cssi/SciSciGPT-SciSciNet huggingface dataset:
Do changes in the SG&A ratio provide different information about changes in future earnings, analyst forecast revisions, and stock returns under different circumstances?

Abstract In fundamental analysis, increases (decreases) in the ratio of selling, general and administrative (SG&A) costs to sales (SG&A ratio) are perceived as negative (positive) signals regarding future firm performance. However, this interpretation focuses on the overall change in the SG&A ratio and ignores the underlying changes in the components of the ratio (sales and SG&A costs). Although prior research examines the changes in the SG&A ratio under some different circumstances, there is no study that examines all the ways that managers adjust costs in reaction to changes in sales. Therefore, I create six subsamples representing all possible combinations of changes in sales, SG&A costs, and the SG&A ratio and test whether changes in the SG&A ratio are informative about future earnings, analyst forecast revisions, and stock returns under these different circumstances. I find that changes in the SG&A ratio in four of my six subsamples provide information about changes in future earnings. I also find that analysts do not impound all of the information contained in the signals into their forecast revisions and in some cases investors appear to understand this fact.
Collective Risk Management in a Flight to Quality Episode

Severe flight to quality episodes involve uncertainty about the environment, not only risk about asset payoffs. The uncertainty is triggered by unusual events and untested financial innovations that lead agents to question their worldview. We present a model of crises and central bank policy that incorporates Knightian uncertainty. The model explains crisis regularities such as market-wide capital immobility, agents' disengagement from risk, and liquidity hoarding. We identify a social cost of these behaviors, and a benefit of a lender of last resort facility. The benefit is particularly high because public and private insurance are complements during uncertainty-driven crises.
Macroeconomics and Finance: The Role of the Stock Market

The treatment of the stock market in finance and macroeconomics exemplifies many of the important differences in perspective between the two fields. In finance, the stock market is the single most important market with respect to corporate investment decisions. In contrast, macroeconomic modelling and policy discussion assign a relatively minor role to the stockmarket in investment decisions. This paper explores four possible explanations for this neglect and concludes that macro analysis should give more attention to the stock market. Despite the frequent jibe that "the stockmarket has forecast ten of the last six recessions," the stock market is in fact a good predictor of the business cycle and the components of GNP. We examine the relative importance of the required return on equity compared with the interest rate in the determination of the cost of capital, and hence,investment. In this connection, we review the empirical success of the Q theory of investment which relates investment to stock market evaluations of firms. One of the explanations for the neglect of the stock market in macroeconomics may be the view that because the stock market fluctuates excessively, rational managers will pay little attention to the market informulating investment plans. This view is shown to be unfounded by demonstrating that rational managers will react to stock price changes even if the stock market fluctuates excessively. Finally, we review the extremely important issue of whether the market does fluctuate excessively, and conclude that while not ruled out on a priori theoretical grounds, the empirical evidence for such excess fluctuations has not been decisive.
Trading Activity and Transaction Costs in Structured Credit Products

contrast, other financial markets—including equities, Treasuries, and, more recently, corporate and municipal bonds—provide market participants with timely information regarding completed transactions. In this study, our goal was to provide the first systematic look at the workings of the secondary market in SCPs, including estimation of the costs that customers pay to execute trades. We also compared SCPs with the corporate bond market to develop insights into potential market outcomes should post
competition, reach for yield, and money market funds

Abstract Do asset managers reach for yield because of competitive pressures in a low rate environment? I propose a tournament model of money market funds (MMFs) to study this question. When funds care about relative performance, an increase in the risk premium leads funds with lower default costs to increase risk taking, while funds with higher default costs decrease risk taking. Without changes in the premium, lower risk-free rates reduce the risk taking of all funds. I show that these predictions are consistent with MMF risk taking during the 2002–2008 period and that rank-based performance is a key determinant of money flows to MMFs.
Commercial Speech, First Amendment Intuitionism and the Twilight Zone of Viewpoint Discrimination

In this article, I seek to demonstrate that arguments made by scholars against First Amendment protection for commercial speech may be divided into three categories: (1) rationalist, (2) intuitionist, and (3) ideological. I argue that all three forms of opposition to commercial speech protection suffer, either directly or indirectly, from the same fundamental flaw: each constitutes or at the very least facilitates creation of a constitutionally destructive form of viewpoint discrimination. I show that all of the specific rationales for opposing First Amendment protection for commercial speech are fatally and illogically underinclusive: In each case the justification asserted to support reduced protection for commercial speech logically applies with equal force to one or more categories of fully protected non-commercial expression, yet those advocating reduced protection for commercial speech readily provide full protection to the categories of non-commercial expression that suffer from the very same defect. Thus, what superficially appears to constitute a plausible and principled rationale for reducing protection for commercial speech in reality is applied?irrationally and unjustifiably?to commercial but not to various forms of fully protected speech. Such irrational underinclusion represents a classic form of sub rosa viewpoint discrimination. In this case, the viewpoint being discriminated against, while not embodied directly in the commercial speech itself, is a belief in a capitalist system of which all commercial speech is a part. Ironically, then, speech which some say should be denied protection because it fails to deal with the political process, in reality is likely excluded from the First Amendment's scope by many for what amount to foundational ideological concerns.
Technological and Economic Decoupling in the Cyber Era

