cssi/SciSciGPT-SciSciNet huggingface dataset:
Why Some Firms Use Collar Offers in Mergers

Collar offers are merger offers using all stock as the method–of–payment that specify a range within which the bidder's price can fluctuate. In this paper the wealth effects associated with collar offers are determined, and cross–sectional regressions are employed to determine if this offer type is a significant determinant of abnormal returns. Results indicate that collar offers are associated with significantly positive abnormal returns for the target firm, even greater than those of firms receiving cash offers, but significantly negative returns for the bidder. These results raise an interesting question: why do some bidders make collar offers? Since the immediate wealth gains are strictly for the target and bidders making collar offers have returns insignificantly different than those making fixed stock offers, bidders must be utilizing collar offers for non–wealth related reasons. Using existing theories regarding the method–of–payment choice, various hypotheses for why firms may make collar offers are presented and tested using a multinomial logit analysis. The choice of collar offers seems to be significantly tied to the relative size of the merger, uncertainty regarding the bidder's value, and the target's and bidder's pre–merger insider ownership percentages.
Imperfect Competition in Selection Markets

Policies to correct market power and selection can be misguided when these forces coexist. We build a model of symmetric imperfect competition in selection markets that parameterizes the degree of market power and selection. We use graphical price-theoretic reasoning to characterize the interaction between these forces. Using a calibrated model of health insurance, we show that the risk adjustment commonly used to offset adverse selection can reduce coverage and social surplus. Conversely, in a calibrated model of subprime auto lending, realistic levels of competition can generate an oversupply of credit, implying that greater market power is desirable.
The predictive ability of fair values for future financial performance of commercial banks and the relation of predictive ability to banks' share prices

For a sample of commercial banks during 1994 – 2008, we find that accumulated fair value adjustments for interest-bearing investment securities are positively associated with future interest income and total realized income from these investments. Additional tests reveal that accumulated fair value adjustments on investment securities also have predictive ability for future investment-security-related cash flows. Our analyses reveal that our predictive ability proxy for interest-bearing investment securities is positively related to the measurement precision of reported fair value measurements. We also provide evidence that the relative ability of fair values to predict reported accounting income is a factor that strengthens the association between fair values and commercial banks’ stock prices. Taken together, our study suggests that fair values have predictive ability for future income realization despite the low persistence of changes in fair value that has been extensively documented in prior studies. Further, we find that our proxy for predictive ability captures banks’ expectations of future above- or below-market relative interest income, which is a real economic condition that is incrementally reflected in current equity prices.
Shareholder litigation and changes in disclosure behavior

Abstract We examine changes in the disclosure behavior of firms involved in 827 disclosure-related class-action securities litigation cases filed between 1996 and 2005. We find no evidence that the firms in our sample respond to the litigation event by increasing or improving their disclosures to investors. Rather, we find consistent evidence that firms reduce the level of information provided post-litigation. Our results suggest that the litigation process encourages firms to decrease the provision of disclosures for which they may later be held accountable, despite the increased protections afforded by the Private Securities Litigation Reform Act of 1995.
Why Has U.S. Inflation Become Harder to Forecast

We examine whether the U.S. rate of price inflation has become harder to forecast and, to the extent that it has, what changes in the inflation process have made it so. The main finding is that the univariate inflation process is well described by an unobserved component trend-cycle model with stochastic volatility or, equivalently, an integrated moving average process with time-varying parameters. This model explains a variety of recent univariate inflation forecasting puzzles and begins to explain some multivariate inflation forecasting puzzles as well.
City Planning and State Policy in the GDR: The Example of Neubaugebiet Hellersdorf*

