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Article
Publication date: 30 October 2019

Richard J. Cebula, Christopher M. Duquette and G. Jason Jolley

Influences on the pattern of internal migration in the US, including economic factors, quality-of-life factors and public policy variables have been extensively studied by…

Abstract

Purpose

Influences on the pattern of internal migration in the US, including economic factors, quality-of-life factors and public policy variables have been extensively studied by regional scientists since the early 1970s. Interestingly, a small number of studies also address the effects of economic freedom on migration. The purpose of this paper is to add to the migration literature by examining the impact of labor market freedom on both gross and net state in-migration over the study period 2008–2016.

Design/methodology/approach

This study uses dynamic panel data analysis to investigate the impact of labor market freedom on both gross and net state in-migration over the study period 2008–2016.

Findings

The panel generalized method of moments analysis reveals that overall labor market freedom exercised a positive and statistically significant impact on both measures of state in-migration over the study period. The study finds a 1 percentage point increase in the overall labor market freedom index results in a 2.8 percent increase in the gross in-migration rate.

Research limitations/implications

The findings imply states interested in attracting migrants and stimulating economic growth should pursue policies consistent with increased labor freedom.

Originality/value

The emphasis in the present study is on the impact of labor market freedom on state-level in-migration patterns, both gross and net, over a contemporary time period that includes both the Great Recession and subsequent recovering.

Details

Journal of Entrepreneurship and Public Policy, vol. 9 no. 1
Type: Research Article
ISSN: 2045-2101

Keywords

Article
Publication date: 1 January 1997

Richard J. Cebula

Using Cointegration Tests, Granger‐Causality Tests, and OLS, this study empirically investigates the determinants of the rate of return on savings and loan assets over the…

Abstract

Using Cointegration Tests, Granger‐Causality Tests, and OLS, this study empirically investigates the determinants of the rate of return on savings and loan assets over the 1965–1991 period. It is found that it is determined by the mortgage rate, the capital/asset ratio, the price of imported crude oil, the cost of deposits, and the ceiling on federal deposit insurance.

Details

Studies in Economics and Finance, vol. 17 no. 2
Type: Research Article
ISSN: 1086-7376

Article
Publication date: 4 April 2016

Richard J. Cebula, Fabrizio Rossi, Fiorentina Dajci and Maggie Foley

The purpose of this study is to provide new empirical evidence on the impact of a variety of financial market forces on the ex post real cost of funds to corporations…

Abstract

Purpose

The purpose of this study is to provide new empirical evidence on the impact of a variety of financial market forces on the ex post real cost of funds to corporations, namely, the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA. The study is couched within an open-economy loanable funds model, and it adopts annual data for the period 1973-2013, so that the results are current while being applicable only for the post-Bretton Woods era. The auto-regressive two-stage least squares (2SLS) and generalized method of moments (GMM) estimations reveal that the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA was an increasing function of the ex post real interest rate yields on six-month Treasury bills, seven-year Treasury notes, high-grade municipal bonds and the Moody’s BAA-rated corporate bonds, while being a decreasing function of the monetary base as a per cent of gross domestic product (GDP) and net financial capital inflows as a per cent of GDP. Finally, additional estimates reveal that the higher the budget deficit as a per cent of GDP, the higher the ex post real interest rate on AAA-rated long-term corporate bonds.

Design/methodology/approach

After developing an initial open-economy loanable funds model, the empirical dimension of the study involves auto-regressive, two-stage least squares and GMM estimates. The model is then expanded to include the federal budget deficit, and new AR/2SLS and GMM estimates are provided.

Findings

The AR/2SLS and GMM (generalized method of moments) estimations reveal that the ex post real interest rate yield on AAA-rated long-term corporate bonds in the USA was an increasing function of the ex post real interest rate yields on six-month Treasury bills, seven-year Treasury notes, high-grade municipal bonds and the Moody’s BAA-rated corporate bonds, while being a decreasing function of the monetary base as a per cent of GDP and net financial capital inflows as a per cent of GDP. Finally, additional estimates reveal that the higher the budget deficit as a per cent of GDP, the higher the ex post real interest rate on AAA-rated long -term corporate bonds.

Originality/value

The author is unaware of a study that adopts this particular set of real interest rates along with net capital inflows and the monetary base as a per cent of GDP and net capital inflows. Also, the data run through 2013. There have been only studies of deficits and real interest rates in the past few years.

