cssi/SciSciGPT-SciSciNet huggingface dataset:
How Do Firms Become Different? A Dynamic Model

This paper presents a dynamic investment game in which firms that are initially identical develop assets that are specialized to different market segments. The model assumes that there are increasing returns to investment in a segment, for example, as a result of word-of-mouth or learning curve effects. I derive three key results: (1) Under certain conditions there is a unique equilibrium in which firms that are only slightly different focus all of their investment in different segments, causing small random differences to expand into large permanent differences. (2) If, on the other hand, sufficiently large random shocks are possible, firms over time repeatedly change their strategies, switching focus from one segment to another. (3) A firm might want to reduce its own assets in the smaller segment in order to entice its competitor to shift focus to this segment. This paper was accepted by J. Miguel Villas-Boas, marketing.
Beyond Tracking and Detracking: The Dimensions of Organizational Differentiation in Schools.

Schools use an array of strategies to match curricula and instruction to students’ heterogeneous skills. Although generations of scholars have debated ‘‘tracking’’ and its consequences, the literat...
150 Years of Patent Office Practice

This article examines the administrative practices of the patent offices in 60 countries over a 150-year period, a little explored arena where government bodies and private firms interact. Larger and wealthier countries where international trade is more important give patent applicants more options. In these nations, patent office administrators' flexibility is often restricted and the responsibility for determining patentability divided between the patent office and the courts. Civil law nations tend to rely solely on the courts to determine patent validity and restrict the discretion of patent office administrators. They also tend to offer patent applicants more options. Copyright 2005, Oxford University Press.
Some Sound and Fury from Kaplow and Shavell

Santa Claus. The Easter Bunny. The Tooth Fairy. Fairness. According to Louis Kaplow and Steven Shavell's Fairness versus Welfare,1 these are just fictional concepts invented to advance society's welfare. While our parents have dispelled the former no longer needing threats of lumps of coal or rewards of chocolate bunnies, Kaplow and Shavell have decided to dispel the greatest myth of all: fairness. In their recent book, these Harvard legal economists revisit the classic conflict between consequentialism and deontology under the guise of law and economics. Consequentialism is recast as "welfare economics";2 deontology is now "fairness".3 And the battlefront has changed: this skirmish is not about ethical theory but legal policymaking. To the victor go all the spoils: unlike the typical law review article that focuses on specific problems in one field, Kaplow and Shavell undertake the Herculean task of explicating the contrast between these opposing views in all the major areas of law. While comprehensive, the book is not impartial. As titled, one might expect an even-handed substantive critique of both theories. What this book actually entails is strong support of welfare
Price movements and the prevalence of informed traders: The case of line movement in college basketball

Abstract Recent research has hypothesized that a higher concentration of informed traders in a market implies that prices are more efficient. A reasonable next question is whether large price movements in markets with a relatively more informed clientele are more indicative of information realization. We find line movements in college basketball games of relatively low profile, denoted by the lack of a “power conference” team in the contest, are significantly more likely to be the result of information realization. This confirms that substantial price changes in markets with fewer ordinary traders are more (less) likely indicative of information flow (noise).
News Sentiment and Cross-Country Fluctuations

What is the information content of news-based measures of sentiment? How are they related to economic fluctuations? I construct a sentiment index by measuring the net amount of positive expressions in the full corpus of Economic news articles produced by Reuters covering 12 countries over the period 1987-2013. The index successfully tracks fluctuations in GDP at the country level, is a leading indicator of GDP growth and contains information on future GDP growth which is not captured by consensus forecasts. This suggests that forecasters do not appropriately incorporate available information in predicting future states of the economy.
Effective data integration in the presence of temporal semantic conflicts

The change in meaning of data over time poses significant challenges for the use of that data. These challenges exist in the use of an individual data source and are further compounded with the integration of multiple sources. In this paper, we identify three types of temporal semantic heterogeneities. We propose a solution based on extensions to the context interchange framework, which has mechanisms for capturing semantics using ontology and temporal context. It also provides a mediation service that automatically resolves semantic conflicts. We show the feasibility of this approach with a prototype that implements a subset of the proposed extensions.
Dynamic Responses to Oil Price Shocks: Conditional vs Unconditional (A)symmetry