‘Socialist living, working, and residing’ – this East German expression reflects the belief in the importance of the dwelling and neighborhood as counterpart to the collectivism and camaraderie of the workplace. The country’s regime conceived of newly-built housing developments, or Neubaugebiete (singular Neubaugebiet), viewing them as concrete and glass frameworks in which communities of citizens would lead a certain way of life. Nonetheless, previous literature on urbanization in the former German Democratic Republic (GDR) entertains little or no analytic regard for the ideals of socialist philosophy and the need of the governing Socialist Unity Party (SED) for an identity which would serve as the foundation for entire cities. Neubaugebiet Hellersdorf serves as an example of the influence of ideology on city planning. Conceptualized in 1979 by the SED, construction began on the residential buildings and their associated infrastructure in 1985. Construction continued until 1989-90, reaching substantial completion. By that time, the state residential construction conglomerates had erected nearly 32,000 apartments where more than 80,000 people now live. The typical structure in the development comprises five stories of prefabricated concrete slabs; several buildings grouped around a central courtyard form a residential block. Situated on the easternmost edge of Berlin, the hyper-settlement belongs to the youngest city district, Berlin-Hellersdorf. Several issues arise from analysis of the planning, locating, and financing of Neubaugebiet Hellersdorf. The first question that needs to be explored is the regime’s policy of embarking upon huge projects of new construction despite the strains placed upon a rapidly weakening economy, rather than rehabilitating the historic inner city of a metropolis such as Berlin. Additionally, what lay behind the official decision to sire what was to become the country’s last hyper-settlement, a Grossiedling, in the capital? How did that decision affect the use of economic resources for its realization and design? Finally, given the social concerns of the SED in establishing the Residential Construction Programme, an examination of the demographics of the development grants a rare opportunity to observe the fate of ideology meeting residential necessity. Through archival documentations, interviews and statistical data this article reveals the intertwining of state policy and city planning in the former GDR.
Dissecting the roles of local packing density and longer‐range effects in protein sequence evolution

What are the structural determinants of protein sequence evolution? A number of site-specific structural characteristics have been proposed, most of which are broadly related to either the density of contacts or the solvent accessibility of individual residues. Most importantly, there has been disagreement in the literature over the relative importance of solvent accessibility and local packing density for explaining site-specific sequence variability in proteins. We show that this discussion has been confounded by the definition of local packing density. The most commonly used measures of local packing, such as contact number and the weighted contact number, represent the combined effects of local packing density and longer-range effects. As an alternative, we propose a truly local measure of packing density around a single residue, based on the Voronoi cell volume. We show that the Voronoi cell volume, when calculated relative to the geometric center of amino-acid side chains, behaves nearly identically to the relative solvent accessibility, and each individually can explain, on average, approximately 34% of the site-specific variation in evolutionary rate in a data set of 209 enzymes. An additional 10% of variation can be explained by nonlocal effects that are captured in the weighted contact number. Consequently, evolutionary variation at a site is determined by the combined effects of the immediate amino-acid neighbors of that site and effects mediated by more distant amino acids. We conclude that instead of contrasting solvent accessibility and local packing density, future research should emphasize on the relative importance of immediate contacts and longer-range effects on evolutionary variation. Proteins 2016; 84:841-854. © 2016 Wiley Periodicals, Inc.
Religious identity and the provision of public goods: Evidence from the Indian Princely States

Abstract This paper describes a simple model of how a ruler’s religious identity affects public goods provision. Our primary insight is that rulers reduce public goods expenditures to a greater degree when there are privately-provided substitutes excludable by religion. The basic idea is that if the good is provided privately to the ruler’s co-religionists, the ruler faces weaker incentives to provide this public good because his co-religionists receive lower marginal utility from its provision. Testing such a conjecture is an empirical challenge, however, since the religious identity of rulers rarely varies over time and place. We address this problem by exploiting variation in the religion of rulers in the Indian Princely States. Using data from the 1911 and 1931 Indian censuses, we find that Muslim-ruled states had lower Hindu literacy but had no significant impact on Muslim literacy. This result is consistent with our model, as Muslim religious schools provided a substitute for public schools that served both Hindus and Muslims. The model is further substantiated by the fact that the religion of the ruler had no statistically significant impact on railroad ownership or post office provision, neither of which had privately-provided substitutes.
Grasping Smoke: Enforcing the Ban on Political Activity by Charities

The rule that charities are not allowed to intervene in political campaigns has now been in place for over fifty years. Despite uncertainty about the exact reasons for Congress' enactment of it, skepticism by some about its validity for both constitutional and public policy reasons, and continued confusion about its exact parameters, this rule has survived virtually unchanged for all of those years. Yet while overall noncompliance with the income tax laws has drawn significant scholarly attention, few scholars have focused on violations of this prohibition and the IRS' attempts to enforce it.This Article focuses on the elusive issue of how extensive is noncompliance with this prohibition and how could the IRS improve its enforcement in this area. The limited data available about the extent of noncompliance indicates that while violations involving extensive expenditures or high profile activities are relatively rare, minor and probably mostly inadvertent violations may be much more widespread than current IRS enforcement figures would indicate. Such violations should be of concern because they risk creating a culture of noncompliance, they may harm the public's trust in both the violating charities and the charitable sector as a whole, and they may have significant effects on the outcome of political campaigns because of the public's generally high regard for charities. To address these violations, the Treasury Department and the IRS should adopt three strategies. First, the IRS should reduce its reliance on third-party complaints by pro-actively looking in publicly available information for possible violations, including by reviewing websites, media reports, and state campaign finance filings. Second, the Treasury Department should adopt an approach that has generally worked in other tax contexts by clarifying the vague boundaries of the prohibition through creating safe harbors for the most common election-related activities, while retaining the current facts and circumstances approach as an anti-abuse rule. Third and finally, the IRS should continue to fully utilize the flexibility of the existing penalty regime to tailor penalties to match violations, issuing only "warning tickets" for first time, apparently unintentional violators while reserving financial penalties and revocation of tax-exempt status for repeat and intentional violators.
Uncommon Approaches to Commons Problems: Nested Governance Commons and Climate Change

