cssi/SciSciGPT-SciSciNet huggingface dataset:
Leading indicator variables and managerial incentives in a dynamic agency setting

This paper studies, in a dynamic agency setting, how incentives and contractual efficiency are affected by leading indicators of firms’ future financial performance. In our two-period model, a leading indicator variable provides a noisy forecast of the uncertain return from the manager’s long-term effort, and both contracting parties cannot refrain from renegotiating contract terms based on updated information. We find that the leading indicator can reduce the manager’s long-term effort incentive, as it allows the firm owner to capture more of the resulting return through renegotiated wages (i.e., the manager is held up). By reducing the uncertainty about future aggregate cash flows, the leading indicator also exacerbates the “ratchet” effect and discourages the manager’s short-term effort. In equilibrium, as the leading indicator becomes more accurate in forecasting future cash flows, the first-period contract attaches higher explicit weights to both the forward-looking leading indicator and backward-looking cash flow, and yet the manager may find it optimal to reduce both the short- and long-term efforts. We further show that with a more accurate leading indicator variable, the explicit incentive on the lagging cash flow may increase more than that on the leading indicator, and the equilibrium firm profit may decrease and diverge from the manager’s equilibrium efforts.
Public perceptions and information gaps in solar energy in Texas

Studying the behavioral aspects of the individual decision-making process is important in identifying and addressing barriers in the adoption of residential solar photovoltaic (PV). However, there is little systematic research focusing on these aspects of residential PV in Texas, an important, large, populous state, with a range of challenges in the electricity sector including increasing demand, shrinking reserve margins, constrained water supply, and challenging emissions reduction targets under proposed federal regulations. This paper aims to address this gap through an empirical investigation of a new survey-based dataset collected in Texas on solar energy perceptions and behavior. The results of this analysis offer insights into the perceptions and motivations influencing intentions and behavior toward solar energy in a relatively untapped market and help identify information gaps that could be targeted to alleviate key barriers to adopting solar, thereby enabling significant emissions reductions in the residential sector in Texas.
The Pervasive Nature of Animal Law: How the Law Impacts the Lives of People and their Animal Companions

Faculty members at Valparaiso University School of Law who attain the rank of full professor are expected to deliver an inaugural lecture to the University community and the public at large. This article is based on that lecture, delivered on September 25, 2008. This Article begins by distinguishing between “animal law,” “animal rights,” and “animal welfare” and discussing the growth of the field of animal law. It continues by setting forth the statistics on the number of companion animals in the United States (“U.S.”) and information about the households who have companion animals. The remainder of the article analyzes some of the legal issues impacting humans who have animal companions.
Taxes, organizational form, and the deadweight loss of the corporate income tax

Abstract By changing the relative gain to incorporation, corporate taxation can play an important role in a firm's choice of organizational form. General equilibrium models have shown that substantial shifting of organizational form in response to tax rates implies a large deadweight loss of taxation. This paper estimates the impact of taxes on organizational form using data from 1900–1939. The results indicate that the effect of taxes is significant but small. A corporate rate increase of 0.10 raises the non-corporate share of capital 0.002–0.03. The implied deadweight loss of the corporate income tax is around 5–10% of revenue.
The Euro and Financial Market Integration

One of the projected benefits of the euro was to be a unified capital market. The cost of capital would be lower and this, coupled with the larger market, would motivate large EU entities to satisfy their financing needs within the euro area. Our results support the expectation that the financial markets of the euro area countries would become more unified with a lowered cost of capital, especially for the less financially credible countries. It appears, however, that the benefit of a lower cost of capital has also accrued to the three EU countries that did not adopt the euro.
Political Hot Potato: How Closing Loopholes Can Get Policymakers Cooked

Loopholes in the law are weaknesses that allow the law to be circumvented Once created, they prove hard to eliminate. A case study of the evolving tax unit used in the federal income tax explores policymakers' response to loopholes. The 1913 income tax created an opportunity for wealthy married couples to shift ownership of family income between spouses, then to file separately, and, as a result, to reduce their collective taxes. In 1948, Congress closed this loophole by extending the income-splitting benefit to all married taxpayers filing jointly. Congress acted only after the federal judiciary and Treasury Department pleaded for congressional reform and, receiving none, reduced their roles policing wealthy couples' tax abuse. The other branches would no longer accept the delegated power to regulate the tax unit. By examining these developments, this article explores the impact of the separation of powers on the closing of loopholes and adds to our understanding of how the government operates. It concludes that when statutes contain loopholes that are not politically salient, there is a limit as to how long policymakers will accept a delegation of responsibility to police the loopholes.
Incidence and Distributional Effects of Value Added Taxes

