Book Reviews

Technological Collaboration in Industry; strutegy, policy and internationalization in innovation
Corporate Venturing: Creating New Businesses within the Firm
Handbook of Innovation Management
Technology and enterprise in a historical perspective
Intellectual Property for Engineers
The Ernst & Young Business Plan Guide
crnagement as a New Technology
Mass Customization: The New Frontier in Business Competition     

IMPACT OF CHILD QUALITY ON EARNINGS: THE PRODUCTIVITY-OF-SCHOOLING HYPOTHESIS

This paper investigates the relationship between average earnings, education (measured by years of schooling), and rates of return to education for major racial/ethnic groups in the United States. It considers the effect of including previously omitted "productivity-of-schooling" (also referred to here as "child quality") variables. An upward-sloping average education, rate-of-return-to-education profile exists for His-panics, blacks, and whites. Productivity-of-schooling (i.e., child quality) measures– including family size, family composition, ability, and parental inputs–significantly affect earnings and rates of return to education. The results here are consistent with Chiswick (1988). Conditions within the family play a larger role in determining the value of education for minority males than for white males, a conclusion of obvious interest to policymakers.     

Inventories and the Business Cycle*

This paper examines the relationship between the inventory cy and the business cycle using both macroeconomic and survey da It is argued that over the past decade and a half, the changes inventory management have reduced the amplitude of the inventc cycle. The paper also argues that the behaviour of inventories consistent with demand shocks being an important source of business cycle fluctuations.     

INSIDER TRADING: THE LAW, THE THEORY, THE EVIDENCE

This paper reviews the arguments concerning the role and effects of insider trading. In reviewing the law of insider trading, we concentrate on the main elements of the regulatory framework and court interpretations. We discuss economic issues involved in the debate over the benefits and costs of insider trading. Finally, we discuss evidence illustrating that legal market research can explain much of the runup in a target firm's stock price before a tender offer is formally announced.     

Strategic Default and Equity Risk Across Countries

We show that the prospect of a debt renegotiation favorable to shareholders reduces the firm's equity risk. Equity beta and return volatility are lower in countries where the bankruptcy code favors debt renegotiations and for firms with more shareholder bargaining power relative to debt holders. These relations weaken as the country's insolvency procedure favors liquidations over renegotiations. In the limit, when debt contracts cannot be renegotiated, equity risk is independent of shareholders' incentives to default strategically. We argue that these findings support the hypothesis that the threat of strategic default can reduce the firm's equity risk.     

Exporting Liquidity: Branch Banking and Financial Integration

Using exogenous liquidity windfalls from oil and natural gas shale discoveries, we demonstrate that bank branch networks help integrate U.S. lending markets. Banks exposed to shale booms enjoy liquidity inflows, which increase their capacity to originate and hold new loans. Exposed banks increase mortgage lending in nonboom counties, but only where they have branches and only for hard‐to‐securitize mortgages. Our findings suggest that contracting frictions limit the ability of arm's length finance to integrate credit markets fully. Branch networks continue to play an important role in financial integration, despite the development of securitization markets.