cssi/SciSciGPT-SciSciNet huggingface dataset:
Has the U.S. Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation

A quantitative investigation of financial intermediation in the United States over the past 130 years yields the following results: (i ) the finance industry’s share of gross domestic product (GDP) is high in the 1920s, low in the 1960s, and high again after 1980; (ii ) most of these variations can be explained by corresponding changes in the quantity of intermediated assets (equity, household and corporate debt, liquidity); (iii ) intermediation has constant returns to scale and an annual cost of 1.5–2 percent of intermediated assets; (iv) secular changes in the characteristics of firms and households are quantitatively important. (JEL D24, E44, G21, G32, N22) This paper is concerned with the theory and measurement of financial intermediation. The role of the finance industry is to produce, trade, and settle financial contracts that can be used to pool funds, share risks, transfer resources, produce information, and provide incentives. Financial intermediaries are compensated for providing these services. The income received by these intermediaries measures the aggregate cost of financial intermediation. This income is the sum of all spreads and fees paid by nonfinancial agents to financial intermediaries and it is also the sum of all profits and wages in the finance industry. This cost of financial intermediation affects the user cost of external finance for firms who issue debt and equity, and the costs for households who borrow or use asset management services.
Learning Occupational Task-Shares Dynamics for the Future of Work

The recent wave of AI and automation has been argued to differ from previous General Purpose Technologies (GPTs), in that it may lead to rapid change in occupations' underlying task requirements and persistent technological unemployment. In this paper, we apply a novel methodology of dynamic task shares to a large dataset of online job postings to explore how exactly occupational task demands have changed over the past decade of AI innovation, especially across high, mid and low wage occupations. Notably, big data and AI have risen significantly among high wage occupations since 2012 and 2016, respectively. We built an ARIMA model to predict future occupational task demands and showcase several relevant examples in Healthcare, Administration, and IT. Such task demands predictions across occupations will play a pivotal role in retraining the workforce of the future.
The Value of Ownership

Author(s): Dan-Cohen, Meir | Abstract: The value of ownership is ordinarily thought to derive from the benefits that objects offer, and from the rights to those benefits in which ownership is thought to consist. This dominant view leaves important aspects of ownership unexplained: the value collectors attach to owning worthless objects, pride of ownership, the per se wrongfulness of trespass, and others. As a solution to these puzzles the paper argues that property's relationship to the self resembles the body's: both fall within the scope of "I", thus licensing the use of the possessive pronoun "my" to describe the relationship. Consequently, like the body, property too can activate values and attitudes, such as autonomy, dignity, and pride, that have an individual human being as their target.
A Qualitative Study of Early Childhood Educators' Beliefs About Key Preschool Classroom Experiences

The aim of the study was to uncover early childhood educators' beliefs about how to best work with children getting ready for kindergarten.
MODELLING THE YIELD CURVE

expectations model, a risk premium model and a market segmentation model. Among the innovations in the present study, we develop the vector autoregressive methodology introduced by Campbell and Shiller (I987) for testing present value models to the case where the frequency of data observation is finer than the maturity of the short-term instrument. In addition, this study is the first to use the interest rate data generated by the ' new' Bank of England method of measuring the yield curve, which is thought to be superior to data on Treasury Bond yields previously published by the Bank (Bank of England I99o).2
When does making detailed predictions make predictions worse

[Correction Notice: An Erratum for this article was reported in Vol 145(10) of Journal of Experimental Psychology: General (see record 2016-42695-001). In the article, the symbols in Figure 2 were inadvertently altered in production. All versions of this article have been corrected.] In this article, we investigate whether making detailed predictions about an event worsens other predictions of the event. Across 19 experiments, 10,896 participants, and 407,045 predictions about 724 professional sports games, we find that people who made detailed predictions about sporting events (e.g., how many hits each baseball team would get) made worse predictions about more general outcomes (e.g., which team would win). We rule out that this effect is caused by inattention or fatigue, thinking too hard, or a differential reliance on holistic information about the teams. Instead, we find that thinking about game-relevant details before predicting winning teams causes people to give less weight to predictive information, presumably because predicting details makes useless or redundant information more accessible and thus more likely to be incorporated into forecasts. Furthermore, we show that this differential use of information can be used to predict what kinds of events will and will not be susceptible to the negative effect of making detailed predictions.
Expected returns and expected dividend growth: time to rethink an established empirical literature

This article examines various state-space and VAR model specifications to investigate the contributions of expected returns and expected dividend growth to movements in the price-dividend ratio. We show that both models involve serious inference problems that need to be dealt with carefully. We propose procedures that offer more reliable inference results, and the corrected inferences indicate that the aggregate data of dividends and returns alone do not provide strong enough evidence to support the notion that the expected returns dominate the stock price variation. However, we show that an alternative measure of cash flows termed the net payout by Larrain and Yogo (2008) appears to lend strong support to the notion that the expected cash flow explains a large fraction of the firm value variation. This finding remains robust in both state-space and VAR decompositions with the corrected inference.
Foreword: Law as...III - Glossolalia: Toward a Minor (Historical) Jurisprudence