Natural capital resources crucial to combatting climate change are potentially subject to tragic overconsumption absent a requisite degree of vertical government regulation of resource appropriators and/or horizontal collective action among resource appropriators. In federal systems, these vertical and horizontal approaches may (or may not) take place in any one of four scales—local, state, national, and global—“nested” one within another. Prior research has described how natural capital in federal systems of government, though privatized and/or subject to government regulation, may nonetheless remain in a tragic plight due to the allocation of governance authority in federal systems—an allocation that may or may not legally entrench the commons dynamic. This Article builds on that research to present a clearer picture of the complexity of natural capital resource commons and does so by first deconstructing the nested commons scales and describing for the first time a number of legal authority and political action scenarios that may either resolve natural capital commons dilemmas or facilitate commons tragedies within the scales of a federal governance structure. The Article then details the “divergent” vertical regulatory and horizontal collective action approaches to managing climate-crucial natural capital within each scale. The Article concludes by pointing toward future scholarship exploring how these “divergent” approaches within scales can become “convergent” by taking into account both legal constraints that may exist on vertical regulation across scales as well as geopolitical circumstances positively or negatively impacting political action within scales. This convergent approach encourages the proper management of natural capital resources by more fully accounting for the complexities of the federal governance commons.
Financial integration and consumption risk sharing and smoothing

Abstract While paying careful attention to the stochastic properties of income process, this paper tests the joint rational expectation and permanent income hypothesis (RE/PIH) to clarify how and to what degree financial integration delinks national income and consumption. It is shown that both the OECD and the non-OECD countries benefit from financial integration in terms of consumption risk sharing and smoothing. The RE/PIH for the transitory income is not rejected for the OECD countries suggesting full consumption smoothing. Regression results also support the RE/PIH prediction that financial integration delivers even larger increases in consumption responding to positive shocks to income growth.
Innovating or doing as told? status differences and overlapping boundaries in offshore collaboration

Increasingly, firms source more complex and strategic as well as harder to codify information technology projects to low-cost offshore locations. Completing such projects successfully requires close collaboration among all participants. Yet, achieving such collaboration is extremely difficult because of the complexity of the context: multiple and overlapping boundaries associated with diverse organizational and national contexts separate the participants. These boundaries also lead to a pronounced imbalance of resources among onshore and offshore contributors giving rise to status differences and inhibiting collaboration. This research adopts a practice perspective to investigate how differences in country and organizational contexts give rise to boundaries and associated status differences in offshore application development projects and how these boundaries and status differences can be renegotiated in practice to establish effective collaboration. To illustrate and refine the theory, a qualitative case study of a large financial services firm, which sourced a variety of high-end IT work to its wholly owned subsidiaries ("captive centers") and to third party vendors in multiple global locations (in particular, to India and Russia), is presented. Using a grounded theory approach, the paper finds that differences in country contexts gave rise to a number of boundaries that inhibited collaboration effectiveness, while differences in organizational contexts were largely mediated through organizational practices that treated vendor centers and captive units similarly. It also shows that some key onshore managers were able to alleviate status differences and facilitate effective collaboration across diverse country contexts by drawing on their position and resources. Implications are drawn for the theory and practice of global software development and multiparty collaboration.
Forecasting stock returns under economic constraints

We propose a new approach to imposing economic constraints on time-series forecasts of the equity premium. Economic constraints are used to modify the posterior distribution of the parameters of the predictive return regression in a way that better allows the model to learn from the data. We consider two types of constraints: Non-negative equity premia and bounds on the conditional Sharpe ratio, the latter of which incorporates timevarying volatility in the predictive regression framework. Empirically, we nd that economic constraints systematically reduce uncertainty about model parameters, reduce the risk of selecting a poor forecasting model, and improve both statistical and economic measures of out-of-sample forecast performance.
What Scribner Wrought: How the Invention of Modern Dialysis Shaped Health Law and Policy

