Shareholder Bargaining Power, Debt Overhang, and Investment

Source: Emmanuel Alanis, Sudheer Chava, Praveen Kumar, The Review of Corporate Finance Studies, Early View, Published: 21 July 2018
(subscription required)

From the abstract:
Using a dynamic model of strategic bargaining between equity and debt holders following default, we analyze the impact of shareholder bargaining power and debt overhang on optimal investment and strategic default. Our empirical tests utilize a new measure of the debt overhang wedge based on default probabilities generated from a hazard model for bankruptcy. Consistent with the theoretical predictions, bondholder (shareholder) ownership concentration ceteris paribus enhances (weakens) the overhang wedge and dampens (increases) capital investment. We identify novel ownership-structure-related factors in firm-level capital investment and document how post-default shareholder bargaining power alleviates the underinvestment problem caused by debt overhang.

Increasing minority employment: Are you ready to recruit?

Source: Mary Lou Egan, Marc Bendick Jr., Employment Relations Today, Early View, First published: 23 July 2018
(subscription required)

From the abstract:
To increase employment from desired race or gender groups, employers nearly always first turn to recruiting from outside their organization. But a few years after such initiatives are undertaken, diversity numbers typically remain low or even decrease, turnover among recruits from the sought‐after groups is high, and the efforts are threatened by their recurrent cost. Employers need to break this fruitless cycle by thinking more strategically. Without an inclusive organizational climate that retains and fully utilizes minority employees after hire, simply recruiting more such employees will not lead to sustainable changes in workforce demographics. Drawing on empirical research, this paper describes six “red flags” that identify workplaces not ready to recruit. Only after organizational changes address the deficiencies identified by the red flags will the time for minority recruitment be at hand. But by then special focused recruitment may not be necessary; when employers change their workplace cultures to become truly inclusive, word gets around.

The Return-On-Investment from Your Public Library is Unbelievable!

Source: Oleg Kagan, EveryLibrary, July 17, 2018

If libraries were a business, you’d want to buy that stock.

Wise investors know a good deal when they see it, which is why so many people who are smart and rich love their public library. It’s simple, really, if you consider what the average U.S. household pays for library services (~$7.50/month) and put that next to a public library’s vast offerings, the point is obvious. For under ten dollars you get thousands of books, music, movies, wholesome activities for kids, very expensive market research databases, and a much, much more. But say you’re still not convinced that libraries are a smart investment. Okay, what if I tell you that over and over again research has shown that the Return-on-Investment (ROI) for your local library is around $5 (but could be up to $9), for every dollar spent. It’s true: for every dollar that communities invest in library services they get five back!….

Related:
Should We Replace Libraries with Amazon?
Source: EveryLibrary, July 22, 2018

Of course not. It’s a terrible idea.

So why did Forbes publish this article that made that horrendous suggestion?

We have no idea….

There are, of course, many problems with this idea. First of all, libraries cost the average American taxpayer over 18 years old just $4.50 per month. An Amazon Prime subscription alone is nearly double that price and you get very little for free with that subscription because you still have to buy books or pay more to gain access to premium goods or services. If you want audio books or eBooks on Amazon, you need to pay for an Audible subscription or Kindle unlimited ($10 a month or twice the cost of a library) but you can get that for free through Overdrive (Libby) at your local library. If you want newly released movies, you have to buy the premium Amazon channels or you can get those for free at your library. If you want access to premium music you have to pay another $7.99 a month on Amazon or you can use Freegal or Hoopla at your library for free. And, if you want magazines, you can just get those for free from your library with Zinio or PressReader……

cost of various library services compared to costs of Amazon services

Return on Investment for Public Libraries
Library Research Service
Public Libraries – A Wise Investment
Final Report

Individual Reports for Participating Libraries
Cortez Public Library
Denver Public Library
Douglas County Libraries
Eagle Valley Library District
Fort Morgan Public Library
Mesa County Public Library District
Montrose Library District
Rangeview Library District

Study-Related Information and Resources
Personal ROI Calculator
Calculate your individual estimated return on investment based on your personal library use

Library ROI Calculator https://www.lrs.org/public/roi/calculator.php
Calculate an estimated ROI for your library

CAL Presentation
PowerPoint presentation of “Public Libraries – A Wise Investment” from 2007 Colorado Association of Libraries Conference

Questions for Key Informants
Approaches to use for key informant interviews during the study

Purges: A Growing Threat to the Right to Vote

Source: Jonathan Brater, Kevin Morris, Myrna Pérez, Christopher Deluzio, Brennan Center for Justice at New York University School of Law, 2018

From the abstract:
Voter purges are an often-flawed process of cleaning up voter rolls by deleting names from registration lists. Done badly, they can prevent eligible people from casting a ballot that counts. This report examines the growing threat, and outlines steps every state can take to protect voters in November and beyond. This builds on the Brennan Center’s 2008 report, Voter Purges.