The COVID-19 pandemic has accelerated the shift toward digital services. Meanwhile, the race for technological and economic leadership has heated up, with risks of decoupling that could set back trade and growth and hinder the recovery from the worst global recession since the Great Depression. This paper studies the conditions under which a country may seek to erect barriers-banning imports or exports of cyber technologies-and in effect promote decoupling or deglobalization. A well-known result is that banning imports may be optimal in monopolistic sectors, such as the digital sector. The novel result of this paper is that banning exports can also be optimal, and in some cases superior, as it prevents technological diffusion to a challenger that may eventually become the global supplier, capturing monopoly rents and posing cybersecurity risks. However, export or import bans would come at a deleterious cost to the global economy. The paper concludes that fostering international cooperation, including in the cyber domain, could be key to avoiding technological and economic decoupling and securing better livelihoods.
The effect of Section 271 on competitive entry into local telecommunications markets: an initial evaluation

Abstract In 1996 Congress passed the landmark Telecommunications Act. The Act, under Section 271, allowed the Regional Bell Operating Companies to offer long distance service to their local customers in exchange for opening their own local networks to local competitors in that state. Using a state-level panel data set we evaluate the effect of FCC Section 271 decisions on entry into the local telephone exchange market. Ordinary least squares and Poisson estimates suggest that Section 271 approvals increase the number of local competitive entrants before and during the year the approval is granted. We obtain no statistically significant and robust results for the effects of Section 271 approval on entry during the following year. In addition, the estimates suggest that Section 271 denials have no statistically significant effect on the entry of local competitors.
The role of constitutions on poverty: A cross-national investigation

Abstract We construct and use a new historical data set on economics and social rights from the constitutions of 195 countries and an instrument variable strategy to answer two important questions. First, do economic and social rights provisions in constitutions reduce poverty, measured as headcount income and health outcomes? Second, does the strength of constitutional language of the economic and social rights matter? Constitutional provisions can be framed either more weakly as directive principles or more strongly as enforceable law. Our results suggest three findings. First, we do not find an association between constitutional rights generally framed and poverty. Second, we do not find an association between economic and social rights framed as directive principles and poverty. Third, we do find a strong negative association between economic and social rights framed as enforceable law and poverty when we use legal origins as our IV. These results persist for indices of constitutional rights and also when we restrict the sample to non-OECD countries. The policy implication is that constitutional provisions framed as enforceable law provide effective meta-rules with incentives for policymakers to initiate, fund, monitor and enforce poverty reduction policies.
Blood Quantum Land Laws and the Race versus Political Identity Dilemma

Modem equal protection doctrine treats laws that make distinctions on the basis of indigeneity defined on blood quantum terms along a racial versus political paradigm. This dichotomy may be traced to Morton v. Mancari and, more recently, to Rice v. Cayetano. In Mancari, the Supreme Court held that laws that privilege members of American Indian tribes do not constitute racial discrimination because the preferences have a political purpose-to further the right of self-government of federally recognized American Indian tribes. Rice crystallized the juxtaposition of the racial from the political nature of indigeneity by invalidating a law that privileged Native Hawaiians. That law, according to the Court, used an ancestral blood requirement to construct a racial category and a racial purpose as opposed to the legally permissible political purpose of promoting the right of self-government of American Indian tribes. Close analysis of the dichotomy between the constitutive notion of indigenous blood as either racial or political has largely escaped scholarship. An analysis deconstructing their juxtaposition is sorely needed. As recent
Why Do Countries Peg the Way They Peg? The Determinants of Anchor Currency Choice

Abstract What determines the currency to which countries peg or “anchor” their exchange rate? Data for over 100 countries between 1980 and 1998 reveal trade network externalities are a key determinant of anchor currency choice. This implies currency anchoring strategies could be sub-optimal. Hence, certain currencies could be oversubscribed as anchors, and changes in anchor choices of a small number of countries can have a large and rapid impact on the international monetary system. Other factors related to anchor choice include the symmetry of output co-movements and the currency denomination of liabilities.
Indirect Liability for Copyright Infringement: An Economic Perspective