In March 1960, Clyde Shields, a machinist dying from incurable kidney disease, was connected to an “artificial kidney” by means of a Ushaped Teflon tube that came to be known as the Scribner shunt.1 By facilitating long-term dialysis, Dr. Belding Scriber’s invention changed chronic kidney failure from a fatal illness to a treatable condition.2 A half-century after this milestone, there are now more than 1.6 million people throughout the world on maintenance dialysis.3
An integral equation representation for overlapping generations in continuous time

This paper develops a method for solving for the dynamic general equilibrium of a deterministic continuous time overlapping generations model with a finite-horizon life-cycle. The model has isoelastic preferences and allows for general assumptions about individual endowments and demographics. Solving for an equilibrium reduces to solving a nonlinear integral equation. In the special case of log utility, the integral equation is linear and global approximations to a solution are easily computed with linear algebra.
Adverse Selection and Liquidity Distortion

This article develops a tractable model with two-dimensional asymmetric information in asset markets: sellers are privately informed about their asset quality and distress positions. Illiquidity arises endogenously and manifests itself through two distinct market outcomes. The first outcome features limited market participation, resulting in a dry-up in trading volume. The second outcome involves a large volume at a depressed price. Only in the latter outcome do distressed sellers engage in fire sales, quickly unwinding their positions at a steep price discount. The article further establishes that this equilibrium can arise only when buyers expect that sellers with a higher need for immediacy will on average have higher-quality assets. Hence, both the information structure and the distribution of sellers’ distress are crucial for the existence of fire sales.
Issues in Examining the Effect of Auditor Litigation on Audit Fees

A large body of research has studied audit fees aiming to determine whether they reflect auditors’ response to clients’ risks, auditors’ expertise, competitive pressures in the audit market, and independence issues between auditors and clients. Badertscher, Jorgensen, Katz, and Kinney [2014] study the effect of auditor litigation risk on audit fees. Litigation risk is expected to be a strong incentive for auditors to deliver high quality audits and an important determinant of audit fees. Nevertheless, determining the impact of litigation risk is complicated because although there is considerable variation in audit fees, there are scarce opportunities to examine variation in litigation risk. This paper provides a brief summary of extant studies examining the effect of auditor litigation on audit fees, and discusses research design issues and future research opportunities in this area.
Applying Learning-Styles Theory in the Workplace: How to Maximize Learning-Styles Strengths to Improve Work Performance in Law Practice

As a lawyer, you are part of a complex web of relationships when servicing clients, and you can maximize your potential by thinking in terms of interacting with others as part of the same team. Furthermore, as an employee, you can pay attention to your learning-style strengths so that you can work productively and efficiently. Alternatively, as a manager, you can communicate in ways that assist employees in terms of their diversity of learning styles. How can you, as a lawyer, make use of theories concerning team approaches, emotional intelligence, and learning styles? How can you, as a manager of a law practice, improve your firm's performance? By understanding two premises: (1) that lawyers, regardless of the size of their practice, work in tandem with others and would benefit from team approaches; and (2) that law firms are composed of individuals with unique learning styles who do not always work well in teams or pairs. Part I of this Article explains how the individual benefits from effective use of a complex web of business relationships. In Part II, the Dunn and Dunn Learning Style Model is summarized. Part III applies the Dunn and Dunn Model to a law practice from the perspectives of both the associate and the manager.
The politics of discretion: toward a critical theory of public administration

