Disclosure Quality and Management Trading Incentives

This study examines whether managers strategically alter disclosure “quality” in response to personal incentives, specifically those derived from trading on their own account. Using changes in market liquidity to proxy for disclosure quality, I find that trading incentives are associated with disclosure quality choices. Tests are performed across three disclosure samples: management forecasts, conference calls, and press releases. Consistent with a desire to reduce the probability of litigation, I find evidence that managers provide higher quality disclosures before selling shares than they provide in the absence of trading. Consistent with a desire to maintain their information advantage, I find some, albeit weaker, evidence that managers provide lower quality disclosures prior to purchasing shares than they provide in the absence of trading.     

Matching Capital and Labor

We establish an important role for the firm by studying capital reallocation decisions of mutual fund firms. The firm's decision to reallocate capital among its mutual fund managers adds at least $474,000 a month, which amounts to over 30% of the total value added of the industry. We provide evidence that this additional value added results from the firm's private information about the skill of its managers. The firm captures this value because investors reward the firm following a capital reallocation decision by allocating additional capital to the firm's funds.     

Strategic Complementarity,Stabilization Policy,and the Optimal Degree of Publicity

This paper examines the welfare implications of public information dissemination within a model in which information is heterogeneous across agents and where a strategic complementarity is present. The focus of the analysis is on how the presence of stabilization policy affects the case for transparency. In considering this issue, it extends James and Lawler's (2011) contribution by incorporating an alternative payoff function and by employing a different representation of public disclosure. The study's key finding is that the conclusions drawn in its precursor are robust to these modifications; specifically, in the presence of optimally designed policy intervention zero transparency maximizes welfare.     

Gender and Race Differences in Company Training

Using recent data from the National Longitudinal Survey of Youth, it is found that among young workers from 1986 to 1991, there were no gender or race differentials in the likelihood of receiving training, in participation in multiple training events, or in hours of training received. White women, however, were more likely to receive more training per hour worked than white men. This gender differential appears to occur because white women are more likely to work fewer hours and to be employed in entry-level positions that are associated with greater training intensity.     

Migrant Organization and Hometown Impacts in Rural Mexico

The interaction between migration, development and rural democratization is not well understood. Exit is usually understood as an alternative to voice, but the Mexican experience with cross-border social and civic action led by hometown associations suggests that exit can also be followed by voice. This article explores migrant impacts on hometown civic life, focusing on voice and bargaining over community development investments of collective remittances that are matched by government social funds. The most significant democratizing impacts include expatriate pressures on local governments for accountability and greater voice for outlying villages in municipal decision-making.     

Exponential Growth Bias and Household Finance

Exponential growth bias is the pervasive tendency to linearize exponential functions when assessing them intuitively. We show that exponential growth bias can explain two stylized facts in household finance: the tendency to underestimate an interest rate given other loan terms, and the tendency to underestimate a future value given other investment terms. Bias matters empirically: More‐biased households borrow more, save less, favor shorter maturities, and use and benefit more from financial advice, conditional on a rich set of household characteristics. There is little evidence that our measure of exponential growth bias merely proxies for broader financial sophistication.     

Does Wage Rank Affect Employees’ Well‐being?

How do workers make wage comparisons? Both an experimental study and an analysis of 16,000 British employees are reported. Satisfaction and well‐being levels are shown to depend on more than simple relative pay. They depend upon the ordinal rank of an individual's wage within a comparison group. “Rank” itself thus seems to matter to human beings. Moreover, consistent with psychological theory, quits in a workplace are correlated with pay distribution skewness.     

ENERGY-EFFICIENT LIGHTING: MARKET DATA, MARKET IMPERFECTIONS, AND POLICY SUCCESS

Many economists question engineering-economic studies aimed at demonstrating anomalously slow diffusion of energy-efficient technology and the benefits of regulations to promote such technology. One argument against such studies is that standard techniques of engineering economics are either inappropriate or are routinely misapplied in assessing the performance of the market for energy efficiency. This paper takes account of such critiques in presenting engineering-economic evidence on the diffusion of energy efficiency improvements. It examines the engineering and economic characteristics of standard and energy-efficient magnetic ballasts for fluorescent lighting. Efficient magnetic ballasts represent an excellent investment for 99 percent of the commercial building floor stock and a moderately good investment for 0.7 percent of the commercial floor stock. Still, in the 1980s these ballasts were being adopted only at a rate commensurate with the enactment of appliance efficiency standards in various states. In this case, solid empirical evidence supports skepticism about the effectiveness of the market mechanism in promoting cost-effective energy efficiency improvements and about the benefits of regulation to counteract this shortcoming.