This article examines the incidence and distributional effects of value added taxes (VAT). A sharp change in the VAT policy on food in Norway is exploited. My findings suggest that taxes levied on food are completely shifted to consumer prices, while there is little spill-over effects to most other goods. To understand the distributional effects of the reform, one uses expenditure data and estimate the compensating variation of the tax induces price changes. I find that lowering the VAT on food attenuates inequality in consumer welfare, in part because households adjust their spending patterns in response to the price change.
Transaction cost regulation

Abstract This paper discusses the fundamental underpinnings and some implications of transaction cost regulation (TCR), a framework to analyze the interaction between governments and investors fundamentally, but not exclusively, in utility industries. TCR sees regulation as the governance structure of these interactions, and thus, as in standard transaction cost economics, it places emphasis in understanding the nature of the hazards inherent to these interactions. The emphasis on transactional hazards requires a microanalytical perspective, where performance assessment is undertaken within the realm of possible institutional alternative. In that sense, politics becomes fundamental to understanding regulation as the governance of public/private interactions. The paper discusses two fundamental hazards and their organizational implications: governmental and third party opportunism. Both interact to make regulatory processes and outcomes more rigid, formalistic, and prone to conflict than envisioned by relational contracting.
Thermography in Juvenile Rheumatoid Arthritis

In the present investigation, thermography turned out to be a very useful tool for examination and follow-up study of child patients with rheumatoid arthritis. The series comprised 46 patients with juvenile rheumatoid arthritis (JRA) and 50 non-rheumatic children of the same age groups.
Pairs Trading: Performance of a Relative-Value Arbitrage Rule

We test a Wall Street investment strategy, ‘‘pairs trading,’’ with daily data over 1962–2002. Stocks are matched into pairs with minimum distance between normalized historical prices. A simple trading rule yields average annualized excess returns of up to 11% for self-financing portfolios of pairs. The profits typically exceed conservative transaction-cost estimates. Bootstrap results suggest that the ‘‘pairs’’ effect differs from previously documented reversal profits. Robustness of the excess returns indicates that pairs trading profits from temporary mispricing of close substitutes. We link the profitability to the presence of a common factor in the returns, different from conventional risk measures. Wall Street has long been interested in quantitative methods of speculation. One popular short-term speculation strategy is known as ‘‘pairs trading.’’ The strategy has at least a 20-year history on Wall Street and is among the proprietary ‘‘statistical arbitrage’’ tools currently used by hedge funds as well as investment banks. The concept of pairs trading is disarmingly simple. Find two stocks whose prices have moved together historically. When the spread between them widens, short the winner and buy the loser. If history repeats itself, prices will converge and the arbi
Entangled Financial Systems

I model an entangled financial system in which banks hedge their portfolio risks using over-the-counter (OTC) contracts. However, banks choose not to hedge counterparty risk, and thus the idiosyncratic failure of a bank can lead to a systemic run of lenders. An inefficiency arises because banks engage in a version of risk shifting through the network externalities created by OTC contracts. Banks do not take into account that the costly hedging of low-probability counterparty risk also benefits other banks. In the model, it is welfare improving to tax OTC contracts to finance a bailout fund. The Author 2013. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oup.com., Oxford University Press.
Assessing methods of identifying management forecasts: CIG vs. researcher collected

This paper examines the characteristics of management forecasts available on Thomson First Call’s Company Issued Guidance (CIG) database relative to a sample of forecasts hand-collected through a search of company press releases. Due to the significantly lower cost of using CIG (relative to hand-collecting data), academics have increasingly relied on this database as a source of management forecasts. However, it is important for researchers to consider the properties of this database (such as coverage, accuracy, and breadth) when evaluating whether it is an appropriate data source for their study. Overall, our results suggest systematic differences between forecasts reported on CIG and forecasts gathered from company press releases. We suggest several sample criteria that will remove or mitigate these biases.
Financial accounting information and corporate governance

Abstract This paper reviews and proposes additional research concerning the role of publicly reported financial accounting information in the governance processes of corporations. We first discuss research on the use of financial accounting in managerial incentive plans and explore future research directions. We then propose that governance research be extended to explore more comprehensively the use of financial accounting information in additional corporate control mechanisms, and suggest opportunities for expanding such research. We also propose cross-country research to investigate more directly the effects of financial accounting information on economic performance through its role in governance and more generally.
Errors and questionable judgments in analysts’ DCF models

