Research Papers
“Revisiting Corporate Governance Regulation: Firm Heterogeneity and the Market for Corporate Domicile” (Job Market Paper) [04.22.09.pdf]
TThis paper uses a discrete choice framework to analyze state design and firm choice of the implications of incorporation: corporate governance laws, corporate taxes and court structure. Firms -- differentiated on ownership, management, industry concentration, financial profile and unobservable dimensions -- freely choose their preferred state of incorporation or reincorporation. The revealed preference embedded in this observable choice is used as window into the heterogeneous preferences within and across firms, yielding several findings: For example, I find, surprisingly, that firms are very responsive to incorporation and franchise taxes. In addition, on average, firms like antitakeover statutes, but, consistent with an agency story, firms with an institutional shareholder block and venture capital backed firms dislike them. On average, firms dislike mandatory governance statutes restricting managerial power and facilitating the representation of minority shareholders, but these laws are less restrictive for the choice of firms in concentrated industries. All firms dislike well functioning courts, consistent with a litigation deterrence motive. The recovered firm preferences are then taken to the simulation of recently proposed federal reforms aimed at centralizing the domicile implications and restricting firm choice. They are also related to the documented differential returns earned by firms with better internal governance in the 1990s, as well as to other (new) trading strategies that would have yielded abnormal returns in the 2000s.
“Estimation and Simulation of A Dynamic Oligopoly Game in the US Airline Industry: The Effects of Hubs, LCC and Mergers on Costs, Profits and Market Structure”
Airlines choose the domestic markets – city pairs – they serve and the prices they charge given the structure of their network and the networks of rival airlines. I cast this choice into a dynamic oligopoly entry game to recover the fixed and variable operating costs, entry costs, and profits, using a panel of 20 quarters of DB1B and T-100 Domestic Segment Data. These estimates are then used to analyze the strategic and cost saving effects of hubs, and the disciplinary effects of LCC entry and actual or potential bankruptcy. I then use these estimates to simulate the effects of slot controls and of the currently debated and recently announced mergers between some of the major players in US domestic airline markets.
“Marginal Effects in Endogenous Binary Outcome Data: The Bias and Caveats in using Linear Probability Models “ (with Whitney Newey)
Linear probability models are commonly used in models with binary outcome data with or without endogeneity. In this work, we develop a test for the statistical bias in these estimators. Then, using both real and simulated data, we show that the estimators produced by linear probability models can perform poorly across a range of data generating processes. Our results provide useful guidance to practitioners in their choice of probability models and endogeneity correction techniques.
“Federal Appeals: Selection, Outcome and Predictability”
Using data on all federal civil trial and appellate cases from 1992-2005, I show that appeals are generally rejected and have negative expected net present value, and that appellate outcomes can be further related to the trial decision being by judge or jury, the identity of the prevailing party (plaintiff or defendant, US or private), and the form of representation. These factors do not, however, explain the types of cases more likely to be appealed. I use these results to inform and estimate a structural model for the selection of cases for appeal, i.e, to characterize the cases and the parties that fail at reaching a socially (and often privately) cheaper out of court settlement. This model is then used to propose and evaluate appellate and judicial selection reforms.