Measuring market response to regulation of the cable TV industry

During the 1988–1990 period, the cable television industry was subject to a number of regulatory events. These centered on possible reregulation of rates for basic service and reduction of entry barriers for potential competitors. Using the event study methodology on a portfolio of cable firms, we find evidence that news of no reregulation caused significant positive abnormal returns. News of reregulation caused insignificant negative abnormal returns. These findings provide some support for the traditional consumer protection theory of regulation. News related to entry barriers generally had no significant effect on returns, which suggests that elements of natural monopoly may exist in the industry.     

The location of initial public offering headquarters: An empirical examination

We study the headquarters location of U.S. firms with an initial public offering (IPO) over the 2001–2011 period. Specifically, we examine IPO intensity, defined as IPOs in a state scaled by state population. We find that IPO intensity is positively related to various measures of education. We also find that IPO intensity is positively related to an economic climate (freedom) index, degree of urbanization, and whether a state contains a financial center. Some economists see IPOs as a driver of economic growth. Thus, our results suggest factors that government officials may consider to increase the number of IPOs headquartered in their states.     

Rebecca Henderson: Reimagining capitalism in a world on fire

Business Economics -     

CAN P.S. 27 TURN A PROFIT? PROVISION OF PUBLIC EDUCATION BY FOR‐PROFIT SUPPLIERS

School districts in the United States have begun to use for-profit contractors to provide management and instructional services. Studies of this phenomenon are limited because this alternative to public provision is relatively new. This article begins to fill the void by examining the conditions under which contractors can be financially viable and can improve quality. Also considered is the potential role of contractors in other policies to restructure public education.     

Gauging the Financial Capability of Americans

There is an increasing interest in the economic and financial knowledge of the public. Former Federal Reserve Chairmen Greenspan and Bernanke often stressed the importance of improved economic and financial knowledge of the general public. Recent survey results from the 2012 National Financial Capability Study provide a rich source of information on the state of financial capability of Americans. In this paper we examine the actual knowledge of individuals, investigate how they self-assess their financial capability and knowledge, and analyze the way these relate to financial outcomes. We also examine the way these measures relate to demographic variables. We find that there is room for improvement in financial knowledge, decisions, and capability, which varies among demographic groups and suggest measures for such improvement.     

Event Studies of Regulation and New Results on the Effect of the Cigarette Advertising Ban

Questions concerning the effects of regulation on stock returns are important to regulators and investors. Analysts must carefully design and interpret tests of hypotheses regarding these effects because of the nature of the regulatory process and financial markets. I discuss the way to test for the impact of regulation on firm value and required return in an event study. I illustrate with an examination of the 1971 radio and television cigarette advertising ban, and find results at odds with those of an earlier study.     

Shareholder taxation and aggregate dividend payout: Evidence from the tax reform act of 1986

The effect of shareholder taxation on corporate dividend policy is a major controversy in financial economics. The Tax Reform Act of 1986 eliminated the statutory tax disadvantage of dividends versus long-term capital gains for individual shareholders. Using aggregate time series data I find evidence that corporate dividend payout has become more generous in the period after tax reform.