We investigate the number of and reasons for errors and questionable judgments that sell-side equity analysts make in constructing and executing discounted cash flow (DCF) equity valuation models. For a sample of 120 DCF models detailed in reports issued by U.S. brokers in 2012 and 2013, we estimate that analysts make a median of three theory-related and/or execution errors and four questionable economic judgments per DCF. Recalculating analysts’ DCFs after correcting for major errors changes analysts’ mean valuations and target prices by between −2 and 14 % per error. Based on face-to-face interviews with analysts and those who oversee them, we conclude that analysts’ DCF modeling behavior is semi-sophisticated in the sense that analysts genuinely make mistakes regarding certain aspects of correctly valuing equity but also respond rationally to the incentives they face, particularly the reality that they are not directly compensated for being textbook DCF correct.
Beneath the Surface of Civil Recourse Theory

As a torts professor, I find much to admire in civil recourse theory as conceived by John Goldberg and Benjamin Zipursky (G & Z). I particularly like the fact that their theory gives a certain upgraded stature to the field, configured in their writings as one of the basic pillars of our legal system, right up there with contract law and property. As a progressive scholar, I am also drawn to the rhetoric of rights, accountability, and empowerment G & Z employ in weaving their narrative of civil recourse. It is a language familiar to left-leaning reformers who struggle to make the law more responsive to the needs of vulnerable people, while avoiding a patronizing, condescending tone of “protection,” “sympathy,” or “pity.” On the surface, civil recourse theory thus seems compatible with a social justice orientation to torts, a refreshing change from the drumbeat of efficiency and bloodless cost-benefit analyses that still characterize the dominant law and economics approach to this area of law. Once you scratch the surface, however, I fear that G & Z’s civil recourse theory turns out not to hold that much promise for those of us who have progressive aspirations for tort law beyond a defense of the status quo. This limitation is largely due to the fact that G & Z’s civil recourse theory takes no account of the importance of group identity in tort law’s historical construction of wrongs and injuries and continues to miss the skewing of interests that characterizes the structure of mainstream U.S. tort doctrine. Instead, like many of its predecessors, civil recourse theory is built around a model of an abstract, disembodied individual who acts and responds apart from social context. Largely oblivious to critical theory and to the contributions of critical scholars over the last several decades, civil recourse theory strikes me as an updated version of classical legal theory— elegant, but a bit too formal for my taste. At the moment, civil recourse theory is not a “school of thought” in the sense of an intellectual movement, with a number of leaders and adherents, such as law and economics or legal feminism. Instead, it is still largely the invention of G & Z, two hugely prolific scholars who have articulated, refined, and applied their theory in any number of major law review articles. For those conversant in tort theory and doctrine, the capstone article that lays out everything you need to know about civil
Natural disasters and child health

With the increasing number of natural disasters, understanding the links between these events and child health has become timely and pertinent. Using a panel dataset, this paper empirically investigates the persistent effects on child health due to exposure to a series of natural disasters that occurred from 2002 to 2007 in Indonesia. We find that girls exposed to multiple disaster events are 0.19 standard deviations shorter and are 7 per cent more likely to be stunted when measured 7 to 12 years later. We find no persistent effect on boys. From a public policy perspective, we highlight the need for coping strategies beyond access to credit or remittances in order to mitigate growth retardation in children.
Tort Duties of Landowners: A Positive Theory

One of the most controversial areas of modern tort law is that of the duty of landowners toward people who visit their land. The common law divided land visitors into three types: invitees, licensees, and trespassers. The highest duty of care was owed to the invitee and the lowest to the trespasser. The distinctions led courts to hand down harsh decisions and to draw formal lines between the categories that seemed to defy common sense at times. This paper explains the incentive-based function of the classical landowner duties. I will argue that the classical duties served useful regulatory functions. The most important was regulating the overall scale of injuries by imposing the risk of latent defective conditions in property to the party who is most likely to be aware of the risk or to take action to avoid the risk. ∗ Honorable Paul J. Liacos Professor Law, Boston University, knhylton@bu.edu. I thank Haoqing Zhang for research assistance.
Do corporate managers skimp on shareholders' dividends to protect their own retirement funds?☆

Abstract What is the impact of long-term executive compensation, particularly large pension payouts, on the firm's current dividend policy? We argue that managers with high pension holdings are less likely to adopt a high dividend policy that can risk their future pension payouts. Using a hand-collected actuarial pension dataset we show that (i) dividend payments are significantly lower when manager compensation relies more heavily on pension payouts; (ii) higher compensation leverage and inside debt have a significant negative effect on dividend payments net of stock repurchases; and (iii) the negative effect of pension on dividend is significantly weaker when pensions are protected in a pre-funding rabbi trust. We show further that this agency behavior reduces firm performance.
Making Markets for Merit Goods: The Political Economy of Antiretrovirals

