Snow and leverage

Using a sample of highly (over-)leveraged Austrian ski hotels undergoing debt restructurings, we show that reducing a debt overhang leads to a significant improvement in operating performance (return on assets, net profit margin). In particular, a reduction in leverage leads to a decrease in overhead costs, wages, and input costs, and to an increase in sales. Changes in leverage in the debt restructurings are instrumented with Unexpected Snow, which captures the extent to which a ski hotel experienced unusually good or bad snow conditions prior to the debt restructuring. Effectively, Unexpected Snow provides lending banks with the counterfactual of what would have been the ski hotel's operating performance in the absence of strategic default, thus allowing to distinguish between ski hotels that are in distress due to negative demand shocks ("liquidity defaulters") and ski hotels that are in distress due to debt overhang ("strategic defaulters")

Does Corporate Governance Matter in Competitive Industries?

By reducing the fear of a hostile takeover, business combination (BC) laws weaken corporate governance and create more opportunity for managerial slack. Using the passage of BC laws as a source of identifying variation, we examine if such laws have a different effect on firms in competitive and non-competitive industries. We find that while firms in non-competitive industries experience a substantial drop in operating performance, firms in competitive industries experience virtually no effect. Though consistent with the general notion that competition mitigates managerial agency problems, our results are, in particular, supportive of the stronger Alchian-Friedman-Stigler hypothesis that managerial slack cannot exist, or survive, in competitive industries. When we examine which agency problem competition mitigates, we find evidence in favor of a “quiet-life” hypothesis. While capital expenditures are unaffected by the passage of BC laws, input costs, wages, and overhead costs all increase, and only so in non-competitive industries. We also conduct event studies around the dates of the first newspaper reports about the BC laws. We find that while firms in non-competitive industries experience a significant decline in their stock prices, firms in competitive industries experience a small and insignificant price impact

Capital and Labor Reallocation within Firms

We document how a positive shock to investment opportunities at one plant (“treated plant”) spills over to other plants within the same firm, but only if the firm is financially constrained. To provide the treated plant with resources, the firm's headquarters withdraws capital and labor from other plants, especially plants that are relatively less productive, not part of the firm's core industries, and located far away from headquarters. As a result of the resource reallocation, aggregate firm-wide productivity increases. We do not find evidence of capital or labor spillovers among plants of financially unconstrained firms

Proximity and Investment: Evidence from Plant-Level Data

Proximity to plants makes it easier for headquarters to monitor and acquire information about plants. In this article, I estimate the effects of headquarters’ proximity to plants on plant-level investment and productivity. Using the introduction of new airline routes as a source of exogenous variation in proximity, I find that new airline routes that reduce the travel time between headquarters and plants lead to an increase in plant-level investment of 8% to 9% and an increase in plants’ total factor productivity of 1.3% to 1.4%. The results are robust when I control for local and firm-level shocks that could potentially drive the introduction of new airline routes, when I consider only new airline routes that are the outcome of a merger between two airlines or the opening of a new hub, and when I consider only indirect flights where either the last leg of the flight (involving the plant’s home airport) or the first leg of the flight (involving headquarters’ home airport) remains unchanged. Moreover, the results are stronger in the earlier years of the sample period and for firms whose headquarters is more time-constrained. In addition, they also hold at the extensive margin, that is, when I consider plant openings and closures

Does Corporate Governance Matter in Competitive Industries?

By reducing the threat of a hostile takeover, business combination (BC) laws weaken corporate governance and increase the opportunity for managerial slack. Consistent with the notion that competition mitigates managerial slack, we find that while firms in non-competitive industries experience a significant drop in operating performance after the laws' passage, firms in competitive industries experience no significant effect. When we examine which agency problem competition mitigates, we find evidence in support of a "quiet-life" hypothesis. Input costs, wages, and overhead costs all increase after the laws' passage, and only so in non-competitive industries. Similarly, when we conduct event studies around the dates of the first newspaper reports about the BC laws, we find that while firms in non-competitive industries experience a significant stock price decline, firms in competitive industries experience a small and insignificant stock price impact.

Snow and Leverage

Using a sample of highly (over-)leveraged Austrian ski hotels undergoing debt restructurings, we show that reducing a debt overhang leads to a significant improvement in operating performance (return on assets, net profit margin). In particular, a reduction in leverage leads to a decrease in overhead costs, wages, and input costs, and to an increase in sales. Changes in leverage in the debt restructurings are instrumented with Unexpected Snow , which captures the extent to which a ski hotel experienced unusually good or bad snow conditions prior to the debt restructuring. Effectively, Unexpected Snow provides lending banks with the counterfactual of what would have been the ski hotel’s operating performance in the absence of strategic default, thus allowing to distinguish between ski hotels that are in distress due to negative demand shocks (“liquidity defaulters”) and ski hotels that are in distress due to debt overhang (“strategic defaulters”).

Does Corporate Governance Matter in Competitive Industries?