Details

Journal of Financial Economic Policy, vol. 8 no. 1
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 1 August 2016

Richard J. Cebula, Wendy Gillis, S. Cathy McCrary and Don Capener

This study aims to identify factors influencing the bank failure rate in the USA over the period from 1970 to 2014 with an emphasis on economic/financial factors on the…

Abstract

Purpose

This study aims to identify factors influencing the bank failure rate in the USA over the period from 1970 to 2014 with an emphasis on economic/financial factors on the one hand and on banking legislation on the other hand. Regarding the latter, this study empirically investigates four major banking statutes: the Community Reinvestment Act of 1977; the Depository Institutions Deregulation and Monetary Control Act of 1980; the Federal Deposit Insurance Corporation Improvement Act of 1991; and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. After adopting the technique of generalized method of moments (GMM), a robustness check in the form of autoregressive conditional heteroskedasticity (ARCH) is undertaken. Overall, the estimations imply that the bank failure rate was a decreasing function of the percentage growth rate of real gross domestic product (GDP) and the real interest rate yields on both three-month US Treasury bills and 30-year fixed-rate mortgages and an increasing function of the real cost of funds. In addition, there is strong evidence that the bank failure rate was increased by provisions in the Community Reinvestment Act of 1977 and the Depository Institutions Deregulation and Monetary Control Act of 1980, whereas the bank failure rate was decreased as a result of provisions in the Federal Deposit Insurance Corporation Improvement Act of 1991 and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. Finally, there also is evidence that higher federal budget deficits elevated the bank failure rate.

Design/methodology/approach

After modeling the bank failure rate as a function of financial/economic variables and banking legislation, the times series from 1970 to 2014 is estimated by GMM and then by the ARCH techniques.

Findings

The results of the GMM and ARCH estimations imply that the bank failure rate in the US was a decreasing function of the percentage growth rate of real GDP as well as the real interest rate yields on both three-month US Treasury bills and 30-year fixed-rate mortgages and an increasing function of the real cost of funds. Furthermore, there is strong empirical support indicating that the bank failure rate was elevated by various provisions in the Community Reinvestment Act of 1977 and in the Depository Institutions Deregulation and Monetary Control Act of 1980, while the bank failure rate was reduced by certain provisions in the Federal Deposit Insurance Corporation Improvement Act of 1991 and the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994. There also is evidence that higher federal budget deficits increased the bank failure rate.

Originality/value

This study is the most contemporary (1970-2014) analysis of potential causes of the bank failure rate in the USA. The study also may be the first to apply the GMM and GARCH models to the problem. Also, some interesting policy implications are provided in the Conclusion.

Details

Journal of Financial Economic Policy, vol. 8 no. 3
Type: Research Article
ISSN: 1757-6385

Keywords

Article
Publication date: 13 February 2018

Fabrizio Rossi, Robert Boylan and Richard J. Cebula

The purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian…

1053

Abstract

Purpose

The purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian listed companies.

Design/methodology/approach

The analysis adopts a balanced panel data set of 984 firm-year observations for the period of 2002-2013, with estimation using a generalized method of moments.

Findings

The results appear to confirm both the hypotheses of the alignment of interests and the entrenchment effect. The entrenchment and alignment effects are not found to be alternatives but rather are found to co-exist. The presence of a coalition of minority shareholders acts as a tool to control agency costs, particularly when the coalition is instrumental in the contestability of corporate control.

Practical implications

These findings suggest that minority shareholders may have a larger impact than previously identified by strategically aligning with other shareholders to form coalitions. This study provides several practical implications. First, dividend payout is not necessarily a good instrument to control and monitor agency costs. This is because the payout can be used to expropriate benefits from the minority shareholders. Second, high ownership concentration does not always reduce agency costs. Third, a non-collusive coalition can be more useful in the monitoring of agency costs than other tools, such as the debt level.

Originality/value

This study shows that there is considerable value to the firm when individual blockholders come together in a contestable environment and become instrumental in making business decisions. The results support the contention that contestability is an excellent deterrent to dampen the expropriation of benefits to minority shareholders. This study also provides evidence that cash holding can be a good substitute for dividends and debt in the effort to limit agency costs.

Details

Corporate Governance: The International Journal of Business in Society, vol. 18 no. 3
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 3 October 2016

Fabrizio Rossi and Richard J. Cebula

The purpose of this study is to investigate the relationship between the debt and ownership structure of a sample of Italian-listed companies to measure the role assumed…

1481

Abstract

Purpose

The purpose of this study is to investigate the relationship between the debt and ownership structure of a sample of Italian-listed companies to measure the role assumed in the control and monitoring of agency costs.