This paper examines the role of policy entrepreneurs and global activists in shaping the international market for antiretroviral drugs to combat HIV/AIDS. When ARVs first came on the market in the 1990s they were exceedingly expensive; the cost of treatment was upwards of $10,000 per year. These drugs were thus accessible only to those patients who had high incomes. But in 2006, the “international community,” meeting at a United Nations General Assembly Special Session (UNGASS), made an astonishing pledge to those who were infected with HIV. It proclaimed that there should be universal access to ARV treatment. This UNGASS, following up on an earlier historic UN special session devoted entirely to AIDS in 2001, marked the first time in history that the international community pledged itself to chronic care for the ill, which in this case includes the approximately 30 million people around the world estimated to be HIV positive. How do we explain the transformation of ARVs from private goods, which only a few could afford, into merit goods that were (at least declaratively) to be made available to everyone? In other words, how does a norm of “universal access to treatment”—that no person should be denied these life-extending drugs—become the ethical basis for global public policy with respect to pharmaceutical allocation? What are the lessons of the ARV story for other global issues? These are the primary questions we explore in this paper. Briefly, we argue that the policy entrepreneurs and activists who promoted the creation of a universal access to treatment regime—of the transformation of ARVs into global merit goods—relied on a combination of moral arguments and ideas with favorable material circumstances. From the ethical perspective, the task of these entrepreneurs was to convince the “international community” that access to ARVs was a “human right,” or conversely to convince decision-makers that it was morally wrong to allocate these life-enhancing drugs solely on the basis of ability to pay. But from a material standpoint, these arguments were greatly facilitated by the lowering prices of ARVs caused by a combination of differential pricing (that is, lower prices for drugs in the developing world than in the advanced welfare states) and competition from generics producers, coupled with increases in foreign aid spending devoted to HIV/AIDS and other diseases.
Do investors trade uniformly through time

Abstract This study tests whether investors trade uniformly through time by analyzing the quarter-by-quarter trading decision of individual shareholders in one no-load mutual fund family over nearly six years. These shareholders' trading probabilities change dramatically through time. Time has a larger economic effect on the shareholders' trading decisions than data commonly used in prior research, including fund performance. This effect is larger among shareholders who have more prior transactions, and it is robust to controls for unobserved heterogeneity.
The Fair Trade Challenge to Embedded Liberalism

The embedded liberalism thesis, a major component of the trade policy literature in political science, argues that governments can build support for free trade by compensating economically those hurt by trade, usually with welfare or education policies. This strategy depends, though, on opposition to trade being driven by employment factors, such as job or income loss because of increased competition. The current fair trade movement raises many non-employment criticisms of trade such as concerns about the environment and labor standards but the literature tends to treat these concerns as traditional protectionism in disguise. This article argues, instead, that for many, these concerns are sincere and that this presents a growing challenge to the compromise of embedded liberalism. The article demonstrates this by examining survey data in the United States and showing that those who support fair trade tend to have characteristics that are opposite those who support economic protection.
Cause Lawyers Inside the State

Scholarship on the legal profession tends to situate cause lawyers in a state of adversarial tension with government lawyers. In this traditional paradigm, cause lawyers challenge the agenda of government attorneys, who represent institutional interests and the status quo. From this oppositional perspective, socio-legal scholars explore the activity of lawyers working at public interest law firms, for general social movement organizations, and in private practice. For some time, however, cause lawyers have moved in and out of government, thus complicating the conventional picture of lawyer-state opposition. This Article aims to identify and understand the significant role that cause lawyers play inside the state. It does so by drawing on recent social movement scholarship exploring the overlapping and interdependent relationship between movements and the state. Ultimately, this Article identifies four key impacts that cause lawyers within the state may produce: (1) reforming the state itself; (2) shaping state personnel and priorities; (3) harnessing state power to advance shared movement-state goals; and (4) facilitating and mediating relationships between the movement and the state. These productive functions, however, also come with significant limitations. By appealing to governmental authority and involving the state as a pro-movement force, cause lawyers in government positions may channel movement activity toward moderate goals and into institutional, state-centered tactics. Accordingly, this Article explores not only the benefits but also the costs of cause lawyer movement in and out of the state.
Clustering in Real Estate Prices: Determinants and Consequences

This study examines the determinants and consequences of price clustering. Real estate list and transaction prices exhibit two price-ending characteristics: even (000-ending) and just-below-even (9...
Valuing Plug-In Hybrid Electric Vehicles' Battery Capacity Using a Real Options Framework

