Upcoming Seminars

5 February

Professor Robert Haveman

University of Wisconsin-Madison

The Process of Social Mobility in the United States: A Glimpse Inside the Black Box

5 February

Professor Barbara Wolfe

University of Wisconsin-Madison

The Link Between Tribal Gaming and the Health Status and Behaviors of American Indians

9 February

Professor Winand Emons

University of Bern

Non-comparative versus Comparative Advertising as a Quality Signal

Abstract:

Two firms produce a product with a horizontal and a vertical characteristic. We call the vertical characteristic quality. The difference in the quality levels determines how the firms share the market. Firms know the quality levels, consumers do not. Under noncomparative advertising a firm may signal its own quality. Under comparative advertising firms may signal the quality differential. In both scenarios the firms may attempt to mislead at a cost. If firms advertise, in both scenarios equilibria are revealing. Under comparative advertising the firms never advertise together which they may do under non-comparative advertising.

5 March

Dr Schaltegger Christoph

University of St. Gallen

Child Health and the Income Gradient: Evidence from Australia

Abstract:

In this paper, we provide empirical evidence for the influence of income taxes on the choice of residence of households on the local level. The fact that Swiss communities can individually set tax multipliers shifting the progressive tax scheme which is fixed on the cantonal (state) level enables to study the effect of differences in income taxation on the locational choice of households within a small and economically and culturally homogeneous region. Using panel IV regressions covering the years 1991-2003 and 171 communities in the Swiss canton of Zurich, we find substantial evidence for Tiebout sorting.

12 March

Dr Rasheda Khanam

University of Queensland

Tax Competition and Income Sorting: Evidence from the Zurich Metropolitan Area

Abstract:

The positive relationship between household income and child health is well documented in the child health literature but the precise mechanisms via which income generates better health and whether the income gradient is increasing in child age are not well understood. This paper presents new Australian evidence on the child health-income gradient. We use data from the Longitudinal Study of Australian (LSAC), which involved two waves of data collection for children born between March 2003 and February 2004 (B-Cohort), and between March 1999 and February 2000 (K-Cohort). This data set allows us to test the robustness of some of the findings of the influential studies of Case et al. (2002) and J.Currie and Stabile (2003), and a recent study by A.Currie et al. (2007) using a sample of Australian children. The richness of the LSAC data set also allows us to conduct further exploration of the determinants of child health. Our results reveal an increasing income gradient by child age using similar covariates to Case et al. (2002). However, the income gradient disappears if we include a rich set of controls. Our results indicate that parental health and, in particular, the mother's health plays a significant role, reducing the income coefficient to zero.

19 March

Professor Ron Giammarino

University of British Columbia

Leaders, Followers and Risk Dynamics in Industry Equilibrium

Abstract:

We examine a model in which two firms strategically compete in a duopolistic product market. Firms produce a homogenous product and face stochastic industry demand. Each firm has a single option either to expand or contract capacity, and hence output. In this setup we analyse the risk characteristics of industries as well as single firms and look at corresponding asset price dynamics. We focus on sequential exercise of options. We find that strategic competition in the product market is risk reducing. Irrespective of expansion or contraction the presence of strategically interacting rivals causes firm’s risk to decline. This is the consequence of a simple hedging argument. Moreover, we find that own firm and industry characteristics have opposite risk implications in case of expansion and contraction. Empirical evidence, however, is that a strong negative relationship exists between firm and rival risk measures.

26 March

Dr Shams Pathan

Bond University

Endogenously Chosen Board Structure: Evidence from the US Bank Holding Companies

Abstract:

This paper examines the trends and endogenous formation of bank board structure (size, independence, CEO duality and gender diversity) for a sample of 212 bank holding companies from 1997 to 2004. Overall, the results show that the costs and benefits of boards monitoring and advising roles could explain bank board structure with caveats. For example, due to regulatory nature and comparatively intensive scrutiny of bank directors, I argue that bank managers may have less control over the directors’ selection process. Thus, bank board independence may not be the outcome of negotiation with CEOs. Consistent with this view, I find that bank CEOs do not effect bank board independence. The trend analysis also provides some important results. For example, in contrast to corporate firm evidence, I find that board size fell over the sample period for large and medium banks while board size was relatively flat for small banks. The results are robust to different estimation specifications. These results have important policy implications for bank regulators and investors.

16 April

Dr Patrick Verwijmeren

University of Melbourne

Convertible Security Design and Contract Innovation

Abstract:

This paper studies convertible security design for a sample of 814 issuers over the years 2000 through 2007. We examine the determinants of the choice of fixed income claim and the method of payment using a nested logit regression model. We find that firms select security designs that reduce corporate income taxes, minimize refinancing costs, and help mitigate managerial discretion costs. Convertible debt issuers frequently select payment methods that permit them to report higher diluted earnings per share. Some of these firms also adopt simultaneous financial strategies (share repurchase programs and call spread overlays) that inflate reported earnings. Firms that adopt these earnings management strategies are more likely to choose certain investment banks.

30 April

Dr Bryan Youngsur Lim

University of Melbourne

The Short-Sales Ban and the Options Market

Abstract:

We examine the effect of the Sep 2008 ban on short sales of specified U.S. financial stocks on the trading behavior in the options market. While theory suggests that long positions in put options are substitutes for short positions in the underlying stock, the ban appears to have substantially driven up the price of trading in options, to the extent that trading activity decreased for both puts and calls during the ban period. On average, the relative spread of an option increases and
the daily traded volume decreases during the ban period. Additionally, a drop in the incidence of put-call parity violations coincides with the start of the ban and
continues beyond the ban’s expiration.

30 April

Professor Simon P. Anderson

University of Virginia

Push-Me Pull-You: Comparative Advertising in
the OTC Analgesics Industry

Abstract:

We estimate the incentives to get ahead by hurting rivals in the context of comparative advertising. To do this, we watched all ads broadcast by the US OTC analgesics industry for a 5-year period and coded them according to which brands target which rival brands in comparisons. Data on how much was spent airing each ad then allows us to determine the dollar amounts spent in these attacks. We take these data to a structural model of targeting in which comparative advertising has a direct effect of pushing up own brand perception along with pulling down the brand images of targeted rivals. Brands’ optimal choices of advertising mix yield simple oligopoly equilibrium relations between advertising levels (for different types of advertising) and market shares. These we estimate by using as instruments the prices of equivalent generic drugs; and we use medical news shocks as further explanatory variables. We estimate that each dollar spent on comparative advertising has the same direct effect as 75 cents spent on non-comparative (purely direct) advertising: the remainder is attributable to pulling down rivals, and there is strong evidence of damage to targets