Curtis M. Hall

Home Safe: No-Trade Clauses and Player Salaries in Major League Baseball

In this paper, we examine the wage effects of no-trade clauses in Major League Baseball. Using an accepted player salary equation and data from the 2003-2008 seasons, we find evidence that there is a trade-off between monetary compensation and the risk reduction provided by a no-trade clause. The results suggest that players may be able to simultaneously negotiate for a no-trade clause and higher salaries, but this is constrained when players also seek to guarantee their income stream with long-term contracts.

Customer Concentration, Cost Structure, and Performance

This study examines the effects of customer concentration levels on firm cost structure decisions. Analyzing cost data from a sample of manufacturing firms from 1976 through 2013, we find a negative relationship between customer concentration and cost elasticity whereby firms exhibit lower proportions of variable-to-fixed costs in the presence of higher levels of customer concentration. Additionally, we find that greater customer bargaining power, proxied by supplier industry competition and product market fluidity, leads to lower cost elasticity as customer concentration becomes greater. These results are robust to alternate specifications as well as controlling for endogeneity using a two-stage model. Our results suggest that suppliers respond to customer concentration by pursuing increased mutual dependence and cooperation with customers rather than attempting to reduce the effect of power imbalances within the supplier-customer relationship.

Shareholder Rights and Employment

In this paper I hypothesize and find that both shareholder rights and debt have significant effects on firm-employee relationships. I find that, consistent with ineffective resource management, firms with weaker governance have more employees per assets and are more likely to hire due to sales growth. I use changes in investment in capital and R&D to rule out that this result is due entirely to the propensity of poorly governed firms to overinvest. Furthermore, this study shows that while weak shareholder rights are associated with lower labor productivity, higher debt is also associated with lower labor productivity. Finally, I show that higher labor productivity is associated with higher wages, and that firms with weak shareholder rights pay more for this productivity. These results are consistent with the theory that debt discipline and shareholder monitoring, although both forms of corporate governance, are subject to the differing incentives of debt and equity investors.