When individuals infringe copyright, they often use tools, services, and venues provided by other parties. An enduring legal question asks to what extent those other parties should be held liable for the resulting infringement. For example, should a firm that produces photocopiers be required to compensate authors for any unauthorized copies made on that firm's machines? What about firms that manufacture personal computers or offer Internet access; should they be liable, at least in part, for online music piracy? Modern copyright law addresses these issues through a variety of common law doctrines and statutory provisions. In this essay, we introduce those rules and evaluate them from an economic perspective. In the process, we emphasize that every mechanism for rewarding authors inevitably introduces some form of inefficiency, and thus the only way to determine the proper scope for indirect liability is to weigh its costs and benefits against those associated with other plausible mechanisms for rewarding authors.
Vicarious Snitching: Crime, Cooperation, and "Good Corporate Citizenship"

With increasing frequency, prosecutors are demanding that corporations act as "good corporate citizens" - which, to prosecutors, means cooperating fully in any investigation. These demands for cooperation present corporation with a dilemma. These prosecutorial demands for cooperation can place a corporation (or, more accurately, its officers and directors) in an extraordinarily difficult position. On the one hand, the cost of cooperating can be significant: the cooperating corporation may be required to terminate employees, disclose confidential documents, and waive privileges - all of which may expose the corporation to substantial civil liability. On the other hand, the cost of not cooperating can be even more devastating, as few firms can survive in indictment. This Article examines corporate cooperation and the difficulties it can create for corporate decision-makers. The Article first describes the principles of vicarious guilt that give prosecutors the power to demand corporate cooperation, and then examines how prosecutors exercise their discretion in deciding whether to charge corporations with crimes. Next, the Article examines the cooperators. Just as a corporation's guilt is only vicarious, so too its cooperation can be only vicarious. In the end, it is not the corporation that cooperates, but its officers and directors - the men and women who make decisions for the corporation. For these vicarious snitches, the process can be a minefield, filled with conflicting loyalties and inevitable self-interest. After examining a series of recent high-profile corporate prosecutions or investigations, the Article reaches two conclusions: first, a corporation's best hope to avoid indictment is to engage in "super cooperation" that will convince prosecutors of its "good corporate citizenship"; and second, that "super cooperation" may be irrevocably hampered if the firm does not quickly change its top management.
SOX 404, Auditor Effort, and the Prevention of Financial Report Misstatements

SUMMARY: Prior research shows that the Sarbanes-Oxley Act (SOX) Section 404(b) integrated audit is associated with a lower incidence of misstatements. We predict that under 404(b), the auditor's ab...
WAVELENGTH-SCALE OPTICAL PARAMETRIC OSCILLATORS

Despite recent progress in nonlinear optics in wavelength-scale resonators, there are still open questions on the possibility of parametric oscillation in such resonators. We present a general approach to predict the behavior and estimate the oscillation threshold of multi-mode subwavelength and wavelength-scale optical parametric oscillators (OPOs). As an example, we propose an OPO based on Mie-type multipolar resonances, and we demonstrate that due to the low-Q nature of multipolar modes in wavelength-scale resonators, there is a nonlinear interaction between these modes. As a result, the OPO threshold, compared to the single-mode case, can be reduced by a factor that is significantly larger than the number of interacting modes. The multi-mode interaction can also lead to a phase transition manifested through a sudden change in the parametric gain as well as the oscillation threshold, which can be utilized for enhanced sensing. We establish an explicit connection between the second-harmonic generation efficiency and the OPO threshold. This allows us to estimate the OPO threshold based on measured or simulated second-harmonic generation in different classes of resonators, such as bound states in the continuum and inversely designed resonators. Our approach for analyzing and modeling miniaturized OPOs can open unprecedented opportunities for classical and quantum nonlinear photonics.
How the machine ‘thinks’: Understanding opacity in machine learning algorithms

This article considers the issue of opacity as a problem for socially consequential mechanisms of classification and ranking, such as spam filters, credit card fraud detection, search engines, news...
Relationship between tax compliance internationally and selected determinants of tax morale

Abstract Tax compliance has been studied by analyzing the individual decision of a representative person between planning and evading taxes. A neglected aspect of tax compliance is the impact of a social contract on tax morale. Such implicit contract between the individual and the state guaranteeing a high level of economic freedom, effective competition laws, an important equity market and high moral norms, is hypothesized to have a positive impact on tax compliance. In this paper, empirical evidence based on data from 30 countries indicate that tax compliance internationally is positively related to the level of economic freedom, the level of importance of the equity market and the effectiveness of competition laws and high moral norms.
Preparing Vulnerable Populations for a Disaster: Inner-City Emergency Preparedness - Who Should Take the Lead?