The impulse-response-function-based Wald test has been gaining wide popularity among researchers seeking to formally test for (a)symmetries in dynamic responses of various macroeconomic aggregates to oil price shocks. However, because the IRF-based Wald test is conditional on the magnitude of an oil price shock, it can sometimes prove to be impractical, especially when producing contrasting evidence for shocks of different sizes. To circumvent this problem, this paper suggests considering a nonparametric IRF-density-based test in addition to the Wald. The former allows the analysis of (a)symmetries in dynamic impulse responses to positive and negative oil price shocks of a wide range of magnitudes. The test permits inference about a general tendency of (a)symmetries in impulse responses as opposed to (a)symmetries pertinent to a shock of a given size only. The examined (a)symmetry is thus unconditional of the magnitude of a shock. Importantly, the testing procedure allows accounting for the relative likelihood of observing the disturbance of a given size.
Knowledge about ignorance: New directions in the study of political information

Abstract For decades, scholars have recognized that most citizens have little or no political knowledge, and that it is in fact rational for the average voter to make little or no effort to acquire political information. Rational ignorance is fully compatible with the so‐called “paradox of voting” because it will often be rational for citizens to vote, but irrational for them to become well informed. Furthermore, rational ignorance leads not only to inadequate acquisition of political information, but also to ineffective use of the information that citizens do possess. The combination of these two problems has fundamental implications for a variety of issues in public policy and international affairs.
Climate Change, Cultural Transformation, and Comprehensive Rationality

Economic cost-benefit analysis aims to evaluate regulatory proposals by identifying, monetizing, and comparing the proposals' expected positive and negative consequences. The methodology has been received critically in the area of environmental, health, and safety regulation, where scientific uncertainty, difficulties of valuation, and uncommonly long time horizons are said to render cost-benefit analysis especially problematic. This Essay reviews such criticisms through a discussion of the use of cost-benefit analysis in the particular context of climate change policymaking. In this context, generic criticisms of cost-benefit analysis in the environmental, health, and safety area become even more pronounced, raising significant doubt about the methodology's philosophical and practical appropriateness as a guide for climate change. In a remarkably clear, candid, and courageous new book, James Gustave Speth documents both the continued deterioration of the global environment and the failure of the international community to respond forcefully and effectively to that deterioration.! As the current dean of the Yale School of Forestry and Environmental Studies, a founder of the World Resources Institute and the Natural Resources Defense Council, an advisor on environmental issues to Presidents Carter and Clinton, and a former chief executive officer of the United Nations Development Programme, Speth brings considerable experience and authority to the account. His views reflect the seasoned gravitas of one who has been intimately involved with the modern environmental movement since its inception and who, despite having' played a leading role in many of its successes and accomplishments, * Associate Professor of Law, Cornell Law School. J.D., Harvard University, 1998; B.A, Indiana University, 1995. This Essay is an edited version of invited remarks on climate change and cost-benefit analysis that were given at the Economic Dynamics of Environmental Law and Static Efficiency Conference held at Syracuse University, College of Law, on October 10-11, 2003. For helpful and stimulating discussion, I thank the conference participants and especially David Driesen, the conference organizer, as well as my colleague, Kevin Clermont. 1 See generally JAMES GUSTAVE SPETII, RED SKY AT MORNING: AMERICA AND TIlE CRISIS OF TIlE GLOBAL ENVIRONMENT (2004).
Time-varying informed and uninformed trading activities

Abstract We develop a framework to investigate time-varying interactions between informed and uninformed trading activities. By estimating the model for 40 NYSE stocks, we demonstrate that the buy and sell arrival rates of the uninformed traders are different and time-varying. Informed traders strategically match the level of the uninformed arrival rate with a certain probability. Uninformed traders tend to adopt contrarian strategy in reaction to high prior stock returns, but employ momentum strategy in reaction to high prior market returns. The estimated time-varying probability of informed trading is a good predictor for various measures of bid–ask spreads, and is a better measure of information asymmetry than several existing measures.
The Importance of Objectivity and Falsification in Management Science

In general, I thought that the Boal and Willis “Note on the Armstrong/Mitroff Debate” 1 provided an interesting and fair discussion. 2 The summary of the consequences of the subjective versus objective approaches (Table 1 in their paper) was helpful. It clearly outlined the dilemma faced by scientists: “Should I strive for personal gain or for scientific contributions?” It also described what is likely to happen to the theories generated from the subjective and objective approaches. For example, the authors claimed that the subjective approach will yield a fuller hearing for a theory.
From Coverture to Contract: Engendering Insurance on Lives

