A Fast Literature Search Engine based on top-quality journals, by Dr. Mingze Gao.
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Results 314 resources
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To investigate the liquidity of large issues, this study tests for yield differences between corporate bonds and medium-term notes. In the sample, medium-term notes have an average issue size of 4 million, compared with 265 million for bonds. Among medium-term notes that have the same issuance date, the same maturity date, and the same corporate issuer, the authors find no relation between size and yields. Moreover, bonds and medium-term notes have statistically equivalent yields. Thus, rather than suggesting that large issues have greater liquidity, these findings indicate that large and small securities issued by the same borrower are close substitutes.
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The thrust of current deposit insurance reform–risk-based insurance premiums and capital requirements–is an effort to price deposit insurance more fairly. Fairly pricing deposit insurance eliminates inequitable wealth transfers but it does not lead to an efficient equilibrium. This paper shows that an alternative charter policy results in an efficient separating equilibrium.
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The authors develop a monopoly model of product design and safety signaling incorporating a parametric liability specification. The firm first engages in R&D to affect the safety of its product. Since the outcome of R&D trials is unobservable to consumers, the firm then chooses its price, understanding that consumers may draw inferences from the price about the product's safety. Consumers acquire and use the product; injuries lead to losses which are allocated by the liability system. The authors vary the liability system's allocation of losses and trace out the implications for R&D investment and the price-safety relationship. Copyright 1995 by American Economic Association.
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The authors provide a framework within which the child-support compliance decisions of noncustodial fathers and the child-support awards set by institutional agents can be coherently interpreted. The model of child-support transfers is able to capture qualitatively the features of the monthly payment distribution. Estimated parental-decision rules are used to infer the implicit weights given by institutional agents to the postdivorce welfare of parents and children. The authors find that the weight attached to the combined welfare of the custodial mother and child is significantly less than the weight given to the father's welfare in most sample cases. Copyright 1995 by American Economic Association.
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The authors present a model of large-scale economic reforms, modeled on the transition process in Eastern Europe, with aggregate and individual uncertainty concerning the outcome of reforms. The government is assumed to choose the speed and sequencing of reforms. The authors compare big-bang strategies with gradualist reform packages. They show that gradualist reform packages may be easier to get started, optimal sequencing of reforms should aim at creating constituencies for further reforms, and gradualism may generate a higher investment response because of a lower option value of waiting than would a big-bang approach. Copyright 1995 by American Economic Association.
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After firms move trading in their stock to the American or New York Stock Exchanges, stock returns are generally poor. Although many listing firms issue equity around the time of listing, postlisting performance is not entirely explained by the equity issuance puzzle. Similar to the conclusions regarding other long-run phenomena, poor postlisting performance appears related to managers timing their application for listing. Managers of smaller firms, where initial listing requirements may be more binding, tend to apply for listing before a decline in performance. Poor postlisting performance is not observed in larger firms.
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This paper examines the structure of staged venture capital investments when agency and monitoring costs exist. Expected agency costs increase as assets become less tangible, growth options increase, and asset specificity rises. Data from a random sample of 794 venture-capital-backed firms support the predictions. Venture capitalists concentrate investments in early stage and high technology companies where informational asymmetries are highest. Decreases in industry ratios of tangible assets to total assets, higher market-to-book ratios, and greater R&D intensities lead to more frequent monitoring. Venture capitalists periodically gather information and maintain the option to discontinue funding projects with little probability of going public.
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In the 1980s, U.S. banks became systematically less profitable and riskier as nonbank competition eroded the profitability of banks' traditional activities. Bank failures rose exponentially during this decade. The leading explanation for the persistence of these trends centers on fixed-rate deposit insurance: the insurance gives bank equityholders an incentive to take on risk when the value of bank charters falls. The authors propose and test an alternative explanation based on corporate control considerations. They show that managerial entrenchment played a more important role than did the moral hazard associated with deposit insurance in explaining the recent behavior of the banking industry.
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