Is Common Stock Obsolete?

Agency theory rests on a well-defined relationship between shareholders and managers. That relationship is examined and found to be a poorly denned state-contingent contract. The implications of that finding, and the existence of only a weak market for managers, lead to the conclusion that the traditional assumptions about the rights of shareholders no longer apply and that common stock (ordinary share capital) is obsolete.     

Have We Underestimated the Likelihood and Severity of Zero Lower Bound Events?

Prior to the financial crisis, most economists probably did not view the zero lower bound (ZLB) as a major problem for central banks. Using a range of structural and statistical models, we find that previous research understated the ZLB threat by ignoring uncertainty about model parameters and latent variables, focusing too much on the Great Moderation experience, and relying on structural models whose dynamics cannot generate sustained ZLB episodes. Our analysis also suggests that the Federal Reserve's asset purchases, while materially improving macroeconomic conditions, did not prevent the ZLB constraint from having first‐order adverse effects on real activity and inflation.     

The Effects of Regulating Hidden Add‐On Costs

We examine the welfare effects of price and disclosure regulation in a model where firms can shroud add‐on costs, such as penalty fees for consumer financial products. Such regulation can increase or decrease welfare even when there are no direct costs. There are, however, strong complementarities between price controls and disclosure mandates: conditional on disclosure being mandated, price controls always (weakly) increase welfare, and conditional on prices being sufficiently constrained, disclosure mandates always (weakly) increase welfare.     

Ersatz Academics and Scholar-saints: The Supply of Financial Accounting Research

Watts and Zimmerman, in a widely acclaimed article, concluded that accounting theories serve to supply excuses for policies determined by political processes. This paper presents a critical review of Watts and Zimmerman's hypothesis, and in return, suggests that the academic reward system in the leading universities does not encourage that kind of activity. The alternative hypothesis is that there are two markets, one for excuses and the other for scholarly research.     

Bank Competition: Measurement,Decision‐Making,and Risk‐Taking

This paper investigates whether greater competition increases or decreases individual bank and banking system risk. Using a new text‐based measure of competition, and an instrumental variables analysis that exploits exogenous variation in bank deregulation, we provide robust evidence that greater competition increases both individual bank risk and a bank's contribution to system‐wide risk. Specifically, we find that higher competition is associated with lower underwriting standards, less timely loan loss recognition, and a shift toward noninterest revenue. Further, we find that higher competition is associated with higher stand‐alone risk of individual banks, greater sensitivity of a bank's downside equity risk to system‐wide distress, and a greater contribution by individual banks to downside risk of the banking sector.     

USING BIDDING STATISTICS TO PREDICT COMPLETED CONSTRUCTION COST

The completed cost of a competitively bid construction project often exceeds the original low bid. This paper presents two models to predict completed construction cost based upon characteristics of the submitted bids. Data on completed projects were obtained from New Jersey Department of Transportation for 298 highway construction projects. Median bid and normalized median absolute deviation (NMAD) were selected from various bid characteristics as the best predictors of completed construction cost. Regression and neural network models were developed from the data. Both models have similar utility to predict completed costs. Due to ease of use, the regression model is preferred over the neural network model.     

Poor relief,labourers’ households and living standards in rural England c.1770–1834: a Bedfordshire case study1

This article estimates the contribution of poor relief to the household economies of the labouring poor in the two case‐study communities of Campton and Shefford, east Bedfordshire, and thereby throws further light on the standard of living of workers during industrialization in the south and east. Utilizing the technique of nominal record linkage between poor law sources and family reconstitution for the period c.1770—c.1834, the article charts the growth in social welfare and estimates the proportion of inhabitants benefiting from regular relief payments, the changing family circumstances of recipients, and the proportion of total income made up by poor relief.