By reducing the fear of a hostile takeover, business combination (BC) laws weaken corporate governance and create more opportunity for managerial slack. Using the passage of BC laws as a source of identifying variation, we examine if such laws have a different effect on firms in competitive and non-competitive industries. We find that while firms in non-competitive industries experience a substantial drop in operating performance, firms in competitive industries experience virtually no effect. Though consistent with the general notion that competition mitigates managerial agency problems, our results are, in particular, supportive of the stronger Alchian-Friedman-Stigler hypothesis that managerial slack cannot exist, or survive, in competitive industries. When we examine which agency problem competition mitigates, we find evidence in favor of a “quiet-life” hypothesis. While capital expenditures are unaffected by the passage of BC laws, input costs, wages, and overhead costs all increase, and only so in non-competitive industries. We also conduct event studies around the dates of the first newspaper reports about the BC laws. We find that while firms in non-competitive industries experience a significant decline in their stock prices, firms in competitive industries experience a small and insignificant price impact

Global, regional, and national comparative risk assessment of 79 behavioural, environmental and occupational, and metabolic risks or clusters of risks, 1990-2015: a systematic analysis for the Global Burden of Disease Study 2015

SummaryBackground The Global Burden of Diseases, Injuries, and Risk Factors Study 2015 provides an up-to-date synthesis of the evidence for risk factor exposure and the attributable burden of disease. By providing national and subnational assessments spanning the past 25 years, this study can inform debates on the importance of addressing risks in context. Methods We used the comparative risk assessment framework developed for previous iterations of the Global Burden of Disease Study to estimate attributable deaths, disability-adjusted life-years (DALYs), and trends in exposure by age group, sex, year, and geography for 79 behavioural, environmental and occupational, and metabolic risks or clusters of risks from 1990 to 2015. This study included 388 risk-outcome pairs that met World Cancer Research Fund-defined criteria for convincing or probable evidence. We extracted relative risk and exposure estimates from randomised controlled trials, cohorts, pooled cohorts, household surveys, census data, satellite data, and other sources. We used statistical models to pool data, adjust for bias, and incorporate covariates. We developed a metric that allows comparisons of exposure across risk factors—the summary exposure value. Using the counterfactual scenario of theoretical minimum risk level, we estimated the portion of deaths and DALYs that could be attributed to a given risk. We decomposed trends in attributable burden into contributions from population growth, population age structure, risk exposure, and risk-deleted cause-specific DALY rates. We characterised risk exposure in relation to a Socio-demographic Index (SDI). Findings Between 1990 and 2015, global exposure to unsafe sanitation, household air pollution, childhood underweight, childhood stunting, and smoking each decreased by more than 25%. Global exposure for several occupational risks, high body-mass index (BMI), and drug use increased by more than 25% over the same period. All risks jointly evaluated in 2015 accounted for 57·8% (95% CI 56·6–58·8) of global deaths and 41·2% (39·8–42·8) of DALYs. In 2015, the ten largest contributors to global DALYs among Level 3 risks were high systolic blood pressure (211·8 million [192·7 million to 231·1 million] global DALYs), smoking (148·6 million [134·2 million to 163·1 million]), high fasting plasma glucose (143·1 million [125·1 million to 163·5 million]), high BMI (120·1 million [83·8 million to 158·4 million]), childhood undernutrition (113·3 million [103·9 million to 123·4 million]), ambient particulate matter (103·1 million [90·8 million to 115·1 million]), high total cholesterol (88·7 million [74·6 million to 105·7 million]), household air pollution (85·6 million [66·7 million to 106·1 million]), alcohol use (85·0 million [77·2 million to 93·0 million]), and diets high in sodium (83·0 million [49·3 million to 127·5 million]). From 1990 to 2015, attributable DALYs declined for micronutrient deficiencies, childhood undernutrition, unsafe sanitation and water, and household air pollution; reductions in risk-deleted DALY rates rather than reductions in exposure drove these declines. Rising exposure contributed to notable increases in attributable DALYs from high BMI, high fasting plasma glucose, occupational carcinogens, and drug use. Environmental risks and childhood undernutrition declined steadily with SDI; low physical activity, high BMI, and high fasting plasma glucose increased with SDI. In 119 countries, metabolic risks, such as high BMI and fasting plasma glucose, contributed the most attributable DALYs in 2015. Regionally, smoking still ranked among the leading five risk factors for attributable DALYs in 109 countries; childhood underweight and unsafe sex remained primary drivers of early death and disability in much of sub-Saharan Africa. Interpretation Declines in some key environmental risks have contributed to declines in critical infectious diseases. Some risks appear to be invariant to SDI. Increasing risks, including high BMI, high fasting plasma glucose, drug use, and some occupational exposures, contribute to rising burden from some conditions, but also provide opportunities for intervention. Some highly preventable risks, such as smoking, remain major causes of attributable DALYs, even as exposure is declining. Public policy makers need to pay attention to the risks that are increasingly major contributors to global burden. Funding Bill & Melinda Gates Foundation

Global, regional, and national incidence, prevalence, and years lived with disability for 310 diseases and injuries, 1990–2015: a systematic analysis for the Global Burden of Disease Study 2015

BACKGROUND: Non-fatal outcomes of disease and injury increasingly detract from the ability of the world's population to live in full health, a trend largely attributable to an epidemiological trans ..