In the 1840s, state legislatures began modifying the law of marital status to ease the economic distress of widows and children at the family breadwinner's death. Insurance-related exceptions to the common law doctrine of "marital unity" under coverture permitted married women to enter into insurance contracts and protected life insurance proceeds from their husbands' creditors. These early insurance-related statutory exceptions to coverture introduced an important theoretical question that persisted for the rest of the nineteenth century-and into the next-as broader legal and social reforms took hold. How could equality of contract for married women be reconciled with the traditional dependencies of the home? Equality of contract also introduced the practical economic problem of how the lives of women could be valued apart from their husbands when the law otherwise enforced their economic
Transactional Structures of Bank Privatizations in Central Europe and Russia

In pursuing bank privatization, governments in Central Europe and Russia faced a common set of policy issues, including how to break up the monobank system, deal with troubled loans, transfer equity to the private sector, and attract capital to the banks. For each bank undergoing privatization, the government's approach to such issues determines its transactional structure. We develop this conceptual framework and assess the findings from three studies of major commercial banks undergoing privatization. The varied transactional structures used in these privatizations appear to have had significant effects on each bank's microstructure and to influence bank strategy and post-privatization performance.J. Comp. Econom.,August 1997,25(1), pp. 5–30. The William Davidson Institute at the University of Michigan Business School, Ann Arbor, Michigan 48109; and University of Michigan Business School, Ann Arbor, Michigan 48109 and The William Davidson Institute at the University of Michigan Business School, Ann Arbor, Michigan 48109.
The United States Execution Drug Shortage: A Consequence of Our Values

The recent inability of states to obtain drugs for use in executions has led to de facto moratoria in a number of states, as well as gruesomely botched executions in states that have resorted to dangerous and unreliable means to obtain these drugs. The refusal of some pharmaceutical companies to provide drugs to U.S. prisons has significantly impeded the imposition of the death penalty in a number of states. Despite this, it is the anti-death penalty activists who tend to draw the attention of the media, state officials, and politicians charged with carrying out executions. The media focuses particular attention on advocates in Europe who have campaigned to pressure European drug companies to stop distribution of their products to U.S. prisons for use in executions. This paper challenges that narrative and posits instead that it is the drug companies that have long sought to avoid the use of their products in executions, for moral and financial reasons, as well as to comply with European law. When we look back on the fourth decade of the modern era of capital punishment in the United States, we may consider it the decade that marked the beginning of the end. If so, it will not be the result of a handful of activists successfully thwarting the administration of capital punishment. Rather, it will be the consequence of U.S. states imposing the death penalty in the context of a modern world that generally abhors the practice, using a method of execution that is very much dependent on major players in that world.
Dynamic Debt Runs

We develop a dynamic model of debt runs on a …rm, which invests in an illiquid asset by rolling over staggered short-term debt contracts (i.e., dierent contracts mature at dierent times.) We derive a unique threshold equilibrium, in which creditors coordinate their asynchronous rollover decisions based on the …rm's publicly observable and time-varying fundamental. The coordination problem ampli…es the creditors'concerns about the …rm's future rollover risk created by its time-varying fundamental, and causes each maturing creditor to run ahead of others even when the current fundamental is substantially higher than its liability. Our model provides a set of implications on the roles played by volatility, illiquidity and debt maturity in driving debt runs, as well as on …rms'capital adequacy standards and credit risk.
Realized Publicness at Public and Private Research Universities

Although research-extensive universities in the United States produce similar outcomes—research, teaching, and service—they vary substantially in terms of the publicness of their environments. In this article, the authors adopt a public values framework to examine how regulative, normative/associative, and cultural cognitive components affect realized public outcomes by faculty. Using survey data from a random sample of faculty scientists in six fields of science and engineering at Carnegie Research I universities, findings show that organizational and individual public values components are associated predictably with different realized individual public outcomes. For example, individual support from federal resources and affiliation with a federal lab (associative) are related to increased research outcomes, while tuition and fee levels (regulative) explain teaching outcomes, and perceived level of influence in the workplace (cultural cognitive) explains teaching and service outcomes.
Generalizations about Advertising Effectiveness in Markets

ABSTRACT Based on over 260 estimates, the mean elasticity of sales or market share to advertising is 0.1 percent. Another 450 field experiments suggest that changes in media, product, target segments, advertising scheduling, and advertising content are more likely to yield changes in sales than do changes in advertising weight. Numerous other studies suggest that advertising wear-in does not exist or occurs quite rapidly while advertising wear-out occurs more slowly. Details of and differences in these results by condition are discussed in this article.
The Separation of Powers and Supreme Court Agenda Setting