Abstract: This article explores the possibility of critical theory as a framework for analysing public administration. Critical theory has a tradition of resisting the predominance of instrumental rationality as the building-block for bureaucracy. The most sophisticated attempt at such an approach is the theory of communicative action developed by Jurgen Habermas. Adapting Habermas's theory to the realities of public administration in the welfare state, the author argues that current forms of administrative action are neither as rational nor as democratically legitimate as they could be. By relying on rules rather than on consensus, and by minimizing the participation of those affected by public administration, bureaucracy under the welfare state has resulted in a general loss of meaning within the public sphere and a high degree of social alienation. By focusing on the potential of discretionary decision-making to foster a dialogue about the important judgments administrators make, it is possible to see the value of a critical approach to administrative structures. The author concludes by briefly exploring the application of a critical theory framework to the question of discretion in the context of Canadian tax administration. Sommaire: Cet article explore la possibilite d'utiliser la theorie critique comme cadre d'analyse de l'administration publique. Traditionnellement, la theorie critique tend a resister l'utilisation de la rationalite instrumentale en tant que pierre angulaire de la bureaucratie. La version la plus sophistiquee d'une telle approche est la theorie de l'action communicative elaboree par Jurgen Habermas. En adaptant la theorie de Habermas aux realites de l'administration publique au sein de l'Etat-providence, l'auteur soutient que les formes actuelles d'action administrative ne sont ni aussi rationnelles, ni aussi democratiquement legitimes qu'elles pourraient l'etre. En faisant appel aux regles plutot qu'au consensus et en minimisant la participation de ceux qui sont touches par l'action administrative, la bureaucratie, dans l'Etat-providence, a entraine une perte generalisee de sens et d'orientation dans le secteur public, ainsi qu'un niveau eleve d'alienation sociale. En mettant l'accent sur le potentiel qu'offre la prise de decisions discretionnaires pour amorcer le dialogue au sujet des jugements importants pris par les administrateurs, on concoit la valeur que revet une approche critique envers les structures administratives. L'auteur conclut en explorant brievement l'application du cadre de theorie critique a la question de la discretion dans le contexte de l'administraiton fiscale au Canada.
DSS for Cooperative Decision-Making

The paper describes a DSS system that should be useful in a number of group decision-making tasks. The system contains several distinct subsystems using common data structures and techniques based on graph theory. Some applications of the system to strategic planning for information systems are described.
Welfare Reform, Returns to Experience, and Wages: Using Reservation Wages to Account for Sample Selection Bias

Abstract One rationale for work-focused welfare reform was human capital theory: work today should raise experience tomorrow, which should raise future wage offers and reduce welfare dependency. Yet few studies have estimated the effect of welfare reform on wages. I approach the problem using a novel sample selection estimator based on reservation wage data. Reservation wages solve the selection problem using bivariate censored regression methods without the need for exclusion restrictions. Whereas OLS and conventional sample selection estimates suggest that reform had little effect on wages, the reservation-wage-adjusted estimates suggest that Florida's welfare reform experiment raised wages by about 4%.
The Central Intelligence Agency's "Family Jewels": Legal Then? Legal Now?

Congress and the media recently have claimed that various activities of the Central Intelligence Agency (CIA)—from rendition operations, to the destruction of videotapes, to the maintenance of secret detention facilities overseas—are illegal. Critics levied similar charges against the CIA thirty-five years ago, with regard to activities contained in the “Family Jewels”—the 1973 compilation of the CIA’s darkest secrets. The recent release of the Family Jewels provides the opportunity to try to put today’s concerns in perspective. This Article evaluates the key activities conducted by the CIA as described in the Family Jewels—experimentation on unconsenting individuals, attempted targeted killings of foreign leaders, electronic surveillance of Americans, examination of U.S. mail, and collection of information on American dissident movements. Contrary to widely held beliefs both then and now, all but one of these activities (experimentation on unconsenting individuals) were legal when they were committed, suggesting that other allegedly “illegal” activities, engaged in by the CIA now, may similarly prove to be lawful.
An Evaluation of the Bush Administration Reforms to the Regulatory Process

The Bush administration has implemented more reforms to the regulatory process than any of its predecessors. These reforms are often stereotyped as anti-regulatory. This article examines the reforms as a whole and asks which interests have been empowered by the Bush administration regulatory reforms. I believe this method is a more effective way of assessing the impact of the reforms. I find that, in addition to adding potential costs to the regulatory process, the reforms are likely to empower powerful interest groups and the presidency. Whether the impact of these reforms is pro-regulation or anti-regulation will depend on how a future administration more dedicated to regulatory protections uses them. I also lay out a research agenda to better empirically assess the impact of these regulatory reforms.
Patent Protection and Innovation Over 150 Years

В работе исследуются воздействия на инновации изменений в патентном законодательстве на основе данных по шестидесяти странам за 150 летний период. Анализ показывает, что усиление защиты прав патентообладателей приводило к большим эффектам в странах с низким первоначальным уровнем защиты и более высоким уровнем экономического развития. Эндогенный характер данных изменений моделируется посредством подхода инструментальных переменных.
INCOME SMOOTHING, INFORMATION UNCERTAINTY, STOCK RETURNS, AND COST OF EQUITY

