Do Managers Have Capital Structure Targets? Evidence from Corporate Spinoffs

The two main theories of capital structure—the tradeoff theory and the pecking order theory—have opposite predictions about the expected relationship between corporate leverage and profitability. According to the tradeoff theory, companies that earn higher profits will use more debt both to shield their income from corporate taxes and to discipline corporate investment policy. In contrast, the pecking order theory predicts that more profitable companies will borrow less mainly because they have less need to borrow.
Corporate spinoffs provide a unique opportunity to investigate the influence of profitability and other asset characteristics on the design of capital structure. In their study of 98 spinoffs over the period 1979–1997, the authors began by investigating the popular argument that managers routinely assign more debt to subsidiaries than parents in order to leave the parents less encumbered—a possibility they reject after finding that the average leverage ratios of the parents and spunoff units were roughly equal. At the same time, the authors reported large differences in the leverage ratios among both parents and spun-off units, and that the variation was explained primarily by differences in three factors: asset tangibility and the level and variability of cash operating profits. Consistent with the tradeoff theory (but not the pecking order), the study found a significantly positive correlation between a post-spinoff company's cash profitability and its assigned debt load, as well as a negative correlation between debt and the variability of operating cash flow.     

Relational foundations of an unequal consumer credit market: Symbiotic ties between banks and payday lenders

Banks have financially supported payday lenders for decades. In this article I qualitatively demonstrate how these financial relationships have reinforced and expanded a bifurcated consumer credit market, and why these relationships matter for consumer access to financial services. I use archival financial documents from publicly traded payday lending companies between 1996 and 2014, available through the Securities and Exchange Commission, to construct the bank-payday lender network and reveal motivations for these financial relationships. I find that bank-payday lender relationships are sustained over many years, and that these relationships are mutually beneficial, enabling payday lender expansion and providing a way for banks to quietly profit from high-interest lending in the face of other regulatory constraints. Further, I show that these relationships have significantly reshaped the consumer credit market over the past two decades. I conclude by considering broader implications of symbiotic institutional relationships in contemporary markets.     

“We Don’t Need Money,We Need to be Together”: Forced Transnationality in Deportation’s Afterlives

As US deportations and repatriations climbed to unprecedented levels, half of Mexican immigrants deported have at least one family member who is a US citizen, and one in five have at least one child who is a US citizen. This paper applies the analytic of forced transnationality, extending its scope beyond one person’s deportation to reveal cascading effects of travel and trauma for families remaking lives across the US-Mexico border. To do so, our research draws on interviews with mixed-status families, where transnational children have legal permission to reside in the US (including citizenship) and live with caregivers (like parents) who do not. In the wake of the rupture of prolonged detention and deportation, families seek to suture themselves as a collective social subject that is reshaped by forced transnationality.     

Social capital and self-organised collective action: Lessons and insights from a South African community project

ABSTRACT

Through the lens of new institutional economics, this paper provides exploratory analysis of the elements of social capital behind the success of self-organised collective action in a longstanding and effective community-based conservation and development project. Our qualitative institutional analysis suggests that critical elements of project-level structural social capital in the Umgano project case study include: forward-thinking and capable leadership; long-standing partnerships with external agencies; sound operational structures and management; and legitimate participation facilitated by forms of representation that are transparent and accountable to constituents. In accordance with the theory, insights from the study also indicate that successful collective action relies on processes of long-term and earnest trust building, within and across communities, and between communities and external agents. Such insights serve as a point of reference for role-players in similar community-based projects and have the potential to inform future research on resource governance in South Africa.     

Replication using templates: Does the unit learn from itself,the template,or both?

Research Summary : Replication of practices is an important value-creating strategy for multi-unit firms, yet they often struggle to share knowledge internally across locations. Drawing on the replication and learning literatures and using data from a Fortune 100 retail chain that implemented a new restocking practice in 280 stores, I examine whether and how templates influence unit learning when replicating new practices. Stores were divided into districts, each with one randomly chosen template and 6–10 replicating stores. A replicating store's prior performance relative to that of its template influences the extent to which the store learns from the template versus from its own experience. These findings suggest that replication involves simultaneously and dynamically learning from both transferred knowledge and knowledge gained from experience. Managerial Summary : Transferring valuable practices within the firm is an important yet difficult task for many firm types, especially multi-unit firms. One way that firms choose to transfer practices is through the use of templates—working examples of the new practice that act as models. Using data from a Fortune 100 retail chain, I show that the use of templates affects the way in which units learn to implement the practice. Because managers face tradeoffs when devoting attention to implementing the new practice, they must balance learning from the template with incorporating their own local experience with the new practice. Overall, my results suggest that choosing many templates is less important than choosing a few templates with superior performance for firms whose units or contexts are similar.     

Compensation and Employment Impact of a Full-time MBA Program

The changing Master of Business Administration (MBA) marketplace and considerable direct and indirect costs for an MBA degree mean that school administrators and other stakeholders need a better understanding of what factors may influence the rate of return to their MBA programs. We investigated the potential of using analytical frameworks to identify those variables that may predict employment probabilities and starting salaries of full-time MBA graduates, in the context of a single, private MBA program. Our results suggest that for graduates of this particular program, pre-MBA salary and work experience in accounting, banking, finance, and consulting industries predicted higher post-MBA salary levels, as did having a liberal arts major as an undergraduate. Other human capital measures, such as Graduate Management Admission Test (GMAT) scores or elite undergraduate education, were not associated with higher employment probabilities or salary levels for this program’s students, while having an undergraduate business major was associated with lower employment probability. Although our study has limited inference to determine the value of an MBA education more generally, it has potentially important implications for administrators of MBA programs, who could gain useful insights on applying empirical analysis to their own programs. Although this process can be costly and time consuming without a supportive institutional environment, it could provide useful evidence-based guidelines for practice with substantial payoffs for both the program and the students.     

Ubiquitous interactive visualization of 3D mantle convection using a web-portal with Java and Ajax framework

We have developed a new strategy and espouse a novel paradigm for large-scale computing and real-time interactive visualization. This philosophy calls for intense interactive sessions for a couple of hours at a time at the expense of storing data on many disk drives during regular or heroic runs on massively parallel systems. We have already carried out successfully real-time volume-rendering visualization by employing hundreds of processors for a grid with over 25 million unknowns. Both Cartesian and spherical 3D mantle convection are visualized. The volume-rendered images are viewed on a large display device, with many panels holding around 13 million pixels. We will employ a software strategy involving an hierarchical rendering service, which will have as software an Ajax interface for interactive visualization of large data sets on many different platforms from desktop PC’s to hand-held devices, such as the OQO and the Nokia N-800. An option for stereo viewing is also implemented. We have installed a user interface as web application, using Java and Ajax framework in order to achieve over the Internet reasonable accessibility to our ongoing runs. Our goal is to expand the array of interactive devices, which will make it feasible to carry out ubiquitous visualization and monitoring of large-scale simulations or onsite events and to allow for collaborations across oceans.     

Violent visions of an ownership society: The land administration project in Petén, Guatemala

This article is a case study of phase one of the World Bank's land administration project in Petén, Guatemala. Although the project's stated aims are merely to formalize an existing set of individual landed property rights, this development intervention necessarily changes the property regime, thereby changing underlying relationships that land as property embodies. Impact evaluations conducted by development economists may fail to substantively address displacement and violence that occur as a short-term effect of the project and long-term disparate impacts of the project that may exacerbate existing inequalities. The case of Petén also highlights the possibility for violent enforcement of property boundaries, where conflict surges between the disenfranchised and those who gain power under the new property regime.