This paper serves as foreword and introduction to the third collection of essays produced under the auspices of the biennial “Law As …” conference, held at the University of California Irvine School of Law. The third conference took place in March 2014; the essays presented there are be published in a symposium issue of the U.C. Irvine Law Review in 2015. Following on from the first (April 2010) and second (March 2012) conferences, the third further develops the distinctive trajectory of “Law As …” as a mode of legal study situated at the intersection of law, the humanities, and the social sciences. Each of the three conferences, and resulting collections of articles [see 1 U.C. Irvine L. Rev. 519 (2011), and 4 U.C. Irvine L. Rev. 1 (2014), has had its own distinctive character, but on each occasion the intent has been to engage in a double move: to deploy history as an interpretive practice – a theory, a methodology, a philosophy – with which to engage law; and simultaneously to offer history as a substantive arena in which other interpretive practices from across the broad spectrum of the humanities and social sciences can undertake their own engagement with law. The result is a multi-year work in progress that has arced in the direction of locating “Law As …” in the realm of jurisprudence. As this introduction explains, that tendency is rendered explicit in the latest collection, which embraces the distinctive template of "minor jurisprudence."
Why Bad Things Happen to Good Organizations: The Link Between Governance and Asset Diversions in Public Charities

In the United States, the IRS now requires charities to publicly disclose any significant asset diversion, which is the theft or unauthorized use of assets, that the charity identifies during the year. We use this new disclosure to investigate whether strong governance reduces the likelihood of a charitable asset diversion. Specifically, for a sample of 1528 charities from 2008 to 2012, we simultaneously examine eleven measures of governance that capture four broad governance constructs: board monitoring, independence of key individuals, tone at the top, and capital provider oversight. We find consistent evidence that good governance across all four constructs is negatively associated with the probability of an asset diversion. Of the eleven governance measures, our results indicate that monitoring by debt holders and government grantors, audits, and keeping managerial duties in-house are most strongly associated with lower incidence of fraud. Our results also indicate that the likelihood of a fraud is negatively associated with a board review of the Form 990, the existence of a conflict of interest policy, and the presence of restricted donations. In addition, we document that the likelihood of an asset diversion is negatively associated with program efficiency and positively associated with growth and organizational complexity.
Fiscal federalism and economic growth

This paper uses an endogenous-growth model with overlapping generations to explore the connection between fiscal federalism and economic growth. The analysis shows that federalism, which allows public-good levels to be tailored to suit the differing demands of young and old consumers, who live in different jurisdictions, increases the incentive to save. This stronger incentive in turn leads to an increase in investment in human capital, and a byproduct of this higher investment is faster economic growth.
Entropy Balancing for Causal Effects: A Multivariate Reweighting Method to Produce Balanced Samples in Observational Studies

This paper proposes entropy balancing, a data preprocessing method to achieve covariate balance in observational studies with binary treatments. Entropy balancing relies on a maximum entropy reweighting scheme that calibrates unit weights so that the reweighted treatment and control group satisfy a potentially large set of prespecified balance conditions that incorporate information about known sample moments. Entropy balancing thereby exactly adjusts inequalities in representation with respect to the first, second, and possibly higher moments of the covariate distributions. These balance improvements can reduce model dependence for the subsequent estimation of treatment effects. The method assures that balance improves on all covariate moments included in the reweighting. It also obviates the need for continual balance checking and iterative searching over propensity score models that may stochastically balance the covariate moments. We demonstrate the use of entropy balancing with Monte Carlo simulations and empirical applications.
The Effects of Increased Product Market Competition and Changes in Financial Markets on the Performance of Nonfinancial Corporations in the Neoliberal Era

Neoliberal policies altered the competitive environment within which nonfinancial corporations operate by slowing global aggregate demand growth and removing national barriers to trade and direct investment. These changes spawned destructive competition, leading to low profits, high leverage and chronic excess capacity. Meanwhile, financial market changes strongly affected nonfinancial corporate behavior. Planning horizons were shortened, the allegiance of key stakeholders to corporate goals declined, a dramatic change in management compensation took place, aligning top managers' interests more tightly with the short-term speculative interests of institutional financial investors, and the percent of cash flow disgorged to financial agents skyrocketed. The result was a "neoliberal paradox": financial markets demanded ever higher profits while product markets tightly constrained earnings.
A Polarization Encoded Photon-to-Spin Interface

