Funeral Price Disclosure in an Urban Market

During telephone interviews in which funeral directors were asked to provide the least expensive option for a fixed list of services, substantial price dispersion among providers was found. Prospective customers were quoted higher prices than were quoted to consumer researchers. The cost of cremation was one-fifth that of earth burial, and cemetery charges amounted to more than one-half of earth burial costs. A memorial society member was quoted lower prices than were available to private customers of the same firm, and lower prices in relation to other funeral providers. These surveys were supported in an examination of actual funeral bills for memorial society members.     

The Debt‐Payment‐to‐Income Ratio as an Indicator of Borrowing Constraints: Evidence from Two Household Surveys

Liquidity constraints have been proposed as an important explanation for deviations from the rational expectations/permanent income hypothesis. This paper introduces to the liquidity constraint literature the ratio of a household's debt payments to its disposable personal income, the debt service ratio (DSR). We find that a household with a high DSR is significantly more likely to be turned down for credit than other households. Also, the consumption growth of likely constrained households, identified using the DSR along with the liquid‐asset‐to‐income ratio, is significantly more sensitive to past income than that of other households, confirming the DSR's value in identifying constrained households.     

Decision‐Making about Workplace Disputes: A Policy‐Capturing Study of Employment Arbitrators,Labor Arbitrators,and Jurors

Firms are increasingly turning to the controversial practice of employment arbitration to resolve workplace disputes. Yet little is know about how decisions are made by employment arbitrators or how their decisions compare to those made in traditional dispute‐resolution forums. This study uses a policy‐capturing design and hierarchical linear modeling to compare how decisions about termination cases are made by employment arbitrators, labor arbitrators, and jurors. The results indicate significant differences in the overall willingness to uphold termination, with labor arbitrators being the most likely to rule in favor of the employee, followed by jurors, employment arbitrators judging statutory and for‐cause claims, and employment arbitrators judging statutory‐only claims. Significant differences were also observed between categories of decision makers in the weight given to procedural compliance, evidence of discrimination, employee work history, and stress‐inducing personal circumstances.     

Venture Capitalist Certification in Initial Public Offerings

This paper provides support for the certification role of venture capitalists in initial public offerings. Consistent with the certification hypothesis, a comparison of venture capital backed IPOs with a control sample of nonventure capital backed IPOs from 1983 through 1987 matched as closely as possible by industry and offering size indicates that venture capital backing results in significantly lower initial returns and gross spreads. In effect, the presence of venture capitalists in the issuing firms serves to lower the total costs of going public and to maximize the net proceeds to the offering firm. In addition, we document that venture capitalists retain a significant portion of their holdings in the firm after the IPO.     

Why Do U.S. Firms Hold So Much More Cash than They Used To?

The average cash-to-assets ratio for U.S. industrial firms more than doubles from 1980 to 2006. A measure of the economic importance of this increase is that at the end of the sample period, the average firm can retire all debt obligations with its cash holdings. Cash ratios increase because firms' cash flows become riskier. In addition, firms change: They hold fewer inventories and receivables and are increasingly R&D intensive. While the precautionary motive for cash holdings plays an important role in explaining the increase in cash ratios, we find no consistent evidence that agency conflicts contribute to the increase.     

China R&D: A High-Tech Field of Dreams1

This study highlights the rapid pace at which new commercial research and development (R&D) centres are being established by foreign investors in the People's Republic of China (PRC). It recounts the motivations behind this growing trend, subtle changes in this trend over time, some lessons learned, and asks what it could mean for future Asia-Pacific relations. The essay emphasizes China's distinct role in attracting R&D through its extensive investment in municipal services, infrastructure and regulatory reforms as well as policy incentives that have helped to spur ever-greater levels of foreign R&D investment over the past decade.