Why Are Quit Rates Lower Among Defense Contractors?

This paper presents empirical evidence of lower quit rates at small manufacturers with defense contracts and examines whether this is associated with differences in their human resource policies and organizational practices and strategies. We take advantage of an original data set to compare labor quits, workforce skills, and occupational structure between defense‐contracting and noncontracting small manufacturers in eastern Pennsylvania. We find that the remarkably large defense contractor advantage in quit rates—7 percentage points—is almost totally explained by differences in skills, operational strategies, and workforce management and training practices, suggesting a mediation effect through these HR practices. Defense‐contracting status emerges as an important overlooked variable in HRM studies.     

Tax Expense Momentum

We investigate the joint hypothesis that (1) tax expense contains information about core profitability that is incremental to reported earnings and (2) that information is reflected in stock prices with a delay. We find that seasonally differenced quarterly tax expense, our proxy for tax expense surprise, is related positively to future returns. This anomaly is separate from previously documented pricing anomalies based on financial and tax variables. Additional investigation reveals that tax expense surprise is related positively to changes in future quarterly earnings and tax expense, and both those future changes are related positively to future returns. While the returns to investing in predictable future earnings changes has been documented before, these results suggest that predicting changes in future tax expense also generates incremental future returns.     

Prices or Knowledge? What Drives Demand for Financial Services in Emerging Markets?

Financial development is critical for growth, but its microdeterminants are not well understood. We test leading theories of low demand for financial services in emerging markets, combining novel survey evidence from Indonesia and India with a field experiment. We find a strong correlation between financial literacy and behavior. However, a financial education program has modest effects, increasing demand for bank accounts only for those with limited education or financial literacy. In contrast, small subsidies greatly increase demand. A follow‐up survey confirms these findings, demonstrating that newly opened accounts remain open and in use 2 years after the intervention.     

STADIUM CONSTRUCTION AND MINOR LEAGUE BASEBALL ATTENDANCE

The established literature shows that new stadium construction for major league baseball (MLB) teams can increase attendance, but there are limited studies at the minor league level. We use a data set encompassing all A, AA, and AAA minor league baseball teams from 1992 to 2006 to estimate the impact of stadium construction on minor league attendance. This data set includes almost 200 teams, over half of which constructed a new stadium during the 15‐year observation period. Over a 10‐year period our results show that new stadiums increase attendance by 1.2 million fans at the AAA level, 0.4 million at the AA and high A level, and 0.2 million at short season low A. A cost benefit analysis suggests that increased ticket sales do not offset the stadium costs, in line with previous works on MLB. (JEL H0, L83)     

AMERICAN SOCIETY FOR ENGINEERING EDUCATION

High technology investments are a rapidly growing segment of business capital expenditures. The questionnaire responses presented in this paper provide information on the capital investment decision processes currently being used for high technology projects. Respondents indicate that the capital evaluation techniques used to justify high technology investments are similar to those used for other types of capital projects and that high-tech projects must meet normal requirements for project acceptability. Respondents specified that a wide variety of factors, some quantified and some not quantified (such as quality control and reduced lead time), are included in their decision process. While there is general satisfaction with the procedures used for project justification, the relative newness of these investments suggests that there is a need to gather more detailed information about this type of capital decision.     

Illegitimacy,paternal financial responsibility,and the 1834 Poor Law Commission Report: the myth of the old poor law and the making of the new

The new poor law's bastardy clauses were amongst the most contested of the 1834 Act, and their unpopularity led to their (partial) reversal by 1844. The issue of paternal financial responsibility for the maintenance of illegitimate children was central to the reforms, and this article uses the Rural and Town Queries to show how parishes could enforce this responsibility effectively. This evidence could have been used as an alternative model of reform; instead, the Poor Law Commissioners misrepresented the operation of the law and recommended the abolition of affiliation. Rooted in the writings of Malthus, their proposals proved ultimately impracticable.     

THE DETERMINANTS OF STATE‐LEVEL CAPS ON PUNITIVE DAMAGES: THEORY AND EVIDENCE

Under the standard economic model of torts, punitive damages correct for imperfect detection. Incorporating litigation costs into the model provides a justification for punitive damage caps. At the optimum, caps balance deterrence against the cost of litigation. Empirical testing of the model is performed via Cox proportional and parametric hazard analyses, using a panel dataset from 1981 to 2007. The results reveal a positive relationship between legal services employment (a proxy for legal costs) and cap enactment, and a negative relationship between state gross state product (a proxy for damages) and cap enactment. Cap enactment is also influenced by political ideology. (JEL K13, K41, L51)     

Management by the Numbers: A Formal Approach to Deriving Informational and Distributional Properties of “Unmanaged” Earnings

We explore the theoretical relation between earnings and market returns as well as the properties of earnings frequency distributions under the assumption that managers use unbiased accounting information to sequentially decide on real options their firms have and report generated earnings truthfully, with the market pricing the firm based on those reported earnings. We generate benchmarks against which empirically observed earnings‐returns relations and aggregate earnings distributions can be evaluated. This parsimonious model shows a coherent set of results: reported losses are less persistent than reported gains, decision making diminishes the S‐shaped market response to earnings and earnings relate to returns asymmetrically in the way documented by Basu [1997]. Furthermore, the implied frequency distribution of aggregate earnings is neither symmetric nor necessarily single‐peaked. Instead, it may exhibit a kink at zero and look similar to the plots reported by Burgstahler and Dichev [1997]. However, within our model, none of these phenomena are due to reporting noise, bias, or some undesirable strategic managerial behavior. They are the natural consequences of using past earnings as the basis for value increasing managerial decision making that in turn generates the future earnings on which future decisions will be based.