Preparing inner-city communities for catastrophic emergencies requires careful planning, coordination, and implementation. Inner-city communities, i.e., residents living in the core areas of the nation's largest cities, often include low-income individuals, the elderly, individuals with disabilities, and a high proportion of children. Many of these individuals do not have the resources that emergency planners often assume are available in the event of a natural or man-made disaster, i.e., surplus food, water, and medical supplies; accessible medical care; adequate private and/or public transportation for evacuation; understandable and appropriate instructions for emergency response; or nearby safe shelter. As this article shows below, the concerns about these vulnerabilities were evidenced by Hurricane Katrina and other events (such as Hurricanes Rita and Wilma), recent excessive heat waves, tornadoes, and flooding) that focused considerable attention on the harsh adverse effects of disasters on unprepared, inner-city communities. Specifically, the failure of the federal government to respond to the needs of New Orleans' inner-city residents during Hurricane Katrina prompted an immediate and much needed focus on this issue. Yet, the federal government's many post-Katrina analyses and reports, while comprehensive and thorough, do not establish a clear agenda for solving this specific problem. In the absence of this federal guidance and support, states and localities, by and large, do not have the resources to lead and fund their own preparedness efforts for inner-city communities. Thus, very little has been done at any governmental level - federal, state, or local - to focus preparedness efforts on inner-city communities that need the most assistance in the event of a catastrophic disaster. This article details the almost self-evident nature of problems inner cities face in confronting emergencies, and how Katrina corroborated the serious nature of this problem. It then critiques several of the federal government's post-mortem reports on Katrina, focusing on the overly generalized recommendations that provide no clear guidance in this area. This article then proposes a pilot program for preparing inner-city communities in the event of a disaster. This pilot program would be developed in at least one small, well-defined inner-city neighborhood. By starting with a pilot program within a single inner-city neighborhood, the appropriate state or city might be able to find the money to fund such a limited effort. In the absence of public funding, private resources might alternatively be utilized. Private funding might also supplement available government funds. This program would be a cost-effective way in which to create a successful template for preparing inner cities for emergencies that could then be duplicated across the country with minimal effort.
Complementarity Among Vertical Integration Decisions: Evidence from Automobile Product Development

This paper examines complementarity among vertical integration decisions in automobile product development. Though most research assumes that contracting choices are independent of each other, contracting complementarity arises when the returns to a single vertical integration decision are increasing in the level of vertical integration associated with other contracting choices. First, effective coordination may depend on the level of (noncontractible) effort on the part of each agent; contracting complementarity results if coordination efforts are interdependent and vertical integration facilitates a higher level of noncontractible effort. Second, effective coordination may require the disclosure of proprietary trade secrets, and the potential for expropriation by external suppliers may induce complementarity among vertical integration choices. We provide evidence for complementarity in product development contracting by taking advantage of a detailed data set that includes the level of vertical integration and the contracting environment for individual automobile systems in the luxury automobile segment. Using an instrumental variables framework that distinguishes complementarity from unobserved firm-level factors, the evidence is consistent with the hypothesis that contracting complementarity is an important driver of vertical integration choices. The findings suggest that contracting complementarity may be particularly important when coordination is important to achieve but difficult to monitor.
Wiwa v. Royal Dutch Petroleum Co.: A New Standard for the Enforcement of International Law in U.S. Courts?

U.S. courts have traditionally been reluctant to exercise jurisdiction over human rights violations committed abroad against foreign persons, often invoking forum non conveniens to dismiss cases. The Second Circuit's ruling in Wiwa v. Royal Dutch Petroleum Company altered the balance of forum non conveniens, making it easier to bring claims based on a foreign human rights violation despite the availability of an alternative forum. The court's reasoning emphasized the interest of the United States in vindicating human rights abroad and would hold wealthy parties to a greater standard of inconvenience than poorer parties. The decision may mark a turning point away from judicial indifference and hostility to international human rights law.
Writing to Learn Law and Writing in Law: An Intellectual Property Illustration

This essay, prepared as part of a Symposium on teaching intellectual property law, describes a method of combining substantive law teaching with a species of what is commonly called "skills" training. The method involves assessing students not via traditional final exams but instead via research memos patterned after assignments that junior lawyers might encounter in actual legal practice. The essay grounds the method in the theoretical disposition known generally as "writing to learn." It argues that students are likely to learn intellectual property law effectively if they learn to practice as intellectual property lawyers, and specifically to write as intellectual property lawyers.
Retaliatory Homicide: Concentrated Disadvantage and Neighborhood Culture