This paper examines the effect of income smoothing on information uncertainty, stock returns, and cost of equity. I show that income smoothing through both total accruals and discretionary accruals tends to reduce firms' information uncertainty, as measured by stock return volatility, analyst earnings forecast dispersion, and analyst earnings forecast error. Further, I provide evidence that stocks of income smoothing firms are priced with a premium. Controlling for earnings shocks and other firm characteristics, income smoothing firms have significantly higher abnormal returns around earnings announcement. In addition, I show that income smoothing reduces firms' implied cost of equity or expected returns. The result is more robust over short horizons up to two years.
If You're so Smart, why Aren't You Rich? Belief Selection in Complete and Incomplete Markets

This paper provides an analysis of the asymptotic properties of Pareto optimal consumption allocations in a stochastic general equilibrium model with heterogeneous consumers. In particular, we investigate the market selection hypothesis that markets favor traders with more accurate beliefs. We show that in any Pareto-optimal allocation whether each consumer vanishes or survives is determined entirely by discount factors and beliefs. Whereas equilibrium allocations in economies with complete markets are Pareto optimal, our results characterize the limit behavior of these economies. We show that, all else equal, the market selects for consumers who use Bayesian learning with the truth in the support of their prior and selects among Bayesians according to the size of their parameter space. Finally, we show that in economies with incomplete markets, these conclusions may not hold. With incomplete markets, payoff functions can matter for long-run survival, and the market selection hypothesis fails.
FX Trading and Exchange Rate Dynamics

I examine the sources of exchange rate dynamics by focusing on the information structure of FX trading. This structure permits the existence of an equilibrium distribution of transaction prices at a point in time. I develop and estimate a model of the price distribution using data from the Deutsche mark/dollar market that prroduces two striking results:(1) Much of the short-term volatility in exchange rates comes from sampling the heterogeneous trading decisions of dealers in a distribution that, under normal market conditions, changes comparatively slowly; (2) public news is rarely the predominant source of exchange rate movements over "any"horizon. Copyright The American Finance Association 2002.
Rewinding Sony: The Evolving Product, Phoning Home, and the Duty of Ongoing Design

It has been clear for sometime that the Supreme Court would revisit its 1984 decision in Sony creating the famous (infamous?) “substantial noninfringing use” test for secondary liability for copyright infringement. The only question was how the challenge would emerge. Would it be a re-make of Sony with the digital video recorder playing the role of the VCR? Or would some other device force its way on the stage? Of course, we now know that peer-to-peer software has done just that and that the lower court decisions in Napster, Aimster and finally Grokster have put these key issues before the Court again.1 Much has changed during the intervening two decades. In 1984, the video content industry feared that the VCR would destroy the way in which broadcast television was financed by making it possible for home viewers to skip over commercials. The industry saw only dimly, if that, a possible future in which revenues for home viewing of movies through tape rentals and
Exporting to bypass weak institutions

Institutions have been shown to be important for trade and growth. In particular, weak institutions may reduce the returns to product quality, harming domestic welfare and making it attractive to export to countries with strong institutions where quality is better rewarded. We model this alternative story as to why the “good apples are shipped out” and explore whether exporting ameliorates the problems created by weak institutions. We find that, instead, because home prices do not reflect the marginal value of quality, access to developed markets can be welfare reducing. Specifically, there are always export prices such that total welfare (and not just consumer welfare) is harmed by exporting. Furthermore, if the domestic price equilibrates to the export price, then the marginal unit exported reduces total welfare. Exporting can even reduce producer surplus, leading to a contraction of the export industry; although, welfare can decrease even if production of the exported good increases. Thus, our results reinforce the importance of strengthening institutions to help the development of economies.
The Politics of Hard Choices: IMF Programs and Government Spending

A central component of International Monetary Fund (IMF) programs is reducing government budget deficits. We ask how domestic political considerations shape the distribution of cuts made by governments in IMF programs. Our central finding is that IMF programs shrink the role played by domestic politics. While democracies allocate larger shares of their budgets to public services in the absence of IMF programs, the difference between democracies and nondemocracies disappears under IMF programs. This result has important implications for our understanding of government spending priorities under different resource constraints.We dedicate this article to the memory of Harold K. Jacobson. Robert Kaufman, Lisa Martin, Joan Nelson, and two anonymous reviewers for IO provided valuable comments on earlier drafts, and Chris Achen, Chris Adolph, Leah Anderson, Carew Boulding, Sarah Brooks, Chelsea Brown, Lawrence Broz, Eric Chang, Dan Corstange, Rob Franzese, Nate Jensen, Marcus Kurtz, Margaret Levi, Autumn Payton, Nita Rudra, Heidi Sherman, and James Vreeland offered helpful advice. We thank Autumn Payton for research assistance. Earlier versions were presented at the 2004 Midwest Political Science Association Meetings, the 2004 American Political Science Association Meetings, the 2005 workshop on “Distributive Politics and Social Protection in the 21st Century” at Ohio State's Mershon Center, and the 2005 International Studies Association Meetings. All errors remain our own.
Household Interest Rate Risk Management

