cssi/SciSciGPT-SciSciNet huggingface dataset:
Security Issue Timing: What Do Managers Know, and When Do They Know It?

We study put option sales on company stock by large firms. An often-cited motivation for these transactions is market timing, and managers' decision to issue puts should be sensitive to whether the stock is undervalued. We provide new evidence that large firms successfully time security sales. In the 100 days following put option issues, there is roughly a 5% abnormal stock return, with much of the abnormal return following the first earnings release date after the sale. Direct evidence on put option exercises reinforces these findings: exercise frequencies and payoffs to put holders are abnormally low. During the 1991 to 2004 period, many large U.S. firms, including Bank of America, Boeing, IBM, McDonald's, and Microsoft, sold puts on their own stock. Our study is the first large-scale empirical analysis of these corporate trans? actions. A put sale can be viewed as a levered bet that the stock price will not drop. Thought of this way, put options offer a unique setting to study market timing by corporations. Our main contribution is to provide strong evidence that large firms successfully time the market with security sales.
Academic Governance and Democratic Processes: The Entrepreneurial Model and Its Discontents

Institutional power over the decision-making process in post-secondary institutions has traditionally been concentrated in the academy itself and, to a lesser extent, in state regulatory offices. Recently, however, this type of governance has been challenged and, in many places, replaced by a new, entrepreneurial model emphasizing more control by college administrations, increased involvement by outside “stakeholders,” and the use of competition among and within schools for students and resources as the main criterion for determining investment and curricular priorities. This article describes the entrepreneurial model of academic governance, then shows it in action through a detailed examination of the presidential succession crisis at the University of Virginia. This case study reveals many aspects of the discourse of entrepreneurial governance and illustrates the utilitarian nature of the model. The article proceeds to consider the reasons why such a discourse developed, tying the entrepreneurial model...
CORPORATE GOVERNANCE OR CORPORATE VALUE ADDED?: RETHINKING THE PRIMACY OF SHAREHOLDER VALUE

Restructuring is a necessary but not sufficient condition for corporate success. The greatest challenge facing large corporations today is ensuring continuous renewal - that is, finding new growth opportunities based on core competencies while still seeking efficiencies in mature businesses. To accomplish this, corporate America must seek to balance its single-minded commitment to shareholders with a greater concern for other corporate stakeholders such as employees and suppliers (especially those supplying access to key technology). All companies compete in at least four distinct markets: capital markets (investors), product markets (consumers), labor markets (specialized talent), and technology markets (suppliers). Creating wealth for investors depends on management's ability to balance the disciplines of these various markets. Success in any one of these markets is not enough to meet the competitive demands placed on firms.
Nussbaum: A Utilitarian Critique

This Essay ofTers a utilitarian perspective on Martha Nussbaum's theory of justice. Nussbaum believes that society should guarantee to every individual a threshold level of central human capabilities. Although Nussbaum's approach has considerable appeal, it is implausible and unappealing when it diverges greatly from utilitarianism. Nussbaum's theory sequires that enormous sums of money be devoted to people who receive very little benefit from efforts to raise them toward a capability threshold. Moreover, Nussbaum refitses to take a principled position on how conflicts among below-threshold interests should be resolved, even when one alternative would produce enormously more good than another alternative. Nussbaum mitigates these problems through an implicit incorporation of utilitarianism to address conflicts among below-threshold interests, but this partial adoption of utilitarianism cannot completely cure her theory. In addition to critiquing Nussbaum's theory, this Essay responds to some of Nussbaum's criticisms of utilitarianism. It rejects Nussbaum's claim that utilitarianism is wrong to give weight to adaptive preferences. It also demonstrates that Nussbaum misstates the relationship between her theory and the doctrine of incommensurability: features of her theory that she attributes to a denial of commensurability actually reflect a commitment to commensurability across the capability threshold.
Longitudinal modeling of insurance claim counts using jitters

Modeling insurance claim counts is a critical component in the ratemaking process for property and casualty insurance. This article explores the usefulness of copulas to model the number of insurance claims for an individual policyholder within a longitudinal context. To address the limitations of copulas commonly attributed to multivariate discrete data, we adopt a ‘jittering’ method to the claim counts which has the effect of continuitizing the data. Elliptical copulas are proposed to accommodate the intertemporal nature of the ‘jittered’ claim counts and the unobservable subject-specific heterogeneity on the frequency of claims. Observable subject-specific effects are accounted in the model by using available covariate information through a regression model. The predictive distribution together with the corresponding credibility of claim frequency can be derived from the model for ratemaking and risk classification purposes. For empirical illustration, we analyze an unbalanced longitudinal dataset of c...
The Economics of Islamic Finance and Securitization