This study employs the first systematic, empirical analysis that relies on archival data to examine whether the separation of powers influences justices’ agenda votes. It spatially models how justices set the Court’s agenda under a sincere approach as well as an SOP approach and compares the competing expectations derived therefrom. The results suggest that legislative and executive preferences fail to influence justices’ votes. Across every model tested, the data show justices uninfluenced by the separation of powers. These results provide a strong rejoinder to SOP models, since the Court’s agenda stage is the most likely stage of the decision-making process to show signs of an SOP effect.
Dynamic Conditional Beta

Dynamic conditional beta is an approach to estimating regressions with time varying parameters. The conditional covariance matrices of the exogenous and dependent variable for each time period are used to formulate the dynamic beta. Joint estimation of the covariance matrices and other regression parameters is developed. Tests of the hypothesis that betas are constant are non-nested tests and several approaches are developed including a novel nested model. The methodology is applied to industry multifactor asset pricing and to global systemic risk estimation with non-synchronous prices.
Optimal mediated auctions with endogenous participation

The majority of academic papers on the Internet auction design do not distinguish between the auctioneer and the object owner, whereas nowadays leading Internet auction websites operate primarily as mediators that provide the platforms with no physical possessions of the auction objects. The role separation between the auctioneer and the object owner (seller) creates both incentive misalignment and information asymmetry issues. In this paper, we acknowledge this role separation and study the optimal (revenue-maximizing) auction mechanism from the mediator's perspective, taking into account the costly participation from both the sellers and the buyers. We show that the mechanism induces participation from low-valuation sellers and high-valuation buyers. Compared with the conventional seller-optimal auction, the seller in the mediator-optimal mechanism keeps the object more frequently ex post because the mediator intentionally compensates the seller for withholding the object. This exacerbated ex post allocative inefficiency also gives rise to too little ex ante participation for both the seller and the buyers. We propose a simple two-stage mechanism for implementation that is reminiscent of some widely observed Internet auctions. Our qualitative results are robust against model variations such as heterogeneous participation costs, multiple units, and multiple sellers.
Reframing and Reforming the Securities and Exchange Commission: Lessons from Literature on Change Leadership

As a reaction to perceived and actual regulatory failures at the Securities and Exchange Commission (the SEC), from mistakes that contributed to the financial crisis to the Bernard Madoff affair, the SEC has been engaged in an operational transformation process. The growing literature on management and leadership in times of change -- change leadership literature -- offers a number of potentially valuable lenses through which we may assess reform at the SEC. With the thought that securities regulators and others may learn valuable lessons about the SEC’s restructuring and reorganization from experts in change leadership, this Article explores a selected group of principles from change leadership literature. These principles are then mapped to recent and current changes at the SEC. The resulting analysis offers certain positive observations but also allows for certain critiques of, questions about, and advice concerning the processes by which change leaders are selected and institutional reform is undertaken at a federal agency. As a result, the Article highlights certain strengths of and exposes possible weaknesses in SEC reform efforts.
Property rights, legal consciousness and the new media in China: The hard case of the ‘toughest nail-house in history’:

Despite recent legislation and regulations to protect homeowners’ rights in the process of urbanization, forced eviction remains one of the most prevalent causes of violence in contemporary China. This article examines the capacity of residents of Chinese cities to protect their property rights using new media to produce alternative discourses on law in the urbanization process. Fieldwork conducted in Beijing from 2007 to 2008, a period during which the national capital underwent massive development schemes for the 2008 Summer Olympic Games, shows that homeowners create virtual precedents, backed not by the authority of the court, but by that of the media. Evictees of so-called dingzihu (nail-houses) facing chaiqian (demolition and relocation) develop arguments based on the 2007 case of Wu Ping, the first new media superstar in (post-)socialist China. The article, following post-structuralist formulations, develops a theory of ‘legal surrealism’ characteristic of the position of law in reform-era China. W...
Analysis and classification of public research institutes

Nowadays the government of industrialised countries, in the presence of reduced public resources, has to assign clear objectives to public research laboratories, to increase the technology transfer necessary to the competitiveness of firms. The purpose of this paper is to analyse the public research bodies of the National Research Council of Italy, to pinpoint the main typologies operating in the national system of innovation (NSI). This research shows four main types of research institutes as drivers of NSI. The results can supply useful information to policy makers on the behaviour of these structures and on their strengths and weaknesses.
Corporate compensation policies and audit fees

Abstract Recent accounting research has started to investigate the links between corporate compensation and auditor compensation. Engel et al. (2010) take a first step to connect these previously distinct literatures by investigating the association between audit committee pay and audit fees. I discuss the findings of this study and then present complementary empirical evidence on the association between CEO compensation and audit fees. My descriptive empirical evidence suggests economically large co-variation in CEO compensation and audit fees. I conclude with suggestions for future research on the links between firms’ corporate compensation and auditor compensation policies.
Abstention, Parity, and Treaty Rights: How Federal Courts Regulate Jurisdiction under the Hague Convention on the Civil Aspects of International Child Abduction

