Variety Of Model Specifications Research Articles

Is US farm sector debt underestimated? Evidence from equipment lending

PurposeThe growth of lending from nontraditional lenders may pose challenges for official US Department of Agriculture (USDA) farm sector debt estimates, but it is difficult to find data to assess official estimates. The purpose of this study is to examine whether debt provided by nontraditional lenders is accurately accounted for in official estimates.Design/methodology/approachWe compare traditional and nontraditional lending data from farm equipment lien collateral values and the USDA Agricultural Resource Management Survey (ARMS). After analyzing trends in equipment lending implied by farm equipment lien data and ARMS, we estimate whether changes in farm equipment lien values predict changes in equipment debt reported in ARMS and whether lender type influences that relationship.FindingsWe find that credit provided by nontraditional lenders is likely underreported in ARMS. Our econometric model shows that equipment debt volumes for nontraditional lenders are consistently lower than traditional loan volumes in ARMS across a variety of model specifications. We also find that an increase in lien values for nontraditional lenders is less likely to predict an increase in ARMS equipment debt volumes than an increase for traditional lenders.Practical implicationsOfficial farm sector debt estimates may not fully account for nontraditional lenders.Originality/valueThis study demonstrates how the growth of nontraditional lending poses challenges for estimating US farm sector debt. We evaluate farm sector debt estimates and advance knowledge of the role of nontraditional lenders in farm equipment credit provision. The farm equipment lien dataset provides a rich source of novel data for research on local and national equipment debt and investment.

Transferability of hometown landholdings and rural migrants’ entrepreneurship: evidence from a pilot rural land use reform in China

ABSTRACT This paper examines how the transferability level of hometown landholdings affects rural migrants’ entrepreneurship in their destination cities. We hypothesize that higher market-oriented transferability of hometown landholdings would promote the entrepreneurial engagement of rural migrants since it would not only alleviate the liquidity constraints of entrepreneurial ventures but also would boost rural migrants’ willingness to get integrated into the local society which is beneficial for entrepreneurship success. To test this hypothesis, we exploit the quasi-experiment nature of a pilot rural land use reform in rural China implemented between 2015 and 2018, which constituted an exogenous change in the transferability level of hometown landholdings in the pilot areas. This reform increased compensation for rural land expropriation, allowed transactions of collectively-owned operating construction land (COCL), and promoted transactions of rural homestead land. Using data from the 2017 China Migrants Dynamic Survey (CMDS), we find that rural migrants outflowed from those pilot areas are associated with 5–7 percentage points of higher entrepreneurial propensity levels. This finding remained robust under a variety of model specifications. We also find that the reform led to a much higher propensity for engagement in necessity-based entrepreneurship as compared with opportunity-based entrepreneurship, and had stronger impacts on middle-aged and married groups. Overall, by documenting the spillover effect of rural land use reform on rural migrants’ entrepreneurial activities in the cities, this paper contributes to extant knowledge by highlighting the complex interconnectedness between rural and urban economies. Implications of the findings for further rural land use reform as well as urban governance in China are discussed.

Regulating Gender Diversity: Evidence from California Senate Bill 826

Do gender diversity quotas enhance firm value? This broad question has sparked significant debate because, whereas diversity is generally thought to improve board functioning, prior research in international settings suggests mandating diversity may have adverse consequences if it moves firms away from market equilibrium. Exploiting the political events leading up to the passage of California Senate Bill (SB) 826 as an exogenous shock to assess the market implications of board gender composition, we document either significantly positive or insignificant two-day abnormal returns for California firms across a variety of model specifications. Importantly, this finding contradicts the strong claims of contemporary studies of SB 826 that the California mandate was value-destructive. We reconcile these findings by providing critical evidence that contemporaneous results lack robustness to alternative model specifications and provide an incomplete picture by failing to comprehensively examine a broader set of event dates or account for mixed messaging on the final event date. We also provide some evidence of significant negative abnormal returns to litigation milestones that threaten to overturn SB 826 with the magnitude increasing in the size of board gender deficits. Finally, we provide evidence that there is no observable decline in newly appointed female director quality following the implementation of SB 826 relative to either preregulation or male director appointments. Collectively, our results suggest nonnegative (if not positive) consequences to California firms arising from SB 826 and directly counter assertions that mandated gender diversity is detrimental to firm value. This paper was accepted by Brian Bushee, accounting. Funding: The authors gratefully acknowledge research funding from Brigham Young University and the University of Toronto. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4825 .

Connecting Bureaucratic Structures to Forest Loss

In this article, we link ideas from Evans concerning embedded autonomy to forest loss. In doing so, we hypothesize that higher levels of meritocratic hiring, firing, and promotion decisions in a government’s bureaucracy should correspond to less forest loss in low- and middle-income nations. We test this hypothesis by analyzing data from 78 low- and middle-income nations with ordinary least squares regression and two-stage instrumental variable regression models. We find support for the hypothesis across a variety of model specifications, which include other factors that have been linked to forest loss. We conclude by discussing the theoretical, methodological, and policy implications of the study.