Global, regional, and national life expectancy, all-cause mortality, and cause-specific mortality for 249 causes of death, 1980–2015: a systematic analysis for the Global Burden of Disease Study 2015

BACKGROUND: Improving survival and extending the longevity of life for all populations requires timely, robust evidence on local mortality levels and trends. The Global Burden of Disease 2015 Study (GBD 2015) provides a comprehensive assessment of all-cause and cause-specific mortality for 249 causes in 195 countries and territories from 1980 to 2015. These results informed an in-depth investigation of observed and expected mortality patterns based on sociodemographic measures. METHODS: We estimated all-cause mortality by age, sex, geography, and year using an improved analytical approach originally developed for GBD 2013 and GBD 2010. Improvements included refinements to the estimation of child and adult mortality and corresponding uncertainty, parameter selection for under-5 mortality synthesis by spatiotemporal Gaussian process regression, and sibling history data processing. We also expanded the database of vital registration, survey, and census data to 14 294 geography-year datapoints. For GBD 2015, eight causes, including Ebola virus disease, were added to the previous GBD cause list for mortality. We used six modelling approaches to assess cause-specific mortality, with the Cause of Death Ensemble Model (CODEm) generating estimates for most causes. We used a series of novel analyses to systematically quantify the drivers of trends in mortality across geographies. First, we assessed observed and expected levels and trends of cause-specific mortality as they relate to the Socio-demographic Index (SDI), a summary indicator derived from measures of income per capita, educational attainment, and fertility. Second, we examined factors affecting total mortality patterns through a series of counterfactual scenarios, testing the magnitude by which population growth, population age structures, and epidemiological changes contributed to shifts in mortality. Finally, we attributed changes in life expectancy to changes in cause of death. We documented each step of the GBD 2015 estimation processes, as well as data sources, in accordance with Guidelines for Accurate and Transparent Health Estimates Reporting (GATHER). FINDINGS: Globally, life expectancy from birth increased from 61·7 years (95% uncertainty interval 61·4-61·9) in 1980 to 71·8 years (71·5-72·2) in 2015. Several countries in sub-Saharan Africa had very large gains in life expectancy from 2005 to 2015, rebounding from an era of exceedingly high loss of life due to HIV/AIDS. At the same time, many geographies saw life expectancy stagnate or decline, particularly for men and in countries with rising mortality from war or interpersonal violence. From 2005 to 2015, male life expectancy in Syria dropped by 11·3 years (3·7-17·4), to 62·6 years (56·5-70·2). Total deaths increased by 4·1% (2·6-5·6) from 2005 to 2015, rising to 55·8 million (54·9 million to 56·6 million) in 2015, but age-standardised death rates fell by 17·0% (15·8-18·1) during this time, underscoring changes in population growth and shifts in global age structures. The result was similar for non-communicable diseases (NCDs), with total deaths from these causes increasing by 14·1% (12·6-16·0) to 39·8 million (39·2 million to 40·5 million) in 2015, whereas age-standardised rates decreased by 13·1% (11·9-14·3). Globally, this mortality pattern emerged for several NCDs, including several types of cancer, ischaemic heart disease, cirrhosis, and Alzheimer's disease and other dementias. By contrast, both total deaths and age-standardised death rates due to communicable, maternal, neonatal, and nutritional conditions significantly declined from 2005 to 2015, gains largely attributable to decreases in mortality rates due to HIV/AIDS (42·1%, 39·1-44·6), malaria (43·1%, 34·7-51·8), neonatal preterm birth complications (29·8%, 24·8-34·9), and maternal disorders (29·1%, 19·3-37·1). Progress was slower for several causes, such as lower respiratory infections and nutritional deficiencies, whereas deaths increased for others, including dengue and drug use disorders. Age-standardised death rates due to injuries significantly declined from 2005 to 2015, yet interpersonal violence and war claimed increasingly more lives in some regions, particularly in the Middle East. In 2015, rotaviral enteritis (rotavirus) was the leading cause of under-5 deaths due to diarrhoea (146 000 deaths, 118 000-183 000) and pneumococcal pneumonia was the leading cause of under-5 deaths due to lower respiratory infections (393 000 deaths, 228 000-532 000), although pathogen-specific mortality varied by region. Globally, the effects of population growth, ageing, and changes in age-standardised death rates substantially differed by cause. Our analyses on the expected associations between cause-specific mortality and SDI show the regular shifts in cause of death composition and population age structure with rising SDI. Country patterns of premature mortality (measured as years o