Interpreting Empirical Estimates of the Effect of Corporate Governance

Empirical studies of corporate governance address potentialendogeneity problems, but fail to place endogeneity in the contextof a model and ignore the possibility of disparate treatmenteffects across companies. This paper tackles these defects.The model and analysis in the paper demonstrate that: (1) Validand positive estimates for the effect of governance can onlyarise if there is random variation in governance and governanceis systematically underproduced, or governance is chosen randomlywithout bias and the randomness under study concerns a subpopulationwith below-average governance. (2) Governance models that correctfor endogeneity using subsamples of firms, fixed effects, orinstrumental variables estimates focus on subpopulations ofcompanies that may have different responses to a governancetreatment than the average firm.     

The contributions of historic preservation to housing and economic development

Abstract

Historic preservation contributes greatly to housing and economic development. Historic preservation has produced almost 250,000 housing units through use of the federal historic rehabilitation tax credit. Additionally, heritage tourism is a multibillion‐dollar industry, and preservation projects help further community revitalization.

Historic preservation also has a downside. Preservation's growing popularity may dilute its imperative and market prowess, and some argue it is used to thwart new development. Preservation requirements may impede affordable housing production and displace area residents. These undesirable consequences are not givens, however. Preservationists are working to become more flexible, and we suggest ways to practice historic preservation while mitigating some of its negative consequences—for example, tax credit changes, more flexible building codes, and a “tiered” system of designating historic properties at varying levels of significance.     

Optimal Trust Design in Mass Tort Bankruptcy

Many firms have filed for bankruptcy to manage mass tort liabilities,most notably asbestos producers. We model a bankruptcy procedurethat optimally balances the liquidity needs of present claimantsand an uncertain number of future claimants. We find that futureclaimants should receive greater awards in expectation thanpresent claimants as compensation for bearing greater futureclaims risk. We also find that allocating more value to contractualcreditors in bankruptcy makes an earlier filing more likely,which may increase overall welfare. Optimal risk-sharing impliesthat creditors should receive equity in a trust fund, with tortclaimants receiving senior debtlike securities.     

Smart growth: More than a ghost of urban policy past,less than a bold new horizon

Abstract

Proponents of smart growth tout its more compact, less automobile‐dependent development as a superior alternative to the prevailing pattern of sprawl. Admittedly, smart growth is characterized by the ghost of urban policy past, ranging from inner‐area revitalization to growth management. Yet smart growth incorporates leading‐edge, contemporary components (e.g., encouraging multimodal transportation, strategically locating public employment), and its timing is propitious—as aging baby boomers, rising immigration, and other forces support core‐area revitalization and other smart growth themes.

The future of smart growth is promising, but its success is far from assured. Multiple factors, such as the lack of adoption across governments, market support for sprawl, the automobile's clinging dominance, and a paucity of techniques, could impair broad implementation. However, smart growth is sensible, broadly recognized, and fortuitously timed, and its proponents have learned from the miscues of its historical antecedents.     

Asian Americans for equality: A case study of strategies for expanding immigrant homeownership

Abstract

At a time when the overall homeownership rate in the United States is at a historic high, many groups still face severe hurdles in realizing the American dream. The public, private, and nonprofit sectors are working to address these barriers, and this article examines one nonprofit's activities. Asian Americans for Equality (AAFE) is a civil rights and housing organization providing homeownership and other services to Asian Americans, a group that often faces language, cultural, credit, and financial difficulties in achieving homeownership.

AAFE addresses these challenges by providing aggressive outreach through housing fairs and neighborhood publications; it offers homeownership education and counseling in a variety of languages and settings, secures multiple housing subsidies and develops affordable housing, and educates lenders on the employment and credit practices of the Asian community. AAFE thus helps tailor the complex web of activities required to expand homeownership to traditionally underserved—especially immigrant—populations.     

Comment on Jack Goodman's “houses,apartments, and the incidence of property taxes”

Abstract

Goodman finds from his analysis of the 2001 Residential Finance Survey that multifamily housing bears a higher effective property tax rate (EPTR) than single‐family owner‐occupied housing and argues that much of the differential is associated with the lower average property value of apartments. We offer comments on how this important research can be enhanced and analyze the EPTR by using a different database, the Public Use Microdata Sample (PUMS) of the decennial census.

Like Goodman, we find from the PUMS that the EPTR of multifamily housing is high relative to that of single‐family detached housing and that lower‐value multifamily housing has a higher EPTR relative to that of higher‐value multifamily units. We offer preliminary findings from the PUMS on the implications of the EPTR for development patterns (it may discourage smart growth), equity (the poor and minorities bear a higher tax burden), and housing (high EPTRs challenge affordability).     

The potential and limitations of mortgage innovation in fostering homeownership in the United States

Abstract

This article presents an empirical analysis of mortgage innovation as a vehicle to enable renters, especially those from traditionally underserved populations, to realize home‐ownership. It examines the financial and underwriting criteria of a typology of mortgage products, from those adhering to historical standards to some of today's most liberal loans, and develops synthetic models to account for all direct purchase costs. These models are calibrated using 1995 data on renter demographic and financial characteristics from the Survey of Income and Program Participation.

Compared with historical mortgages, today's more innovative loans increase the number of renters who could hypothetically qualify for homeownership by at least a million and expand potential home‐buying capacity by $300 billion. Certain policies could greatly expand the potential gains. Nevertheless, even the most aggressive innovations can play only a limited role in efforts to deliver the material benefits of homeownership to underserved populations.     

Federal housing policy and preservation: Historical evolution,patterns, and implications

Abstract

This paper considers the evolution and patterns of federal low‐income¹ housing policies and programs over roughly the past half‐century. It begins with an overview of the multifaceted involvement of the federal government in housing — only one aspect of which is its intervention in the low‐income sector. This is followed by an overview of federal low‐income housing policy from the New Deal to today. The underlying assumptions and approaches of these policies are then considered with respect to such considerations as the government's presence and role, its targeting of assistance, and the selection of subsidy levels and vehicles. The paper concludes with a brief review of the implications of the historical record for future policy.