Islamic lending transactions are governed by the precepts of the shariah, which bans interest and stipulates that income must be derived as return from entrepreneurial investment. Since Islamic finance is predicated on asset backing and specific credit participation in identified business risk, structuring shariah-compliant securitization seems straightforward. This article explains the fundamental legal principles of Islamic finance and presents a valuation model that helps distil the essential economic characteristics of shariah- compliant synthetication of conventional finance. In addition to a brief review of the current state of market development, the examination of pertinent legal and economic implications of shariah compliance on the configuration of securitization transactions informs a discussion of the most salient benefits and drawbacks of structured finance under Islamic law.
Marketing and policy considerations for violent video games

In this article, the author discusses the video game marker, marketing practices, the rating system, and efforts by the gaming industry and stare and federal lawmakers to keep videos with adult themes out of the hands of minors. Language: en
Industry Characteristics, Risk Premiums, and Debt Pricing

ABSTRACT: Despite theoretical and anecdotal evidence highlighting the importance of industry-level analyses to lenders, the empirical literature on debt pricing has focused almost exclusively on firm-level forces that affect expected loss. This paper provides empirical evidence that industry-level characteristics relate to debt pricing through risk premiums. We address the empirical challenges that arise when testing these theories by using a proprietary dataset of time-varying and forward-looking measures of industry characteristics. These characteristics include growth, sensitivity to external shocks, and industry structure, all measured at the six-digit NAICS level. Our results show that lenders demand higher spreads to bear industry-level risk. The relation exists within subsamples with constant credit ratings, and strengthens when lenders' loan portfolios are less diversified and during periods when diversification is difficult. Therefore, our results suggest that industry characteristics relate to d...
Diversification Bias and the Law of One Price: An Experiment on Index Mutual Funds

ABSTRACTIndividual investors select high-fee index mutual funds despite the fact that the future payouts are nearly identical. The authors offer an explanation for this violation of the law of one price based on investor desire to diversify. While diversification in some settings may be beneficial, in the case of assets with identical payouts, fee minimization is the only rational strategy. The evidence confirms that investors diversify by selecting multiple higher fee funds rather than minimizing fees when investing in index mutual funds.
Liquidity preference and interest-bearing money: the Ottoman Empire, 1840–1851

Legal restrictions theory suggests that interest-bearing money would dominate if there were no legal impediments precluding competition with non-interest-bearing currency. There are very few historical examples with meaningful issues of interest-bearing currency, however, and these tend to occur during extreme circumstances like civil war. The Ottoman Empire in the 1840s offers an unusual opportunity to observe large-scale issuance of interest-bearing notes under stable conditions over an extended period of time. This experience features government-issued interest-bearing money circulating in the absence of legal restrictions â€“ with the data pointing to a liquidity preference favouring the smaller denominations most useful in daily transactions.
Creative capital accumulation and the advancement of India's creative economy

Despite the relevance of Richard Florida's ideas about the role of creative capital in promoting the creative economy of developing nations like India, there is no theoretical research on these topics in the extant literature. Therefore, we focus on an arbitrary region in a developing country like India and then analyze the creative capital accumulation decision faced by workers in this region who aspire to membership in the so-called creative class. Specifically, we compute the present discounted value of a worker's lifetime earnings as a function of the primitives of the problem. Next, we solve for the level of education that maximizes the lifetime earnings function. Finally, we describe how this optimal level of education is affected by changes in the lifespan of workers, the interest rate, and by the growth rate of the wage function.
The Liberal State's Response to Religious Visions of Education

This article responds to several commentators on my work relating to religious schooling. I highlight the inclination of scholarly defenders of religious schooling to insist that religious schooling need not be, and perhaps generally is not, illiberal, and I ask on what basis they themselves valorize this contestable form of child rearing. I also highlight the tendency of defenders of religious schooling to refrain from offering any solution to the problem, which they sometimes acknowledge, that some religious schools clearly are illiberal and therefore arguably harm children developmentally.
The Default In Florida's Tort Reform: How Bankruptcy Affects The Meaning Of Financial Responsibility

Under the Florida Financial Responsibility statute section 458.320(5)(g), physicians in Florida are permitted to opt out of carrying medical malpractice liability insurance. The only conditions to satisfy financial responsibility by this method are that the physician hangs a sign in her office stating that she does not have medical malpractice liability insurance and that she promises pay any judgment up to $250,000. Physicians who self-insure are referred to as "going bare." This article explores how bankruptcy courts treat "bare" self-insured physicians who petition for Chapter 7 bankruptcy and attempt to discharge medical malpractice judgments. For the past 15 years, bankruptcy courts have consistently discharged these medical malpractice judgments and the Florida Board of Medicine does not regularly discipline the physicians for not paying the judgments as promised. This article argues that the Florida legislature should repeal section 458.320(5)(g) given the statute's alternate options of escrow accounts or irrevocable letters of credit. Additionally, this article argues that Congress should impose a "good faith" requirement on Chapter 7 debtors with non-consumer debts and that Congress should establish an additional section 523(a) exception to discharge that targets medical malpractice judgments owed by uninsured or self-insured physicians.
"May you stay forever young": Robert Sadoff and the history of mental disability law.