I investigate household interest rate risk management by solving a life-cycle asset allocation model that includes mortgage and bond portfolio choice. I find that most investors prefer an adjustable-rate mortgage and thereby save on the bond risk premium that is contained in fixed-rate mortgage payments. Only older, risk-averse investors hold some fixed-rate mortgage debt. Together with a position in short-term bonds this enables them to hedge against changes in the real interest rate, while the inflation exposure of the debt and bond positions cancel out. Hedging house price changes with bonds only occurs at the end of the life cycle. Early in the life cycle short-sale constraints prevent an effective hedge.
Semi-Nonparametric Estimates of Currency Substitution: the Demand for Sterling in Europe

The paper presents new evidence of significant substitution between European domestic monetary assets and foreign holdings of sterling. The finding of significant cross-country currency substitution implies reduced costs of transition towards monetary union and easier European policy convergence. Elasticities of substitution, using the Morishima measure, are estimated from the semi-nonparametric Fourier flexible form.
Risks For The Long Run And The Real Exchange Rate

We propose an equilibrium model that can explain a wide range of international finance puzzles, including the high correlation of international stock markets, despite the lack of correlation of fundamentals. We conduct an empirical analysis of our model, which combines cross-country-correlated long-run risk with Epstein and Zin preferences, using U.S. and U.K. data, and show that it successfully reconciles international prices and quantities, thereby solving the international equity premium puzzle. These results provide evidence suggesting a link between common long-run growth perspectives and exchange rate movements.
An alternative efficient representation of demand‐based competitive asymmetry

Competitive asymmetry is defined in terms of the directional level of competition among brands/firms (i.e., unit of analysis), where the degree to which brand/firm A may compete with brand/firm B does not equal the degree to which brand/firm B competes with brand/firm A. Such a market structure phenomenon is quite commonplace in virtually every market, e.g., where there exists distinct market leaders and followers. DeSarbo, Grewal, and Wind recently (2006) proposed a new spatial methodology in SMJ to assess these competitive asymmetries based on information on consumer choice sets (i.e., a demand-based approach). However, the approach espoused by DeSarbo et al. results in as many competitive maps as there are brands/firms in a dataset. In this research, the authors devise a distance-based unfolding multidimensional scaling procedure for deriving joint spaces of brands/firms both as givers and takers of consumer consideration with the objective to have a more efficient representation of competitive asymmetries (i.e., one map irrespective of the number of brands/firms under study). An application is provided for an actual commercial study undertaken by a major U.S. automobile manufacturer examining the mid-size car marketplace. The strategic implications of the results are detailed. Copyright © 2007 John Wiley & Sons, Ltd.
The Impact of Outcome Elaboration on Susceptibility to Contextual and Presentation Biases

Abstract The authors examine an important anomaly in investment behavior—namely, the tendency to fall prey to the effects of contextual and presentation biases, which emerge when people make different decisions as a function of how information is presented to them. They also identify an important factor that moderates these effects. The results from four studies show that investors with a stronger tendency to engage in predecision outcome elaboration are less susceptible to various contextual and presentation biases and are more likely to make consistent investment choices. Furthermore, the authors find that encouraging predecision elaboration on both the potential benefits and the potential risks of investing helps investors who tend not to engage in such elaboration become less influenced by peripheral cues, such as information framing and presentation mode. The findings offer implications for decision research and for the design, presentation, and communication of financial products.
An Easy Case Makes Bad Law: The Misapplication of Heightened Scrutiny in Maxwell's Pic-Pac, Inc. v. Dehner, 887 F. Supp. 2d 733 (W.D. Ky. 2012)

Expressing displeasure or incredulity with “dumb laws” is a common pastime. Just such a “dumb” restriction on alcohol sales was at the center of a recent Western District of Kentucky decision. In striking down this restriction, the court followed other lower federal courts in determining that some laws are so bad that they run afoul of the U.S. Constitution. However, these purportedly innocuous decisions could have far-reaching implications. This essay discusses the case and its background, the jurisprudential questions it raises and the author's conclusion that, while the trial court decided the case against the weight of Supreme Court precedent, there is a possible avenue under the Kentucky Constitution to properly strike the law.
Communication and Decision-Making in Corporate Boards