Much of the research on violent crime is situated within an exclusively structural or subcultural framework. Some recent work, however, argues that these unidimensional approaches are inherently limited and that more attention needs to be given to the intersection of structural and cultural determinants of violence. The present study takes up this challenge by examining both structural and cultural influences on one underexamined type of homicide: retaliatory killings. Using quantitative data to examine the socioeconomic correlates and ecological distribution of homicide in St. Louis, Missouri, and narrative accounts of homicide incidents, we find that a certain type of homicide (what we call "cultural retaliatory homicide") is more common in some neighborhoods than in others due to the combined effects of economic disadvantage, neighborhood cultural responses to disadvantage, and problematic policing. Problems confronting residents of these communities are often resolved informally-without calling the police-and neighborhood cultural codes support this type of problem-solving, even when the "solution" involves a retaliatory killing. The findings thus lend support to a more integrated structural-cultural perspective on violent crime in urban neighborhoods.
Unreasonable Accommodation and Due Hardship

This Article analyzes authoritative sources concerning the Americans with Disabilities Act accommodation requirement and concludes: (1) Reasonable accommodation and undue hardship are two sides of the same coin. The statutory duty is accommodation up to the limit of hardship, and reasonable accommodation should not be a separate hurdle for claimants to surmount apart from the undue hardship defense. There is no such thing as “unreasonable accommodation” or “due hardship.” (2) The duty to accommodate is a substantial obligation, one that may be expensive to satisfy, and one that is not subject to a cost-benefits balance, but rather a cost-resources balance; it is also subject to increase over time. (3) The accommodation duty entails mandatory departure from neutral workplace rules, effectively creating a preference for workers with disabilities, but one not to be confused with the affirmative action concept found in other anti-discrimination regimes. These conclusions are in some respects consistent with, and in other respects quite inconsistent with, leading judicial interpretations, including the single Supreme Court case on accommodations in employment, U.S. Airways v. Barnett. The Article will suggest avenues by which courts may be led back to the correct interpretation of reasonable accommodation by looking to the text of the statute and its legislative history, interpretations by the enforcing agency, judicial construction of analogous language elsewhere in the ADA, and precedent from other jurisdictions. For twenty years, judicial and scholarly attention focused on who is a person with a disability entitled to the protections of the ADA. Narrow readings of coverage kept many cases with accommodations claims from reaching decision on the merits. Recently, Congress enacted the ADA Amendments Act, vastly expanding the range of covered individuals. After the Amendments, attention will turn to what accommodations employers must provide. This Article is the first to return to the original sources to determine what Congress required and to analyze both Barnett and the lower court cases in light of that understanding.
The Impact of Perceived Fairness on Satisfaction: Are Airport Security Measures Fair? Does it Matter?

In the marketing literature to date, the relationship between fairness perceptions and satisfaction is examined in contexts very familiar to consumers—service failure and recovery. This study exten...
ECONOMETRIC METHODS FOR FRACTIONAL RESPONSE VARIABLES WITH AN APPLICATION TO 401 (K) PLAN PARTICIPATION RATES

SUMMARY We develop attractive functional forms and simple quasi-likelihood estimation methods for regression models with a fractional dependent variable. Compared with log-odds type procedures, there is no difficulty in recovering the regression function for the fractional variable, and there is no need to use ad hoc transformations to handle data at the extreme values of zero and one. We also offer some new, robust specification tests by nesting the logit or probit function in a more general functional form. We apply these methods to a data set of employee participation rates in 401 (k) pension plans. I. INTRODUCTION Fractional response variables arise naturally in many economic settings. The fraction of total weekly hours spent working, the proportion of income spent on charitable contributions, and participation rates in voluntary pension plans are just a few examples of economic variables bounded between zero and one. The bounded nature of such variables and the possibility of observing values at the boundaries raise interesting functional form and inference issues. In this paper we specify and analyse a class of functional forms with satisfying econometric properties. We also synthesize and expand on the generalized linear models (GLM) literature from statistics and the quasi-likelihood literature from econometrics to obtain robust methods for estimation and inference with fractional response variables. We apply the methods to estimate a model of employee participation rates in 401 (k) pension plans. The key explanatory variable of interest is the plan's 'match rate,' the rate at which a firm matches a dollar of employee contributions. The empirical work extends that of Papke (1995), who studied this problem using linear spline methods. Spline methods are fiexible, but they do not ensure that predicted values lie in the unit interval. To illustrate the methodological issues that arise with fractional dependent variables, suppose that a variable y, O^y^l, is to be explained by a 1 x/^ vector of explanatory variables \ = {Xi,X2 XK), with the convention that Xi = l. The population model
Federalism and Incentives for Success of Democracy

