STADIUMS AND ARENAS: ECONOMIC DEVELOPMENT OR ECONOMIC REDISTRIBUTION?

This article explores the literature on the impact of professional sports teams and stadiums on their host communities. A large body of research has addressed these issues, some of it academic and much of it for hire by team and sport boosters. The broad conclusion of this literature is that stadiums and franchises are ineffective means to creating local economic development, whether that is measured as income or job growth. There may be substantial public benefits from stadiums and franchises, but those too are insufficient to warrant large-scale subsidies by themselves. In combination with consumer surpluses from attendance, however, subsidies may be efficient. ( JEL R58, J30, H71, L83)     

Global Banks and Synthetic Funding: The Benefits of Foreign Relatives

This paper examines the effect of dislocations in foreign currency (FX) swap markets (“CIP deviations”) on bank lending. Using data from UK banks we show that when the cost of obtaining swap-based funds in a particular foreign currency increases, banks reduce the supply of cross-border credit in that currency. This effect is increasing in the degree of banks' reliance on swap-based FX funding. Access to foreign relatives matters as banks employ internal capital markets to shield their cross-border FX lending supply from the described channel. Partial substitution occurs from banks outside the UK not affected by changes in synthetic funding costs.     

NOVELTY EFFECTS OF NEW FACILITIES ON ATTENDANCE AT PROFESSIONAL SPORTING EVENTS

We investigate the effect of new facilities on attendance in professional baseball, basketball, and football from 1969 to 2001. We find a strong, persistent effect in baseball and basketball, and little effect in football. Size and duration estimates imply that baseball teams sell 2,500,794 additional tickets over the first eight seasons, basketball teams 293,878 over the first nine seasons, and football teams 137,792 over the first five seasons, implying an increase in revenues that could defray public subsidies that state and local governments provide for new sports construction projects. Rough calculations suggest that stadium subsidies are an inefficient method of subsidizing professional sports franchises. (JEL R39 , D12 , L83 )     

Corporate Bankruptcy and Managers' Self-Serving Behavior

We investigate whether insiders of bankrupt firms hold less stock or reduce their stockholdings compared to what we observed for insiders of similar firms that do not go bankrupt. We find little evidence of such time-series and cross-sectional differences in spite of the fact that the stock value of bankrupt firms falls by more than ninety percent in the five years preceding bankruptcy. One implication of our results is that the amount of stock owned and the magnitude of the trades undertaken by corporate insiders of both bankrupt and nonbankrupt firms appear to provide no information about firm value.     

Social Issues and Socially Responsible Investment Behavior: A Preliminary Empirical Investigation

An important dimension of the ongoing trend toward greater corporate social responsibility is the emergence of individual and institutional investors who invest in companies that support social objectives. While a small number of studies have examined the criteria used by institutions, no studies have looked at individual investors. Using a mail survey of 4,000 investors in two mutual funds that incorporate social screens in their investment decisions, this study finds that compared with other investors, socially responsible investors are younger and better educated. Respondents most frequently identify environmental and labor relations issues when asked what defines socially responsible corporate behavior. Although the respondents value socially responsible behavior in companies they invest in, they are unwilling to sacrifice financial returns to achieve it.