Project Bundling, Liquidity Spillovers, and Capital Market Discipline

This paper develops a theory of integration based on the inability of parties to write comprehensive financial contracts. In our model, integration comes with both benefits and costs. On the one hand, integration entails liquidity spillovers from high- to low-return projects, implying that integrated firms have better access to external finance than non-integrated firms. On the other hand, integration leads to the creation of a larger internal capital market, thereby making integrated firms less dependent on the provision of follow-up financing by outside investors. But in a world where financial contracting is incomplete, the threat not to provide follow-up financing may be the only means that investors have to make borrowers repay their debt. By making this threat less effective, integration may aggravate existing financing constraints caused by contractual incompleteness.

Spectroscopic parameters and rest frequencies of isotopic methylidynium, CH+

Astronomical observations toward Sagittarius B2(M) as well as other sources with APEX have recently suggested that the rest frequency of the J = 1 - 0 transitions of 13CH+ is too low by about 80 MHz. Improved rest frequencies of isotopologs of methylidynium should be derived to support analyses of spectral recording obtained with the ongoing Herschel mission or the upcoming SOFIA. Laboratory electronic spectra of four isotopologs of CH+ have been subjected to one global least-squares fit. Laboratory data for the J = 1 - 0 ground state rotational transitions of CH+, 13CH+, and CD+, which became available during the refereeing process, have been included in the fit as well. An accurate set of spectroscopic parameters has been obtained together with equilibrium bond lengths and accurate rest frequencies for six CH+ isotopologs: CH+, 13CH+, 13CD+, CD+, 14CH+, and CT+. The present data will be useful for the analyses of $Herschel$ or SOFIA observations of methylidynium isotopic species.Comment: Astronomy and Astrophysics, accepted as Letter; 4 (here 5) page

Terrestrial vs. spaceborne, quantum vs. classical tests of the equivalence principle

The equivalence principle can be tested by precision experiments based on classical and quantum systems, on the ground as well as in space. In many models, these tests are mostly equivalent in their ability to constrain physics beyond the Standard Model. We mention differences that nevertheless exist between spaceborne and quantum mechanical tests and their conventional competitors.Comment: Four pages for the proceedings of the sixth meeting on CPT and Lorentz symmetr

A lender-based theory of collateral

We consider an imperfectly competitive loan market in which a local relationship lender has an information advantage vis-à-vis distant transaction lenders. Competitive pressure from the transaction lenders prevents the local lender from extracting the full surplus from projects, so that she inefficiently rejects marginally profitable projects. Collateral mitigates the inefficiency by increasing the local lender’s payoff from precisely those marginal projects that she inefficiently rejects. The model predicts that, controlling for observable borrower risk, collateralized loans are more likely to default ex post, which is consistent with the empirical evidence. The model also predicts that borrowers for whom local lenders have a relatively smaller information advantage face higher collateral requirements, and that technological innovations that narrow the information advantage of local lenders, such as small business credit scoring, lead to a greater use of collateral in lending relationships. JEL classification: D82; G21 Keywords: Collateral; Soft infomation; Loan market competition; Relationship lendin

Family Firms, Paternalism, and Labor Relations

Using firm-, industry-, and country-level data, we document a link between family ownership and labor relations. Across countries, we find that family ownership is relatively more prevalent in countries in which labor relations are difficult, consistent with firm-level evidence suggesting that family firms are particularly effective at coping with difficult labor relations. Our cross-country results are robust to controlling for minority shareholder protection and various other potential determinants of family ownership. Our results also hold if we use strike data from the 1960s to predict cross-country variation in family ownership thirty years later. We address causality in two ways. First, we instrument our measure of the quality of labor relations using 'Labor Origin', a variable describing the extent to which the emerging European liberal states in the 18th and 19th centuries confronted guilds and labor organizations. Second, making use of within-country variation at the industry level, we show that - controlling for industry and country fixed effects - industries that are more labor dependent have relatively more family ownership in countries with worse labor relations.

Financing a portfolio of projects

This paper shows that investors financing a portfolio of projects may use the depth of their financial pockets to overcome entrepreneurial incentive problems. Competition for scarce informed capital at the refinancing stage strengthens investors’ bargaining positions. And yet, entrepreneurs’ incentives may be improved, because projects funded by investors with “shallow pockets” must have not only a positive net present value at the refinancing stage, but one that is higher than that of competing portfolio projects. Our paper may help to understand provisions used in venture capital finance that limit a fund’s initial capital and make it difficult to add more capital once the initial venture capital fund is raised

Matter-wave Tests of the Gravitational Redshift in Space

A recent measurement of the gravitational redshift was based on interference of matter waves. Operation in microgravity can improve it by a factor of $10^5$ and, in some models, even $10^{10}$.Comment: Talk given at the Fifth Meeting on CPT and Lorentz Symmetry, at Indiana University, Bloomington, IN. Corrected problem with Figur