Success and failure of democracy are interpreted as different equilibria of a dynamic political game with cost of changing leadership and incomplete information about politicians' virtue. Unitary democracy can be frustrated when voters do not replace corrupt leaders, because any new leader would probably also govern corruptly. However, federal democracy cannot be consistently frustrated at both national and provincial levels, because provincial leaders who govern responsibly could build reputations to become contenders for higher national office. Similarly, democracy cannot be consistently frustrated in a democratization process that begins with decentralized provincial democracy and only later introduces nationally elected leadership.
Finding the Bad Apples in the Barrel: Using the Market Value of Equity to Signal Banking Sector Vulnerabilities

This paper measures the performance of different metrics in assessing banking system vulnerabilities. It finds that metrics based on equity market valuations of bank capital are better than regulatory capital ratios, and other metrics, in spotting banks that failed (bad apples). This paper proposes that these market-based ratios could be used as a surveillance tool to assess vulnerabilities in the banking sector. While the measures may provide a somewhat fuzzy signal, it is better to have a strategy for identifying bad apples, even if sometimes the apples turn out to be fine, than not being able to spot any bad apples before the barrel has been spoiled.
Can Secular Feminists and Catholic Feminists Work Together to Ease the Conflict Between Work and Family

Anti-essentialist critiques of feminist legal theory have led to a broadening of feminist theory to reflect the voices of women of color, those of different classes and those of homosexual orientation. However, despite both the insistence on the need to include other voices and the growing development of Catholic feminist theologians, mainstream feminist legal thought has paid insufficient attention to what a religious perspective might add to the secular feminist dialogue about the law. This paper represents the first step in a broader project to explore a Catholic feminist legal perspective. The Article begins by exploring the theoretical underpinnings of what may be called a Catholic Feminist Legal Theory to see what such a theory adds to secular feminist legal theory. It then considers how that theoretical framework speaks to the relationship between work and family. Work and family make a good starting point for this inquiry in that secular feminists and Catholic feminists share a concern about issues that affect women both generally and in their ability to participate fully in the workplace. They also share a concern about family, albeit not always in the same way. That is, while there are places secular and Catholic feminists can walk together in promoting a restructuring of the workplace to accommodate family, there are also areas in which they part company. This Article represents an effort to see where those points of convergence and divergence lie.
Self-Fulfilling Credit Market Freezes

This paper develops a model of a self-fulfilling credit market freeze and uses it to study alternative governmental responses to such a crisis. We study an economy in which operating (nonfinancial) firms are interdependent, with their success depending on the ability of other operating firms to obtain financing. In such an economy, we show, inefficient credit market freeze may arise in which banks abstain from lending to operating firms with good projects because (and only because) of their (self-fulfilling) expectations that other banks will not be lending. We show how inefficient credit freeze equilibria may result from the arrival of information about fundamentals or a negative shock to the banking system’s capitalization. While such equilibria result from the arrival of information about fundamentals, they do represent a “coordination failure:” banks’ separate and fully rational decisions produce an outcome that would have been avoided had they been able to choose a coordinated action. Our model enables us to study the effectiveness of alternative measures for getting an economy out of an inefficient credit market freeze. In particular, we study the effectiveness of (1) interest rate cuts, (2) infusion of capital into financial firms, (3) direct lending to operating firms by the government, (4) lending to operating firms by funds owned by the government and managed by private agents compensated with a share of the profits generated by the fund, and (5) provision of guarantees by the government against losses incurred by banks on loans to operating firms. Throughout, we discuss the implications of our analysis for understanding and responding to the credit crisis of 2008.
ELT imaging of MWC 297 from the 23-m LBTI: Complex disk Structure and a companion candidate

Herbig Ae/Be stars represent the early outcomes of star formation and the initial stages of planet formation at intermediate stellar masses. Understanding both of these processes requires detailed characterization of their disk structures and companion frequencies. We present new 3.7 micron imaging of the Herbig Be star MWC 297 from non-redundant masking observations on the phase-controlled, 23-m Large Binocular Telescope Interferometer. The images reveal complex disk structure on the scales of several au, as well as a companion candidate. We discuss physical interpretations for these features, and demonstrate that the imaging results are independent of choices such as priors, regularization hyperparameters, and error bar estimates. With an angular resolution of ~17 mas, these data provide the first robust ELT-resolution view of a distant young star.
A new look at hedging with derivatives: Will firms reduce market risk exposure?