While Article VI of the US Constitution establishes treaties as supreme federal law, scholars and lawmakers have historically doubted that state judges will enforce the United States’ international obligations when they conflict with important state interests. The Hague Convention on the Civil Aspects of International Child Abduction, codified in US law as the International Child Abduction Remedies Act (ICARA), is the first major family law treaty ratified by the United States. Its provisions are regularly enforced by both federal and state courts. Notwithstanding the relationship of the treaty to important state interests like the integrity of family court systems, financial and social support for families and minors, and the substantive law of marriage and divorce, there is general convergence between federal and state judges on the applicability of the convention and certain exceptions authorized by the treaty. Several federal district courts, acknowledging these state and federal interests in efficacious adjudication of treaty claims, have abstained from hearing ICARA applications in favor of state proceedings. Federal appellate courts, however, have been overwhelmingly hostile to these abstention decisions, citing the role of federal courts in upholding the United States’ international commitments. Thise article argues that federal appellate courts have largely ignored the jurisdictional plan designed by Congress in favor of an implied Article III power to enforce treaties, and recommends changes for both ICARA and additional family law treaties the United States is now preparing to join. The Hague Child Abduction Treaty 1
Big Data: The End of Privacy or a New Beginning?

‘Big Data’ refers to novel ways in which organizations, including government and businesses, combine diverse digital datasets and then use statistics and other data mining techniques to extract from them both hidden information and surprising correlations. While Big Data promises significant economic and social benefits, it also raises serious privacy concerns. In particular, Big Data challenges the Fair Information Practices (FIPs), which form the basis of all modern privacy law. Probably the most influential privacy law in the world today is the European Union Data Protection Directive 95/46 EC (DPD). 1 In January 2012, the European Commission (EC) released a proposal to reform and replace the DPD by adopting a new Regulation. 2 In what follows, I argue that this Regulation, in seeking to remedy some longstanding deficiencies with the DPD as well as more recent issues associated with targeting, profiling, and consumer mistrust, relies too heavily on the discredited informed choice model, and therefore fails to fully engage with the impending Big Data tsunami. My contention is that when this advancing wave arrives, it will so overwhelm the core privacy principles of informed choice and data minimization on which the DPD rests that reform efforts will not be enough. Rather, an adequate response must combine legal reform with the encouragement of new business models premised on consumer empowerment and supported by a personal data ecosystem. This new business model is important for two reasons: First, existing business models have proven time and again that privacy regulation is no match for them. Businesses inevitably collect and use more and more personal data, and while consumers realize many benefits in exchange, there is little doubt that businesses, not consumers, control the market in personal data with their own interests in mind. Second, a new business model, which I describe below, promises to stand processing of personal data on its head by shifting control over both the collection and use of data from firms to individuals. This new business model arguably stands a chance of making the FIPs efficacious by giving individuals the capacity to benefit from Big Data and hence the motivation to learn about and control how their data are collected and used. It could also enable businesses to profit from a new breed of services
Global Corporate Finance: A Focused Approach

Introduction Motives for World Trade and Foreign Investment Balance of Payments and International Monetary System Foreign Exchange Market and Parity Conditions Currency Futures and Options Financial Swaps Managing Transaction Exposure and Economic Exposure Translations Exposure Management International Financial Markets Financing International Transactions International Working Capital Management International Portfolio Investment Cost of Capital for Foreign Projects Foreign Direct Investment Corporate Performance of Foreign Operations.
Advertising Strategies to Increase Usage Frequency

Interest has been shifting from how consumers choose brands to how they use brands. The authors focus on how advertising can best encourage consumers to use a mature brand in a new situation. They ...
Self-Governance by Humanitarian Non-State Actors in Health and Nutrition Relief

In the provision of humanitarian health assistance in a post disaster context, critical concerns such as local ownership, financial and political transparency and humane implementation are central. Given that poor quality or unsuitable health assistance can have grossly negative consequences such as "increased morbidity, mortality, and disability," increasingly, humanitarian agencies are recognizing the need for a common set of standards and guiding principles for humanitarian health assistance. This includes consideration of provision of quality health services in addition to other core issues such as cooperation and coordination between various institutions and sectors. The central argument postulated in this paper is that despite the absence of a proper global enforcement mechanism of the obligation to provide quality humanitarian assistance in health and nutrition, emerging self-governing mechanisms, such as the Sphere Humanitarian Charter provides a useful mechanism for self-regulation and action by civil society organizations. Such self-regulatory mechanisms contribute to the development of international customary law with regard to an emerging responsibility to provide effective humanitarian assistance.
Credibility, real interest rates, and the optimal speed of trade liberalization

