• Selected
• Entire List

Abstract:
Merck & Co., Inc. pulled Vioxx, a $2.5 billon a year nonsteroidal anti-inflammatory drug, off the shelf in September 2004. The removal followed a study that was published reporting Vioxx increased the risk of cardiovascular events after long-term use. In the years since then, many lawsuits have been filed against Merck. This paper examines the incentive to recall a product and the effects of Merck pulling Vioxx from the shelves. Using the market's expected internal rate of return for Merck, I calculate the expected profits from future Vioxx sales. I then use data on financial effects to show how the market value of Merck reflects their probability of winning legal cases concerning Vioxx.

pharma, recall, internal rate of return, event study

Abstract:
Stadium boosters have long used the promise of economic development as a means of gaining public support to finance local sports teams. Past research has shown little or no impact on employment or income when viewed at the MSA level. This paper expands the current literature on the economic impact of professional sports franchises. Following Coates and Humphreys (2003) we look at employment and wages at the county level using detailed SIC and NAICS industry codes. We find mixed results on employment within a county, but find a negative effect on the payrolls within these industries.

Stadium Finance, Public Finance, Sports, Employment

Abstract:
Companies in financial distress have an incentive to take on high-risk/high-reward projects, known as 'bankruptcy behavior.' This paper investigates the activity of bankruptcy behavior outside of the corporate setting by analyzing the effects of the overtime structure in the NFL relative to College Football. Because of the difference in overtime structures, NFL teams will act differently when overtime is possible. The structure causes moral hazard, which happens because NFL teams views overtime differently than college football teams. I find evidence that NFL teams take on more risk late in the game to avoid overtime, or act as if they have bankruptcy behavior.

Bankruptcy Behavior, Firm Behavior, Sports, Risk Shifting

Abstract:
Stock exchanges around the world have integrated a hybrid trading system. This has added anonymity for traders, making it harder for market makers to match large continuous trades, leading to an increase in volatility and a decrease in efficiency. This occurs because less information is contained in the price of a stock at any given time. Using a relative difference-in-difference estimation I find that as the hybrid market was adopted market volatility increased (for both the NYSE and LSE) relative to an electronic market. Although the use of a hybrid market may increase transaction speed, it decreases informational efficiency.

Market Efficiency, Hybrid Market, Information Efficiency, Speed Efficiency

Abstract:
NASCAR’s reward structure for rank order tournaments has been considered the exception to the rule in tournament theory due to the linear payout structure. We suggest that the rewards for drivers are nonlinear when you take into consideration the value of sponsorship time on camera and sponsor mentions during a race on TV. Given the importance of corporate sponsorship in NASCAR, we suggest that performance in a race provides additional benefits that are not captured in traditional tournament payments.

Tournament Structure, Sports, Sponsorship Pay, NASCAR

Abstract:
Sports leagues in different parts of the world are set up in different ways, some as open leagues and some as closed leagues. It has been shown that spending on players is higher in open leagues. This paper shows that consumer welfare is increased by open leagues, by showing that aggregate spending is higher and aggregate profit is lower in these leagues. Teams in the bottom of their league spend more on talent to avoid relegation and teams at the top of their league spend more to win championships and try for promotion. Rent Dissipation occurs because a team at the bottom of a closed league will put forth less effort than a similar quality team in an open league.

Open and Closed Leagues, Rent Dissipation, Sports

Abstract:
Many states are outlawing the use of affirmative action, which has lead to the use of inefficient measures as a substitute. I show that schools still use affirmative action in the application process because of a down-stream demand from employers.

Education, Affirmative Action