Home Equity,Household Savings and Consumption

The home-owning family’s equity is a piggybank that can be broken open by borrowing. Each borrowing increases liabilities and cash equally, initially leaving net wealth unchanged. When those funds are spent and cash balances fall, consumption increases even as net wealth can decline. In a dynamic optimization, the marginal propensity to consume from net wealth is not always positive and can be positively correlated with housing debt.

Risk forecasting in (T)GARCH models with uncorrelated dependent innovations

(G)ARCH-type models are frequently used for the dynamic modelling and forecasting of risk attached to speculative asset returns. While the symmetric and conditionally Gaussian GARCH model has been generalized in a manifold of directions, model innovations are mostly presumed to stem from an underlying IID distribution. For a cross section of 18 stock market indices, we notice that (threshold) (T)GARCH-implied model innovations are likely at odds with the commonly held IID assumption. Two complementary strategies are pursued to evaluate the conditional distributions of consecutive TGARCH innovations, a non-parametric approach and a class of standardized copula distributions. Modelling higher order dependence patterns is found to improve standard TGARCH-implied conditional value-at-risk and expected shortfall out-of-sample forecasts that rely on the notion of IID innovations.     

Do Analysts' Cash Flow Forecasts Encourage Managers to Improve the Firm's Cash Flows? Evidence from Tax Planning

Recent research finds that analysts' cash flow forecasts have meaningful financial reporting ramifications, but, to date, the identified effects are unlikely to yield meaningful cash flow benefits. This study examines whether analysts' cash flow forecasts encourage managers to enhance the firm's cash flow position through tax avoidance activities. We evaluate the change in cash tax avoidance after analysts begin issuing cash flow forecasts relative to a propensity score matched control sample of firms without cash flow forecasts. Consistent with analysts' cash flow forecasts encouraging tax avoidance that enhances the firm's cash flow health, we find a negative association between cash tax payments and analysts' cash flow coverage. Additional analysis suggests this association is driven primarily by strategies to permanently avoid rather than to temporarily defer tax payments and that increased cash tax avoidance activity represents a nontrivial component of the overall increase in reported operating cash flows after the initiation of analysts' cash flow coverage.     

Are managers strategic in reporting non-earnings news? Evidence on timing and news bundling

Using a comprehensive sample of non-earnings 8-K filings from 2005 to 2013, we examine whether firms strategically report mandatory and voluntary news. In particular, we examine whether firms report negative news when investor attention is low and whether they bundle positive and negative news. Our findings support the notion that managers believe in the existence of investor inattention and strategically report negative news after trading hours. These results particularly apply to public firms, where equity market pressures provide stronger incentives to mitigate market reaction to news by exploiting investor inattention. Further analysis of the market reaction to strategic disclosure uncovers no evidence of investor inattention, consistent with market efficiency. We also observe that public firms are more likely to strategically disclose through news bundling and that the likelihood of this increases with the likelihood of strategic disclosure through timing.     

Should We Require Every New Venture to Be a Hybrid Organization?

Critics of entrepreneurial capitalism have argued that entrepreneurship creates dysfunction in individuals, families, communities, and society because entrepreneurs neglect social and environmental dimensions of value in favour of financial value creation. By way of contrast, hybrid organizations, such as Benefit Corporations, are created explicitly to address social and environmental objectives in addition to their financial objective. Therefore, in this paper we explore the consequences of a world of blended value in which every new venture is required to be a hybrid organization. In doing so, we reveal the boundary conditions of current social criticism levied against entrepreneurship and suggest that blended value may best be relegated to the role of ideal or guideline as opposed to normative or legal obligation.     

Housing and Health

Deprived housing is recognized as a source of poor health, but there is still little evidence of a causal relationship between housing and health. While existing literature identifies neighborhood effects and the individual dwelling as factors which affect health, it does not offer a joint examination of these factors. Moreover, endogeneity is a concern in analyses of both problems. Thus far, studies addressing endogeneity have done so through experimental design or instrumental variables. The first approach suffers from problems of external validity and the latter from the lack of reliable instruments. We therefore adopt an alternative strategy which considers both sources of endogeneity in order to identify the effects of housing on health by estimating fixed‐effect models. We reveal how housing problems affect health depending on living conditions and socioeconomic status. Our results therefore indicate that living in poor housing is an important short‐term socioeconomic determinant that directly affects health.     

Resolution of Uncertainty and Asset Prices: Why the Timing of Information Release Might be Relevant After All

The objective of this paper is to reexamine the effects of the timing of information releases on security prices. We extend Ross (1989) by allowing the timing of information releases to affect the martingale probabilities. We show that if the early release of information is expected to resolve part of the uncertainty about the economy wide shock, it will positively affect asset prices in general and, under some conditions, the price of the information generating firm will rise more than the price of other firms. Our results are consistent with puzzling empirical observations documented in both the accounting and financial economics literatures.     

When do high‐level managers believe they can influence the stock price? Antecedents of stock price expectancy cognitions

Stock based rewards are often used to motivate high‐level managers to take actions to increase the stock price of the firm. However, numerous constraints may weaken the perceived link between individual effort and stock price appreciation for many recipients. This study introduces a new construct, stock price expectancy, which we define as individuals' perceptions of influence over their firm's stock price. We examined its antecedents in a sample of 349 high‐level U.S. managers and found that employment at corporate headquarters, firm size, hierarchical level, and contact with investment analysts predicted stock price expectancy perceptions. © 2010 Wiley Periodicals, Inc.     

Interweaving threads of credit and debt: Trading (through) textiles in colonial Dar es Salaam

Tracing the modus operandi of textile traders in colonial Dar es Salaam, this article makes a case for viewing the availability and extension of credit in the form of textiles as a central aspect of traders’ lives. The versatility of textiles in the local context of Dar es Salaam not only contributed to their high demand, their use as the main medium of exchange and the basis on which credit was extended; it also shaped the local conceptualisation of entrepreneurship. For textile traders in colonial Dar es Salaam, it was of economic, social and cultural importance to always be both in debt and have others in debt to them.