Time constraints, managerial power, and reputational concerns can impede board communication. This paper develops a model where board decisions depend on directors' effort in communicating their information to others. I show that directors communicate more effectively when pressure for conformity is stronger�that is, when directors are more reluctant to disagree with each other. Hence, open ballot voting can be optimal, even though it induces directors to disregard their information and conform their votes to others. I also show that communication can be more efficient when directors' preferences are more diverse. The analysis has implications for executive sessions, transparency, and committees.
Software process diversity: conceptualization, measurement, and analysis of impact on project performance

This article investigates software process diversity, defined as the project condition arising out of the simultaneous use of multiple software development process frameworks within a single project. Software process diversity is conceptualized as the response of a project team to such contingencies as requirements volatility, design and technological novelty, customer involvement, and the level of organizational process compliance enforced on the project. Moreover, we conceptualize that the degree of fit (or match) between a project's software process diversity and the level of process compliance enforced on the project impacts overall project performance. This conceptualization was empirically tested by utilizing data collected from 410 large commercial software projects of a multinational firm. The results show that higher levels of requirements volatility, design and technological novelty, and customer involvement increased software process diversity within a project. However, software process diversity decreased relative to increases in the level of process compliance enforced on the project. A higher degree of fit between the process diversity and process compliance of a project, rather than the effects of those variables independently, was found to be significantly associated with a higher level of project performance, as measured in terms of project productivity and software quality. These results indicate that increasing software process diversity in response to project-level contingencies improves project performance only when there is a concomitant increase in organizational process compliance efforts. The implications of these results for research are discussed and prescriptive guidelines derived to manage the fit between process diversity and process compliance for improving software project performance.
Video Killed the Textbook Star?: Use of Multimedia Supplements to Enhance Student Learning

Multimedia use in the collegiate political science classroom has had a negative image since Janda's (1992) early work on CD-ROM-based video presentations. In the nearly two decades since, multimedia has matured and best practices have emerged to challenge the “sobering” findings presented by Janda. Many of the best practices point to student interest in interactive materials, but one of the great advantages of multimedia use is the accommodation of multiple learning styles that better engage students in course materials generally. Using a web-based multimedia supplement in addition to a textbook and other traditional classroom pedagogies, this article tests student performance on a fully integrated multimedia supplement with interactive graphics, videos, and vital source documents as an assessed part of student participation in an introductory American Government class among 14 sections over three years. Results of the study suggest that multimedia supplements, when consistent with interactive media best ...
The Gravitational Force of Originalism

In Part I of this Article, I describe four aspects of the New Originalism: First, New Originalism is about identifying the original public meaning of the Constitution rather than the original Framers’ intent. Second, the interpretive activity of identifying the original public meaning of the text is a purely descriptive empirical inquiry. Third, there is also a normative tenet of the New Originalism that contends that the original public meaning of the text should be followed. Finally, distinguishing between the activities of interpretation and construction identifies the limit of the New Originalism, which is only a theory of interpretation. In Part II, I then discuss how originalism can influence the outcome of such cases as District of Columbia v. Heller, McDonald v. City of Chicago, and National Federation of Independent Business v. Sebelius (NFIB). I suggest that, so long as there are justices who accept the relevance of original meaning, originalism can exert a kind of “gravitational force” on legal doctrine even when, as in McDonald and NFIB, the original meaning of the Constitution appears not to be the basis of a judicial decision.
Creditor control rights and resource allocation within firms

Abstract We examine the within-firm resource allocation and restructuring outcomes at firms violating debt covenants. Using establishment-level data from the US Census Bureau, we find that covenant violations are followed by reductions in employment, investment, and more frequent establishment closures among violating firms’ noncore business lines and less productive establishments. These changes are concentrated among establishments at which manager-shareholder agency costs are pronounced and when key lenders have industry experience. Our findings suggest that enhanced creditor control reduces managerial agency costs and encourages a more efficient allocation of resources within the boundaries of firms in technical default.
The Mises-Hayek business cycle theory, fiat currencies and open economies

This paper extends the Mises-Hayek business cycle theory to open economies with fiat currencies. I explore: (1) the problem of domestic versus international monetary policy with fiat currencies in an international setting. (2) How the feedback effects between central banks in the context of an expansionary monetary contributes to extend and transmit a Mises-Hayek business cycle from big economies to small financially integrated economies. I find that a lengthening of the period of production is not the only effect produced on the capital structure, but also a misallocation of capital goods between the production of tradable and non-tradable goods and services and that business cycles can become more severe when there are open economies with fiat currencies.