Plug-in hybrid electric vehicles (PHEVs) enable their drivers to choose whether to use electricity or gasoline, but this fuel flexibility benefit requires the purchase of additional battery capacity relative to most other vehicles. We value the fuel flexibility of PHEVs by representing the purchase of the battery as the purchase of a strip of call options on the price of transportation. We use a Kalman filter to obtain maximum likelihood estimates for three gasoline price models applied to a U.S. municipal market. We find that using a real options approach instead of a discounted cash flow analysis does not raise the retail price at which the battery pays for itself by more than $50/kWh (or by more than 15%). A discounted cash flow approach often provides a good approximation for PHEV value in our application, but real options approaches to valuing PHEVs' battery capacity or role in climate policy may be crucial for other analyses.
The Effects of Foreign Direct Investment in Mexico since NAFTA

Foreign Direct Investment (FDI) into Mexico has increased dramatically since the inception of the North American Free Trade Agreement (NAFTA), raising questions about its effect on the Mexican economy. This paper studies the impact of FDI on industry productivity and wages over the first ten years of NAFTA, paying particular attention to the source country and destination industry of investments. It also offers a detailed description of the evolution of FDI, its components, sectoral composition, and sources from 1994-2005. There is evidence of a positive effect of FDI on productivity, particularly total factor productivity (TFP). The effect on wages is negative or zero at best, suggesting a divergence from productivity over this time period. The positive productivity effect stems largely from U.S. FDI into non-maquiladora industries, which receive over two thirds of manufacturing FDI. There is no evidence that more distant source countries have a differential effect. Consistent with theoretical expectations, FDI into maquiladoras benefits unskilled workers at the expense of skilled workers. This effect may be strong enough to dampen income inequality.
America’s Wetland? A National Survey of Willingness to Pay for Restoration of Louisiana’s Coastal Wetlands

AbstractA nationwide survey was conducted to estimate welfare associated with large-scale wetland restoration in coastal Louisiana. Binary- and multinomial-choice survey instruments were administered via Knowledge Networks, using the latter to estimate willingness to pay (WTP) for increments in three ecosystem services: wildlife habitat provision, storm surge protection, and fisheries productivity. Results indicate that confidence in government agencies, political leanings, and “green” lifestyle choices were significant explanatory factors. All three ecosystem services significantly affected project support, with increased fisheries productivity having the largest marginal effect, followed by improved storm surge protection and increased wildlife habitat. Mean household WTP, in the form of a one-time tax, is estimated to be $909 (confidence interval $732–$1,185), with resource users being willing to pay substantially more. This figure implies a mean aggregate willingness to pay of $105 billion (confidence...
Animal Rights Without Controversy

Many consumers would be willing to pay something to reduce the suffering of animals used as food. The problem is that existing markets do not disclose the relevant treatment of animals, even though that treatment would trouble many consumers. Steps should be taken to promote disclosure, so as to fortify market processes and to promote democratic discussion of the treatment of animals. In the context of animal welfare, a serious problem is that people’s practices ensure outcomes that defy their existing moral commitments. A disclosure regime could improve animal welfare without making it necessary to resolve the most deeply contested questions in this domain. I. Of Theories and Practices To all appearances, disputes over animal rights produce an extraordinary amount of polarization and acrimony. Some people believe that those who defend animal rights are zealots, showing an inexplicable willingness to sacrifice important human interests for the sake of rats, pigs, and salmon. Judge Richard Posner, for example, refers to “the siren song of animal rights,” while Richard Epstein complains that recognition of an “animal right to bodily integrity . . . will not happen, and it should not happen.” Others believe that those who ridicule animal rights are morally obtuse, replicating some of the cruelty and abuse of sexism, slavery, and even the Holocaust. Gary Francione, a ♦ Many thanks are due to the McCormick Companions’ Fund for its support of the Chicago Project on Animal Treatment Principles, out of which this paper arises. Excellent research assistance was provided by Salma Bakht, Susie Cowen, Laura Lallos, Vicki Lovei, Arden Rowell, and Ben Sirota. * Associate Clinical Professor of Law and Director, Chicago Project on Animal Treatment Principles, University of Chicago Law School ** Karl N. Llewellyn Distinguished Service Professor, Law School and Department of Political Science, University of Chicago. 1 See Richard A. Posner, “Animal Rights: Legal, Philosophical, and Pragmatic Perspectives,” in Animal Rights: Current Controversies and New Directions 74 (Cass R. Sunstein and Martha C. Nussbaum eds. 2004). 2 Richard A. Epstein, “Animals as Objects, or Subjects, of Rights,” in id. at 157.
Politics, credit allocation and bank capital requirements