This study examines derivatives use of foreign exchange, interest rate, and commodities risk by nonfinancial firms across multiple industries, using data from 1995 to 2001. This work considers the interaction of a firm's risk exposures, derivatives use, and real operations simultaneously, and considers how these factors change over time using a consistent database. Hedging with derivatives is only signi.cantly related to commodity risk exposure during most years of the study, and to a more limited degree to interest rate exposure. Further, a strong correlation was found between risk exposures for some years using a new technique, suggesting that univariate modeling is not always appropriate. The implications are that hedging with derivatives is not always important to a firm's rate of return and is linked to other nonfinancial and economic factors. © 2007 Wiley Periodicals, Inc. Jrl Fut Mark 27: 1053–1083, 2007
Come on Over: Analyst/Investor Days as a Disclosure Medium

ABSTRACT: Our study introduces analyst/investor days, a new disclosure medium that allows for private interactions with influential market participants. We also highlight interdependencies in the choice and information content of analyst/investor days and conference presentations, a well-researched disclosure medium that similarly allows for private interactions. Analyst/investor days are less frequent, but with longer duration and greater price impact than conference presentations. They are mostly hosted by firms that already have opportunities to interact with investors at conferences, but whose complex and diverse activities make the short duration and rigid format of a conference presentation an imperfect solution to these firms' information problems. Analyst/investor days and conference presentations tend to occur in different quarters, consistent with their competing for the time and attention of senior management. When these two mediums are scheduled in close temporal proximity to each other, anal...
Evolutionary time best explains the latitudinal diversity gradient of living freshwater fish diversity

Aim: The evolutionary causes of the latitudinal diversity gradient are debated. Hypotheses have ultimately invoked either faster rates of diversification in the tropics, or more time for diversification due to the tropical origins of higher taxa. Here we perform the first test of the diversification rate and time hypotheses in freshwater ray-finned fishes, a group comprising nearly a quarter of all living vertebrates. Location: Global. Time period: 368-0 mya. Major taxa studied: Extant freshwater ray-finned fishes. Methods: Using a mega-phylogeny of actinopterygian fishes and a global database of occurrence records, we estimated net diversification rates, the number of colonizations and regional colonization times of co-occurring species in freshwater drainage basins. We used Generalized Additive Models to test whether these factors were related to latitude. We then compared the influence of diversification rates, colonization numbers, colonization times and surface area on species richness, and how these factors are related to each other. Results: While both diversification rates and time were related to richness, time had greater explanatory power and was more strongly related to latitude than diversification rates. Other factors (basin surface area, number of colonizations) also helped explain richness but were unrelated to latitude. The world9s most diverse freshwater basins (Amazon, Congo rivers) were dominated by lineages with Mesozoic origins. The temperate groups dominant today arrived near the K-Pg boundary, leaving comparatively less time to build richness. Diversification rates and colonization times were inversely related: recently colonized basins had the fastest rates, while ancient species-rich faunas had slower rates. Main conclusions: We concluded that time is the lead driver of latitudinal richness disparities in freshwater fish faunas. We suggest that the most likely path to building very high species richness is through diversification over long periods of time, rather than diversifying quickly.
Asset pricing: A tale of night and day

Abstract The capital asset pricing model (CAPM) performs poorly overall, as market risk (beta) is weakly related to 24-hour returns. This is because stock prices behave very differently with respect to their sensitivity to beta when markets are open for trading versus when they are closed. Stock returns are positively related to beta overnight, whereas returns are negatively related to beta during the trading day. These day-night relations hold for beta-sorted portfolios and individual stocks in the US and internationally as well as for industry and book-to-market portfolios and cash flow and discount rate beta-sorted portfolios. In addition to the change in slope of returns with respect to beta, the implied risk-free rate differs significantly between night and day. Consistent with this, returns on US Treasury futures differ significantly between night and day.
Primaries and the New Hampshire Effect

Candidates for U.S. presidential elections are determined through sequential elections in single states, the primaries. We develop a model in which candidates can influence their winning probability in electoral districts by spending money on campaigning. The equilibrium replicates several stylized facts very well: Campaigning is very intensive in the first district. The outcome of the first election then creates an asymmetry in the candidates’ incentives to campaign in the next district, which endogenously increases the equilibrium probability that the first winner wins in further districts. On the normative side, our model oers a possible explanation for the sequential organization: It leads (in expectation) to a lower level of advertising expenditures than simultaneous elections. Moreover, if one of the candidates is the more eective campaigner, sequential elections also perform better with regard to the selection of the best candidate.
Law and the Emotions