Abstract This paper investigates the effects of imperfectly credible trade liberalization programs on welfare and the allocation of resources. We present a rational expectations model in which a government with limited access to international borrowing will abort a liberalization program if hard-currency reserves are depleted too quickly. The liberalization's lack of perfect credibility acts as a distortion which becomes (rationally) intensified under the typical first-best policy of immediate liberalization. A more gradual lowering of trade barriers leads to higher welfare and a greater probability that the program succeeds. We derive the optimal speed of liberalization, and the endogenous level of credibility.
The U.S. Demographic Transition

Between 1800 and 1940 the U.S. went through a dramatic demographic transition. In 1800 the average woman had 7 children, and 94 percent of the population lived in rural areas. By 1940 the average woman birthed just 2 kids, and only 43 percent of populace lived in the country. The question is: What accounted for this shift in the demographic landscape? The answer given here is that technological progress in agriculture and manufacturing explains these facts.
Economic Implications of Changing Share Ownership

Institutional investors, including especially pension funds and mutual funds, are steadily replacing individuals as owners of equity shares in the United States. Forty years ago individual investors owned 90% of all equity shares outstanding. Today the individually owned share is just 50%. The arguments and evidence surveyed in this paper suggest four ways in which this shift in share ownership could affect the functioning of the equity market: (1) Increasing institutional ownership could either enhance or impair the market's ability to provide equity financing for emerging growth companies. (2) Increasing institutional ownership, especially in the form of open-end mutual funds, has probably increased the market's volatility in the context of occasional large price movements. (3) The increasing prevalence of defined contribution (as opposed to defined benefit) pension plans, and especially of 401-k plans, has probably resulted in an increased market price of risk. (4) Increasing institutional ownership has facilitated a greater role for shareholders in the governance of U.S. corporate business, and correspondingly reduced the independence of corporate managements.
The effects of using the internal audit function as a management training ground or as a consulting services provider in enhancing the recruitment of internal auditors

SYNOPSIS: This paper examines factors that influence job applicants' willingness to apply for positions in internal auditing. We predict and find evidence that job applicants are dissuaded from applying for internal audit positions. In two separate experiments involving participants at seven universities, we discover that this phenomenon is most prevalent for applicants with business experience. Experienced applicants are 20 and 33 percent less willing to apply for a position if it is labeled as “internal audit” versus “accounting” in the two experiments, respectively. In addition, we find that the only experimental condition that increases interest in applying for an internal audit position for experienced applicants occurs when the position advertises the combination of (1) a short stint in internal auditing and then a move from internal audit into a management position, and (2) work primarily related to consulting services rather than assurance services. As a potential explanation for these findings, w...
Better to Burn Out than to Fade Away--Tax Consequences on the Disposition of a Tax Shelter

In Tufts v. Commissioner the court addressed but failed to resolve the issue of how an individual taxpayer must account for the disposition of a burned out tax shelter when that tax shelter provides significant tax benefits. This article addresses Tufts and focuses on what treatment taxpayers deserve when they dispose of depreciable property subject to a nonrecourse mortgage in excess of the property's fair market value. This article disapproves of certain proposed approaches to this problem. It discredits the suggestion that the debt should be included in the taxpayer's amount realized because this result provides capital gains treatment to taxpayers who have in fact suffered capital losses. The article poses alternative solutions to these unjustified deductions. First, it proposes an application of the tax benefit rule, which would require the taxpayer to account for previous tax benefits to the extent they turn out to have been inappropriately granted in the first place. It would produce some ordinary income upon taxpayers' disposition of their property, but it would also produce limited capital gains, unless the property were transferred to someone other than the lender. The second proposal is the application of cancellation of indebtedness principles. This approach would produce ordinary income and a capital loss. It mirrors the real decline in both the taxpayer's obligation and the property's value; but at the same time, it may allow certain taxpayers to defer recognition of any income until some later time.
Necessary and sufficient conditions for the equivalence of economic and ecological criteria in range management

