Overconfidence and Early‐Life Experiences: The Effect of Managerial Traits on Corporate Financial Policies

We show that measurable managerial characteristics have significant explanatory power for corporate financing decisions. First, managers who believe that their firm is undervalued view external financing as overpriced, especially equity financing. Such overconfident managers use less external finance and, conditional on accessing external capital, issue less equity than their peers. Second, CEOs who grew up during the Great Depression are averse to debt and lean excessively on internal finance. Third, CEOs with military experience pursue more aggressive policies, including heightened leverage. Complementary measures of CEO traits based on press portrayals confirm the results.     

International Transmission of U.S. Monetary Policy Shocks: Evidence from Stock Prices

This paper analyzes intraday changes in firm‐level equity prices around interest rate announcements to assess the transmission of U.S. monetary policy to the global economy. We document that foreign firms on average are roughly as sensitive to U.S. monetary policy as U.S. firms, although we also find considerable cross‐sectional variation across firms. In particular, foreign stocks in cyclically sensitive industries show stronger responses to interest rate surprises, consistent with a demand channel of policy transmission. In addition, transmission of U.S. policy appears to be stronger to economies with fixed exchange rates. Evidence for a credit channel is weaker.     

Consumer Preferences for Group Practice Medical Services in Rural Areas

Public initiatives are promoting the development of group medical practices in rural areas despite the fact that little information regarding consumer preferences for group practice medical services is available. In this paper, survey data are used to investigate these preferences, as evidenced in the choice of a usual source of care. In the rural area of central Wisconsin studied, consumers tended to choose a multispecialty group in preference to alternative providers, given equal travel costs. Variations in travel costs were found to be an important determinant of this choice. This suggests that consumer acceptance of multispeciality group practices in rural areas will depend to a large extent on their locational convenience. Additional research is needed to determine how consumer preferences for multispecialty group services, particularly as they are reflected in the acceptance of higher travel costs, are dependent on the size and characteristics of the group.