Working Papers
Mitchell A. Petersen
My working papers are in Adobe Acrobat format (.pdf). To read view them, you will need the Adobe Acrobat reader. Adobe's home page gives instructions on how to download a copy of the Adobe Acrobat reader for your particular machine. Some of the files can only be read with the newer version of Acrobat Reader. If you have trouble, you may need to download a newer version.
1) Investment and Capital Constraints: Repatriations Under the American Jobs Creation Act
ABSTRACT:
Do publicly traded firms forego valuable
investment opportunities because they have insufficient capital to fund those
projects? This is an important question in finance and has public policy
implications. Many of the previous studies have been plagued with the
difficulty of distinguishing the role of insufficient capital with the extent
to which investment opportunities were available. The enactment of the American
Jobs Creation Act (AJCA) allows an opportunity to more cleanly answer this
question than has been available to prior researchers. Our results show that
the average firm that repatriated under the act did not increase investment
following repatriation. However, those firms who we measure as most likely to
have been under funding investment prior to the act’s passage saw significant
increases in investment beyond those firms that did not participate in the act
and beyond those that did participate but that were not financially
constrained. This is true even after we control for the availability of funds
to repatriate. We find little change in employment, leverage, or disbursements
to shareholders following repatriation, even among the financially constrained
firms.
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Full text of paper (Adobe Acrobat Format) |
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Last Revision: March, 2009 |
2) Information: Hard and Soft
ABSTRACT:
Information is an essential component of all financial markets and transactions. However information can arrive in multiple forms. In this paper, I begin to define what is meant by hard and soft information. Hard information is quantitative, easy to store and transmit in impersonal ways, and its content is independent of the collection process. Technology is changing the way we communicate and thus must fundamentally change the way financial markets and institutions operate. One of these changes is a greater reliance on hard relative to soft information in financial transactions. This paper discusses the advantages and costs of this substitution and the possible consequences of the hardening of information on both financial markets and institutions as well as those who study them.
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Full text of paper (Adobe Acrobat Format) |
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Last Revision: July, 2004 |
Slides for
the talk at Studienzentrum Gerzensee entitled "Hard and Soft
Information: Implications for Banking and Finance Research"
3) Premature De-escalation in Response to Failed Investment: A Test of Escalating Commitment, Marginal Decision-making, and Mental Budgeting (joint with Chip Heath)
ABSTRACT:
Using sophisticated subjects in an environment that should make the norms of economic behavior highly salient (MBAs in a corporate finance class), we test three theories about how people respond to previous investments: escalating commitment, mental budgeting, and marginal decision making. The results support mental budgeting.
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Full text of paper (Adobe Acrobat Format) |
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Last Revision: January, 1996 |
4) Quote Revisions and The Quoted Size: An Empirical Analysis, (joint with Steve Umlauf)
ABSTRACT:
We examine the importance of the size quoted by the specialist in the adjustment of prices. The quoted size is the maximum trade size for which the posted quotes are guaranteed. We find that the impact of trades on subsequent quote revisions depends significantly on whether the trade size exceeds the quoted size. Although larger trades are followed by larger quote revisions, most of the variation in quote revisions is explained by whether the trade size exceeds the quoted size. Once it does, further increases in the trade size have no effect. Our results also indicate that only a fraction of trades move the quotes.
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Full text of paper (Adobe Acrobat Format) |
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Last Revision: June, 1994 |
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