Projects with negative expected value cannot obtain financing in competitive capital markets if all potential investors are risk neutral and have identical beliefs about the distribution of the project′s net revenue. We present a series of examples with heterogeneous beliefs in which it is possible for a project to obtain financing even though all investors in the project believe, conditional on the project being undertaken, that the project has negative expected value. An important feature of the examples is that the differences in beliefs are due only to differences in information, and are not simply arbitrary unexplained differences in opinions. Journal of Economic Literature Classification Numbers:D8, G1.

World War II veterans earn more than nonveterans in their cohort. We test whether the World War II veteran premium reflects nonrandom selection into the military of men with higher earnings potential. The estimation is based on the fact that from 1942 to 1947 priority for conscription was determined by date of birth. Information on individuals' dates of birth may therefore be used to construct instrumental variables for veteran status. Empirical results from the 1960, 1970, and 1980 censuses, along with two other microdata sets, support a conclusion that World War II veterans earn no more than comparable nonveterans and may well earn less.

While the classical dividend irrelevance theory implies that shareholders unanimously support the firm's dividend policy, managerial benefits from free cash flow, heterogenous personal tax rates and information asymmetries give rise to internal shareholder conflicts over the dividend decision. We conjecture that observed dividends resolve this conflict by consensus across heterogenous shareholder groups. We develop and test this consensus-dividend hypothesis using Canadian firms where managers tend to own a large amount of voting stock. The empirical evidence indicates that cash dividends decrease as the voting power of owner-managers increases, and are almost always zero when owner-managers have absolute voting control of the firm. Panel data estimation as well as factor-analytic techniques give further empirical support for the consensus-dividend hypothesis.

Michael B. Devereux, Beverly J. Lapham; The Stability of Economic Integration and Endogenous Growth*, The Quarterly Journal of Economics, Volume 109, Issue 1, 1

Michael S. Long, Illeen B. Malitz, Stephan E. Sefcik, An Empirical Examination of Dividend Policy Following Debt Issues, The Journal of Financial and Quantitative Analysis, Vol. 29, No. 1 (Mar., 1994), pp. 131-144

Using intraday data, we find that bank announcements of changes in the prime rate have significant effects on Dow Jones stock price indexes and yields in the Treasury bill futures market. We find comparable effects using daily data for indexes of share prices of banks and financial firms as well as interest rates on various maturities of government securities. Our evidence is consistent with the view that banks have a comparative advantage in processing private information gained through bank-borrower relations and the regulatory supervision process.