The Medicare hospice program is intended to provide palliative care to terminal patients, but patients with long stays in hospice are highly profitable, motivating concerns about overuse among the Alzheimer's and Dementia (ADRD) population in the rapidly growing for-profit sector. We provide the first causal estimates of the effect of for-profit hospice on patient spending using the entry of for-profit hospices over 20 years. We find hospice has saved money for Medicare by offsetting other expensive care among ADRD patients. As a result, policies limiting hospice use including revenue caps and antifraud lawsuits are distortionary and deter potentially cost-saving admissions.

Why Are Recessions Good for Your Health? by Douglas L. Miller, Marianne E. Page, Ann Huff Stevens and Mateusz Filipski. Published in volume 99, issue 2, pages 122-27 of American Economic Review, May 2009

Social Distance and Other-Regarding Behavior in Dictator Games: Reply by Elizabeth Hoffman, Kevin McCabe and Vernon L. Smith. Published in volume 89, issue 1, pages 340-341 of American Economic Review, March 1999

Historically, English and Dutch auctions have been used for the exchange of single objects such as works of art or single lots of a good such as produce, fish, or cut flowers. Where these institutions have been used for the exchange of multiple units, such as the Australian wool auction (using English rules), successive lots of the good are sometimes sold sequentially at auction. In some, but not all, instances this is because the goods are not identical, even though the various lots may be close substitutes (see Penny Burns, 1985). Where the goods are accepted universally as being homogeneous, as in the securities markets, multiple units are often commonly auctioned simultaneously. In the securities industry, orders are batched for simultaneous execution in multiple-unit auctions in what are referred to as markets; that is, the security is for auction at a particular point in time. This type of market is used on the stock exchanges of Austria, Belgium, France, Germany, and Israel. Some of these are verbal, and some are sealed bid auctions. Although the U.S. organized exchanges are predominantly continuous rather than call markets (except that call markets are used each day to open trading in each listed security), there is a growing number of exceptions such as the proliferation, since 1984, of Auction Preferred Stock (Goldman, Sachs and Co., October 1984) and Money Market Preferred Stock (Lehman Brothers, July 1984). We now have Dutch Auction Rate Transferable Securities, called DARTS, Stated Rate Auction Preferred Stock, or STRAPS, and many more. After the initial subscription offering of this type of security, the market is called every 49 days to reset the preferred dividend rate using a multiple-unit auction. The exchange of shares and the dividend determination is based on the array of stated dividend rates at which existing holders and potential new holders are willing to sell and/or buy corresponding quantities. The dividend rate and exchange of shares every 49 days is executed using the uniform price or competitive sealed bid mechanism (Vernon L. Smith et al., 1980). The discussion to follow will be confined to this sealed bid form of the call market. Call markets provide temporal consolidation of trade orders or other forms of expressing the desire to buy and sell. By comparison with continuous trading, call markets offer both advantages and disadvantages (Robert A. Schwartz, 1988 pp. 442-6). The cited advantages include low cost of operating the exchange; information aggregation and presumed pricing efficiency; price stability; individual trades, which are thought to have a small impact on price; reduced price uncertainty; and, finally, nondiscriminatory pricing. However, there are offsetting disadvantages: (1) the market is inaccessible except at the time of call; (2) no bid, offer, contract, or price information is available until the results of the call are announced; and (3) there is transaction uncertainty because a submitted bid (offer) may be too low (high) to execute inside the supply-demand cross. These conditions are only partially alleviated if there is a secondary market between calls. These disadvantages may be significant. In September 1988, the Wall Street Journal published an article on the failure of a call market for the auction rate preferred stock *Economic Science Laboratory, University of Arizona, Tucson, Arizona. This material is based upon work supported by the National Science Foundation under grant no. SES-8320121.

Developing models to detect financial statement fraud involves challenges related to (1) the rarity of fraud observations, (2) the relative abundance of explanatory variables identified in the prior literature, and (3) the broad underlying definition of fraud. Following the emerging data analytics literature, we introduce and systematically evaluate three data analytics preprocessing methods to address these challenges. Results from evaluating actual cases of financial statement fraud suggest that two of these methods improve fraud prediction performance by approximately 10 percent relative to the best current techniques. Improved fraud prediction can result in meaningful benefits, such as improving the ability of the SEC to detect fraudulent filings and improving audit firms' client portfolio decisions.

This study addresses whether firms’ share prices correctly reflect two accounting measures: dirty surplus and really dirty surplus. Dirty surplus is readily observable from the financial statements, but really dirty surplus, which arises from recognizing equity transactions such as employee stock option exercises at other than fair market value, is not. Findings show that dirty surplus and really dirty surplus are irrelevant for forecasting abnormal comprehensive income. However, findings also indicate that investors appear to undervalue really dirty surplus. Hedge returns are insignificant when portfolios are formed based on dirty surplus, but are significantly positive based on really dirty surplus. Really dirty surplus positive hedge returns are robust to a variety of sensitivity tests. Taken together, the findings are consistent with either investors over-valuing firms that have large negative really dirty surplus or really dirty surplus being correlated with an unmodeled risk factor.

We examine the long‐standing question of whether firms derive value from investment bank relationships by studying how the Lehman collapse affected industrial firms that received underwriting, advisory, analyst, and market‐making services from Lehman. Equity underwriting clients experienced an abnormal return of around −5%, on average, in the 7 days surrounding Lehman's bankruptcy, amounting to $23 billion in aggregate risk‐adjusted losses. Losses were especially severe for companies that had stronger and broader security underwriting relationships with Lehman or were smaller, younger, and more financially constrained. Other client groups were not adversely affected.

We find that the majority of variation in leverage ratios is driven by an unobserved time‐invariant effect that generates surprisingly stable capital structures: High (low) levered firms tend to remain as such for over two decades. This feature of leverage is largely unexplained by previously identified determinants, is robust to firm exit, and is present prior to the IPO, suggesting that variation in capital structures is primarily determined by factors that remain stable for long periods of time. We then show that these results have important implications for empirical analysis attempting to understand capital structure heterogeneity.

For NYSE‐listed IPOs, limit order submissions and depth relative to volume are unusually low on the first trading day. Initial buy‐side liquidity is higher for IPOs with high‐quality underwriters, large syndicates, low insider sales, and high premarket demand, while sell‐side liquidity is higher for IPOs that represent a large fraction of outstanding shares and have low premarket demand. Our results suggest that uncertainty and offer design affect initial liquidity, though order flow stabilizes quickly. We also find that submission strategies are influenced by expected underwriter stabilization and preopening order flow contains information about both initial prices and subsequent returns.

We provide evidence that corporate tax status is endogenous to financing decisions, which induces a spurious relation between measures of financial policy and many commonly used tax proxies. Using a forward‐looking estimate of before‐financing corporate marginal tax rates, we document a negative relation between operating leases and tax rates, and a positive relation between debt levels and tax rates. This is the first unambiguous evidence supporting the hypothesis that low tax rate firms lease more, and have lower debt levels, than high tax rate firms.