We propose an integrated photonics device for mapping qubits encoded in the polarization of a photon onto the spin state of a solid-state defect coupled to a photonic crystal cavity: a “polarization-encoded photon-to-spin interface” (PEPSI). We perform a theoretical analysis of the state fidelity’s dependence on the device’s polarization extinction ratio and atom–cavity cooperativity. Furthermore, we explore the rate-fidelity trade-off through analytical and numerical models. In simulation, we show that our design enables efficient, high fidelity photon-to-spin mapping.
The Philosophy of Tax: A Review of David Foster Wallace’s The Pale King:

David Foster Wallace’s last novel, The Pale King,1 revolves around the administration of the federal income tax. Wallace’s portrayal of this system, for all its hilarity and incisiveness, might ultimately seem a bit banal because he emphasizes that the tax system is boring; surely we all knew that. Yet the portrayal of boredom in The Pale King is nuanced and provocative, recalling a long tradition of thinking about modernity and boredom. Most notably, Kierkegaard diagnosed modernity as an age beset by a particular form of boredom. In the modern age people have more and more leisure, but less and less guidance as to how to lead one’s life either through religion or the rigorous patterns of agricultural life, and thus modern people have found themselves bored in a new way. This insight was picked up on by many and was most developed by Martin Heidegger. What can one learn about tax from learning more about boredom? Within the novel it is observed that a new notion of the “interesting” arose along with the n...
On the marketing of IPOs

Abstract Derrien [2005. Journal of Finance 60, 487–521] and Ljungqvist et al. [2006. Journal of Business] build upon the work of Miller [1977. Journal of Finance 32, 1151–1168] and claim that issuers and the regular customers of investment bankers benefit from the presence of sentiment investors (noise traders) in the market for an initial public offering (IPO). Thus we argue that investment bankers have an incentive to promote an IPO to induce sentiment investors into the market for it. Consistent with this motivation and these models, we expect that the promotional efforts of investment bankers should influence the compensation of investment bankers, the valuation of an IPO, its initial returns and trading, the wealth gains of insider shareholders, and the likelihood that an issuer switches investment bankers for a subsequent seasoned equity offering. Examining data for a sample of IPOs from 1993 through 2000, we find evidence consistent with these predictions and so with the proposition that an investment banker's ability to market an IPO to sentiment investors is important.
Religious Reasons in Public: Let a Thousand Flowers Bloom, But Be Prepared to Prune

In a recent speech, Senator Barack Obama claimed that democracy requires political actors to “translate their concerns into universal, rather than religion-specific, values.”1 If I understand him correctly, we need to translate from the religious to the universal because, “in a pluralistic democracy. . . .[p]olitics depends on our ability to persuade each other of common aims based on a common reality.”2 And we cannot do that if we “simply point to the teachings of [our] church or evoke God’s will.”3 So it is the requirement of persuasion amongst a pluralistic population that requires us to advert to the universal. I believe this argument is fallacious. In order to explain why, it will be helpful to reflect, if only briefly, on the kind of political reality that elicits such claims. More particularly, I will reflect on the sliver of political reality described by Allen Hertzke in his excellent book, “Freeing God’s Children: The Unlikely Alliance for Global Human Rights.”4
Interdisciplinary Research and Environmental Law

This article considers the involvement of environmental law researchers in interdisciplinary research. Using a survey and a series of unstructured interviews, we explore environmental law professors’ level of interest in such research; the extent of their engagement in it; and the inducements and barriers they perceive to such research. We conclude that levels of engagement in such research are probably lower than they ought to be, and we therefore recommend steps that individuals and institutions could take to facilitate more and better interdisciplinary work. More generally, we conclude that some common critiques of interdisciplinary legal research rest on assumptions that are not accurate, at least for the sub-field of environmental law.
Educational Responses to the COVID-19 Outbreak in South Korea

This paper investigates South Korean educational responses to school closures amid the COVID-19 pandemic, viewed with a risk and resilience framework. The COVID-19 crisis emerged and worsened right before the beginning of the new school year (March 2) in South Korea, and immediately led to students’ limited access to educational facilities. Well-established IT infrastructure and national curriculum facilitated the adoption of distance learning in South Korean schools. However, educational inequality due to family influences, and financial instabilities in early care and education settings disrupted students’ optimal learning during the changes. The situation brought both benefits and challenges to South Korean education system. The adoption of distance learning potentially downgraded overall educational quality, but it also provided opportunities to improve educational content and professional development for teachers, and to promote individualized learning for students. Despite some challenges, distance learning was an effective alternative for South Korean schools during the COVID-19 crisis. More practical and research efforts are needed in order to reduce educational inequality and maximize the effectiveness of distance learning.
Chae Chan Ping at 125: An Introduction

