Sheltering Corporate Assets from Political Extraction

We hypothesize that firms structure their asset holdings so as to shelter assets from extraction by politicians and bureaucrats. In countries where the threat of political extraction is higher, we hypothesize that firms hold a lower fraction of their assets in liquid form. Consistent with this conjecture, using data for over 30,000 firms across 109 countries, we find that corporate holdings of liquid assets are negatively correlated with measures of political corruption. Further, annual investment in property, plant, equipment, and inventory plus dividends is positively correlated with measures of political corruption suggesting that owners channel their cash into harder to extract assets. To the extent that the threat of political extraction moves firms away from their otherwise optimal levels of liquid assets, our findings suggest that the threat of political extraction may reduce economic development not only through the direct costs of political payoffs, but also because the potential for asset extraction moves firms away from their otherwise optimal asset holdings.

Why Did Auction Rate Bond Auctions Fail During 2007-2008?

The auction rate bond market grew from inauspicious beginnings in 1985 to representing a significant fraction of the municipal bond market in 2007 with a total of 603 issuances that year raising more than $35 billion in capital. Since March of 2008 not a single auction rate bond has been issued. The last issuance coincided with a wave of “failures” of auction rate bond auctions during the early winter of 2008. Pundits have attributed the auction failures to a “frozen” market and hint that irrationality on the part of investors precipitated the auction failures. Missing from the headlines is that all auction rate bonds have interest rate caps that limit their yields. We find that, contrary to the impression given by news headlines, not all auctions failed and that investors rationally discriminated among bonds such that it was primarily those with low caps that experienced high failure rates. We further conclude that, in the absence of such caps, few if any, auctions would have failed.

Hard x-ray polarimeter for gamma-ray bursts and solar flares

We report on the development of a dedicated polarimeter design that is capable of studying the linear polarization of hard X-rays (50-300 keV) from gamma-ray bursts and solar flares. This compact design, based on the use of a large area position-sensitive PMT (PSPMT), is referred to as GRAPE (Gamma-RAy Polarimeter Experiment). The PSPMT is used to determine the Compton interaction location within an array of small plastic scintillator elements. Some of the photons that scatter within the plastic scintillator array are subsequently absorbed by a small centrally-located array of CsI(Tl) crystals that is read out by an independent multi-anode PMT. One feature of GRAPE that is especially attractive for studies of gamma-ray bursts is the significant off-axis response (at angles \u3e 60 degrees). The modular nature of this design lends itself toward its accomodation on a balloon or spacecraft platform. For an array of GRAPE modules, sensitivity levels below a few percent can be achieved for both gamma-ray bursts and solar flares. Here we report on the latest results from the testing of a laboratory science model

Dedicated polarimeter design for hard x-ray and soft gamma-ray astronomy

We have developed a modular design for a hard X-ray and soft gamma-ray polrimeter that we call GRAPE (Gamma RAy Polarimeter Experiment). Optimized for the energy range of 50-300 keV, the GRAPE design is a Compton polarimeter based on the use of an array of plastic scintillator scattering elements in conjunction with a centrally positioned high-Z calorimeter detector. Here we shall review the results from a laboratory model of the baseline GRAPE design. The baseline design uses a 5-inch diameter position sensitive PMT (PSPMT) for readout of the plastic scintillator array and a small array of CsI detectors for measurement of the scattered photon. An improved design, based on the use of large area multi-anode PMTs (MAPMTs), is also discussed along with plans for laboratory testing of a prototype. An array of GRAPE modules could be used as the basis for a dedicated science mission, either on a long duration balloon or on an orbital mission. With a large effective FoV, a non-imaging GRAPE mission would be ideal for studying polarization in transient sources (gamma ray bursts and solar flares). It may also prove useful for studying periodically varying sources, such as pulsars. An imaging system would improve the sensitivity of the polarization measurements for transient and periodic sources and may also permit the measurement of polarization in steady-state sources

The Development of GRAPE, a Gamma Ray Polarimeter Experiment

The measurement of hard X‐ray polarization in γ‐ray bursts (GRBs) would add yet another piece of information in our effort to resolve the true nature of these enigmatic objects. Here we report on the development of a dedicated polarimeter design with a relatively large FoV that is capable of studying hard X‐ray polarization (50–300 keV) from GRBs. This compact design, based on the use of a large area position‐sensitive PMT (PSPMT), is referred to as GRAPE (Gamma‐RAy Polarimeter Experiment). The feature of GRAPE that is especially attractive for studies of GRBs is the significant off‐axis polarization response (at angles greater than 60°). For an array of GRAPE modules, current sensitivity estimates give minimum detectable polarization (MDP) levels of a few percent for the brightest GRBs

Do Institution Investors Exacerbate Managerial Myopia?

This study analyzes corporate expenditures for property, plant and equipment (PP&E) and research and development (R&D) for over 2,500 firms from 1987 to 1994. We document a positive relation between expenditures for PP&E and R&D and institutional share ownership. This relation is robust to a variety of specifications. We examine the link between firm-level expenditures and institutional ownership by using lead-lag structures and changes in institutional ownership. The data do not support the contention that institutional investors cause corporate managers to behave myopically. Indeed, the data indicate that the presence of institutional shareholders allows managers to invest more in PP&E and R&D than would individual shareholders.

Does Insider Trading Really Move Stock Prices?

Prior studies have reported a positive correlation between insider trading and stock price changes. The implication of these studies is that insider (i.e., informed) trades have a differential impact on price discovery than non-insider (i.e., uninformed) trades. Based on these results, various scholars have argued for the legalization of insider trading to facilitate rapid price discovery. We analyze the trading activity of a confessed inside trader, Ivan Boesky, in Carnation’s stock just prior to the acquisition of Carnation by Nestle, and find that our tests are unable to distinguish the price effect of Boesky’s (i.e., informed) purchases of Carnation’s stock from the effect of non-insider (i.e., uninformed) purchases. Our conclusion survives extensive robustness tests and has methodological and public policy implications.

Development of a Hard X-Ray Polarimeter for Astrophysics

We have been developing a Compton scatter polarimeter for measuring the linear polarization of hard X-rays (100-300 keV) from astrophysical sources. A laboratory prototype polarimeter has been used to successfully demonstrate the reliability of our Monte Carlo simulation code and to demonstrate our ability to generate a polarized photon source in the lab. Our design concept places a self-containedpolarimeter module on the front-end of a a 5-inch position sensitive PMT (PSPMT). We are currently working on the fabrication of a science model based on this PSPMT concept. Although the emphasis of our development effort is towards measuring hard X-rays from solar flares, our design has the advantage that it is sensitive over a rather large field-of-view (\u3e1 steradian), a feature that makes it especially attractive for γ-ray burst studie

Radiation Damage and Activation from Proton Irradiation of Advanced Scintillators

We present results from a proton accelerator beam test to measure radiation damage and activation in advanced scintillator materials. Samples of LaBr3:Ce and LaCl3:Ce were exposed to protons from 40-250 MeV at the Proton Irradiation Facility of the Paul Scherrer Institute in Switzerland. Twelve energy bands were used to simulate the spectrum of the South Atlantic Anomaly (SAA), with different samples exposed to the equivalent of 4 months, 1 year, and 5 years of SAA passage. No significant decrease in light output was found due to radiation damage, indicating that these new scintillator materials are radiation tolerant. High-resolution spectra of the samples were obtained before and after irradiation with a Germanium spectrometer to study activation. We present a detailed analysis of these spectra and a discussion of the suitability of these scintillator materials for detectors in future space missions