External threats and state support for arms control

The successful closure of arms control negotiations today is conditional on the commitment of many more states than during the Cold War. The question of what determines states’ positions on arms control has therefore become increasingly relevant. Multiple scholars have identified external security threats by other states as the key explanatory factor of opposition to arms control, but empirical evidence hereof is so far limited to a small set of cases. Against this backdrop, this article carries out a global examination of the effect of external threats in the form of interstate disputes and rivalries on state support for arms control. This analysis is facilitated by a novel measure of arms control support that combines United Nations General Assembly voting data with manual coding of 1,178 resolutions. Across a variety of model specifications, the results do not show any significant effect of external threats on support for arms control. This article argues that this means either that the two variables are not related at all, or that two opposing mechanisms cancel out each other: arms control not only entails costs, but also benefits for states that face external threats, as it limits both states involved in a rivalry or dispute. Either way, this study challenges the notion that there is a strictly negative relationship between external threats and arms control support and thus contributes to our understanding of arms control and foreign policy making in general.

Public Opinion and Presidents’ Unilateral Policy Agendas

AbstractUnilateral power is an important source of policy change for contemporary presidents. In contrast with scholarship that examines the institutional constraints on presidents’ exercise of unilateral authority, I consider presidents’ unilateral behavior in a framework of political accountability. I argue that presidents have incentives to incorporate the public's policy priorities in their unilateral agendas. I examine this account using panel data on executive orders and public opinion across issue areas from 1954 to 2018. Across a variety of model specifications and estimation strategies, I find evidence that patterns of executive action reflect the public's policy priorities. Presidents issue greater numbers of unilateral directives on issues that gain public salience, particularly on issues that are more familiar to the public and when issuing more policy‐significant directives. These findings suggest that accountability mechanisms structure how presidents exercise unilateral power and have normative implications for considering presidential unilateralism in a separation‐of‐powers system.

Race Differentials in the Credit Market Experiences of Small Business Owners

AbstractSmall businesses employ more than half of the entire workforce, account for more than sixty percent of new jobs created in the United States, and are responsible for about fifty percent of private domestic gross product. It is noteworthy, however, that small business owners in credit markets, in particular minority owners, have difficulty in securing sources of capital for their business operation. The literature on credit market discrimination shows consistent results that can be interpreted as evidence that minority owners are discriminated against compared to their counterparts (i.e., White owners) in obtaining loans, which may be caused by lenders’ discrimination, although such behavior is prohibited under current fair-lending laws. This paper uses pooled cross-sectional data from the Survey of Small Business Finances (1993, 1998, and 2003) and a bivariate probit model based on James J. Heckman’s approach to deal with sample selection bias for those choosing to apply for loans. Those who didn’t apply for loans have been ignored in analyses of credit markets for small business owners. This paper adds to the small business lending market literature by 1) combining cross sectional data from the Survey of Small Business Finances (SSBF) for 1993, 1998, and 2003 to get more precise estimates and test statistics with more power; 2) conducting regression analyses with different model specifications to show the robustness of the empirical results; and 3) dealing directly with problems of sample selection based on Heckman’s approach with particular attention to the assumptions required to justify the identification of the effect (i.e., exclusion restrictions).The analysis confirms previous results, suggesting that minority owners are discriminated against in credit markets. These conclusions are supported in a variety of model specifications.

Wage Risk and the Skill Premium

Abstract The skill premium has increased significantly in the United States in the last five decades. During the same period, individual wage risk has also increased. This paper proposes a mechanism through which a rise in wage risk increases the skill premium. Intuitively, a rise in uninsured wage risk increases precautionary savings, thereby boosting capital accumulation, which increases the skill premium due to capital-skill complementarity. Using a quantitative macroeconomic model, we find that the rise in wage risk observed between 1967 and 2010 increases the skill premium significantly. This finding is robust across a variety of model specifications.

Why a Firm Hires Former Regulators: Governance Improvement or Regulation Circumvention?

ABSTRACT We investigate the effects of hiring former officials of the China Securities Regulatory Commission (CSRC) on a firm’s misconduct likelihood. Using the CSRC’s enforcement actions data from 2008 to 2015, we find that revolving-door directors significantly increase a firm’s ex ante misconduct likelihood. Further analysis shows that the effect of revolving-door directors is more significant in firms with higher administrative ranks for revolving-door directors and firms without financial expertise. Our findings are consistent with the “regulation circumvention” hypothesis, which suggests that revolving-door directors may help regulated firms to game the system after they join the regulated firms. Moreover, to establish causality, we adopt the number of direct flights from Beijing to the firm’s headquarters as the instrument variable. Our results are robust to a variety of model specifications.