Design/methodology/approach

This study examines a balanced panel data, using both a random effects model and a generalized method of moments model to better capture any problems related to the endogeneity of the variables in the model.

Findings

The results provide evidence of a positive relationship between debt and ownership concentration on the one hand and a negative relationship between debt and institutional investors on the other hand. The debt seems to assume both functions, i.e. the disciplinary role of substitute at low levels of ownership concentration and a complementary role at high levels of ownership concentration.

Practical implications

This study provides three practical implications. The first is that the complementarity between debt and ownership concentration provides evidence of the entrenchment effect and tends to weaken the company financially. Second, the results also provide useful prompts to policy-makers who should encourage the presence of institutional investors. Third, the policy-makers should also encourage the expansion of the stock market to enhance the protection of shareholders, reduce private control benefits and provide Italy the same opportunities as other common and civil law countries to collect risk capital, avoiding the abuse of debt.

Originality/value

The empirical results suggest that ownership concentration increases the degree of corporate debt, whereas institutional investors assume the disciplinary role of monitoring and controlling agency costs. The results provide evidence of both the entrenchment effect and the alignment-of-interests hypothesis and that the expropriation theory seems to prevail over the control and monitoring role.

Details

Corporate Governance: The International Journal of Business in Society, vol. 16 no. 5
Type: Research Article
ISSN: 1472-0701

Keywords

Article
Publication date: 1 January 1998

Marc C. Chopin

The possibility that government borrowing may crowd out private borrowing has been widely discussed in the popular press and extensively analyzed by researchers. The…

123

Abstract

The possibility that government borrowing may crowd out private borrowing has been widely discussed in the popular press and extensively analyzed by researchers. The Clinton Administration's “Operation Twist,” resulting in increased reliance on short‐term securities to fund the Federal deficit, highlights the impact of the maturity structure of Treasury debt issues on interest rates. This paper examines the relationship between changes in the maturity distribution of Treasury issues and Moody's twenty year AA municipal bond yield. Briefly, I find changes in the maturity structure of outstanding Treasury securities Granger‐cause changes in the Moody's twenty‐year AA municipal bond yield. The results suggest that changes in the maturity structure of Treasury borrowing will impact the interest expense of municipal debt issues and therefore the rate of return earned by holders of municipal securities.

Details

Studies in Economics and Finance, vol. 19 no. 1/2
Type: Research Article
ISSN: 1086-7376

Article
Publication date: 1 February 1993

Bahram Adrangi and Todd Easton

This research applies the loanable funds theory in an international framework to investigate government borrowing's effect on U.S. interest rates. The equations estimated…

Abstract

This research applies the loanable funds theory in an international framework to investigate government borrowing's effect on U.S. interest rates. The equations estimated offer little support for the hypothesis that government borrowing raises interest rates and no evidence that inflows of foreign capital offset the effect of government borrowing.

Details

Studies in Economics and Finance, vol. 15 no. 1
Type: Research Article
ISSN: 1086-7376

Article
Publication date: 12 July 2013

Robert Houmes, Maggie Foley and Richard J. Cebula

Audit quality studies document that accruals decrease when the audit firm is large, or the audit firm is an industry specialist, or the audit‐client tenure is long. The…

2972

Abstract

Purpose

Audit quality studies document that accruals decrease when the audit firm is large, or the audit firm is an industry specialist, or the audit‐client tenure is long. The purpose of this paper is to posit that incentives related to highly‐valued equity mitigate these results, as managers use income increasing accruals to augment earnings.

Design/methodology/approach

To test this assertion, the authors regress discretionary accruals on: controls, a highly valued equity indicator variable equal to 1 if the client's lagged price‐to‐earnings ratio is in the highest P/E quintile, indicator variables equal to 1 for alternative measures of audit quality, and interaction terms between the highly valued equity indicator variable and audit quality indicator variables.

Findings

Results of tests show positive and statistically significant coefficients for each of the highly‐valued equity‐audit quality interaction terms, suggesting that when a firm is highly valued the accruals' decreasing effect of high quality auditors is reduced.

Originality/value

Beginning with Jensen's article regarding the agency costs of overvalued equity, a stream of research examining factors associated with highly priced firms has developed. The paper extends these findings, as well as the considerable body of audit quality studies, by examining the ability of a high quality auditor to attenuate this result.

Details

Accounting Research Journal, vol. 26 no. 1
Type: Research Article
ISSN: 1030-9616

Keywords

Book part
Publication date: 10 December 2018

Abstract

Details

Disarmament, Peace and Development
Type: Book
ISBN: 978-1-78743-854-5

1 – 10 of 31