I am honored to have been asked to participate in the symposium honoring Bob Sadoff. He has been one of my closest friends for over 30 years and has been an inspiration to me at every stage of my career. I was especially gratified that I was asked to speak about the history and development of mental
Testing the Theory of Consumer Discrimination as an Explanation for the Lack of Minority Hiring in Hollywood Films

The underrepresentation of minorities in cultural industries is a widely publicized problem with far-reaching economic and social significance. It is also one of many industries in which employers ...
The dynamic relationship between low birthweight and induced abortion in New York City: An aggregate time-series analysis

We use a vector autoregression to examine the dynamic relationship between the race-specific percentage of pregnancies terminated by induced abortion and the race-specific percentage of low-birthweight births in New York City. With monthly data beginning in 1972, we find that induced abortion explains low birthweight for blacks, but not for whites. There is no evidence of feedback from low birthweight to induced abortion. The findings suggest that unanticipated decreases in the percentage of pregnancies terminated by induced abortion would worsen birth outcomes among blacks in New York City.
Space–time autoregressive models and forecasting national, regional and state crime rates

Abstract The recently advanced space–time autoregressive (ST-AR) model is used to forecast US, regional and state rates of violent and property crime. The disaggregate state (Florida) violent crime model includes murder, rape, robbery, and assault, while the property crime model includes burglary, larceny, and motor vehicle theft. In experimental forecasts, ST-AR RMSEs are compared to those for aggregate univariate AR(p) models, vector autoregressions (VAR), Bayesian VARs (BVAR), and two naive models that predict future crime rates either as the most recent rate or according to the most recent change in rates. The ST-AR model is of particular interest, given its efficient use of data, much like panel-data estimation. The ST-AR, BVAR, and AR(p) models outperform the other three approaches, but the ST-AR models are generally superior.
Political economy of forgiveness

A successful transition involves balancing a decisive break with the previous regime with the simultaneous minimization of the costs associated with the administration of justice. Where the benefits of pursuing transitional justice outweigh the associated costs, the administration of justice is a net benefit and contributes to the overall transition to liberalism. However, where the costs outweigh the associated benefits, pursuing justice will have the counterproductive effect of damaging the likelihood of establishing a sustainable liberal order. In short, pursuing transitional justice is not an all or nothing endeavor but rather must be thought of in terms of marginal or additional units. The key question is: Does it make sense to invest additional resources in administering justice against members of the previous regime?
CEOs Under Fire: The Effects of Competition from Inside Directors on Forced CEO Turnover and CEO Compensation

This study examines board monitoring when a credible chief executive officer (CEO) replacement is on the board. Inside directors whose talents are in greater demand externally, as reflected by their holding outside directorships, are more likely to become CEOs, and their presence is associated with greater forced CEO turnover sensitivity to accounting performance and CEO compensation sensitivity to stock performance. These results reveal that certain insiders strengthen board monitoring by serving as a readily available CEO replacement and contradict the presumption that all insiders are under CEO control. Furthermore, the results persist when accounting for the endogenous firm selection of talented inside directors.
Chae Chan Ping v. United States: Immigration as Property

There is arguably no other case that is more familiar to immigration legal scholars than Chae Chan Ping v. United States. Chae Chan Ping, a Chinese laborer and long-term non-citizen resident of the United States found himself excluded at the border after a trip to China. Border officers denied him entry under an amendment to the Chinese Exclusion Act, which voided the certificate to re-enter the United States that Ping obtained prior to embarking on his trip to China. Ping challenged the constitutionality of the Chinese Exclusion Act but ultimately failed. Upholding Ping’s exclusion, the Supreme Court declared that Congress’s power to “exclude aliens from its territory is a proposition” that is not open to controversy. Moreover, maintaining that “jurisdiction over its own territory . . . is an incident of every independent nation,” the Court explained that if the United States did not have the ability to exclude non-citizens, it would mean that “it would be subject . . . to the control over another power.” Crucially, the Court stated that Congress’s decision to deny entry to non-
Evidence from Two Large Field Experiments that Peer Comparison Feedback Can Reduce Residential Energy Usage