In 2014, the University of Oklahoma College of Law held a symposium to mark the 125th anniversary of the U.S. Supreme Court opinion in Chae Chan Ping v. United States, 130 U.S. 581 (1889), also known as the Chinese Exclusion Case. Chae Chan Ping was a Chinese migrant who had lived in the United States for 12 years before he left the country, which he did only after obtaining legal permission to return. While Chae Chan Ping was at sea on his way back to the United States, Congress passed a law revoking reentry certificates for Chinese migrants, and Chae Chan Ping was denied reentry. A unanimous Supreme Court determined that Congress’ decision to revoke the reentry certificates was “conclusive upon the judiciary.” That holding has become known as the “plenary power doctrine,” and it has been foundational to constitutional immigration jurisprudence. Under this doctrine, any laws passed by Congress with respect to immigration, even those that would be unconstitutional if applied to citizens, are not subject to judicial challenge. In this introduction, I explain the relevance of this seminal decision and introduce the symposium contributions.
The Foggy Road for Evaluating Punitive Damages: Lifting the Haze from the BMW/State Farm Guideposts

In this Article, Professors Chanenson and Gotanda propose that courts treat comparable maximum criminal or civil legislative fines as a presumptive due process limit on punitive damage awards. The Article reviews the manner in which courts have implemented the three-guidepost framework for constitutional review of punitive awards laid out by the Supreme Court in BMW of North America, Inc. v. Gore and in State Farm Mutual Automobile Insurance Co. v. Campbell. Finding that courts have struggled to articulate a coherent rationale and methodology for review of such awards, the authors propose a greater reliance on the third guidepost of State Farm, comparison with legislative fines for comparable misconduct. In particular, the authors propose that the highest comparable fine should be the presumptive constitutional limit on a punitive damage award. Such an approach would give lower courts clear and workable guidance for review of punitive damage awards, while also providing civil defendants with fair notice of potential awards and reinforcing the proposition that important lawmaking authority belongs in the hands of state legislatures.
Optimal reservation policies and market segmentation

When operating in a market with heterogeneous customers, a service firm (e.g., a car rental company or a hotel) needs to manage its capacity so as to maximize its revenue. To gauge the potential demand, a service firm often allows each customer to reserve a unit of service in advance. However, to avoid the loss associated with “no-shows”, service firms may require a non-refundable deposit. To determine an optimal reservation policy with a non-refundable deposit, we consider the case in which the market is divided into four segments (high vs. low valuation and high vs. low show-up probability). When customer demand and the firm׳s capacity are large so that they can be approximated by continuous values, we determine the optimal reservation policy analytically, and we establish analytical conditions under which the firm should discriminate against (i.e., price out) certain customer segments. For the case when customer demand and the firm׳s capacity are finite so that they take on discrete values, we find that some of the insights obtained from the “continuous” case continue to hold especially when the firm׳s capacity is large. However, the key difference is that in the former case, the firm discriminates mostly based on customers׳ valuation, whereas in the latter case it discriminates mostly based on customers׳ show-up probability.
Do older investors make better investment decisions

Abstract This paper examines the investment decisions of older individual investors. We find that older and experienced investors are more likely to follow rules of thumb that reflect greater investment knowledge. However, older investors are less effective in applying their investment knowledge and exhibit worse investment skill, especially if they are less educated, earn lower income, and belong to minority racial/ethnic groups. Overall, the adverse effects of aging dominate the positive effects of experience. These results indicate that older investors' portfolio decisions reflect greater knowledge about investing, but investment skill deteriorates with age due to the adverse effects of cognitive aging.
Mapp v. Ohio Revisited: A Law Clerk's Diary

At conference Frankfurter said Mapp is the worst tragedy since Dred Scott. Justice Brennan says he means it. —Richard S. Arnold, from his diary of the 1960 Supreme Court Term2
Reforming health care: the paradoxes of cost.

﻿Whatever happens in Washington in the weeks and months ahead, the United States is fated for the indefinite future to conduct a prolonged and difficult national debate on health care. The reason for this protracted and arduous argument can be summarized in a single word: cost. Yet, paradoxically, the rhetoric of unspecified cost reduction is used to avoid the painful choices needed to prune health care outlays, choices which inevitably involve agonizing denials of medical services in a world of finite resources. Medical costs cannot be controlled without denying something to somebody. Yet, paradoxically the term “cost” is used in contemporary political discourse to avoid the difficult choices involved in such denials. It is easier to favor unspecified cost reductions, than to identify particular service denials which would actually reduce medical care expenditures. Elected officials are reluctant to deny medical services to cut costs, but health care costs cannot be meaningfully controlled without such service denials. Our employer-based system of medical care is a major reason we confront this difficult situation. Yet, again paradoxically, the employer-based system, though flawed, is the best tool available to us to control medical care costs since employers must respond to competitive pressures in the marketplace and thus are better positioned than is government to implement the painful service denials necessary to curb health care outlays. However, even under the best of circumstances, medical care costs are not a problem which will be solved but rather are a reality to be permanently and painfully managed and controlled.
The Patent Litigation Explosion

