number of non tbtf banks we provide both theory and new empirical evidence to support our argument that the tbtf policy leads management to significantly increase risk taking with no corresponding increase in performance while prior studies have considered the effects of the tbtf policy on limited but risk related aspects of bank behavior such as the cost of funds our study provides direct evidence about the risk taking behavior associated with the tbtf policy our study has important implications for the current political debate regarding the too big to fail policy

one hat too many key executive plurality and shareholder wealth tracing backward the career paths of the key executives of business week s 1990 listing of the 1000 most valuable publicly held companies we empirically examined the impact of announced changes in key executive plurality on stockholder returns we found the more complete the position consolidation the more negative were the shareholder responses to attempt to gain further understanding the additional variables of executive s origin the size of the board of directors of the firm the proportion of outsiders on the board and prior firm performance were examined 1997 by john wiley sons ltd

financing property s contribution to regeneration attracting investment and finance into inner city and other renewal areas poses particular difficulties and is frequently reliant on strong public sector commitment through special incentives or other mechanisms to provide the conditions to lever private sector activity this paper initially links the concept of market failure and the rationale for regeneration and examines policy responses from uk european and us perspectives followed by a consideration of public and private sector financing approaches international perspectives draw particularly upon the use of tax based mechanisms in regeneration notably those used in the us in the european context the paper highlights implications for regeneration stemming from the interpretation of state aid rules and competition policy conclusions reflect upon the complexity of regeneration and the importance of the different stakeholders within the regeneration process

are pilots property taxes for nonprofits abstract nonprofit charitable organizations are exempt from most taxes including local property taxes but u s cities and towns increasingly request that nonprofits make payments in lieu of taxes known as pilots strictly speaking pilots are voluntary though nonprofits may feel pressure to make them particularly in high tax communities evidence from massachusetts indicates that pilot rates measured as ratios of payments to the value of local tax exempt property are higher in towns with higher property tax rates a one percentage point higher property tax rate is associated with a 0 2 percentage point higher pilot rate pilots appear to discourage nonprofit activity a one percentage point higher pilot rate is associated with 0 8 lower real property ownership by local nonprofits 0 2 lower total assets and 0 2 lower revenues of local nonprofits these patterns are consistent with voluntary pilots acting in a manner similar to low rate compulsory real estate taxes