Municipal bond insurance and the U.S. drinking water crisis

We show that the collapse of the municipal bond insurance industry plays an important, but previously overlooked, role in driving regional variation in U.S. drinking water pollution. Public water infrastructure has traditionally been financed using municipal debt partly backed by a small number of monoline insurers. Starting in the 1990's, some - but not all - of these insurers began insuring structured financial products unrelated to water infrastructure. After these products crashed in value in 2007, several bond insurers ceased to insure new debt issues. We show that municipalities that were previously more reliant on relationships with adversely affected insurers subsequently face higher borrowing costs. These municipalities then reduce their borrowing and scale back investments in water infrastructure, leading to increased water pollution. The data suggest that market failures in the municipal bond insurance industry explain 32% of the relative rise in U.S. drinking water pollution since 2007

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;

Private Equity, Technological Investment, and Labor Outcomes

This paper uses novel data on the employment histories of a large fraction of the US workforce to present empirical evidence that corporate technological investment has a significant impact on workers’ subsequent labor market outcomes. Exploiting leveraged buyouts as shocks to firms’ production technologies, we find that employees retained after a private equity acquisition experienced increased long run employment tenures, reductions in short run unemployment durations, and higher rates of within-occupation mobility. The evidence supports the view that private equity investment, by upgrading the technology of the firm, imparts valuable and transferable human capital to retained workers. The effects are especially pronounced for workers in occupations complementary to IT-enabled work practices, and for those who are employed at the acquired firm for longer durations before exit. The findings suggest that employers’ investments in information technology are a critical determinant of human capital stock and subsequent labor outcomes for workers

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

Corporate Governance Objectives of Labor Union Shareholders: Evidence from Proxy Voting

Labor union shareholders have become increasingly vocal in matters of corporate governance, however, their motives have been subject to much debate in the academic literature and business press. I examine the proxy votes of AFL-CIO pension funds in director elections of 504 companies from 2003 to 2006. Using the 2005 AFL-CIO breakup as a source of exogenous variation in the union affiliations of workers across firms, I find that AFL-CIO affiliated shareholders are significantly more supportive of director nominees once the AFL-CIO no longer represents workers or represents significantly fewer workers at a given firm. Other institutional investors do not exhibit the same changes in voting behavior. This difference suggests that labor relations affect the voting patterns of some union shareholders. I also find that AFL-CIO funds are more likely to vote against directors of firms in which there is greater frequency of plant-level conflict between labor unions and management during collective bargaining and union member recruiting. The sensitivity of director votes to union conflict, however, decreases at firms in which the AFL-CIO no longer represents workers or represents significantly fewer workers. The evidence suggests that AFL-CIO affiliated shareholders vote against directors partly to support union worker interests rather than increase shareholder value alone

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

An overview of information extraction techniques for legal document analysis and processing

In an Indian law system, different courts publish their legal proceedings every month for future reference of legal experts and common people. Extensive manual labor and time are required to analyze and process the information stored in these lengthy complex legal documents. Automatic legal document processing is the solution to overcome drawbacks of manual processing and will be very helpful to the common man for a better understanding of a legal domain. In this paper, we are exploring the recent advances in the field of legal text processing and provide a comparative analysis of approaches used for it. In this work, we have divided the approaches into three classes NLP based, deep learning-based and, KBP based approaches. We have put special emphasis on the KBP approach as we strongly believe that this approach can handle the complexities of the legal domain well. We finally discuss some of the possible future research directions for legal document analysis and processing

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

Private equity and workers’ career paths: the role of technological change

We analyze a new dataset on workers’ career paths to examine whether private equity (PE) investments can have positive spillover effects on workers. We study leveraged buyouts in the context of recent information technology (IT) diffusion, and find evidence supporting the argument that many employees of companies acquired by PE investors gain transferable, IT-complementary human capital. Our estimates indicate that these workers experience increases in both long-run employability and wages relative to what they would have realized in the absence of PE investment. The findings underscore PE’s role in mitigating the effects of workforce skill obsolescence resulting from technological change