A review of:“DATA ANALYSIS & DECISION MAKING WITH MICROSOFT EXCEL ” By CHRISTIAN S. ALBRIGHT,WAYNE L. WINSTON,CHRISTOPHER ZAPPE Duxbury Press,Pacific Grove,California, 2002, xii + 998 pp. + accompanying CD: ISBN 0-534-38932-5. List: $97·95.

The assumption of a positive marginal tax rate in each period over the life of an investment project does not properly characterize the tax position of a significant number of firms. The paper develops a lower bound on the present value of the tax shield from declining balance depreciation given a reasonable assumption about the stochastic nature of the period by period marginal tax rate. It turns out that the standard textbook formula is a reasonably good approximation of the true present value of the tax shield since our lower bound is very close to the textbook formula.     

On Equilibrium When Contingent Capital Has a Market Trigger: A Correction to Sundaresan and Wang Journal of Finance (2015)

This paper identifies an error in Sundaresan and Wang (2015, hereafter SW) that invalidates its Theorem 1. The paper develops a model of contingent capital (CC) with a stock price trigger that is consistent with SW's framework and yields closed‐form solutions for stock and CC prices. Yet, the model shows that unique stock price equilibria exist for a broader range of CC contractual terms than those required by SW. Specifically, when conversion terms benefit CC investors and penalize shareholders, a unique equilibrium can exist rather than the multiple equilibria stated in SW.     

Corporate Taxes and Securitization

Most banks pay corporate income taxes, but securitization vehicles do not. Our model shows that, when a bank faces strong loan demand but limited deposit market power, this tax asymmetry creates an incentive to sell loans despite less‐efficient screening and monitoring of sold loans. Moreover, loan‐selling increases as a bank's corporate income tax rate and capital requirement rise. Our empirical tests show that U.S. commercial banks sell more of their mortgages when they operate in states that impose higher corporate income taxes. A policy implication is that tax‐induced loan‐selling will rise if banks’ required equity capital increases.     

The Impact of Plant Modernization on Organizational Work Practices

Employee survey data from a single Canadian firm are examined to determine the extent to which various work practices and job dimensions have been transformed as a consequence of the introduction of new production technologies. The modernization resulted in the creation of new jobs, while many previous tasks were either made redundant or altered. Although supervisor-worker consultation and planning were minimal throughout the modernization process, the results provide no evidence to suggest that deskilling had occurred.     

Superkurtosis

Very little is known on how traditional risk metrics behave under intraday trading. We fill this void by examining the finiteness of the returns' moments and assessing the impact of their infinity in a risk management framework. We show that when intraday trading is considered, assuming finite higher order moments, potential losses are materially larger than what the theory predicts, and they increase exponentially as the trading frequency increases—a phenomenon we call $superkurtosis$. Hence, the use of the current risk management techniques under intraday trading imposes threats to the stability of financial markets, as capital ratios are severely underestimated.