This paper provides the first look at patent litigation hazards for public firms during the 80s and 90s. Public firms face dramatically increased hazards of litigation as plaintiffs and even more rapidly increasing hazards as defendants. The increase cannot be explained by patenting rates, R&D, firm value or industry composition, leaving legal changes as the most likely explanation. Firms that spend more on R&D are more likely to be sued and firms that acquire more patents are more likely to sue. The sharp increase in the probability of being sued per R&D dollar implies an increase in the “tax” that litigation imposes on innovation. Small firms face much higher marginal enforcement costs and marginal taxes on R&D. *Research on Innovation and Boston University School of Law, and Boston University School of Law, respectively. Thanks to Iain Cockburn, Bronwyn Hall, Jay Kesan, Zorina Khan, Jenny Lanjouw, Josh Lerner, Glynn Lunney Jr., Mark Schankerman and participant in seminars at BU, NBER and Napa for helpful comments. Thanks to Annette Fratantaro, Bob Hunt, Megan MacGarvie and Rosemarie Ziedonis for sharing data. Thanks to Debbie Koker for research assistance. Contact: jbessen@bu.edu Hosted by The Berkeley Electronic Press 1 – Patent Litigation Explosion Bessen & Meurer – 2/05
Legal Plug-Ins: Cultural Distance, Cross-Listing, and Corporate Governance Reform

This paper considers the extent to which countries or companies can successfully borrow foreign corporate governance elements with a view to improving their own governance system. Companies in particular theoretically can rent other countries' governance system through cross-listing. At bottom, the question is whether foreign legal elements can be "plugged-in" neatly into an existing corporate governance system, be compatible with it, and produce the expected improvements. Advances in different branches of psychology dealing with cultural orientations and cognitive styles suggest that the greater the cultural distance between the source and target countries the more difficult it would be to implement such a strategy for corporate governance reform. To demonstrate these points in detail, this paper considers South Korea's corporate governance system and its culture as a reference case.
And Not a Drop to Drink: Admiralty Law and the BP Well Blowout

Although viewed as an admiralty tort by commentators (e.g., Professor David Robertson) and a 2011 BP Blowout MDL opinion (B-1 Bundle) by presiding MDLJudge Carl Barbier) I argued that the blowout is not an admiralty tort for three reasons: 1. The tort does not satisfy the requirement of Executive Jet Aviation Co. v. City of Cleveland, 409 U.S. 249 (1972) (Executive Jet) that it be "substantially related to a traditional maritime activity." 2. It does not satisfy the Executive Jet requirement for a "vessel." More specifically, the Deepwater Horizon drilling rig or "mobile offhsore drilling unit" (MODU) does not qualify as a "vessel" under Outer Continental Shelf Act(OCSLA) sec.1333(a)(1), which, instead classifies MODUs as "temporarily attached devices (TADs). 3. In line with Rodrigue v. Aetna Cas. & Sur. Co., 395 U,S,352 (1969), torts occurring on OCSLA situses are governed by the (non-admiralty) OCSLA, not by admiralty law. Rodrigue overruled the leading Fifth Circuit precedent, Snipes v. Pure Oil Co., 293 F.2d 60 (5th Cir. 1961), because, like the B-1 Bundle ruling in the BP MDL, it wrongly ruled that tdortgs on OCSLA situses are not "maritime" events but rather are ruled by OCSLA. A major theme of the article is that virtually all 5th Circuit OCSLA tort rulings up to the BP MDL addressed the entitlement of injured or deceased workers atop drilling rig platforms (whether fixed or TADS) whereas the unique OCSLA/Oil Pollution act of 1990 tort being litigated in the BP blowout is an action to remedy the economic and property losses incurred by tens of thousands of off-platform plaintiffs in the Gulf coastal state in consequence of the OCS oil discharge of the BP subsea and the 45/10,0000ths of the total discharge from the Deepwater Horizon. The policy argument in favor of deeming the MODU an admiralty "vessel" in the conventional injured deceased platform worker case (that the latter's recovery is dependent on that labelling) is wholly irrelevant with respect to the dissimilar OCSLA/OPA tort in the BP MDL.
Alcohol taxes and labor market outcomes.