Abstract I develop a normative theory of political influence on bank lending and capital structure. Legislators want banks to make politically-favored loans that reduce bank profits but generate social or political benefits. The regulator uses asset-choice regulation and capital requirements to induce the lending desired by legislators. There are four main results. First, if regulators dislike bank fragility, then credit-allocation regulation should be accompanied by higher capital requirements. Second, banks will resist higher capital requirements, which will be lower when banks have more bargaining power. Third, when politics matters more in bank regulation, the banking sector is larger and more competitive, with higher capital requirements. Fourth, the optimal reporting mechanism, in which banks report their privately-known profitability and the regulator endogenously determines capital requirements and stringency of credit-allocation regulation in response, shows that political influence is stronger when banks are more profitable.
Equity Crowdfunding: A Market for Lemons?

Everything is online now—the way we connect with others, the way we shop, even some forms of education. We keep up with friends on Facebook we cannot see in person, buy light bulbs from Amazon rather than making a trip to the hardware store,1 and obtain an MBA at night on our computers from the comfort of our own home after the kids have gone to bed.2 One area that has initially resisted the move to cyberspace, however—eschewing the virtual world for the real one—is entrepreneurial finance. Venture capitalists (VCs) and angel investors have long valued close networks and personal relationships when selecting which entrepreneurs to fund, and they closely monitor their investments in person after they fund.3 These practices lead to intense locality in funding—i.e., investors funding entrepre-
The Role of Donations in Quality Disclosure: Evidence from Nonprofit Nursing Homes

This paper uses a quality disclosure policy—the Nursing Home Quality Initiative, which mandates the public reporting of quality information on selected dimensions—to investigate how nonprofit nursi...
The (Social) Media is the Message: Theories of Liability for New Media Artists

There is a trend in Internet art away from simply using social media as a tool, and towards actually challenging the platforms themselves. This note proposes best practices for new media artists whose works violate social media terms of use. By examining three works of art on three different social media platforms — McNugget by Chris Alexander, Face to Facebook by Alessandro Ludovico and Paolo Cirio, and High Retention, Slow Delivery by Constant Dullaart — this note will clarify the networks of liability that emerge when an artist undertakes a conceptual social-media based work. Given the thorny landscape of user agreements, the uncertainty of whether such works qualify for protection under the Copyright Act, and the doubtful safeties under the Visual Artists Rights Act, these artists should look to the example of conceptual and post-modern artists to maintain their proprietary and monetary interests. This note proposes a program of best practices for such artists: entering into an indemnification agreement with a collector or gallery before executing the work; instituting take down measures to maintain the privacy of unwilling, non-consenting third parties; and considering alternative monetization and licensing schemes for such works to remove them from standard streams of commerce.
Breadth of ownership and stock returns

Abstract We develop a stock market model with differences of opinion and short-sales constraints. When breadth is low—i.e., when few investors have long positions—this signals that the short-sales constraint is binding tightly, and that prices are high relative to fundamentals. Thus reductions in breadth should forecast lower returns. Using data on mutual fund holdings, we find that stocks whose change in breadth in the prior quarter is in the lowest decile of the sample underperform those in the top decile by 6.38% in the twelve months after formation. Adjusting for size, book-to-market, and momentum, the figure is 4.95%.
Unlucky or Bad? Economic Policy and Economic Growth

Cross-country growth regressions have in recent years become a major growth industry. The most common purpose of this work has been to investigate the determinants of economic growth. But it is also possible to use the existing growth data to determine the extent to which policy choices help or hinder growth. This paper generates estimates of the net contribution of policy to growth for a wide variety of countries. It also provides the ability to "see" in an almost photographic way what substantial economic reform looks like, to test whether countries have meaningfully reformed. The findings also provide grist for speculation on the virtues of gradual versus dramatic, total economic reform.
Metropolitan fragmentation, law enforcement effort and urban crime

This paper investigates how a system of local law enforcement agencies operates within a metropolitan area. In a cross section of 236 US MSA the paper finds that greater agency fragmentation leads to less law enforcement effort (resources), but also to less crime! This seemingly contradictory result is robust to many alternative specifications. To explain the result a model is developed in which a unilateral increase in local law enforcement effort has the effect of “spatially displacing” criminals as well as incarcerating them. In this model, greater agency fragmentation by itself leads to lower spending but higher crime. The model is expanded to include an “X-efficiency” advantage by smaller agencies, which is shown to be necessary to explain the empirical results. The exact source of this advantage however, is not uncovered.
The Judicial Oath and the American Creed: Comments on Sanford Levinson's the Confrontation of Religious Faith and Civil Religion: Catholics Becoming Justices