This paper presents a framework for understanding the relationship between rational choice and emotional behavior. Emotions are interpreted as temporary albeit predictable changes in preferences, abilities, and beliefs. People act rationally in anticipation of their own emotional reactions to provocations and other stimuli; they also act rationally when under the influence of emotion. The law needs to take account of both of these effects. The paper discusses (1) the sanction for murders committed under the influence of rage or hate, (2) the treatment of prejudicial evidence such as gory photographs, (3) safety regulation when individuals are subject to fear or dread, (4) contract and judicial remedies when parties become angry at each other, and (5) cost-benefit analysis of projects that provoke emotional responses.
What's in a Name? Reputation as a Tradeable Asset

The author develops a model in which a firm's only asset is its name, which summarizes its reputation, and studies the forces that cause names to be valuable, tradable assets. An adverse selection model in which shifts of ownership are not observable guarantees an active market for names with either finite or infinite horizons. No equilibrium exists in which only good types buy good names. The reputational dynamics that emerge from the model are more realistic than those in standard game-theoretic reputation models and suggest that adverse selection plays a crucial role in understanding firm reputation.
Dynamic effects of financial stress on the U.S. real estate market performance

Abstract Based on the theoretical framework of financial amplification, this study investigates the dynamic effects of financial stress on the performance of the U.S. real estate market proxied by Real Estate Investment Trust (REIT) returns in the United States using vector autoregressive (VAR) analysis. Based on the analysis of monthly REIT returns and the monthly changes in the Federal Reserve Bank of St. Louis Financial Stress Index spanning 1994–2011, the response of returns on the CRSP Ziman REIT indices and sub-indices becomes negative in the first few months following the spike in financial stress. The Granger-causality tests indicate that financial stress causes the returns on the CRSP Ziman REIT indices and sub-indices to drop. The variance decomposition analyses show that financial stress is relatively more important than the overall stock market in forecasting the errors of the returns on the CRSP Ziman REIT indices and sub-indices.
An evaluation of divergent perspectives on customer relationship management: Towards a common understanding of an emerging phenomenon

Abstract Prompted, in part, by the highly publicized failure of customer relationship management (CRM) initiatives, academic research on CRM has begun to flourish. While numerous studies have yielded important insights, the extant CRM literature appears to be inconsistent and is highly fragmented due, primarily, to the lack of a common conceptualization. Thus, to help advance a cohesive body of knowledge on this topic of growing interest and importance, this paper attempts to provide a clear and accurate delineation of CRM's domain. Following the review and analysis of process, strategy, philosophy, capability, and technology-based CRM perspectives, the authors propose that the phenomenon is best conceptualized as an ongoing process that involves the development and leveraging of market intelligence for the purpose of building and maintaining a profit-maximizing portfolio of customer relationships. Based on the proposed conceptualization, a detailed description of the CRM process is provided, along with a comprehensive framework intended to aid marketers in their quest to achieve CRM success.
Is a VC Partnership Greater Than the Sum of Its Partners

This paper investigates whether individual venture capitalists have repeatable investment skill and the extent to which their skill is impacted by the venture capital (VC) firm where they work. We examine a unique data set that tracks the performance of individual venture capitalists' investments over time and as they move between firms. We find evidence of skill and exit style differences even among venture partners investing at the same VC firm at the same time. Furthermore, our estimates suggest the partners' human capital is two to five times more important than the VC firm's organizational capital in explaining performance.
Do We Have a Debt Collection Crisis? Some Cautionary Tales of Debt Collection in Indiana

The Federal Trade Commission, in 2009, raised issues about debt collection practices and called on jurisdictions to investigate local practices that may be abusive to consumers. This article is the beginning of a larger study of debt collection practices in Indiana. It examines debt collection cases filed in Indiana courts in a three month period of 2009 and 2011 While most research on this issues has been in small claims court systems, this article suggests that the same, if not greater, consumer abuses exist in other courts. The research shows a pattern of large, national debt collection firms moving away from small claims courts, despite the size of the debt being collected. The procedural hurdles in these courts make it easier to obtain judgments and may result in greater abuse to consumers.
Does Financial Liberalization Reduce Financing Constraints

We use panel data on a large number of firms in 13 developing countries to find out whether financial liberalization relaxes financing constraints of firms. We find that liberalization affects small and large firms differently. Small firms are financially constrained before the start of the liberalization process, but become less so after liberalization. Financing constraints of large firms, however, are low before financial liberalization, but become higher as financial liberalization proceeds. We hypothesize that financial liberalization has adverse effects on the financing constraints of large firms, because these firms had better access to preferential directed credit during the period before financial liberalization. JEL Classification Codes: E22, E44, G31, O16