Kansas Supreme Court rules in favor of K-12 public schools, a credit positive for districts

Source: Denise Rappmund, Matthew Butler, Moody’s, Sector Comment, July 18, 2018
(subscription required)

On June 25, the Kansas Supreme Court ruled that the Kansas (Aa2 stable) state legislature’s latest K-12 public school funding bills still do not meet the state’s constitutional standards for adequately funding public education. This ruling is a credit positive for Kansas school districts because it will mean a modest amount of additional operational revenue to districts, on top of the $643.9 million in additional funding over the next five-year period covered by the legislature’s current funding plan. Further, the court has also stated that the current plan is to remain in temporary effect with a stay on the ruling through June 30, 2019, during which time the state will need to re-submit to the court a remedy that will bring funding up to state standards for student achievement.

Large, established toll road systems are better positioned for the next recession

Source: Maria Matesanz, Eriq Alexander, Kurt Krummenacker, Moody’s, Sector In-Depth, July 17, 2018
(subscription required)

Large road systems will experience more stable traffic and revenue trends in a recession than smaller or less well established systems, based on our analysis of their performance during and after the last recession. From a financial and operational standpoint, we expect larger toll roads to maintain steady traffic growth and performance with minimal negative credit effects associated with typical traffic and toll revenue drops seen during recessions. We define large, established toll roads as those that operate multiple assets and have been in operation more than 15 years….

Most states adopt timely fiscal 2019 budgets amid strong revenue growth

Source: Matthew Butler, Nicholas Samuels, Emily Raimes, Timothy Blake, Moody’s, Sector In-Depth, July 16, 2018
(subscription required)

Growth in state tax revenue was robust in fiscal 2018 and positioned many states to carry an operating surplus into fiscal 2019, which for all but four states began on July 1. Likely aided by the strong revenue performance, all but two states began fiscal 2019 with an adopted budget in place, which is a departure from the past few years when several states entered the new fiscal year without an enacted budget.

Young People Are Registering to Vote in Huge Numbers, New Study Finds

Source: Kara Voght, Mother Jones, July 19, 2018

In some battleground states, 18-to-29-year-olds now make up a far greater percentage of new registrants.

The March for Our Lives teens said they’d #VoteThemOut, and a new study suggests they could be poised to do just that. According to the political data firm TargetSmart, the percentage of newly registered voters who are under the age of 30 has grown significantly in a number of key battleground states since the February school shooting in Parkland, Florida. The surge could have big implications in this fall’s fight for control of Congress.

The study evaluated all new voter registrations in the 39 states with available data since February 14, 2018—the day of the Parkland shooting—and calculated the change in the share of new registrants who are 18 to 29 years old. Across the country, the share of youth registrants increased by a modest 2.16 percentage points. But in Indiana, Virginia, and New York—home to some of this year’s marquee House and Senate contests—the share of youth registrants increased by 9.87, 10.49, and 10.7 percentage points, respectively. In Pennsylvania—where voters will decide as many as nine competitive congressional races—the share of new registrants who are younger than 30 jumped by a whopping 16.14 percentage points. The study doesn’t evaluate how many of the new registrants may have been motivated by the #NeverAgain movement…..

Related:
Analysis: After Parkland Shooting, Youth Voter Registration Surges
Source: Tom Bonier, TargetSmart, July 19, 2018

A new TargetSmart analysis of voter registration data in the 39 states with available data show that registration rates for voters aged 18-29 have significantly increased in key battleground states over the last seven months, presaging the increased impact youth voters may have on the upcoming midterm and presidential elections. Using February 14, 2018, as a reference point ­­– the date on which the Parkland shooting happened, which spurred a youth-led movement to register young voters across the country — TargetSmart’s analysis found that the share of youth registrants nationwide has increased by 2.16 percent, a potentially impactful surge in youth enrollment. With more than a dozen states’ primaries still left and months until voter registration deadlines, the findings are an early quantitative sign that youth turnout is on the rise in this year’s midterm elections. The state-by-state analysis shows that younger voters are poised to have an outsized impact in key battleground races. Pennsylvania – which has November elections for U.S. Senator, Governor, and many critical House races – saw youth voter registration surge by over 16 points after February 14, jumping from 45.2 percent to 61.4 percent of new registrants.

Health Insurers Are Vacuuming Up Details About You — And It Could Raise Your Rates

Source: Marshall Allen, ProPublica, July 17, 2018

Without any public scrutiny, insurers and data brokers are predicting your health costs based on data about things like race, marital status, how much TV you watch, whether you pay your bills on time or even buy plus-size clothing. ….

…. This year, ProPublica and NPR are investigating the various tactics the health insurance industry uses to maximize its profits. Understanding these strategies is important because patients — through taxes, cash payments and insurance premiums — are the ones funding the entire health care system. Yet the industry’s bewildering web of strategies and inside deals often have little to do with patients’ needs. As the series’ first story showed, contrary to popular belief, lower bills aren’t health insurers’ top priority. ….