NBER WORKING PAPER SERIESEVIDENCE FROM TWO LARGE FIELD EXPERIMENTS THAT PEER COMPARISONFEEDBACK CAN REDUCE RESIDENTIAL ENERGY USAGEIan AyresSophie RasemanAlice ShihWorking Paper 15386http://www.nber.org/papers/w15386NATIONAL BUREAU OF ECONOMIC RESEARCH1050 Massachusetts AvenueCambridge, MA 02138September 2009Special thanks to Tyler Curtis and Alex Laskey from Positive Energy/oPower for contributing criticismto earlier drafts. The views expressed herein are those of the author(s) and do not necessarily reflectthe views of the National Bureau of Economic Research.© 2009 by Ian Ayres, Sophie Raseman, and Alice Shih. All rights reserved. Short sections of text,not to exceed two paragraphs, may be quoted without explicit permission provided that full credit,including © notice, is given to the source.
Climate Change, Oceans, Public Health, and the Law

The oceans are bearing the brunt of climate change, with significant direct implications for the world’s weather and climate, navigation and maritime commerce, ocean water quality, marine biodiversity, sea-level rise, and storm surge. All of these impacts, in turn, raise public health concerns, albeit in a variety of different ways.
Preference-Based Unawareness

Morris (1996, 1997) introduced preference-based denitions of knowledge and belief in standard state-space structures. This paper extends this preference-based approach to unawareness structures (Heifetz, Meier, and Schipper, 2006, 2008). By dening unawareness and knowledge in terms of preferences over acts in unawareness structures and showing their equivalence to the epistemic notions of unawareness and knowledge, we try to build a bridge between decision theory and epistemic logic. Unawareness of an event is characterized behaviorally as the event being null and its negation being null.
Comparative Administrative Procedure: Evidence from Northeast Asia

This paper concerns a puzzle in comparative law. Why did Japan and Korea, two countries with nearly identical legal regimes governing administrative procedure, adopt radically different statutory schemes in the mid-1990s? This paper uses principal-agent theory to understand the divergence and to develop a general theory of comparative administrative procedure. Administrative proceduralization is likely to occur when alternative mechanisms of controlling bureaucratic agents become more costly. When politicians have shorter time horizons, they have a greater incentive to adopt more extensive administrative procedures regimes.
ASYMMETRIC INFORMATION AND LEARNING: EVIDENCE FROM THE AUTOMOBILE INSURANCE MARKET

This paper tests the predictions of adverse-selection models using data from the automobile insurance market. I find that, in contrast to what recent research suggests, the evidence is consistent w...
Incentives for teacher relocation: Evidence from the Gambian hardship allowance

Abstract We evaluate the impact of the Gambian hardship allowance, which provides a salary premium of 30–40% to primary school teachers in remote locations, on the distribution and characteristics of teachers across schools. A geographic discontinuity in the policy's implementation and the presence of common pre-treatment trends between hardship and non-hardship schools provide sources of identifying variation. We find that the hardship allowance increased the share of qualified (certified) teachers by 10 percentage points. The policy also reduced the pupil–qualified teacher ratio by 27, or 61% of the mean, in recipient schools close to the distance threshold. Further analysis suggests that these gains were not merely the result of teachers switching from non-hardship to hardship schools. With similar policies in place in more than two dozen other developing countries, our study provides an important piece of evidence on their effectiveness.
Alternative Nonnested Specification Tests of Time Series Investment Models

Abstract This paper develops and compares non-nested hypothesis tests for linear regression models with first-order serially correlated errors. It extends the non-nested testing procedures of Pesaran, Fisher and McAleer, and Davidson and MacKinnon, and compares their performance on four conventional models of aggregate investment demand using quarterly U.S. investment data from 1951:I to 1983:IV. The data and the non-nested hypothesis tests initially indicate that none of the models are correctly specified. The tests are also intransitive in their assessments. Before rejecting these conventional models of investment demand, we investigate the small-sample properties of these different non-nested test procedures through a series of Monte Carlo studies. We find that these non-nested tests can have significant finite-sample size and power biases.
FROM MAINE TO MAITLAND VIA AMERICA

