UNIT MANAGEMENT BUYOUTS, STOCKHOLDER WEALTH, AND SELLING FIRMS' CHARACTERISTICS

Previous research on unit management buyouts, UMBs, has shown that selling firms benefit from the selloff transaction. The current research demonstrates that when the selling firm has either poor liquidity or poor earnings, selling firm shareholders do not benefit as much. We hypothesize that the unit managers have knowledge about the selling firm's difficulties so they do not pay as large a premium for the assets. Since the unit managers technically are employed by the selling firm shareholders, their bargaining to achieve a better price is an agency cost. Finally, selloff frequency does not affect seller abnormal returns.     

High school athletics and the wages of black males

This article examines the effects of high school athletic participation on the future wages of black males. Our evidence suggests that former black male athletes receive significantly greater wages than their otherwise comparable counterparts. Data from the National Longitudinal Survey of Youth was used for the analysis and allows for comparisons of the athlete premium to be made at different points in time. Both the human capital and signaling models are discussed. There appears to be a once and for all enhancement to human capital that accrues to black males who participated in high school athletics. The article adds to the literature on determinants of black male wages and on the earnings effects of athletic participation.     

Capital Markets and Capital Formation in Australia 1890–1945

This survey article examines the interaction between the domestic capital markets and capital formation in Australia from the 1890s up to the end of World War II. The disenchantment of the City of London with Australian securities in the 1890s opened a window for the development of domestic capital markets. It was the demands of the government for funds, especially during both wars, that transformed the scale and character of local markets. Local deposit taking institutions and stock exchanges handled a sufficient volume of domestic savings to fund the lion's share of both public and private sector capital formation.     

An Economic Analysis of Auto Compensation Systems: Choice Experiences From New Jersey and Pennsylvania

Nearly since the first automobile traveled on U.S. soil, questions about how best to compensate people injured by their use have been raised. As early as in 1932, in fact, the tort system of imposing costs on negligent drivers was strongly criticized, and a system of compensation without regard to negligence recommended. Yet despite various efforts to identify and implement improved systems during the past more than 70 years, no clear best compensation mechanism has been found. Current discussions have focused on the “choice” system, under which insureds are allowed to select either a tort system or a no‐fault system of compensation at the time of insurance purchase. New Jersey and Pennsylvania, which implemented very similar choice programs in 1989 and 1990, respectively, offer an opportunity to observe the effects of choice on outcomes such as: use of attorneys, speed of payment, and consistency (equity) of payment. Our results indicate outcomes consistent with expectations in New Jersey (NJ), which switched from no‐fault to choice, but inconsistent with expectations in Pennsylvania (PA), which switched from tort to choice. Furthermore, analysis of tort versus no‐fault selectors postchoice in New Jersey and Pennsylvania does not offer clear evidence of no‐fault's lower administrative costs and speedier, more equitable payment in these jurisdictions.     

Child malnutrition and school performance in China

Data on the height, weight, age and grade level of over 3,000 children in five quite different locations in China allow computation of how far behind in school each child is, relative to where he should be given his age, as well as of the nutritional status variables of height-for-age, weight-for-age and weight-for-height. This paper uses these data to estimate the impact of the nutritional variables on the available measure of school performance. Children tend to be about one grade further behind in rural areas than in the provincial capitals, and about one-half a grade further behind in the provincial capitals than in Beijing. Even after controlling for location, however, lower nutritional status (particularly height-for-age) was found to affect school performance adversely; a one standard deviation reduction in height-for-age, for example, would result in a child's being about one-third of a year further behind. Though results from a geographically limited sample should be generalized only with substantial caution, and alternative interpretations of the data are possible, it does appear likely that malnutrition in rural China remained sufficiently prevalent in 1979 to retard the school advancement of large numbers of children.