Leverage and house-price dynamics in U.S. cities

Article Abstract:

The pattern of financial borrowing exhibited by homeowners offers an in-depth understanding on house-price dynamics. Preliminary results derived from 44 metropolitan areas between the 1984 and 1994 period revealed that in cities populated with financially leveraged homeowners house prices are influenced by city-specific changes, particularly per capita income gyrations. These results present novel evidences on the role of borrowing in determining the behavior of asset prices.

Prices and rates, Housing, Leverage (Finance), Leverage, Reverse mortgages, Home equity conversion

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Is there discretion in wage setting? A test using takeover litigation

Article Abstract:

The implementation of antitakeover legislation at the state level creates a substantial impact on the wage preferences of managers. Through an empirical analysis involving a sample of companies, it was shown that these laws are instrumental in raising the annual wage level of employees by 1% to 2%, or roughly equivalent to $500 dollars a year. These results appeared consistently in all samples observed, even in the presence of political biases.

Evaluation, Laws, regulations and rules, Wages, Wages and salaries, Labor policy, Income distribution, Business economics, Managerial economics

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Auditing without commitment

Article Abstract:

An optimal contract in which a principal is incapable of commiting to an audit regulation was analyzed to study the nature of auditing in the absence of such a commitment. A contract needs to give incentives to the principal whenever commitment to an audit regulation is not assured so as to ensure compliance of the principal. Giving of incentives also increases the likelihood that the principal will undertake auditing.

Management, Auditing, Economic research

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