A small group of largely overlooked American scholars linked the two great English legal historians, Henry Maine and Frederic Maitland. Ancient Law, published by Maine in 1861, and The History of English Law Before the Time of Edward I, published by Frederick Pollock and Maitland in 1895 and written primarily by Maitland,1 are probably the two most important books about legal history ever written in the English language. In Ancient Law, Maine generated provocative conclusions about legal evolution based largely on works by previous scholars on the history of Roman law. For Henry Adams, who initiated the professional study of legal history in the United States, Maine was both an inspiration and a foil. Better known for his subsequent multivolume works of American history and especially for his great books, The Education of Henry Adams and Mont Saint Michel and Chartres, Adams was appointed to the history faculty of Harvard College in 1870 as part of the effort by its new president, Charles W. Eliot, to transform Harvard from a traditional teaching college to a major research university. Adams praised Ancient Law and placed Maine at the same level of intellectual importance as Darwin and Spencer.2 Yet Maine's "brilliant hypotheses", Adams declared, remained "hazardous guesses" unsupported by facts.3 In his teaching and scholarship, Adams tested Maine's "brilliant hypotheses" by examining the facts of English legal history, which Maine had not addressed in Ancient Law. Dismissing as amateurish prior work in England on the history of English law, Adams endorsed and directed his students to German "scientific" methods of research in original sources and to German scholars, such as Rudolph Sohm and Heinrich Brunner, who used these methods while studying the history of Teutonic law. In their Essays in Anglo-Saxon Law, published in 1876, Adams and his students relied on primary sources to test, and often to question, many of Maine's generalizations.
Copyright Reform Principles for Libraries, Archives, and Other Memory Institutions

U.S. libraries, archives, and other memory institutions are stewards of some of the largest collections of copyrighted content in the world. These institutions hold billions of works, the vast majority of which have been created in the last century and are thus subject to copyright protection. This Article is about how these institutions interact with the copyright system and, in particular, how reforming section 108 of the Copyright Act— limitations on copyright for library and archive uses—can help these organizations in their efforts to preserve and make their collections more available to the world. This Article examines the situations in which section 108 works, where it fails, and where libraries rely on other tools, such as fair use, for preserving, archiving, and distributing works. Understanding section 108 in this context helps to clarify its intended purpose and, in turn, principles for reform. Over the last several decades, it has become clear that policymakers and librarians view section 108’s principal purpose as providing a useful, clear, and unambiguous exception that practicing librarians can employ to make decisions about the use of copyrighted works in situations that frequently recur in libraries, supplementary to decisions made under other limitations such as fair use. So far, section 108 has largely failed to fulfill that purpose. This Article identifies five long-term principles that help explain why section 108 has failed in certain respects and can help guide reform efforts to make section 108 more useful in the future. © 2014 David R. Hansen. † Reference Librarian & Clinical Assistant Professor of Law, UNC–Chapel Hill School of Law, and Digital Library Fellow, UC Berkeley School of Law. This article benefited from the insights of an extraordinarily knowledgeable group of academic and research library information policy officers who participated in a half-day workshop in Berkeley, CA on the topic of section 108 reform. That workshop session and the other work that preceded this article was graciously funded by the Alfred P. Sloan Foundation through the Berkeley Digital Library Copyright Project. For more information, see http://law. berkeley.edu/librarycopyright.htm. Special thanks go to Pamela Samuelson for comments on an early draft of this paper, to Peter Jaszi, Lolly Gasaway, and Anne Gilliland for early discussions about the basic idea and structure of the paper, and to my other colleagues at UNC and at UC Berkeley who have taken the time to read this paper and offer suggestions. 1560 BERKELEY TECHNOLOGY LAW JOURNAL [Vol. 29:1559
Statutory Interpretation in Econotopia

Much of the debate in the recent revival of interest in statutory interpretation centers on whether or not courts should use legislative history in construing statutes. The consensus in favor of this practice has come under sharp attack from public choice critics who argue that traditional models of legislative intent are positively and normatively incoherent. This paper argues that in actual practice, courts look at a fairly narrow subset of legislative history. By thinking about the power to write that legislative history as a property right and legislatures as markets, it is actually possible to use Coase's Theorem and the concept of Pareto optimality to justify current judicial practice. However, such a justification suggests that certain aspects of current practice should be changed.
Who are the Top Law Firms? Assessing the Value of Plaintiffs' Law Firms in Merger Litigation

Using a hand-collected sample of 1,739 lawsuits that challenge the fairness of M&A transactions from the period 2003–2012, we examine the effectiveness of plaintiffs' law firms. From out of the 336 law firms in our sample, we determine the top law firms based on their popularity with informed plaintiffs as well as their proven ability to obtain large attorneys' fees awards. We find that the presence of a top plaintiffs' law firm is significantly and positively associated with a higher probability of lawsuit success. These results hold even after instrumenting for unobserved case quality, given that top law firms likely can obtain better cases with higher chances of success. This success appears to stem from the fact that top plaintiffs' law firms are significantly more active in prosecuting cases than other plaintiffs' law firms: they file more documents in the cases they litigate and they are more likely to bring injunction motions to enjoin a transaction. Defendants are also less likely to file a motion to dismiss cases filed by top plaintiffs' law firms. Our results inform the debate over shareholder litigation as well as provide courts guidance for selecting lead counsel in shareholder class action litigation.
Unifying the Rules for Wills and Revocable Trusts in the Federal Estate Tax Apportionment Arena: Suggestions for Reform

