The Impact of Investor Protection Law on Corporate Policy: Evidence from the Blue Sky Laws

Recent studies have debated the impact of investor protection laws on firms’ corporate policies. I exploit the passage of state investor protection statutes (“blue sky laws”) in the U.S. in the early 20th century to estimate the effects of investor protection law on firm financing decisions and investment activity. Regression estimates indicate that the passage of investor protection statutes causes firms to pay out greater dividends, issue more equity, and grow in size. The introduction of investor protection law is also associated with improvements in operating performance and market valuations. Additional analysis suggests that alternative hypotheses for the measured changes in corporate policy and performance have limited explanatory power. Overall, the evidence is strongly supportive of theoretical models which predict that investor protection laws have a significant impact on firm financing and investment policy.Corporate Governance; Investor Protection; Law and Finance; law; finance; empirical corporate finance; financial institutions;

Labor Unemployment Risk and Corporate Financing Decisions

This paper examines the impact of labor unemployment risk on corporate financing decisions. Theory suggests that firms choose conservative financial policies partly as a means of mitigating worker exposure to unemployment risk. Using changes in state unemployment insurance benefit laws as a source of variation in the costs borne by workers during layoff spells, we explore the connection between unemployment risk and the corporate financing decisions of public firms in the United States. We find that increases in legally mandated unemployment benefits lead to increases in corporate leverage. The impact of reduced unemployment risk on financial policy is especially strong for firms that have greater layoff separation rates, labor intensity, and financing constraints. The estimated premium required to compensate workers for unemployment risk due to financial distress is about 57 basis points of firm value for a BBB-rated firm. These findings suggest that labor market frictions have a significant impact on corporate financing decisions

Labor unemployment risk and corporate financing decisions

This paper presents evidence that firms choose conservative financial policies partly to mitigate workers' exposure to unemployment risk. We exploit changes in state unemployment insurance laws as a source of variation in the costs borne by workers during layoff spells. We find that higher unemployment benefits lead to increased corporate leverage, particularly for labor-intensive and financially constrained firms. We estimate the ex ante, indirect costs of financial distress due to unemployment risk to be about 60 basis points of firm value for a typical BBB-rated firm. The findings suggest that labor market frictions have a significant impact on corporate financing decisions

The impact of investor protection law on corporate policy and performance: evidence from the blue sky laws

Recent studies have debated the impact of investor protection law on corporate behavior and value. I exploit the staggered passage of state securities fraud statutes (“blue sky laws”) in the United States to estimate the causal effects of investor protection law on firm financing decisions and investment activity. The statutes induce firms to increase dividends, issue equity, and grow in size. The laws also facilitate improvements in operating performance and market valuations. Overall, the evidence is strongly supportive of theoretical models that predict investor protection law has a significant impact on corporate policy and performance

Wave-Guiding In Substrate Supported And Freestanding Films Of Insoluble Conjugated Polymers

We demonstrate that waveguiding is possible in substrate supported and freestanding films of insoluble conjugated polymers. Photoresist gratings were used to couple 1.06-1.53 mum radiation into the waveguides allowing the refractive indices, the birefringence, and the linear losses to be measured

Early Sexual Trauma Exposure and Neural Response Inhibition in Adolescence and Young Adults: Trajectories of Frontal Theta Oscillations During a Go/No-Go Task

Objective Trauma, particularly when experienced early in life, can alter neurophysiologic and behavioral development, thereby increasing risk for substance use disorders and related psychopathology. However, few studies have empirically examined trauma using well-characterized developmental samples that are followed longitudinally. Method The association of assaultive, non-assaultive, and sexual assaultive experiences before 10 years of age with developmental trajectories of brain function during response inhibition was examined by measuring electrophysiologic theta and delta oscillations during no-go and go conditions in an equal probability go/no-go task. Data were drawn from the Collaborative Study of the Genetics of Alcoholism (COGA) prospective cohort, composed of offspring from high-risk and comparison families who were 12 to 22 years old at enrollment, with follow-ups at 2-year intervals since 2004. In addition, other important predictors of neurophysiologic functioning (eg, substance use, impulsivity, and parental alcohol use disorders) were investigated. Moreover, associations of neurophysiologic functioning with alcohol and cannabis use disorder symptom counts and externalizing and internalizing psychopathology were examined. Results Individuals exposed to sexual assaultive trauma before 10 years of age had slower rates of change in developmental trajectories of no-go frontal theta during response inhibition. Importantly, effects remained significant after accounting for exposure to other traumatic exposures, such as parental history of alcohol use disorder and participants’ substance use, but not measures of impulsivity. Further, slower rates of change in no-go frontal theta adolescent and young adult development were associated with increased risk for alcohol use disorder symptoms and internalizing psychopathology, but not for cannabis use disorder symptoms or externalizing psychopathology. Conclusion Childhood sexual assault is associated with atypical frontal neurophysiologic development during response inhibition. This could reflect alterations in frontal lobe development, synaptic pruning, and/or cortical maturation involving neural circuits for inhibitory control. These same areas could be associated with increased risk for young adult alcohol use disorder symptoms and internalizing psychopathology. These findings support the hypothesis that changes in neurocognitive development related to early sexual trauma exposure could increase the risk for mental health and substance use problems in young adulthood

Association of Polygenic Liability for Alcohol Dependence and EEG Connectivity in Adolescence and Young Adulthood

Differences in the connectivity of large-scale functional brain networks among individuals with alcohol use disorders (AUD), as well as those at risk for AUD, point to dysfunctional neural communication and related cognitive impairments. In this study, we examined how polygenic risk scores (PRS), derived from a recent GWAS of DSM-IV Alcohol Dependence (AD) conducted by the Psychiatric Genomics Consortium, relate to longitudinal measures of interhemispheric and intrahemispheric EEG connectivity (alpha, theta, and beta frequencies) in adolescent and young adult offspring from the Collaborative Study on the Genetics of Alcoholism (COGA) assessed between ages 12 and 31. Our findings indicate that AD PRS (p-threshold < 0.001) was associated with increased fronto-central, tempo-parietal, centro-parietal, and parietal-occipital interhemispheric theta and alpha connectivity in males only from ages 18-31 (beta coefficients ranged from 0.02-0.06, p-values ranged from 10-6-10-12), but not in females. Individuals with higher AD PRS also demonstrated more performance deficits on neuropsychological tasks (Tower of London task, visual span test) as well as increased risk for lifetime DSM-5 alcohol and opioid use disorders. We conclude that measures of neural connectivity, together with neurocognitive performance and substance use behavior, can be used to further understanding of how genetic risk variants from large GWAS of AUD may influence brain function. In addition, these data indicate the importance of examining sex and developmental effects, which otherwise may be masked. Understanding of neural mechanisms linking genetic variants emerging from GWAS to risk for AUD throughout development may help to identify specific points when neurocognitive prevention and intervention efforts may be most effective