Abstract We present reduced form estimates of the effect of alcohol taxes on employment, weekly work hours, and wages. The reduced form estimates are meaningful in two ways: first, they provide estimates of the effect of an important public policy tool—alcohol taxes—and second, they can be used to evaluate hypotheses about the structural effects of alcohol use on labor market outcomes. Estimates indicate that there is a weak and indeterminate relationship between alcohol taxes and labor market outcomes. This implies that alcohol use does not adversely affect labor market outcomes and is inconsistent with findings from previous studies.
The Cost of Populism in Argentina, 2003-2015

This paper studies the historical context, and economic and institutional impact of the Nestor Kirchner’s and Cristina Fernandez de Kirchner’s presidencies (Kirchner-Kirchner administration) in Argentina. The effects of the major economic policies during their presidency are explained as well as the indices fall of the institutional quality. The challenges of stepping out of populism are also mentioned.
The Human Factor: Globalizing Ethical Standards in Drug Trials through Market Exclusion

This Article is part one of a two-part series that seeks to deter unethical clinical drug trials in developing nations by preventing products developed unethically from gaining market approval. In particular, this Article argues for a combination of soft-law techniques, including more robust and subaltern-centric surveillance of international drug trials, and hard-law rules within the regulatory agencies of the United States and European Union (EU) that require clinical drug research to adhere to international ethical standards. The intended result is to create a stiff economic penalty: exclusion from lucrative markets for unethical testing practices. This in turn will create a strong ex ante economic incentive for drug companies to ethically conduct drug trials. First, this Article outlines how the international community's current medical ethics regime has emerged as a reaction to historical ethical abuses. Next, this Article addresses how globalization has transformed human drug testing trials and, in the process, has rendered inadequate the current ethics regime, which does not operate well across international borders into developing nations. Lastly, this Article describes how soft law, which can work effectively across international borders, can be used to effectuate hard-law sanctions, such as blocking market approval within the United States and the EU to deter unethical practices in clinical drug trials.
Reconciling the Firm Size and Innovation Puzzle

There is a prevailing view in both the academic literature and the popular press that firms need to behave more entrepreneurially. This view is reinforced by a stylized fact in the innovation liter...
Institutional Holdings and Payout Policy

We examine the relation between institutional holdings and payout policy in U.S. public firms. We find that payout policy affects institutional holdings. Institutions avoid firms that do not pay dividends. However, among dividend-paying firms they prefer firms that pay fewer dividends. Our evidence indicates that institutions prefer firms that repurchase shares, and regular repurchasers over nonregular repurchasers. Higher institutional holdings or a concentration of holdings do not cause firms to increase their dividends, their repurchases, or their total payout. Our results do not support models that predict that high dividends attract institutional clientele, or models that predict that institutions cause firms to increase payout.
Transition from Inflation to Price Stability

This paper provides a detailed discussion of the real phenomena that materialized in the stabilization period which followed the German hyper-inflation. Significant real dislocations arose after the monetary reform; and these can be attributed to a government policy which subsidized heavy industry through the inflation tax proceeds. The "credibility problem" appears not to have been a significant factor in the post-reform dislocation.
CEO turnover in a competitive assignment framework

Abstract There is widespread concern about whether Chief Executive Officers (CEOs) are appropriately punished for poor performance. While CEOs are more likely to be forced out if their performance is poor relative to the industry average, overall industry performance also matters. This seems puzzling if termination is disciplinary, however, we show that both absolute and relative performance-driven turnover can be natural and efficient outcomes in a competitive assignment model in which CEOs and firms form matches based on multiple characteristics. The model also has new predictions about replacement managers' equilibrium pay and performance. We document CEO turnover events during 1992–2006 and provide empirical support for our model.
Portfolio and financing adjustments for U.S. banks: Some empirical evidence

Abstract This paper presents a model of the portfolio and financing adjustments of U.S. banks over the business cycle. At the core of the model is a moral hazard problem between depositors/bank regulators and stockholders. The solution to this problem takes the form of shared management of the bank. Stockholders manage the bank's portfolio and the regulator manages the financing of the portfolio. The model predicts that portfolio adjustments are made to conform to the risk aversion of shareholders and financing adjustments are made to offset changes in portfolio risk. Regression evidence for 1955–2000 fails to reject these predictions.
Politics and Policy Change in American Administrative Law