This article summarizes Professor Levinson’s discussion of the Catholic Justices’ senate judiciary committee confirmation experiences in his article “The Confrontation of Religious Faith and Civil Religion: Catholics Becoming Justices.” The author argues that a potential for “creedal” conflicts arises under article VI of the Constitution, and explores the dimensions of the “creedal” conflict experienced by the Catholic nominees. The article then goes beyond the Catholic context to examine the dimensions of such conflicts as they might arise for a judicial nominee with Quaker religious commitments and one with secular moral commitments. The article then turns to consider whether the requirements that one subordinate one’s religious and moral commitments to one’s commitment to the Constitution in the performance of the judicial role is an occasion for hope or caution. The article closes with some brief comments on whether, given the “religious” nature of moral commitments which cannot be grounded solely in reason, we can talk about these issues.
Locally Adaptive Semiparametric Estimation of the Mean and Variance Functions in Regression Models

This article proposes a Bayesian method for estimating a heteroscedastic regression model with Gaussian errors, where the mean and the log variance are modeled as linear combinations of explanatory variables. We use Bayesian variable selection priors and model averaging to make the estimation more efficient. The model is made semiparametric by allowing explanatory variables to enter the mean and log variance flexibly by representing a covariate effect as a linear combination of basis functions. Our methodology for estimating flexible effects is locally adaptive in the sense that it works well when the flexible effects vary rapidly in some parts of the predictor space but only slowly in other parts. Our article develops an efficient Markov chain Monte Carlo simulation method to sample from the posterior distribution and applies the methodology to a number of simulated and real examples.
Transcriptional Profiling Reveals Extraordinary Diversity Among Skeletal Muscle Tissues

Skeletal muscle comprises a family of diverse tissues with highly specialized morphology, function, and metabolism. Many acquired diseases – including HIV, COPD, cancer cachexia, critical illness myopathy, and sepsis – affect specific muscles while sparing others. Even monogenic muscular dystrophies tend to selectively affect certain muscle groups, despite their causative genetic mutations being present in all tissues. These observations suggest that factors intrinsic to muscle tissues influence their susceptibility to various disease mechanisms. Nevertheless, most studies have not addressed transcriptional diversity among skeletal muscles. Here we use unbiased RNA sequencing (RNAseq) to profile global mRNA expression in a wide array of skeletal, smooth, and cardiac muscle tissues from mice and rats. Our data set, MuscleDB, reveals extensive transcriptional diversity, with greater than 50% of transcripts differentially expressed among skeletal muscle tissues. This diversity is only partly explained by fiber type composition and developmental history, suggesting that specialized transcriptional profiles establish the functional identity of muscle tissues. We find conservation in the transcriptional profiles across species as well as between males and females, indicating that these data may be useful in predicting gene expression in related species, such as humans. Notably, thousands of differentially expressed genes in skeletal muscle are associated with human disease, and hundreds of these genes encode targets of drugs on the market today. Related to this observation, we suggest a mechanistic explanation for how myotonic dystrophy induces weakness in the extensor digitorum longus (EDL) while sparing nearby muscles. These data may therefore provide the means by which muscle-specific sensitivity to disease may be unraveled. In addition, we detect hundreds of putative myokines that may underlie the endocrine functions of skeletal muscle. We anticipate that in conjunction with transcriptional modeling, this resource will catalyze more sophisticated tissue engineering of skeletal muscle to improve the efficacy of regenerative medicine.
International Criminal Law Aspects of the War Against Terrorism

n March 4, 1801, Thomas Jefferson, the newly inaugurated President of the United States, took charge of a nation torn between the possibilities of the new century and the uncertainty caused by the changing face of warfare. America was a new republic very much aware of its vulnerability, yet facing the future with faith built on dedication to the dual pillars of peace through justice and peace through strength.2 As President Jefferson rose to deliver his inaugural address, America faced a new century filled with new dangers and unfolding challenges that threatened to erode the very foundations of our liberty and collective peace. His inaugural message was rooted in our democratic values, yet articulated an American vision to propel us forward as a nation of purpose and principle in the international arena.
Taxation Without Replication

It is well known that investors can structure derivatives portfolios to replicate a position in an underlying asset and synthetically create an index fund. While an individual investor can achieve perfect replication on a before-tax basis, taxes make derivatives inferior to direct investment in the index, because synthetically generated dividends and capital gains do not benefit from the preferential tax treatment accorded direct investment in the index. Derivative strategies also have lower after-tax expected returns and Sharpe ratios and are less volatile than the index. Option strategies benefit from a tax inequity favoring low exercise prices but are still inferior to direct investment in the index. Thus, synthetic indexing may be effective on a before-tax or non-taxable basis, but it fails for taxable individual investors because today9s tax code disadvantages derivatives replicating strategies.
Do auctions induce a winner's curse? New evidence from the corporate takeover market ☆

