Abstract
A common objection to “sin taxes”—corrective taxes on goods that are thought to be overconsumed, such as cigarettes, alcohol, and sugary drinks—is that they often fall disproportionately on ...low-income consumers. This paper studies the interaction between corrective and redistributive motives in a general optimal taxation framework and delivers empirically implementable formulas for sufficient statistics for the optimal commodity tax. The optimal sin tax is increasing in the price elasticity of demand, increasing in the degree to which lower-income consumers are more biased or more elastic to the tax, decreasing in the extent to which consumption is concentrated among the poor, and decreasing in income effects, because income effects imply that commodity taxes create labor supply distortions. Contrary to common intuitions, stronger preferences for redistribution can increase the optimal sin tax, if lower-income consumers are more responsive to taxes or are more biased. As an application, we estimate the optimal nationwide tax on sugar-sweetened beverages, using Nielsen Homescan data and a specially designed survey measuring nutrition knowledge and self-control. Holding federal income tax rates constant, our estimates imply an optimal federal sugar-sweetened beverage tax of 1 to 2.1 cents per ounce, although optimal city-level taxes could be as much as 60% lower due to cross-border shopping.
Abstract
We document that finance companies and FinTech lenders increased lending to small businesses after the 2008 financial crisis. We show that most of the increase substituted for a reduction in ...bank lending. In counties in which banks had a larger market share before the crisis, finance companies and FinTech lenders increased their lending more. We find no effect of reduced bank lending on employment, wages, and new business creation by 2016. Our results suggest that finance companies and FinTech lenders are major suppliers of credit to small businesses and played an important role in the recovery from the 2008 financial crisis.
Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online
This study examines key mechanisms through which CEO narcissism influences global performance variance in the context of Asian emerging market multinational enterprises. Building on the contextual ...reinforcement model of narcissism and the cushion hypothesis, we focus on the role of foreign direct investment (FDI) risk‐taking and business group affiliation (BGA). We test our moderated mediation model on data from 149 South Korean multinational enterprises from 2006 to 2016. The results show that CEO narcissism is positively associated with FDI risk‐taking. The effect of CEO narcissism on global performance variance is mediated by FDI risk‐taking. Furthermore, BGA moderates the above‐mentioned relationships. Our findings offer important contributions to the international business and CEO narcissism literatures.
Abstract
How can fragility be averted in open-end mutual funds? In recent years, markets have observed an innovation that changed the way open-end funds are priced. Alternative pricing rules (known ...as swing pricing) adjust funds’ net asset values to pass on funds’ trading costs to transacting shareholders. Using unique data on investor-level transactions in U.K. corporate bond funds, we show that swing pricing eliminates the first-mover advantage arising from the traditional pricing rule and significantly reduces outflows during market stress. Swing pricing also reduces concavity in the flow-performance relationship and dilution in fund performance.
We provide evidence of a violation of the informativeness principle whereby lucky successes are overly rewarded. We isolate a quasi-experimental situation where the success of an agent is as good as ...random. To do so, we use high-quality data on football (soccer) matches and select shots on goal that landed on the goal posts. Using nonscoring shots, taken from a similar location on the pitch, as counterfactuals to scoring shots, we estimate the causal effect of a lucky success (goal) on the evaluation of the player's performance. We find clear evidence that luck is overly influencing managers' decisions and evaluators' ratings. Our results suggest that this phenomenon is likely to be widespread in economic organizations.
Audits are a standard mechanism for reducing corruption in government investments. The quality of audits themselves, however, may be affected by relationships between auditor and target. We study ...whether provincial chief auditors in China show greater leniency in evaluating prefecture governments in their hometowns. In city-fixed-effect specifications—in which the role of shared background is identified from auditor turnover—we show that hometown auditors find 38 percent less in questionable monies. This hometown effect is similar throughout the auditor’s tenure and is diminished for audits ordered by the provincial Organization Department as a result of the departure of top city officials. We argue that our findings are most readily explained by leniency toward local officials rather than an endogenous response to concerns of better enforcement by hometown auditors. We complement these city-level findings with firm-level analyses of earnings manipulation by state-owned enterprises (SOE) via real activity manipulation (a standard measure from the accounting literature), which we show is higher under hometown auditors.
Abstract
Despite recent attention to the role of competition in determining health outcomes in developed nations, little is known about how market power impedes access to quality care in lower-income ...countries. This paper studies the effects of policy changes that stopped collusion among firms supplying insulin to one of Mexico’s largest health care providers. I document increased insulin utilization and decreased diabetes complications and mortality following the sudden drop in insulin prices caused by the cartel’s collapse. These adverse health outcomes expand the assessment of damages caused by the cartel. The findings highlight the importance of market design policies in health markets, particularly for low- and middle-income countries.
Abstract
Homelessness and precarious living conditions are on the rise across much of the Western world. This paper exploits quasi-exogenous variation in the affordability of rents due to a cut in ...rent subsidies for low-income households in the United Kingdom in April 2011. Using comprehensive district-level administrative data, we show that the affordability shock caused a significant increase in financial distress, evictions, property crimes, insecure temporary housing arrangements, statutory homelessness, and actual rough sleeping. The most notable rise in statutory homelessness is driven by families with children, lone parents, individuals with existing health conditions, and as a result of having been evicted. We estimate that the fiscal savings were low and shifted toward the local administration: Savings by the central government were partially offset by an increase in council spending to meet statutory obligations for homelessness.
Abstract
In a developing market, where the ownership is highly concentrated and the central governance issue is the conflict between majority and minority shareholders, how do managers with previous ...military experience (military managers) affect the quality of financial reporting? We use a sample of Chinese listed firms over period 2006–2016, with a total of 16,010 firm‐year observations. Our results suggest that firms with military managers are associated with higher levels of earnings management, through both accrual‐based and real‐activities manipulations. Those firms are more susceptible to financial restatements, qualified audit opinions, and penalties for violation. To alleviate endogeneity problems, we use both the instrumental variable regression and propensity score matching, and our results are robust. In addition, the effect of military managers is more pronounced in state‐owned firms and firms with weak internal control systems. These findings improve our understanding of the link between managerial traits and financial reporting decisions, in an environment where the major governance issue is the conflict between majority and minority shareholders.
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