Not your typical rate structure change: Heterogeneous water demand responses

This paper investigates behavioral responses to a complicated and peculiar change in a municipality's water rate structure. In 2006, the City of Norman, Oklahoma Water Utility added a four-dollar fixed fee, reduced the number of block-rate tiers, and changed the rate structure from one that decreased and then increased across higher consumption block groups, to a strictly increasing rate structure. The changes in the volumetric rates were not uniform across the block rates. Customers at ultra-low volumes of consumption faced a one-penny reduction in their volumetric rate but experienced a large increase in total and average cost of water due to the addition of the relatively large fixed fee. In contrast, higher-volume users faced a less severe increase in the total and average charge per gallon consumed. To address the co-determination of average water charge and consumption choice, we estimate separate regressions for households grouped by pre-price change demand and the block group of last gallon consumed. Using detailed, monthly panel data for 23,408 residential water customers from 2002 to 2010 and a variety of model specifications, our results highlight heterogeneous responses across consumption groups. Ultra-low users responded to the price-regime change by increasing consumption whereas higher-volume users reduced consumption. Behavioral responses were found to be greater in the longer-run than shorter-run as expected.

The effectiveness of mediation and peacekeeping for ending conflict

Mediation and peacekeeping are commonly used tools to manage conflict. To what extent are they complementary and effective instruments for ending violent conflicts? Generally, they are seen as distinct tools: mediation aims to facilitate negotiated settlements, while the goal of peacekeeping is to prevent agreements from collapsing. However, peacekeeping and mediation regularly occur simultaneously. Arguably, peacekeeping operations rely on continuing political processes, while peacekeepers create a context favorable for mediation and provide a valuable source of independent information. Using a variety of model specifications, including selection models, empirical evidence supports that (a) mediation rather than peacekeeping is key to halting hostilities, (b) mediation and peacekeeping are largely complementary, but (c) this complementarity is conditional: in the post-Cold War period, transformative peacekeeping boosted the effectiveness of mediation to halt civil wars. There is no evidence that peacekeeping on its own matters for ending conflict. Finally, counterfactual analysis shows the substantial impact of mediation and peacekeeping on the frequency of conflict.

Employee Cash Profit-Sharing and Earnings Management

This paper examines how a firm’s employment policy, particularly employee cash profit-sharing plans, affects its financial reporting. We find that firms with employee cash profit-sharing programs are more likely to engage in downward earnings management to reduce labor costs, especially with decreasing performance. This effect is more evident in firms with higher labor costs and human-capital reliant firms. Our findings are robust to a variety of model specifications and endogeneity problems.

BNPmix: An R Package for Bayesian Nonparametric Modeling via Pitman-Yor Mixtures

BNPmix is an R package for Bayesian nonparametric multivariate density estimation, clustering, and regression, using Pitman-Yor mixture models, a flexible and robust generalization of the popular class of Dirichlet process mixture models. A variety of model specifications and state-of-the-art posterior samplers are implemented. In order to achieve computational efficiency, all sampling methods are written in C++ and seamless integrated into R by means of the Rcpp and RcppArmadillo packages. BNPmix exploits the ggplot2 capabilities and implements a series of generic functions to plot and print summaries of posterior densities and induced clustering of the data.

Population Change and Income Inequality in Rural America.

This paper examines the effects of population growth and decline on county-level income inequality in the rural United States from 1980 to 2016. Findings from previous research have shown that population growth is positively associated with income inequality. However, these studies are largely motivated by theories of urbanization and growth in metropolitan areas, and do not explicitly test for differences between the impacts of population growth and decline. Examining the effects of both forms of population change on income inequality is particularly important in rural counties of the United States, the majority of which are experiencing population decline. We analyze county-level data (N=11,320 county-decades) from the U.S. Decennial Census and American Community Survey, applying fixed-effects regression models to estimate the respective effects of population growth and decline on income inequality within rural counties. We find that both forms of population change have significant effects on income inequality relative to stable growth. Population decline is associated with increases in income inequality, while population growth is marginally associated with decreases in inequality. These relationships are consistent across a variety of model specifications, including models that account for counties' employment, sociodemographic, and ethno-racial composition. We also find that the relationship between income inequality and population change varies by counties' geographic region, baseline level of inequality, and baseline population size, suggesting that the links between population change and income inequality are not uniform across rural America.

