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Articles 1 - 8 of 8
Full-Text Articles in Social and Behavioral Sciences
Price Exuberance And Contagion Across Housing Markets: Evidence From Us Metropolitan Areas, Md Shahedur R. Chowdhury, Damian S. Damianov, Diego Escobari
Price Exuberance And Contagion Across Housing Markets: Evidence From Us Metropolitan Areas, Md Shahedur R. Chowdhury, Damian S. Damianov, Diego Escobari
Economics and Finance Faculty Publications and Presentations
Contagion occurs when cross-market correlation increases because of a shock to one market. Identifying shocks as episodes of house price exuberance, we provide evidence for contagion effects among the largest metropolitan markets in the US. We find that changes in income, interest rates, and unemployment also create contagion effects. These empirical findings are consistent with a model in which shocks to house prices and economic variables relaxes households down payment constraints and increases household mobility and housing demand. These effects are established in an equilibrium framework in which house prices and household choices are determined endogenously, and we account for …
Systematic And Idiosyncratic Risks Of The U.S. Airline Industry, Rafiqul Bhuyan, André Varella Mollick, Md Ruhul Amin
Systematic And Idiosyncratic Risks Of The U.S. Airline Industry, Rafiqul Bhuyan, André Varella Mollick, Md Ruhul Amin
Economics and Finance Faculty Publications and Presentations
Understanding the risky nature of the airline industry has received attention in the tourism literature from separate angles. Although the systematic risk of the airline industry has been examined before, idiosyncratic risk has largely been ignored. This study fills this gap in the tourism literature by investigating the effect of passengers’ air travel on systematic and idiosyncratic risks of the U.S. airline industry. Using historical air travel data and utilizing both OLS and fixed-effect models, this paper documents negative relationships between the occupancy of airline seats and idiosyncratic risks for 21 U.S. airline companies. This negative effect of occupancy is …
Residual State Ownership, Foreign Ownership And Firms' Financing Patterns, Yu Liu, Jian Xu
Residual State Ownership, Foreign Ownership And Firms' Financing Patterns, Yu Liu, Jian Xu
Economics and Finance Faculty Publications and Presentations
Would different types of ownerships affect each other's effect on firm behavior? We investigate the effect of residual state ownership, foreign ownership, and the interaction between the two on firms' financing patterns, employing the World Bank Enterprise Survey (WBES) dataset, which covers over 130 thousand firms in 139 economies from 2006 to 2017. We find that neither firms with residual state ownership only nor firms with foreign ownership only are positively related with external finance. In comparison, firms with both state and foreign ownerships are associated with higher external finance. The coefficient of the state-foreign interaction is both statistically and …
Laissez-Faire, Social Networks, And Race In A Pandemic, Roland Pongou, Guy Tchuente, Jean-Baptiste Tondji
Laissez-Faire, Social Networks, And Race In A Pandemic, Roland Pongou, Guy Tchuente, Jean-Baptiste Tondji
Economics and Finance Faculty Publications and Presentations
We study the effects of race, network centrality, and policies that tolerate some level of virus spread (laissez-faire) on COVID-19 deaths in nursing homes in the United States. Our analysis uses unique data on nursing home networks and calibration-based estimates of states' preferences for health relative to short-term economic gains. Our findings suggest that laissez-faire policies increase deaths. Nursing homes with a larger share of Black residents experience more deaths, but they are less vulnerable to laissez-faire policies, especially when not central in social networks. Our findings highlight significant interactions between COVID-19 policies, race, and network structure among US seniors.
Overconfidence And Welfare In A Differentiated Duopoly, Jean-Baptiste Tondji
Overconfidence And Welfare In A Differentiated Duopoly, Jean-Baptiste Tondji
Economics and Finance Faculty Publications and Presentations
We examine whether owners' decisions to delegate corporate responsibilities to overconfident managers improve welfare. We develop a dynamic model with product differentiation, where firms compete in cost-reducing research and development (R&D) and output. Before firms compete, each owner makes a strategic decision whether to hire an overconfident manager. The results reveal that when R&D technology is less productive, owners hire overconfident managers who overinvest in cost-reducing R&D. These strategic decisions improve welfare when spillovers are small and R&D productivity is low, or spillovers are large, or product differentiation is strong.
Stable Allocations Of Vaccines In A Political Economy, Zephirin Nganmeni, Roland Pongou, Bertrand Tchantcho, Jean-Baptiste Tondji
Stable Allocations Of Vaccines In A Political Economy, Zephirin Nganmeni, Roland Pongou, Bertrand Tchantcho, Jean-Baptiste Tondji
Economics and Finance Faculty Publications and Presentations
We develop a theory that addresses the existence of stable vaccine allocations in a political economy where vaccination offers both private and social benefits. These are allocation policies that a political leader can enforce without losing their popularity. We show that a stable allocation may not exist if vaccine supply is sufficiently low relative to the number of individuals eligible to receive a dose. We then characterize the minimum number of vaccine doses guaranteeing the existence of a stable vaccine allocation. Moreover, when individuals have unequal voting rights in the political economy, stable allocations favor those with greater voting power. …
The Effect Of Foreign Institutional Ownership On Corporate Tax Avoidance: International Evidence, Iftekhar Hasan, Incheol Kim, Haimeng Teng, Qiang Wu
The Effect Of Foreign Institutional Ownership On Corporate Tax Avoidance: International Evidence, Iftekhar Hasan, Incheol Kim, Haimeng Teng, Qiang Wu
Economics and Finance Faculty Publications and Presentations
We find that foreign institutional investors (FIIs) reduce their investee firms’ tax avoidance. We provide evidence that the effect is driven by the institutional distance between FIIs’ home countries/regions and host countries/regions. Specifically, we find that the effect is driven by the influence of FIIs from countries/regions with high-quality institutions (i.e., common law, high government effectiveness, and high regulatory quality) on investee firms located in countries/regions with low-quality institutions. Furthermore, we show that the effect is concentrated on FIIs with little experience in the investee countries/regions or FIIs with stronger monitoring incentives. Finally, we find that FIIs are more likely …
Unintended Consequences Of The Dodd–Frank Act On Credit Rating Risk And Corporate Finance, Bina Sharma, Binay K. Adhikari, Anup Agrawal, Bruno R. Arthur, Monika K. Rabarison
Unintended Consequences Of The Dodd–Frank Act On Credit Rating Risk And Corporate Finance, Bina Sharma, Binay K. Adhikari, Anup Agrawal, Bruno R. Arthur, Monika K. Rabarison
Economics and Finance Faculty Publications and Presentations
Prior research finds that Dodd–Frank Act’s regulations on credit rating agencies (CRAs) increase rated firms’ risk of rating downgrades, regardless of their credit quality. Our difference-in-difference estimates suggest that after Dodd–Frank, low-rated firms, which face steep costs from a further downgrade, significantly reduce their debt issuance and investments compared to similar unrated firms. Our results are not driven by credit supply or the financial crisis. They reveal an unintended consequence of Dodd–Frank: Greater regulatory pressure on CRAs leads to negative spillover effects on firms concerned about credit ratings, regardless of their credit quality.