Abstract We contrast the winner's curse hypothesis and the competitive market hypothesis as potential explanations for the observed returns to bidders in corporate takeovers. The winner's curse hypothesis posits suboptimal behavior in which winning bidders fail to adapt their strategies to the level of competition and the amount of uncertainty in the takeover environment and predicts that bidder returns are inversely related to the level of competition in a given deal and to the uncertainty in the value of the target. Our measure of takeover competition comes from a unique data set on the auction process that occurs prior to the announcement of a takeover. In our empirical estimation, we control for the endogeneity between bidder returns and the level of competition in takeover deals. Controlling for endogeneity, we find that the returns to bidders are not significantly related to takeover competition. We also find that uncertainty in the value of the target does not reduce bidder returns. Related analysis indicates that prestigious investment banks do not promote overbidding. Analysis of post-takeover operating performance also fails to find any negative effects of takeover competition. As a whole, the results indicate that the breakeven returns to bidders in corporate takeovers stem not from the winner's curse but from the competitive market for targets that occurs predominantly prior to the public announcement of bids.
If you build it, will they come? School availability and school enrollment in 21 poor countries

Increasing the supply of schools is commonly advocated as a policy intervention to promote schooling. Analysis of the relationship between the school enrollment of 6 to 14 year olds and the distance to primary and secondary schools in 21 rural areas in low-income countries (including some of the poorest countries in Sub-Saharan Africa) reveals that the two are often statistically significantly related. However, the magnitudes of the associations are small. Simulating big reductions in distance yields only small increases in average school participation, and only small reductions in within-country inequality. The data are mostly cross-sectional and therefore it is difficult to assess the degree to which results might be driven by endogenous school placement. Data can be geographically matched over time in three of the study countries and under some assumptions the results from these countries are consistent with no substantial bias in the cross-sectional estimates. Although increasing school availability by decreasing the average distance to schools can be a tool for increasing enrollments, it cannot be expected to have a substantial effect. Other interventions, such as those geared toward increasing the demand for schooling or increasing the quality of schooling should be prioritized.
Profit sharing and monitoring in partnerships

We consider partnerships among risk-averse professionals endowed with (i) a risky and personally-costly production technology and (ii) a personally-costly monitoring technology providing contractible noisy signals about partners’ productive efforts. Partners shirk both production and monitoring tasks because efforts are unobservable. We characterize optimal partnership size, profit shares and incentive payments when every partner performs the same tasks, and show that medium-sized partnerships are dominated by either smaller or larger partnerships. Prohibiting some partners from monitoring increases the incentives for others to monitor. We illustrate how task assignments and incentives interact, leading to improvements in partner welfare.
Are busy boards detrimental

Abstract Busy directors have been widely criticized as being ineffective. However, we hypothesize that busy directors offer advantages for many firms. While busy directors may be less effective monitors, their experience and contacts arguably make them excellent advisors. Among IPO firms, which have minimal experience with public markets and likely rely heavily on their directors for advising, we find busy boards to be common and to contribute positively to firm value. Moreover, these positive effects of busy boards extend to all but the most established firms. Benefits are lowest among Forbes 500 firms, which likely require more monitoring than advising.
Comparative advantage, demand for external finance, and financial development

The differences in the levels of financial development between industrial and developing countries are large and persistent. Theoretical and empirical literature has argued that these differences are the source of comparative advantage and could therefore shape trade patterns. This paper points out the reverse link: financial development is influenced by comparative advantage. The authors illustrate this idea using a model in which a country's financial development is an equilibrium outcome of the economy's productive structure: financial systems are more developed in countries with large financially intensive sectors. After trade opening demand for external finance, and therefore financial development, are higher in a country that specializes in financially intensive goods. By contrast, financial development is lower in countries that primarily export goods which do not rely on external finance. The authors demonstrate this effect empirically using data on financial development and export patterns in a panel of 96 countries over the period 1970-99. Using trade data, they construct a summary measure of a country's external finance need of exports and relate it to the level of financial development. In order to overcome the simultaneity problem, they adopt a strategy in the spirit of Frankel and Romer (1999). The authors exploit sector-level bilateral trade data to construct, for each country and time period, a predicted value of external finance need of exports based on the estimated effect of geography variables on trade volumes across sectors. Their results indicate that financial development is an equilibrium outcome that depends strongly on a country's trade pattern.