This Article examines the unification of the rules for wills and revocable trusts in the federal estate tax arena. The author asserts that true unification in the area of federal estate tax apportionment will be achieved only when American law places the revocable trust device, the functional equivalent of a will, on par with wills in terms of a decedent’s ability to change default apportionment rules. While virtually all states have adopted the principle of apportionment; American law has a long way to go if revocable trusts are to be placed on an equal footing with wills. Traditionally, only wills could be used to change default rules on federal estate tax apportionment, and this continues to be the rule in many states. This Article also addresses Conflict of laws issues that further complicate the area of law, considering troublesome state law conflicts, particularly whether the law of the decedent’s domicile should control on apportionment issues. The author goes on to consider various Internal Revenue Code provisions, giving special attention to the overarching question of whether these provisions conflict with state rules on apportionment. The Article concludes with the author’s suggested unifying solutions to resolve the inappropriate disparities between wills and revocable trusts in the federal estate tax apportionment area.
Toward a model of strategic outsourcing

Abstract Acknowledging efficiency motives, firms have increasingly turned to outsourcing in an effort to capture cost savings. Transaction cost theory (TCT) has been the dominant means of explaining outsourcing as an economizing approach whereby cost efficiencies are achieved by assigning transactions to different governance mechanisms. Recent research has used the resource-based view (RBV) to examine the role of specialized capabilities as a potential source of value creation in relationships between firms. Although research in supply chain management has expanded substantially, only limited applications of TCT and the RBV are available, especially in the field of operations management. We extend both perspectives to explain conditions leading to strategic outsourcing.
Social Security, Pensions and Retirement Behavior Within the Family

This paper estimates a structural model of family retirement using US data from the Health and Retirement Study (HRS). It provides further insight into household retirement decision making and the reasons for interdependence in the retirement decisions of each spouse. Improvements in HRS data and matched employer provided pension histories allow more precise identification of key parameters governing interdependent behaviour within the household. In an earlier study we found that interdependence was due to preferences rather than coordination of retirement incentives in the budget, and in particular that it is not a correlation in preferences, but the appearance of the spouse's retirement status in the husband's and wife's utility function that is largely responsible for coordination of retirement between spouses. We now find that a measure of how much each spouse values being able to spend time in retirement with the other accounts for a good portion of that apparent interdependence. For the wife, the husband's retirement status influences her retirement decision only if she values spending time in retirement with her husband. For husbands, the effect of having the wife already retired on his retirement decision is roughly doubled if he enjoys spending time in retirement with his wife, but there is some effect even if he does not. This is consistent with our earlier findings that the husband is more influenced by having a retired spouse than the wife is. The increase in the extent of the dependence of the wife's labour supply on the husband's retirement from our past work probably is traceable to better measurement of the opportunity set facing the husband in HRS data. Once estimated, we use the model to investigate the labour supply effects of alternative social security policies, examining the effect of dividing credit for earnings evenly between spouses, or of basing social security benefits on the amounts accumulated in private accounts. Both policies change the relative importance of spouse and survivor social security benefits within the household and both raise the relative reward to work later in the life cycle. The incentives created are modest, and retirement responds accordingly. Nevertheless, at some ages, such as 65, there may be as much as a 6% increase in the old age work force under privatized accounts. Copyright © 2004 John Wiley & Sons, Ltd.
Microeconomic Origins of Macroeconomic Tail Risks

We document that even though the normal distribution provides a good approximation to GDP fluctuations, it severely underpredicts “macroeconomic tail risks,” that is, the frequency of large economic downturns. Using a multi-sector general equilibrium model, we show that the interplay of idiosyncratic microeconomic shocks and sectoral heterogeneity results in systematic departures in the likelihood of large economic downturns relative to what is implied by the normal distribution. Notably, we also show that such departures can happen while GDP is approximately normally distributed away from the tails, highlighting the qualitatively different behavior of large economic downturns from small or moderate fluctuations. We further demonstrate the special role that input-output linkages play in generating “tail comovements,” whereby large recessions involve not only significant GDP contractions, but also large simultaneous declines across a wide range of sectors.
THE FINAL BULLET IN THE BODY OF THE MORE GUNS, LESS CRIME HYPOTHESIS

