AN NBER PUBLICATION ISSUE: No. 2, February 2005

The Digest

A free monthly publication featuring non-technical summaries of research on topics of broad public interest
The cleaner U.S. manufacturing composition is not offset by dirtier imports. Rather, the composition of imports has also become cleaner. Polluting industries' share of U.S. manufacturing output has declined in recent decades. That is good news for environmental quality in the United States. However, the fact that the decline has coincided with falling trade barriers has given rise to suspicions that the United States has outsourced its polluting industrial processes...

Research Summaries

Article
Staggered boards have a decidedly negative effect on firm value... that ... is several times larger than that of some two dozen other management-favoring provision. In The Costs of Entrenched Boards (NBER Working Paper No. 10587), researchers Lucian Bebchuk and Alma Cohen ask if the market value of publicly traded corporations is related to whether a firm's board of directors is strongly protected from removal by shareholders. They find that a strong protection from...
Article
The introduction of accountability systems leads to higher achievement growth than would have occurred without accountability. But simply reporting results of tests has a minimal impact on performance. The systems are much more effective if poor educational results have adverse consequences for the schools. When teachers and their schools are held accountable for the educational performance of their pupils and face consequences when the children do not measure up to...
Article
Among a restricted sample of low- and middle-income countries, a one-year higher life expectancy results in a 9 percent increase in gross FDI inflows. Foreign direct investment (FDI) is increasingly viewed as a way to reduce poverty and spur economic growth among developing countries. It provides not only employment and financial capital, but also a means of transferring technology and skills, and increasing access to global markets. Yet poorer countries are...
Article
Earned equity has an economically more important impact on the dividend decision than do profitability or growth... firms pay dividends to mitigate the agency costs associated with the high cash/low debt capital structures that would eventually result if they did not pay dividends. Why do firms pay dividends? In Dividend Policy, Agency Costs, and Earned Equity (NBER Working Paper No. 10599), authors Harry DeAngelo, Linda DeAngelo, and Rene Stulz document that,...
Article
Increases in the costs of producing information affected the asset prices of small firms; in particular, the stocks of small firms that lost analyst coverage after the adoption of Regulation FD experienced significant increases in the costs of capital. Well-functioning capital markets depend heavily on the free and efficient flow of economic and financial information between firms and investors, analysts, and the public. From this perspective, the Securities and...

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