This paper investigates changes in firm spending following changes in shareholder taxes. We show that firms with less elastic demand for equity capital will expand operations less than other firms following shareholder tax cuts. Since financial constraint is a factor that diminishes a firms demand elasticity for capital, we predict that financially constrained firms expand less than other companies following shareholder tax reductions.
Although both businessmen and scholars agree that the practice of corporate finance and corporate strategy should be closely coordinated and logically consistent, a large gap exists between the two functions. Although MBA programs routinely cover both subjects, they employ very different analytical and decision tools and the interaction between the two bodies of knowledge rarely receives the attention it deserves. The resulting Finance-Strategy gap can lead strategically oriented firms to de-emphasize or even discard classic finance techniques such as Net Present Value (NPV).
The Frank H. Kenan Institute of Private Enterprise hosted its inaugural North Carolina Investment Forum (NCIF) November 1, 2017, at the Kenan Center on the campus of the University of...
In this paper, we provide a theoretical and empirical framework that allows us to synthesize and assess the burgeoning literature on CEO overconfidence. We also provide novel empirical evidence that overconfidence matters for corporate investment decisions in a framework that explicitly addresses the endogeneity of firms' financing constraints.
DaimlerChrysler’s origins date as far back as 1883, when its predecessor “Benz & Co. Rheinische Gasmotoren-Fabrik, Mannheim” was founded by Karl Benz in Germany. The Chrysler Corporation was founded in the United States in1925 by Walter P. Chrysler. In November 1998 Chrysler and Daimler Benz completed a $36 billion merger, forming DaimlerChrysler, the fifth largest automaker in the world with estimated sales of $160 billion.
With every passing generation, a family-run business faces the risk of losing steam due to improper handovers and inadequate talent and leadership development. How, then, can the senior-generation of leaders ensure that all the years of blood and sweat that went into building a business don't go to waste? The third and final installment of our family business series attempts to answer this question.
In this second part of our family business series, we take a look at Vietri, America's largest company selling fine Italian tableware. The metaphor of beautiful, fragile crockery is rather apt in the context of family-owned businesses, which can be destroyed in the blink of an eye unless there is an abiding commitment to handling it with care--across generations. Yes, we are talking succession planning, still the Achilles' heel of several painstakingly built enterprises.
The image of the ‘home’ is central to family businesses, beyond its obvious role as the mooring ground for generations of entrepreneurs. Entrepreneurs often find it difficult to keep home and business apart—which is why the story of a home that is itself the business can offer many fascinating lessons. The Biltmore Estate, America’s largest private home and a National Historic Landmark, is today an 8,000-acre, 1,800-employee enterprise, run by a fourth-generation family hand. The estate defies an old myth—that family businesses don’t last beyond three generations. Evolving from just a tourist attraction to a luxury hotel, a winery, a home products line and an equestrian center, Biltmore has been a celebrated model of sustainable growth held together by a strong family anchor over nearly twelve decades. This article explores Biltmore’s mix of family-led and professional management, and how the grand estate is gearing up for the future.
Prior research examines practitioner, investor, and executive perceptions of corporate tax planning. However, little is known about how the typical U.S. consumer views corporate tax planning. We examine consumers’ perceptions of corporate tax planning using both survey and experimental methods.
We model leverage cycles in the natural laboratory of a mature asset class, namely US Commercial Real Estate. In this setting we can observe entrepreneurs' asset values as well as debt balance and thus model capital-market yields, as conditioned by market-wide leverage, which indicates debt availability. Using a VAR framework, we examine variance decompositions and impulse-response functions. We show that leverage constitutes the primary driver of innovations in capital-market yields and vice versa. We further find evidence for flight to quality as well as knock-on effects that affect low-leverage entrepreneurs in the market.
What do accelerators do? Broadly speaking, they help ventures define and build their initial products, identify promising customer segments, and secure resources, including capital and employees. More specifically, accelerator programs are programs of limited-duration—lasting about three months—that help cohorts of startups with the new venture process.
Most retailers operate under the assumption that stabilizing employees’ schedules would hurt their financial performance because instability is an inevitable outcome of variable demand patterns in retail stores. We tested the validity of this commonly held belief. The goal of our experiment was to determine if it is possible to improve schedule stability without hurting financial performance.
The UNC Energy Center and the Kenan Institute of Private Enterprise hosted a conference on "Meeting the Renewables Intermittency Challenge" on April 13-14, 2018. The conference, and resulting white paper, examined the true cost of integrating renewable energy generation into the electric grid and explore ways to address the challenges posed by wind and solar energy intermittency.
This study provides evidence that nonbank institutional investors that participate in loan syndicates value inside information obtained through lending agreements with bellwether borrowers. The private information nonbank institutional investors obtain from lending relationships with bellwether firms can help identify trading opportunities in other public market securities. Thus, we predict and find that institutional investors compensate bellwether firms by charging a lower loan spread.
We conduct what is, to our knowledge, the first systematic examination of Chinese-based firms that utilize a variable interest entity (VIE) structure to evade Chinese regulation on foreign ownership to list equity in the U.S. The use of the VIE structure is not only questionable under Chinese laws but also exacerbates the agency costs within the firm. We find that Chinese VIE firms have a Tobin’s Q as much as 35% lower than Chinese non-VIE firms, and this discount is concentrated in firms with higher risks of government intervention and managerial expropriation. To remediate these risks, VIE firms are more likely to have a politically connected director on the board, hire a Big N auditor and have higher levels of institutional ownership.
African American older adults face a major retirement crisis (Rhee, 2013; Vinik, 2015)). Owing to a legacy of racial discrimination in education, housing, employment, and wages or salaries, they are less likely than their white counterparts to have accumulated wealth over the course of their lives (Sykes, 2016). In 2013, the median net worth of African American older adult households ($56,700) was roughly one-fifth of the median net worth of white older adult households ($255,000) (Rosnick and Baker, 2014). Not surprising, given these disparities in net worth, African American older adult males (17%) and females (21%) were much more likely than their white male (5%) and female (10%) counterparts to live in poverty (Johnson and Parnell, 2016; U.S. Department of Housing and Urban Development, 2013a). They also were more likely to experience disabilities earlier in life and to have shorter life expectancies (Freedman and Spillman, 2016).
A growing body of rigorous academic literature empirically demonstrates that high-skilled immigrants provide a range of long-lasting and material benefits to the U.S. economy through entrepreneurship and innovation. Recent research has quantified the impact of foreign-born founders on key economic indicators such as firm creation, job creation and overall business innovation. Likewise, a growing body of literature documents how skilled immigrants have more broadly facilitated technological innovation.
A roadmap for inclusive and equitable development is proposed which has four core elements that will lead to greater shared prosperity in Durham: a sustainability scorecard; a collective ambition community mobilization strategy; a more inclusive entrepreneurial/business ecosystem; and an equitable community economic development innovations fund. These activities aim to support historically underutilized businesses and invest in workforce development partnerships that support working poor civil servants at-risk of being priced out of and displaced from Durham’s housing market. Utilizing these tools and leveraging the four corners of intellectual assets that exist at Duke University, University of North Carolina at Chapel Hill, North Carolina State University, and North Carolina Central University should strategically position Durham to be one of the most inclusive, equitable, and sustainable cities in America.
Universities are under tremendous pressure related to declining resources, flat enrollments, and increasing stakeholder demands. Strategic questions are surfacing related to resource allocation – how to connect investments to outcomes in an increasingly competitive and dynamic environment.