Managerial Stock Ownership and the Maturity Structure of Corporate Debt

This study documents that managerial stock ownership plays an important role in determining corporate debt maturity. Controlling for previously identified determinants of debt maturity and modeling leverage and debt maturity as jointly endogenous, we document a significant and robust inverse relation between managerial stock ownership and corporate debt maturity. We also show that managerial stock ownership influences the relation between credit quality and debt maturity and between growth opportunities and debt maturity.     

INTERTEMPORAL COURNOT AND WALRAS EQUILIBRIA: AN ILLUSTRATION*

In an intertemporal general equilibrium framework, we compare a Cournot equilibrium to the Walras equilibrium. The Cournot agents trade and invest less than the Walras agents. This generates an inefficiency that does not vanish as the number of Cournot agents tends to infinity. A larger number of strategic Cournot agents implies that the amount of trade (relative to their aggregate consumption) increases (i.e., it moves towards the Walrasian amount), but their investment (relative to the stock) decreases (i.e., it moves away from the Walrasian amount). "S'il y avait 3, 4, ...n producteurs en concurrence [...] la valeur de p, qui en résulte, diminuerait indéfiniment par l'accroissement indéfini du nombre n,”A. A. Cournot (1838, p. 63)."     

DOES SPENDING MORE ON TOBACCO CONTROL PROGRAMS MAKE ECONOMIC SENSE? AN INCREMENTAL BENEFIT‐COST ANALYSIS USING PANEL DATA

This paper presents a benefit‐cost analysis of the ongoing, state‐level tobacco prevention and control programs in the United States. Using state‐level panel data for the years 1991–2007, the study applies several variants of econometric modeling approaches to estimate the state‐level tobacco demand. The paper finds a statistically significant evidence of a sustained and steadily increasing long‐run impact of the tobacco control program spending on cigarette demand in states. The study also shows that, if individual states follow the Best Practices funding guidelines, potential future annual benefits of the tobacco control program can be as high as 14–20 times the cost of program implementation. (JEL C2, H5, I1)     

BENEFITS OF HAZARDOUS WASTE CLEANUP: NEW EVIDENCE FROM SURVEY- AND MARKET-BASED PROPERTY VALUE APPROACHES

This article compares the discrete choice random utility model and the hedonic property value model in estimating the benefits of cleaning up Waukegan Harbor, a Superfund site on the Great Lakes. The study uses survey-based conjoint choice data on housing preferences and market data on housing transactions. The research finds that the benefit estimates for different levels of cleanup are quite comparable between the models. The estimates compare very well with those of some previous studies. The results of the study suggest that tax increment financing by the local government is a feasible option to fund cleanup.     

The Pricing of Initial Public Offers of Corporate Straight Debt

This study examines the initial-day and aftermarket price performance of corporate straight debt IPOs. We find that IPOs of speculative grade debt are underpriced like equity IPOs, while those rated investment grade are overpriced. IPOs of investment grade debt are typically issued by firms listed on the major exchanges and underwritten by prestigious underwriters. In contrast, junk bond IPOs are more likely to be handled by less prestigious underwriters and are typically issued by OTC firms. Our analysis also reveals that bond rating, market listing of the firm, and investment banker quality are significant determinants of bond IPO returns.