Showing papers by "Alexander W. Butler published in 2019"
TL;DR: The authors show that initial public offerings (IPOs) have nontrivial positive spillover effects on local labor markets, business environments, consumer spending, real estate, and migration, and show that it is the listing decision, which encompasses both a wealth and liquidity shock, that induces economic spillovers.
Abstract: We show that initial public offerings (IPOs) have nontrivial positive spillover effects on local labor markets, business environments, consumer spending, real estate, and migration. We mitigate endogeneity concerns about unobserved heterogeneity with restrictive geographic fixed effects coupled with a matching procedure. We show that it is the listing decision, which encompasses both a wealth and liquidity shock, that induces economic spillovers. Conditional on an IPO occurring, we estimate that an additional $10 million in IPO proceeds is associated with an extra 41 jobs and 0.7 new establishments locally.
16 citations
TL;DR: In this article, the impact of population aging on municipal access to credit is examined and the authors highlight the challenges municipalities face to cope with systemic demographic transition, highlighting the need for state governments to take into account demographic changes.
Abstract: We examine the impact of population aging on municipal access to credit. A one standard deviation increase in a state’s population age leads to a 23 basis point increase in municipal bond issue spread. Three mechanisms drive this effect: income tax revenue, healthcare liabilities, and pension underfunding. Constitutional pension protections and securities with lower credit quality or longer maturity exacerbate the effect. To control for endogenous migration and mortality patterns, we exploit variation from historical state fertility trends. Our findings highlight the challenges municipalities face to cope with systemic demographic transition.
15 citations
TL;DR: The average maturity of newly issued corporate bonds has declined substantially over the past 40 years, and the traditional determinants of debt maturity fail to explain this decrease fully as mentioned in this paper, and the changing composition of the investors in the corporate bond market affects the maturity of new bond issues.
Abstract: The average maturity of newly issued corporate bonds has declined substantially over the past 40 years, and the traditional determinants of debt maturity fail to explain this decrease fully. We show that the changing composition of the investors in the corporate bond market affects the maturity of new bond issues. The results of a Granger causality test, a natural experiment, and a regulatory study suggest that a decline in ownership share of insurance companies—which prefer long-term bonds—in the corporate bond market explains the maturity decline. These findings illustrate how investor preferences can have real effects on corporations.
5 citations
TL;DR: This paper found no significant changes in return on assets after megamergers, suggesting that the apparent non-result is driven by merged firms subsidizing their increased operating inefficiencies with higher markups.
Abstract: There is no consensus in the literature regarding the financial consequences of megamergers in part due to the difficulty in establishing a good counterfactual. By comparing the performance of these deals to the performance of synthetic mergers constructed using a novel matching procedure, we find no significant changes in return on assets after megamergers. This apparent non-result is driven by merged firms subsidizing their increased operating inefficiencies with higher markups. We show that this cross-subsidization effect is stronger in larger deals and in more concentrated industries, suggesting that our findings are driven by market power and quiet life considerations.