This essay uses Justice Scalia’s and Breyer’s dueling opinions in FCC v. Fox Television Stations, Inc. (2009), as a vehicle for exploring the contested relationship between politics and policy change in administrative law. In Fox, a five – justice majority led by Justice Scalia insisted that an agency’s abandonment of an old policy position in favor of a new one should survive review for arbitrariness so long as the agency explains why its new position is reasonable. A different five – justice majority (yes – that adds up to ten) led by Justice Breyer thought that Justice Scalia’s stance left too much room for politicization of policymaking. To curb such influence, Justice Breyer insisted that an agency, to justify abandoning an old policy, must explain why it was reasonable to change from its old policy to the new one. Neither of these two approaches in Fox hits quite the right note. Justice Scalia’s view unduly minimizes the problem of politicization. Justice Breyer’s solution seems formalistic and easy to evade. A better way forward may lie in combining Justice Scalia’s simpler framework with Justice Breyer’s more suspicious attitude. Taking a cue from Justice Frankfurter in Universal Camera, the courts should respond to the potential for excessive politicization of agency policymaking not with more doctrinal metaphysics but with a suspicious “mood.” Cet article se base sur les opinions adverses des juges Scalia et Breyer dans FCC v. Fox Television Stations Inc. (2009) comme vehicule pour explorer le rapport conteste entre la politique et les changements de politiques en droit administratif. Dans Fox, une majorite de cinq juges dirigee par le juge Scalia a insiste que l’abandon d’une ancienne politique par une agence en faveur d’une nouvelle politique devrait survivre a un examen pour juger si elle est arbitraire en autant que l’agence explique pourquoi sa nouvelle politique est raisonnable. Une autre majorite de cinq juges (oui – cela fait dix) dirigee par le juge Breyer a trouve que la position du juge Scalia laissait trop de place a la politisation de l’elaboration de politiques. Pour enrayer cette influence, le juge Breyer a insiste que l’agence, pour justifier l’abandon d’une ancienne politique, doit expliquer pourquoi il etait raisonnable de changer de l’ancienne a la nouvelle. Ni l’une ni l’autre de ces approches n’est tout a fait dans la note. L’avis du juge Scalia minimise trop le probleme de politisation. La solution du juge Breyer semble formaliste et facile a contourner. Une meilleure facon d’avancer serait peut – etre de combiner le cadre plus simple du juge Scalia avec l’attitude plus soupconneuse du juge Breyer. En suivant l’exemple du juge Frankfurter dans Universal Camera, les tribunaux devraient reagir contre le potentiel de politisation excessive de l’elaboration de politiques par une agence non pas avec une metaphysique plus doctrinale mais avec une «disposition» soupconneuse.
The Motherhood Wage Penalty Revisited: Experience, Heterogeneity, Work Effort, and Work-Schedule Flexibility:

This paper seeks an explanation for the well-documented wage disadvantage of mothers compared to women without children. An analysis of data from the 1968–88 National Longitudinal Survey of Young W...
Negotiated versus Cost-Based Transfer Pricing

This paper studies an incomplete contracting model to compare the effectiveness of alternative transfer pricing mechanisms. Transfer pricing serves the dual purpose of guiding intracompany transfers and providing incentives for upfront investments at the divisional level. When transfer prices are determined through negotiation, divisional managers will have insufficient investment incentives due to “hold-up” problems. While cost-based transfer pricing can avoid such “hold-ups”, it does suffer from distortions in intracompany transfers. Our analysis shows that negotiation frequently performs better than a cost-based pricing system, though we identify circumstances under which cost-based transfer pricing emerges as the superior alternative.
Chasing the Illusory Pot of Gold at the End of the Rainbow: Negligence and Strict Liability in Design Defect Litigation

Courts continue to draw hairline distinctions between cases sounding in negligence and strict liability. Where the underlying theory for recovery is based on some form of risk-utility balancing the distinctions are either meaningless or outright wrong. In a recent case the Illinois Supreme Court in seeking to differentiate negligence from strict liability was able to do so only by misstating the law of negligence. The Illinois decision is representative of a problem that pervades product liability cases in many jurisdictions. The author espouses a functional rather than doctrinal approach to the definition of design defect and argues that continuing to insist that doctrine difference exist will lead juries to needless cases of inconsistent verdicts.
Nature or Nurture? Judicial Lawmaking in the European Court of Justice and the Andean Tribunal of Justice

Are international courts power-seeking by nature, expanding the reach and scope of international rules and the courts' authority where permissive condi- tions allow? Or, does expansionist lawmaking require special nurturing? We investi- gate the relative influences of nature versus nurture by comparing expansionist lawmaking in the European Court of Justice ~ECJ! and the Andean Tribunal of Jus- tice ~ATJ !, the ECJ's jurisdictional cousin and the third most active international court+ We argue that international judges are more likely to become expansionist law- makers where they are supported by substate interlocutors and compliance constitu- encies, including government officials, advocacy networks, national judges, and admin- istrative agencies+ This comparison of two structurally identical international courts calls into question prevailing explanations of ECJ lawmaking, and it suggests that prevailing scholarship puts too much emphasis on the self-interested power-seeking of judges, the importance of institutional design features, and the preferences of gov- ernments to explain lawmaking by international courts+
The Law of Corporate Purpose

