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Category Archives: Financial System

Addressing Agency Costs Through Private Litigation in the U.S.

Cox, James D. and Thomas, Randall S., Addressing Agency Costs Through Private Litigation in the U.S: Tensions, Disappointments, and Substitutes (August 26, 2015). Vanderbilt Law and Economics Research Paper No. 15-20. Available for download at SSRN: http://ssrn.com/abstract=2651863

“Many scholars argue that over the past seventy years, shareholder representative litigation has acted as an important policing mechanism of managerial abuses at U.S. public companies. Different types of representative litigation have had their moment in the sun – derivative suits early on, followed by federal securities class actions, and most recently merger litigation – often producing benefits for shareholders, but posing difficult challenges as well. In particular, the benefits are qualified by another concern, the litigation agency costs that surround shareholder suits. This form of agency costs arises since the suits are invariably representative with no requirement that the named plaintiffs have a substantial ownership interest in the corporation, so that their prosecution could be easily seen as lawyer-driven. And that perception is further underscored in the U.S. where the “American Rule,” in contrast to the “Loser Pays Rule,” provides no governor on the suit’s initiation and prosecution.  In this article, we assess the interactions of shareholder suits and governance mechanisms. Our thesis is straightforward: we claim that the recent rise of some important governance developments is a natural consequence of both the ineffectiveness and inefficiency of private suits to address certain genre of managerial agency costs. That is, just as one part of a balloon expands when another part contracts, we find that governance responses evolve to fill voids caused by the decompression of shareholder monitoring once supplied by private suits. In other words, as representative shareholder litigation comes under increasing attack, greater attention needs to be devoted to governance and market mechanisms as alternative means to address managerial agency costs.”

Census Data Used For Comprehensive Visualization of Segregation in American Cities

Wired – “This is the most comprehensive map of race in America ever created [by Dustin Cable at University of Virginia’s Weldon Cooper Center for Public Service]. White people are shown with blue dots; African-Americans with green; Asians with red; and Latinos with orange, with all other race categories from the Census represented by brown.Continue Reading

World Bank Opens Online Archives Holdings

Elisa Liberatori Prati – World Bank – “In April 2015, as part of its commitment to transparency and openness, the World Bank Group launched its Archives Holdings website. This is a state-of-the-art platform, which maximizes the public’s online access to a vast amount of original primary source material in the custody of the Archives. CreatedContinue Reading

Housing Tax and Transfer Programs Decrease Inequality

Gregory Acs and Paul Johnson, Urban Institute. August 18, 2015: “We examine the relationships between housing subsidies, the mortgage interest and real estate tax deductions, and income inequality and find that housing subsidies to low-income families reduce income inequality while the mortgage interest and real estate tax deductions increase it. On net, the distribution ofContinue Reading

Barclays UK Prosperity Map – new research that uses factors including average annual pay, business survival rates, the percentage of households

“A Prosperity Index score has been calculated by Opinium for each UK city and region, helping to explain the data on millionaire numbers calculated by Wealth-X. The index uses third party figures on the factors listed below: Factors used in regional Prosperity Index score: Median household wealth GDP per capita Unemployment rate Average weekly householdContinue Reading

Global dollar credit and carry trades: a firm-level analysis

Bank for International Settlements – Global dollar credit and carry trades: a firm-level analysis by Valentina Bruno and Hyun Song Shin, Working Papers No 510 August 2015. “We conduct a firm-level analysis of borrowing in US dollars by non-financial corporates from outside the United States. The dataset combines bond issuance data with firm-level financial information.Continue Reading

Capital Inflows, Credit Growth, and Financial System

Capital Inflows, Credit Growth, and Financial Systems. Author/Editor: Deniz Igan; Zhibo Tan. IMF. August 19, 2015. “Exploiting a granular panel dataset that breaks down capital inflows into FDI, portfolio and other categories, and distinguishes between credit to the household sector and to the corporate sector, we investigate the association between capital inflows and credit growth.Continue Reading

Americans’ Views on Mobile Etiquette

August 26, 2015, Americans’ Views on Mobile Etiquette ‘Always on’ mobile connectivity poses new challenges for users about when to be present with those nearby or engaged with others on their screens. By Lee Rainie and Kathryn Zickuhr “Cellphones and smartphones have become a mainstay in the lives of many Americans, and this has introducedContinue Reading

Income and Earnings Estimates: First Quarter 2013

“Using the two later waves (14 and 15) from the 2008 Survey of Income and Program Participation panel, this table package presents income and earnings estimates at the individual, family and household level for the first quarter (January, February and March) 2013. Estimates are provided by selected demographic characteristics, such as gender, race/ethnicity, age, marital status andContinue Reading

Federal Debt and the Statutory Limit, August 2015

“The debt limit—commonly referred to as the debt ceiling—is the maximum amount of debt that the Department of the Treasury can issue to the public and to other federal agencies. That amount is set by law and has been increased over the years in order to finance the government’s operations. In March, the debt ceilingContinue Reading

An Update to the Budget and Economic Outlook: 2015 to 2025

“According to the Congressional Budget Office’s estimates, this year’s deficit will be noticeably smaller than what the agency projected in March, and fiscal year 2015 will mark the sixth consecutive year in which the deficit has declined as a percentage of gross domestic product (GDP) since it peaked in 2009. Over the next 10 years,Continue Reading

Incentive Pay and Gender Compensation Gaps for Top Executives

New York Fed – “Stefania Albanesi, Claudia Olivetti, and Maria Prados, August 2015: “The persistence of a gender gap in wages is shaping the debate over women’s equality in the workplace and underscores the challenge facing policymakers as they consider their potential role in closing it. While the disparity affects females at all income levels,Continue Reading