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We examine the maturity structure in private placements of debt and relate it to contracting, signaling, tax, and liquidity risk considerations for firms. We find that firms with higher tax rates issue private placements of debt with longer maturities, consistent with the tax hypothesis. However, our results do not support the contracting, signaling, and liquidity risk hypotheses. In addition, the results are confined to the smaller firms in the sample, firms without a public debt rating, and debt issues not pursuant to Rule 144A. The evidence is consistent with smaller firms issuing private placements of debt to avoid monopoly rent extraction from banks.

We develop two new measures for assessing project uncertainty in sensitivity/scenario analyses. For sensitivity analysis, we develop the “Z% Elasticity Coefficient,” building on the elasticity concept in economics. For scenario analyses, we develop the “Proportionate Range.” Both are substitutes for employing mean–variance (of Net Present Value or NPV) analysis, which has been criticized for assessing project uncertainty. The appendix provides examples of computing each measure for a hypothetical project.

We develop an indicator of project uncertainty via the sensitivity of the IRR to any assumption regarding which performance scenario for the project is most relevant. The most relevant scenario represents the performance (into the future) that we should project (as compared to any we actually project). Our indicator is a measure one can regard as a form of absolute value of elasticity that we define as the ratio of an expected absolute value change in IRR, over differing scenarios, to a location parameter.

We examine the ability of co-founders of a firm to create an artificial (or “homemade”) dividend as in Miller and Modigliani (1961). We employ traditional discounted valuation in showing that the act of creating an artificial dividend may decrease the value of the firm because it can divert funds from investment to the consumption of perquisites. Only where there is complete trust in the party to which the shares are sold can a co-founder costlessly create an artificial dividend. It seems likely that a dividend policy, idiosyncratic to the firm’s founders, would be established at the founding of the firm.

Previous studies have shown that stock returns bear a premium for downside risk versus upside potential. We develop a new risk measure which scales the traditional CAPM beta by the ratio of the upside beta to the downside beta, thereby incorporating the effects of both upside potential and downside risk. This “modified” beta has substantial explanatory power in standard asset pricing tests, outperforming existing measures, and it is robust to various alternative modeling and estimation techniques.

We examine the link between oil production and bank deposits in North Dakota’s Bakken oil formation. We find that oil production is positively related to bank deposits, even in the presence of gas production, farm production, the level of interest rates, and the term premium of interest rates. The effect is significant even when we “purge” the effect of the other variables from oil production, which indicates a strong relationship between oil production and bank deposits.

The growth of firms is fundamentally based on selfreinforcing feedback loops, one of the most important of which involves cash flow.When profit margin is positive, sales generate cash, which may then be reinvested to finance the operating cash cycle.We analyze simulations of a sustainable growth model of a generic new venture to assess the importance of taxes, and regulatory costs in determining growth.The results suggest that new ventures are particularly vulnerable to public policy effects, since their working capital resource levels are minimal, and they have few options to raise external funds necessary to fuel their initial operating cash cycles.Clearly, this has potential consequences in terms of gaining competitive advantage from experience effects, word of mouth, scale economies, etc. The results of this work suggest that system dynamics models may provide public policy-makers a cost-effective means to meet the spirit of the U.S. Regulatory Flexibility Act