Fiscal Pressures and Discriminatory Policing: Evidence from Traffic Stops in Missouri

AbstractThis paper provides evidence of racial variation in traffic enforcement responses to local government budget stress using data from policing agencies in the state of Missouri from 2001 through 2012. Like previous studies, we find that local budget stress is associated with higher citation rates; we also find an increase in traffic-stop arrest rates. However, we find that these effects are concentrated among White (rather than Black or Latino) drivers. The results are robust to the inclusion of a range of covariates and a variety of model specifications, including a regression discontinuity examining bare budget shortfalls. Considering potential mechanisms, we find that targeting of White drivers is higher where the White-to-Black income ratio is higher, consistent with the targeting of drivers who are better able to pay fines. Further, the relative effect on White drivers is higher in areas with statistical over-policing of Black drivers: when Black drivers are already getting too many fines, police cite White drivers from whom they are presumably more likely to be able to raise the needed extra revenue. These results highlight the relationship between policing-as-taxation and racial inequality in policing outcomes.

A risk management perspective on CSR and the marginal cost of debt: empirical evidence from Europe

This article investigates the association between CSR and marginal credit costs of European companies. We provide instance for a negative association based on a variety of model specifications and fine-grained measures for CSR. These results can be explained in light of the increasing relevance of socially responsible investors for financing costs of companies. We further apply the risk management perspective on CSR to the credit market and show that the insurance-like property of CSR is especially relevant for companies in relative financial distress as measured by the interest coverage ratio. This study also examines the association between CSR assurance and credit costs and provides evidence that creditors reward non-financial insurance by reduced required rate of returns. Finally, we contribute to the corporate governance literature by modelling the association between different board characteristics and credit costs.

Extending Research on the “War on Cops”: The Effects of Ferguson on Nonfatal Assaults Against U.S. Police Officers

This study tests whether violence directed toward American law enforcement has increased in the wake of events in Ferguson, Missouri, in summer 2014. Using monthly data from the Federal Bureau of Investigation’s (FBI) Law Enforcement Officers Killed and Assaulted (LEOKA) reports (2010–2016), we carried out time-series analyses to examine trends in nonfatal assaults on police officers in a sample of 4,921 agencies. Neither injurious nor noninjurious assaults on officers increased following Michael Brown’s death in August 2014. The findings are robust across a variety of model specifications and estimation techniques, providing little evidence of a “War on Cops” through 2016. The study adds empirical rigor to an ongoing national debate based largely on speculation/anecdotes. The impact and potential consequences of the current climate for officers’ perceptions of safety/risk are discussed.

Testing homogeneity in a heteroscedastic contaminated normal mixture

ABSTRACTLarge-scale simultaneous hypothesis testing appears in many areas. A well-known inference method is to control the false discovery rate. One popular approach is to model the z-scores derived from the individual t-tests and then use this model to control the false discovery rate. We propose a heteroscedastic contaminated normal mixture to describe the distribution of z-scores and design an EM-test for testing homogeneity in this class of mixture models. The proposed EM-test can be used to investigate whether a collection of z-scores has arisen from a single normal distribution or whether a heteroscedastic contaminated normal mixture is more appropriate. We show that the EM-test statistic has a shifted mixture of chi-squared limiting distribution. Simulation results show that the proposed testing procedure has accurate type-I error and significantly larger power than its competitors under a variety of model specifications. A real-data example is analysed to exemplify the application of the proposed method.

Producing Goods and Projecting Power: How What You Make Influences What You Take

How does a state’s source of wealth condition the domain in which it seeks to project influence? We argue that what a state makes conditions what they take. Specifically, the less states rely on land rents to acquire wealth, the less interested they will be in seeking control over territory and the more interested they will be in securing access to distant markets. We develop and test several observable implications that should follow whether this proposition is true. First, as states become less economically dependent on territory, they should be less likely to fight over territory; second, those states should be more likely to both invest in power projection capabilities and subsequently project power at greater distances. Our findings support our theory. These results are robust across a variety of model specifications that take into account potential confounds, such as regime type, economic development, threat, and geography.

Fiscal Pressures and Discriminatory Policing: Evidence from Traffic Stops in Missouri

This paper provides evidence of racial variation in traffic enforcement responses to local government budget stress using data from policing agencies in the state of Missouri from 2001 through 2012. Like previous studies, we find that local budget stress is associated with higher citation rates; we also find an increase in traffic-stop arrest rates. However, we find that these effects are concentrated among White (rather than Black or Latino) drivers. The results are robust to the inclusion of a range of covariates and a variety of model specifications, including a regression discontinuity examining bare budget shortfalls. Considering potential mechanisms, we find that targeting of White drivers is higher where the White-to-Black income ratio is higher, consistent with the targeting of drivers who are better able to pay fines. Further, the relative effect on White drivers is higher in areas with statistical over-policing of Black drivers: when Black drivers are already getting too many fines, police cite White drivers from whom they are presumably more likely to be able to raise the needed extra revenue. These results highlight the relationship between policing-as-taxation and racial inequality in policing outcomes.