In 1997, John Lott and David Mustard launched what has become one of the most remarkable tales in the history of public policy evaluation when they announced that laws permitting citizens to carry a concealed handguns, so cold right to carry laws, caused crying to fall. Hailed as heroes by the National Rifle Association and his supporters, while derided as scoundrels by the staunchest critics, locked and mustard precipitated a scholarly and political odyssey that can teach us much about the techniques and limitations of sophisticated empirical research and the diversion norms of the scholarly and political realms.... Language: en
Data Mining the University: College GPA Predictions from SAT Scores

We analyze a data set comprised of academic records of undergraduates at the University of Oregon from 2000-2004. We find correlations of roughly 0.35 to 0.5 between SAT scores and upper division, in-major GPA (henceforth, GPA). Interestingly, low SAT scores do not preclude high performance in most majors. That is, the distribution of SAT scores after conditioning on high GPA (e.g., 3.5 or even 4.0) typically extends below 1000 (the average among test takers). We hypothesize that "overachievers" overcome cognitive deficits through hard work, and discuss to what extent they can be identified from high school records. Only a few majors seem to exhibit a "cognitive threshold" -- such that high GPA (mastery of the subject matter) is very unlikely below a certain SAT threshold (i.e., no matter how dedicated or hard working the student). Our results suggest that almost any student admitted to university can achieve academic success, if they work hard enough. In addition to our primary result, we find that the best predictor of GPA is a roughly equally weighted sum of SAT and high school GPA, measured in standard deviation units. Using a sub-population of honors college students, we can estimate how students at elite universities would fare at a typical state university, allowing us to comment on issues such as grade inflation. Finally, we observe that 1) SAT scores fluctuate little on retest (very high reliability), 2) SAT and GRE scores (where available) correlate at roughly 0.75 (consistent with the notion that both tests measure a stable general cognitive ability) and 3) the SAT distribution of students that obtained a degree does not differ substantially from that of the entering class.
Financial Market Dislocations

Dislocations occur when financial markets, operating under stressful conditions, experience large, widespread asset mispricings. This study documents systematic dislocations in world capital markets and the importance of their fluctuations for expected asset returns. Our novel, model-free measure of these dislocations is a monthly average of hundreds of individual abnormal absolute violations of three textbook arbitrage parities in stock, foreign exchange, and money markets. We find that investors demand statistically and economically significant risk premiums to hold financial assets performing poorly during market dislocations, that is, when both frictions to the trading activity of speculators and arbitrageurs and their marginal utility of wealth are likely to be high.
Value-based performance and risk management in supply chains: A robust optimization approach

Integrated performance and risk management is the key lever to increase shareholder value holistically. In this paper, we develop a corresponding framework for value-based performance and risk optimization in supply chains. Economic Value Added (EVA) as a prevalent metric of value-based performance is applied to mid-term sales and operations planning (S&OP). Robust optimization methods are utilized to deal with operational risks in physical and financial supply chain management due to the uncertainty of future events. Multiple aspects of robustness and general implications of the framework are highlighted using a case-oriented numerical analysis.
How Do Financial Firms Manage Risk? Unraveling the Interaction of Financial and Operational Hedging

This paper investigates how firms manage risk by examining the relationship between financial and operational hedging using a sample of bank holding companies. Risk management theory holds that capital market imperfections make cash flow volatility costly. I investigate whether financial firms consider this cost or focus exclusively on managing tradable exposures. After documenting that acquisitions provide operational hedging by reducing potentially costly volatility, I find that postacquisition financial hedging declines even after controlling for the specific underlying risks. In addition, the decrease in financial hedging is related to the acquisition's level of operational hedging. Larger increases in operational hedging are followed by larger declines in financial hedging. These results indicate that firms in this sample manage aggregate risk, not just tradable exposures, and that operational hedging can substitute for financial hedging. This paper was accepted by John Birge, focused issue editor.
Short-sale constraints and stock returns

Abstract Stocks can be overpriced when short-sale constraints bind. We study the costs of short-selling equities from 1926 to 1933, using the publicly observable market for borrowing stock. Some stocks are sometimes expensive to short, and it appears that stocks enter the borrowing market when shorting demand is high. We find that stocks that are expensive to short or which enter the borrowing market have high valuations and low subsequent returns, consistent with the overpricing hypothesis. Size-adjusted returns are 1–2% lower per month for new entrants, and despite high costs it is profitable to short them.
Deciding Who Decides: Understanding the Realities of Judicial Reform