Abstract For rangelands managed with spatial and temporal controls, [a] the long run expected net cost of management operations, [b] the long run rate of moving grazing from one paddock to another, and [c] the long run rate of moving grazing between paddocks because of adverse environmental factors are salient criteria for a range manager. In this paper, we provide the first theoretical analysis of the relationship between these three economic and ecological criteria. We first characterize these criteria mathematically. Then, we provide necessary and sufficient conditions under which criterion [a] (economic criterion) is equivalent to, in turn, criterion [b] (first ecological criterion) and criterion [c] (second ecological criterion).
The Association between Auditor Litigation and Abnormal Accruals

Concern that earnings management erodes the quality of financial reporting has prompted the Securities and Exchange Commission to question the role of the external auditor. To help address that concern, this study examines the relation between earnings management and auditor litigation. While prior research on the relation between auditor litigation and total accruals has yielded inconclusive results, I find that the risk of auditor litigation is positively associated with a sharper measure of earnings management—abnormal accruals. Using a larger and more recent sample, this study provides evidence that the probability of auditor litigation increases as clients report more positive (income‐increasing) abnormal accruals. This result holds in: (1) univariate analyses, (2) logit analyses that also control for auditor size, client importance to the auditor, length of the auditor‐client relationship, client industry, client financial condition, client size, and client growth, and in (3) the subsample of lawsui...
Delegated Monitoring: When Can Boards Rely on Outside Experts?

This paper provides a theoretical model to examine when and how boards of directors can utilize outside experts who provide second opinions to assist them in 1) monitoring managers with career concerns and 2) approving firm investments. Because an agreeable second opinion serves as a signaling mechanism, when such opinions are credible, policies mandating the use of experts are unnecessary as managers will choose to seek out second opinions on their own. Mandates can be counterproductive, however, if they unduly elevate the status of costly second opinions that always agree with management recommendations. In the absence of incentives for truthful disclosure of information to experts, it is better for boards to forego efforts to and require management and experts to present their recommendations as one. Copyright 2012, Oxford University Press.
Spectral GMM estimation of continuous-time processes

Abstract This paper derives a methodology for the estimation of continuous-time stochastic models based on the characteristic function. The estimation method does not require discretization of the stochastic process, and it is simple to apply in practice. The method is essentially generalized method of moments on the complex plane. Hence it shares the efficiency and distribution properties of GMM estimators. We illustrate the method with some applications to relevant estimation problems in continuous-time Finance. We estimate a model of stochastic volatility, a jump–diffusion model with constant volatility and a model that nests both the stochastic volatility model and the jump–diffusion model. We find that negative jumps are important to explain skewness and asymmetry in excess kurtosis of the stock return distribution, while stochastic volatility is important to capture the overall level of this kurtosis. Positive jumps are not statistically significant once we allow for stochastic volatility in the model. We also estimate a non-affine model of stochastic volatility, and find that the power of the diffusion coefficient appears to be between one and two, rather than the value of one-half that leads to the standard affine stochastic volatility model. However, we find that including jumps into this non-affine, stochastic volatility model reduces the power of the diffusion coefficient to one-half. Finally, we offer an explanation for the observation that the estimate of persistence in stochastic volatility increases dramatically as the frequency of the observed data falls based on a multiple factor stochastic volatility model.
Corporate Liability Under Customary International Law

This contribution to a symposium on Kiobel v. Royal Dutch Petroleum Co. examines two ways of looking at the question of corporate liability under customary international law. It argues that the Second Circuit was wrong to ask whether a “norm of corporate liability” exists in the abstract and that the proper question is whether the particular norm at issue — torture, for example — applies to juridical persons. The essay notes that all of the norms actionable under the Alien Tort Statute prohibit certain acts, irrespective of the perpetrator, and explains that state practice applying norms to natural persons may generate customary international law binding on juridical persons unless there is some difference between natural and juridical persons relevant to the norm.
Participation and unbiased pricing in CDS settlement mechanisms

Credit default swaps are insurance contracts on default. Currently, there are about 30 trillion USD worth of outstanding CDS contracts. These contracts are settled through a centralized market that has been criticized for underpricing the asset. In this paper, I take a mechanism design approach and characterize robust settlement mechanisms that deliver an unbiased price for the asset. A second contribution of my paper is a new notion of the core of a game of incomplete information. This is particularly relevant here because participation in the settlement mechanism cannot be compelled.
Responding to Political Corruption: Some Institutional Considerations