Delaware corporate law requires corporate directors to manage firms for the benefit of shareholders, and not for any other constituency. Delaware jurists have been clear about this in their case law, and they are not coy about it in extra-judicial settings, such as speeches directed at law students and practicing members of the corporate bar. Nevertheless, the reader of leading corporate law scholarship is continually exposed to the scholarly assertion that the law is ambiguous or ambivalent on this point, or even that case law affirmatively empowers directors to pursue non-shareholder interests. It is shocking, and troubling, for corporate law scholarship to evince such confusion about the most important black letter matter in the field. While I am a critic of the “shareholder primacy norm” in corporate governance, I am nevertheless convinced that shareholder primacy is the law. In fact, the critical vantage and reformative program that I have pursued in other writing presupposes that shareholder primacy is currently the law. This article is therefore dedicated both to providing doctrinal clarification on the law of corporate purpose, and to vindicating a key presumption in a broader normative agenda. 1 Associate Professor, Santa Clara University School of Law. Dyosifon@scu.edu. A summer research stipend from Santa Clara University School of Law helped support the writing of this article. My thanks to Mary Sexton for her expert assistance in obtaining research materials. Thanks to Molly Holsinger and Patrick Wallen for excellent research assistance.
Stability and Control of Chaplygin Beanies Coupled to a Platform Through Nonholonomic Constraints

Many multi-agent systems in nature are comprised of agents that interact with, and respond to, the dynamics of their environment. In this paper, we approach the study of such agent-environment interactions through the study of passively compliant vehicles coupled to their environment via simple nonholonomic constraints. We first consider a single passively compliant Chaplygin beanie atop a platform having translational compliance, introduce the reduced equations for the system using the notion of nonholonomic momentum, and provide proof for its stability under arbitrary deformations of the elastic element modeling its compliance. We then direct our focus to results concerning the frequency response and control of passive Chaplygin beanies under actuation of the platform, discuss rich dynamical features arising from periodic actuation, and develop rules by which control can be exerted to collect and disperse multiple passive vehicles. We then discuss how the latter of these results clarifies the extent to which stable behavior can be excited in the system through exogenous control.
CHOICE, INTERNAL CONSISTENCY AND RATIONALITY

The classical theory of rational choice is built on several important internal consistency conditions. In recent years, the reasonableness of those internal consistency conditions has been questioned and criticized, and several responses to accommodate such criticisms have been proposed in the literature. This paper develops a general framework to accommodate the issues raised by the criticisms of classical rational choice theory, and examines the broad impact of these criticisms from both normative and positive points of view.
Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development

We estimate the respective contributions of institutions, geography, and trade in determining income levels around the world, using recently developed instrumental variables for institutions and trade. Our results indicate that the quality of institutions “trumps” everything else. Once institutions are controlled for, conventional measures of geography have at best weak direct effects on incomes, although they have a strong indirect effect by influencing the quality of institutions. Similarly, once institutions are controlled for, trade is almost always insignificant, and often enters the income equation with the “wrong” (i.e., negative) sign. We relate our results to recent literature, and where differences exist, trace their origins to choices on samples, specification, and instrumentation.
The Effect of Malpractice Liability on the Delivery of Health Care

The growth of medical malpractice liability costs has the potential to affect the delivery of health care in the U.S. along two dimensions. If growth in malpractice payments results in higher malpractice insurance premiums for physicians, these premiums may affect the size and composition of the physician workforce. The growth of potential losses from malpractice liability might also encourage physicians to practice "defensive medicine." We use rich new data to examine the relationship between the growth of malpractice costs and the delivery of health care along both of these dimensions. We pose three questions. First, are increases in payments responsible for increases in medical malpractice premiums? Second, do increases in malpractice liability drive physicians to close their practices or not move to areas with high payments? Third, do increases in malpractice liability change the way medicine is practiced by increasing the use of certain procedures? First, we find that increases in malpractice payments made on behalf of physicians do not seem to be the driving force behind increases in premiums. Second, increases in malpractice costs (both premiums overall and the subcomponent factors) do not seem to affect the overall size of the physician workforce, although they may deter marginal entry, increase marginal exit, and reduce the rural physician workforce. Third, there is little evidence of increased use of many treatments in response to malpractice liability at the state level, although there may be some increase in screening procedures such as mammography.
Does Incomplete Spanning in International Financial Markets Help to Explain Exchange Rates

We assume that domestic (foreign) agents, when investing abroad, can only trade in the foreign (domestic) risk-free rates. In a preference-free environment, we derive the exchange rate volatility and risk premia in any such incomplete spanning model, as well as a measure of exchange rate cyclicality. We find that incomplete spanning lowers the volatility of exchange rate, increases the risk premia but only by creating exchange rate predictability, and does not affect the exchange rate cyclicality.
Industry-University Cooperative Research Centers

This paper takes a first look at the effect of Industry-University Cooperative Research Centers (IUCRCs) on industrial R&D laboratories. IUCRCs are small academic centers designed to foster technology transfer between universities and firms. Since IUCRCs depend on industry support we expect them to further the research of member companies.