On October 1, 1981, an extraordinary spectacle took place in the ceremonial courtroom of the ornate Fifth Circuit Court of Appeals building in New Orleans. More than 30 circuit judges assembled on a platform along with Solicitor General Rex E. Lee, former Attorney General Griffin Bell, and other dignitaries. After a series of speeches extolling the Fifth Circuit’s illustrious past, 17 of the judges, led by Chief Judge John Godbold, filed from the platform. They were now members of a new tribunal, the Court of Appeals for the Eleventh Circuit. The old Fifth Circuit had passed into history.The story of how the Fifth Circuit came to be divided into two new circuits is told by two political scientists, Deborah J. Barrow and Thomas G. Walker, in A Court Divided: The Fifth Circuit Court of Appeals and the Politics of Judicial Reform. The account is fascinating in its own right, but it also raises a number of questions that transcend the particular restructuring that is the book’s subject. This essay addresses two of these broader issues. First, how does a scholar go about investigating the origins of judicial reforms? Second, were the political underpinnings to the controversy over dividing the Fifth Circuit aberrational, or are political consequences implicit in any proposal for the restructuring of judicial institutions?In this essay, the author draws on his experiences as the deputy director of the Hruska Commission to provide additional context for the events discussed in the book and to illustrate the difficulties of accurately tracing the history of a judicial reform measure. The author also examines the history and political implications of other judicial-reform efforts, including a successful proposal to centralize patent appeals in a single national court and pending legislation to divide the largest of the federal circuits, the Ninth.
On the possibility of an inverse relationship between tax rates and government revenues

Abstract When Arthur Laffer and other ‘supply side advocates’ plot total tax revenue as a function of a particular tax rate, they draw an upward-sloping segment called the normal range, followed by a downward-sloping segment called the prohibitive range. A brief literature review indicates that tax rates on the prohibitive range in theoretical and empirical models have been the result of particularly high tax rates, high elasticity parameters, or both. The labor tax rate which maximizes total revenue, for example, will depend on the assumed labor supply elasticity. This paper introduces a new curve which summarizes the tax rate and elasticity combinations that result in maximum revenues, separating the ‘normal area’ from the ‘prohibitive area’. A general- purpose empirical U.S. general equilibrium model is used to plot the Laffer curve for several elasticities, and to plot the newly introduced curve using the labor tax example. Results indicate that the U.S. could conceivably be operating in the prohibitive area, but that the tax wedge or labor supply elasticity would have to be much higher than most estimates would suggest.
Bayesian Alphas and Mutual Fund Persistence

We use daily returns to compare the performance predictability of Bayesian estimates of mutual fund performance with standard frequentist measures. When the returns on passive nonbenchmark assets are correlated with fund holdings, incorporating histories of these returns produces a performance measure that predicts future performance better than standard measures do. Bayesian alphas based on the Capital Asset Pricing Model (CAPM) are particularly useful for predicting future standard CAPM alphas. Over our sample period, priors consistent with moderate to diffuse beliefs in managerial skill dominate more skeptical prior beliefs, a result that is consistent with investor cash flows. SINCE THE 1960S, THE ACADEMIC LITERATURE has analyzed mutual funds with an expanding array of performance measures. The majority of the measures are based on ordinary least squares (OLS) estimation of factor model regressions. In two early studies, Jensen (1968, 1969) uses the single-factor Capital Asset Pricing Model (CAPM). Subsequently, performance measures based on factor models have evolved along with the empirical asset pricing literature to incorporate passive assets such as size, book-to-market (Fama and French (1993)), and momentum (Jegadeesh and Titman (1993)). See, for example, Ippolito (1989), Elton et al. (1993), and Carhart (1997). Besides relying on least squares regression to estimate performance, studies typically use passive asset returns that are contemporaneous with fund returns. However, P ´ astor and Stambaugh (PS, 2002a) demonstrate that mutual fund performance measures need not be restricted to information on fund and passive assets over the life of the fund. Indeed, they find that incorporating a long time series of passive asset returns using Bayesian methods produces estimates of fund performance which are more precise. The approach of PS (2002a) for measuring fund performance may be particularly well suited to examining another topic central to the fund literature,
Categorical Municipal Expenditures with a Focus on the Flypaper Effect

Using data for Wisconsin cities and villages the effects of grants in aid from state government on 10 categories of municipal expenditures are examined. We build on the traditional grants in aid public finance literature by looking for evidence of the flypaper effect. By focusing on the Wisconsin state shared revenues program, a pure grant of considerable size for many Wisconsin municipalities, we offer a clean test of the flypaper effect. We find a positive flypaper effect on 8 of the 10 categorical expenditures. We also find the impact of unconditional grants on categorical expenditures is stronger on nonessential “luxury” goods (e.g., parks and recreation, culture, and educational services) than on essential “normal” municipal goods (e.g., police and fire protection).