Earlier this year, New York Times columnist Gail Collins asked which state has the most corrupt political culture. As one might expect, she focused on the Empire State, where the governor who was elected in 2006 was forced from office in a sex scandal, his successor is under several ethical clouds, and a state senator who was briefly involved in an abortive coup against his party’s leadership was expelled from the legislature after being convicted of domestic assault.1 In the end, though, she gave the nod to Illinois, where the governor elected in 2006 was impeached and removed from office for misconduct and is now facing a retrial for allegedly trying to auction President Obama’s former U.S. Senate seat to the highest bidder, among other charges, and the Democratic nominee for lieutenant governor withdrew amid personal scandals.2 Many readers suggested that other states deserved consideration for this questionable honor.3 As a native Bostonian, I would like to nominate Massachusetts for consideration. My home state has the dubious distinction of having three consecutive Speakers of the House of Representatives indicted for felonies; two later pleaded guilty, while the third case is still pending (a fourth was indicted in 1964 but died before the case was resolved).4
Law, Society, Identity and the Making of the Jim Crow South: Travel and Segregation on Tennessee Railroads, 1875-1905

This article reexamines the well-known debate over the origins of de jure segregation in the American South, which began in 1955 with the publication of C. Vann Woodward's The Strange Career of Jim Crow. Arguing that the debate over Woodward's thesis implicates familar but outmoded ways of looking at sociolegal change and Southern society, the article proposes a reorientation of this debate using theoretical perspecttves taken from recent work by legal historians, critical race theorsts, and historians of race, class, and gender. This article examines the advent of railroad segregation in Tennessee (the state that enacted the nation's first railroad segregation statute) in order to sketch out these themes, arguing that de jure segregation was brought about by a dialectic between legal, social, and identity'based phenomena. This dialectic did not die out with the coming of de jure segregation; rather it continued into the modem era.
Sex Differences in Morbidity and Mortality

Women have worse self-rated health and more hospitalization episodes than men from early adolescence to late middle age, but are less likely to die at each age. We use 14 years ofdata from the u.s. National Health Interview Survey to examine this paradox. Our results indicate that the difference in self-assessed health between women and men can be entirely explained by differences in the distribution ofthe chronic conditions they face. This is not true, however, for hospital episodes and mortality. Men with several smoking-related conditions-including cardiovascular disease and certain lung disorders-are more likely to experience hospital episodes and to die than women who suffer from the same chronic conditions, implying that men may experience more-severe forms of these conditions. While some of the difference in mortality can be explained by differences in the distribution of chronic conditions, an equally large share can be attributed to the larger adverse effects of these conditions on male mortality. The greater effects ofsmoking-related conditions on men’s health may be due to their higher rates ofsmoking throughout their lives.
The Tort-Proof Plaintiff: The Drunk in the Automobile, Crashworthiness Claims, and the Restatement (Third) of Torts

This article, for the Brooklyn Law School Symposium on the 10th Anniversary of the Restatement (Third) of Torts: Products Liability, looks at the difficult challenge courts face when they review crashworthiness claims that arise in conjunction with drunk driving. These claims highlight the difficulty of preserving structural accountability in tort law after the shift toward apportionment of liability that includes intentional, reckless and strict liability torts as well as negligence. The article suggests that certain court-created causal-apportionment doctrines help to preserve structural accountability. It also urges a more systematic confrontation of structural accountability questions in comparative responsibility systems like those recommended by the Restatement of Torts.
Inequality, Labor Market Segmentation, and Preferences for Redistribution

We formalize and examine two overlapping models that show how rising inequality combined with ethnic and racial heterogeneity can explain why many advanced industrial countries have experienced a drop in support for redistribution as inequality has risen. One model, based on altruism and homophily, focuses on the effect of increasing “social distance” between the poor and the middle class, especially when minorities are increasingly overrepresented among the very poor. The other, based on self-interest, combines an “insurance” model of preferences for redistribution with increasingly segmented labor markets, in which immigration of workers without recognized skills leaves most native workers better off but intensifies competition for low-end jobs. Empirically, when we estimate parameters from the two models using data from multiple waves of ISSP surveys, we find that labor market segmentation, previously omitted in this literature, has more consistent effects than social distance.
Information asymmetry and capital structure: Evidence from regulation FD

This study uses Regulation Fair Disclosure (FD) as a plausibly exogenous shock to the information environment to identify the causal effect of information asymmetry on corporate financing behavior. Although Regulation FD prevents firms from selectively disclosing material information to market professionals in the equity market, firms can still do so to banks and rating agencies in the debt market. The standard׳s differential disclosure requirements lead to differential changes in the information environments between the two markets, providing a reasonably useful setting to examine the effect of information asymmetry on firms׳ capital structure. I find that firms with a high level of information asymmetry increase debt more than firms with a low level of information asymmetry post-Regulation FD. The results suggest that managers adjust the target leverage ratios to rely more on debt when facing higher costs of equity.