http://hdl.handle.net/2027.42/35324 http://deepblue.lib.umich.edu/retrieve/187574 http://hdl.handle.net/2027.42/35324 Search the Channel search http://deepblue.lib.umich.edu/simple-search http://hdl.handle.net/2027.42/60210 Title: Costly external equity: Implications for asset pricing anomalies <br/> <br/>Author(s): Li, Erica, X. N. <br/> <br/>Abstract: We document new evidence that the magnitude of the investment anomaly, the asset growth anomaly, the value premium, and the net stock issues puzzle is higher in financially more constrained firms than that in financially less constrained firms. We interpret the evidence using an investment-based asset pricing model augmented with costly external finance. Intuitively, financial frictions make marginal costs of investment more sensitive to investment in more constrained firms, giving rise to a stronger negative relation between investment and the discount rate. http://hdl.handle.net/2027.42/58723 Title: Firm R&D Behavior and Evolving Technology in Established Industries <br/> <br/>Author(s): Posen, Hart E. <br/> <br/>Abstract: One of the key mechanisms of firms' strategic renewal is R&D, and a key driver of the intensity of R&D is industry context. A number of theories develop propositions linking industry factors to firm R&D behavior, but these theories lack consensus. To date empirical tests have been unable to resolve the competing predictions due to lack of time-varying measures of technology. We create new measures for technology then conduct a test of the competing theories. Our results indicate that the data best match a model of innovative behavior in which firms invest in R&D principally to regain eroded advantage rather than to pursue the new frontier. http://hdl.handle.net/2027.42/58722 Title: Supply Disruptions, Asymmetric Information and a Backup Production Option <br/> <br/>Author(s): Beil, Damian R. <br/> <br/>Abstract: We study a manufacturer that faces a supplier privileged with private information about supply disruptions. We investigate how risk-management strategies of the manufacturer change, and examine whether risk-management tools are more, or less, valuable, in the presence of such asymmetric information. We model a supply chain with one manufacturer and one supplier, in which the supplier's reliability is either high or low and is the supplier's private information. Upon disruption the supplier chooses between paying a penalty to the manufacturer for the shortfall and using backup production to fill the manufacturer's order. Using mechanism design theory, we derive the optimal contract menu offered by the manufacturer. We find that information asymmetry may cause the less reliable supplier type to stop using backup production while the more reliable supplier type continues to use it. Additionally, the manufacturer may stop ordering from the less reliable supplier type altogether. The value of backup production for the manufacturer is not necessarily larger under symmetric information and, for the more reliable supplier type, it could be negative . The manufacturer is willing to pay the most for information when backup production is moderately expensive. The value of information may increase as supplier types become uniformly more reliable. Thus, higher reliability need not be a substitute for better information. http://hdl.handle.net/2027.42/58610 Title: Sustainability, Faith, and the Market <br/> <br/>Author(s): Sandelands, Lloyd E. <br/> <br/>Abstract: Sustainability has become a major force within today's market environment. But, there remains much confusion about what exactly the term means and much dissatisfaction at the limited successes that have been achieved. In this paper, we argue that the idea of sustainability that today informs academic and policy debate about economic development is too small. The solutions it proposes draw on the same logic and beliefs that created the problem in the first place, and will be limited in its ability to achieve its ends. Thus, present calls for sustainability have neither the vision nor the authority to sustain us in the relationships that define our human being; specifically our relationship to self, our relationship to others in society, and our relationship to nature. We argue for a bigger idea of sustainability that puts these relationships into their true context of our being in God. In particular, we identify the idea of sustainability with four principles of Catholic theology--which we label anthropic, relational, ethical, and divine love--and we identify the practice of sustainable development with eight principles of Catholic social doctrine--which the Church labels unity and meaning, common good, universal destination, subsidiarity, participation, solidarity, social values, and love. With this bigger idea of sustainability, which lies at the center of Christian teaching, we imagine that public discussion about sustainability can be transformed--from a gloomy and contentious movement based on a politics of fear, to a bright and cooperative humanism based on a politics of hope. At the end of the day we learn what we should perhaps have known all along--that we are sustained by faith.