Our data show that nearly all firms borrow for the first time in their life from a single bank, but soon afterward some of them start borrowing from additional banks. Duration analysis shows that the likelihood of a firm substituting a single relationship with multiple relationships increases with the duration of that relationship. It also shows that this substitution is more likely to occur for firms with more growth opportunities and for firms with poor performance. The analysis of the ex post effects of the initiation of multiple relationships, in turn, shows that firms with higher levels of investment prior to the initiation of multiple relationships increase their investment even further when they start to borrow from multiple banks and that firms with poor prior performance continue to perform poorly afterward. These results suggest that concerns with hold-up costs, together with an unwillingness by the incumbent bank to increase its exposure to a firm because of its past poor performance, are the key reasons for these firms to initiate an additional relationship this early in their life. Journal of Economic Literature Classification Numbers: G21, G32.

Compensating wage theory predicts that workers receiving more generous fringe benefits are paid a lower wage than comparable workers who prefer fewer fringe benefits. This study tests this prediction for employer‐provided health insurance by modeling the wages of married women employed full‐time in the labor market. Husband's union status, husband's firm size, and husband's health coverage through his job are used as instruments for his wife's own employer health insurance benefits. The estimates suggest wives with own employer health insurance accept a wage about 20% lower than what they would have received working in a job without benefits.

The 1986 Immigration Reform and Control Act (IRCA) granted amnesty to approximately 1.7 million long‐term unauthorized workers in an effort to bring them “out of the shadows” and improve their labor market opportunities. An analysis of wages using panel data for a sample of legalized men provides evidence that wage determinants are structurally different after amnesty for them but not for the comparison group as measured during the same time periods. The wage penalty for being unauthorized is estimated to range from 14% to 24%. The wage benefit of legalization under IRCA was approximately 6%.

This paper examines the information voluntarily disclosed about corporate restructurings. In 1995 the FASB’s Emerging Issues Task Force reached a consensus opinion about mandatory restructuring disclosures. I use these requirements to construct a statistic that measures the amount of information voluntarily disclosed for a sample of firms from 1990–1993. Disclosure levels increased dramatically when the SEC targeted restructurings as an area for increased oversight in late 1993. Controlling for this SEC action, I document a positive association between the amount of information disclosed and increased monitoring by shareholders, suggesting that monitoring complements disclosure rather than substitutes for it. The amount disclosed is negatively related to the appointment of a new CEO prior to the restructuring, perhaps reflecting the use of the restructuring charge to manage earnings for these firms.

This study presents empirical evidence on the ex post costs of employee stock option (ESO) grants to issuing firms and examines whether the Black–Scholes [1973] model provides reasonable estimates of these values. Because there are no market prices for ESOs, the traditional avenues for testing option–pricing models are unavailable. This research relies instead on techniques from the economic forecasting literature, viewing model values as forecasts of the options’ payoff. The theoretically appropriate rate at which to discount ESO payoffs is derived under the maintained hypothesis that the Black–Scholes model is valid. This rate is used in estimating ex post ESO costs at the time of grant, which are then compared with Black–Scholes estimates using Theil’s [1966] tests of forecast rationality. Based on a sample of 966 ESO grants over 1963–1984, the results suggest that the Black–Scholes model, adjusted for concavity in the time to exercise using the Hemmer, Matsunaga, and Shevlin [1994] procedure, appears to provide reasonable estimates of ex post ESO costs for the average ESO grant. However, there is significant variability in the amount of model error on an individual grant basis.