Free Cash Flow,Issuance Costs,and Stock Prices

We develop a dynamic model of a firm facing agency costs of free cash flow and external financing costs, and derive an explicit solution for the firm's optimal balance sheet dynamics. Financial frictions affect issuance and dividend policies, the value of cash holdings, and the dynamics of stock prices. The model predicts that the marginal value of cash varies negatively with the stock price, and positively with the volatility of the stock price. This yields novel insights on the asymmetric volatility phenomenon, on risk management policies, and on how business cycles and agency costs affect the volatility of stock returns.     

Consumer Experiences with Predatory Lending Practices

This investigation examines how consumers perceive and experience predatory lenders. Findings reveal that industry practices are carried out to the detriment of persons typically defined as “vulnerable,” such as elderly, impoverished, and African American consumers. Using a series of personal interviews with a geographically diverse set of respondents, data reveal thematic categories that include the friendly veneer, the rules of engagement, and an aggressive response, which capture the nuances of this exchange relationship from the perspective of these unwitting consumers. The closing section provides implications for scholars and regulators seeking workable solutions to limit additional financial exploitation.     

Respectability,Roughness and ‘Race’: Neighbourhood Place Images and the Making of Working‐Class Social Distinctions in London

Housing has come to play an important role in demarcating the contours of social polarization in inner London, notably via the widening socio‐spatial divide between an impoverished working class located in council housing estates and affluent home‐owning gentrifiers. In mass media and policy discourses, the former are routinely represented as an unruly urban ‘underclass’, a representation that homogenizes council tenants and marginalizes their voices. This article aims to move beyond a narrow underclass perspective by providing an in‐depth analysis of neighbourhood place images and social identity based on interviews with white working‐class council tenants in the inner London Borough of Camden. Drawing on debates around social distinction and place, the article illustrates a complex set of neighbourhood images rooted in narratives of urban decline as well as notions of belonging and knowing people. The article examines these place images in relation to the longstanding status distinction between respectability and roughness, as well as ‘race’. In conclusion, the defensive and exclusionary elements of neighbourhood images are related to processes of social deprivation and insecurity that have affected working‐class council tenants in Camden.     

Options and the Bubble

Many believe that a bubble existed in Internet stocks in the 1999 to 2000 period, and that short‐sale restrictions prevented rational investors from driving Internet stock prices to reasonable levels. In the presence of such short‐sale constraints, option and stock prices could decouple during a bubble. Using intraday options data from the peak of the Internet bubble, we find almost no evidence that synthetic stock prices diverged from actual stock prices. We also show that the general public could cheaply short synthetically using options. In summary, we find no evidence that short‐sale restrictions affected Internet stock prices.     

Historical Patterns of Inequality and Productivity around Financial Crises

To understand the determinants of financial crises, previous research focused on developments closely related to financial markets. In contrast, this paper considers changes originating in the real economy as drivers of financial instability. To this end, I assemble a novel data set of long-run measures of income inequality, productivity, and other macrofinancial indicators for advanced economies. I find that rising top income inequality and low productivity growth are robust predictors of crises, and their slow-moving trend components largely explain these relations. Moreover, recessions that are preceded by such developments are deeper than recessions without such ex ante trends.     

Changing Administrative Practices in American Unions: A Research Note

This note presents findings from the first longitudinal study of the administrative practices of American unions. Our surveys, conducted in 1990 and 2000, gathered information on the hiring, human resource, and financial/strategic planning practices of U.S.-based national and international unions. The results indicate that American unions are changing their criteria for hiring staff and moving toward more formal human resource policies and systematic financial and strategic planning practices.     

Using a Real‐Options Approach to Model Technology Adoption Under Carbon Price Uncertainty: An Application to the Australian Electricity Generation Sector*

The present climate for investment in electricity generation assets in Australia is uncertain. We develop a real‐options model to contrast the timing of the uptake of various electricity generation technologies under two carbon tax simulations: when a carbon tax of known size commences at a certain date in the future; and a carbon tax of known size commences at an uncertain date in the future. We find that uptake in the future varies significantly depending upon an investor's view of uncertainty and whether the technology is primarily designed to be viable in a market with or without carbon taxes.     

STUDENT OUTCOMES AT UNIVERSITY IN AUSTRALIA: A QUANTILE REGRESSION APPROACH*

Students’ success during their first year at university is largely influenced by their university entrance score. Personal characteristics and secondary school characteristics also impact on success. This paper uses quantile regression to investigate how the effects of these factors vary along the grade distribution. It finds that the factors which influence grades have a more pronounced impact on the success of low‐achieving students than on that of high‐achieving students. These results have implications for student selection and also for the way scholarships may be used to attract talented high school students.