Corporate Finance

We investigate whether the globalization process of the last thirty years has lead to "convergence" of asset prices in a wide set of countries, encompassing both developed and emerging markets. We examine several measures of convergence for interest rates (real and nominal) and bond and equity returns, and important fundamentals as inflation and earnings growth rates. While doing so, we extensively review the extant literature. Our results do not indicate strong effects of globalization on the convergence of asset prices, even though we document some links.

The packet is the fundamental unit of transportation in modern communication networks such as the Internet. Physical layer scheduling decisions are made at the level of packets, and packet-level models with exogenous arrival processes have long been employed to study network performance, as well as design scheduling policies that more efficiently utilize network resources. On the other hand, a user of the network is more concerned with end-to-end bandwidth, which is allocated through congestion control policies such as TCP.

No matter your field, industry, or specialty, as a leader you make a series of crucial decisions every single day. And the harsh truth is that the majority of decisions — no matter how good the intentions behind them — are mismanaged, resulting in a huge toll on organizations, the people they employ, and even the people they serve.

In this paper, we develop a structural model that captures the interaction between the cash balance and investment opportunities for a firm that already has some debt outstanding. We consider a firm whose assets produce a stochastic cash flow stream. The firm has an opportunity to expand its operations, which we refer to as an "option the expand." The exercise cost of the option can be financed either by cash or costly equity issuance.

Accounting is often criticized for omitting intangible assets from the balance sheet. This paper points out that the omission is not necessarily a deficiency. There is also an income statement, and the value of intangible (and other) assets can be ascertained from the income statement. Thus, calls for the recognition of "intangible assets" on the balance sheet may be misconceived. The paper lays out the property whereby the income statement corrects for deficiencies in the balance sheet.

This paper examines the relation between ownership, corporate form, and innovation for a cross-section of private and publicly traded innovating firms in the US and 15 European countries. A striking novel observation emerges from our analysis: while most innovating firms in the US are publicly traded conglomerates, a substantial fraction of innovation is concentrated in private firms and in business groups in continental European countries.

The rate of increase of longevity has varied considerably across U.S. states since 1991. This paper examines the effect of the quality of medical care, behavioral risk factors (obesity, smoking, and AIDS incidence), and other variables (education, income, and health insurance coverage) on life expectancy and medical expenditure using longitudinal state-level data. We examine the effects of three different measures of the quality of medical care. The first is the average quality of diagnostic imaging procedures, defined as the fraction of procedures that are advanced procedures.

Accounting is often criticized for omitting intangible assets from the balance sheet. With value in firms of today flowing less from tangibles assets and more from so-called intangibles—brands, distribution systems, supply chains, "knowledge capital," "organization capital"—accounting is seen as remiss, with high price-to-book ratios as evidence. The remedy often proposed involves booking these intangible assets to the balance sheet.

We examine the extent to which uncertainty delays investment, and the effect of competition on this relationship, using a sample of 1214 condominium developments in Vancouver, Canada built from 1979–1998. We find that increases in both idiosyncratic and systematic risk lead developers to delay new real estate investments. Empirically, a one-standard deviation increase in the return volatility reduces the probability of investment by 13 percent, equivalent to a 9 percent decline in real prices.