Roberto Pinheiro

Health Insurance as a Productive Factor

In this paper, we present a less-explored channel through which health insurance impacts productivity: by offering health insurance, employers reduce the expected time workers spend out of work in sick days. Using data from the Medical Expenditure Panel Survey (MEPS), we show that a worker with health coverage misses on average 52% fewer workdays than uninsured workers, after controlling for endogeneity. We develop a model that embodies this impact of health coverage in productivity. In our model, health insurance reduces the probability that a healthy worker gets sick, missing workdays, and it increases the probability that a sick worker recovers and returns to work. In our model, firms that offer health insurance are larger and pay higher wages in equilibrium, a pattern observed in the data. We calibrated the model using US data for 2004 and show the impact of increases in health costs, as well as of changes in tax benefits of health insurance expenses, on labor force health coverage and productivity. Finally, we show that a government mandate that forces firms to offer health insurance increases average wages and aggregate productivity while reducing aggregate profits, ultimately having a positive impact on welfare.

CEOs in Family Firms: Does Junior Know What He's Doing?

We model the evolution of CEO quality in family firms. When heirs work toward a common goal alongside an older generation, Bayesian updating attributes success mostly to the older (proven) agent. Thus, heirs learn little about their own skill. This effect is strongest after the founder, implying that family firms tend to either die immediately or be relatively long-lived. More generally, we obtain an even/odd fluctuation in generational quality. Because uncertainty breeds caution, our analysis points to a conservative managerial style in family firms and emphasizes the importance of external screening mechanisms, especially for heirs following a very successful generation.

Information Production and the Duration of Accounting Fraud

We evaluate the determinants of the duration of accounting misconduct for …rms which were issued an Accounting and Auditing Enforcement Release (AAER) by the SEC. We …nd a strong role for the …nancial reporting and auditing process in limiting the duration of frauds. Frauds are more likely to be terminated following the release of the audited annual statements in the 4 th …scal quarter rather than following any of the interim period reports, suggesting scrutiny and monitoring pressures are particularly large in this period. Managers more skilled at fraud appear to anticipate this increased scrutiny since frauds starting in the 1 st …scal quarter (i.e., as far away from the 4 th quarter as possible) tend to be longer than the ones starting in other …scal quarters. We also …nd that the presence of a new auditor as well as any form of explanation in the auditor’s statement increases the likelihood of termination. Moreover, we …nd that …nancial analyst following matter as analyst coverage reduce the chance of a longer misconduct spell, especially if the analyst is a specialist in the industry. However, the presence of too many analysts covering the same …rm signi…cantly reduce the value of analyst coverage at the margin, independent of the analysts’industry knowledge. In terms of …rm characteristics, we show that pro…table and high stock return …rms are able to maintain accounting misconduct over longer time periods. In terms of misconduct characteristics, we …nd that

Information Production, Misconduct Effort, and the Duration of Financial Misrepresentation

We evaluate the determinants of the duration of accounting misconduct for …rms which were issued an Accounting and Auditing Enforcement Release (AAER) by the SEC. We …nd a strong role for the …nancial reporting and auditing process in limiting the duration of frauds. Frauds are more likely to be terminated following the release of the audited annual statements in the 4 th …scal quarter rather than following any of the interim period reports, suggesting scrutiny and monitoring pressures are particularly large in this period. Managers more skilled at fraud appear to anticipate this increased scrutiny since frauds starting in the 1 st …scal quarter (i.e., as far away from the 4 th quarter as possible) tend to be longer than the ones starting in other …scal quarters. We also …nd that the presence of a new auditor as well as any form of explanation in the auditor’s statement increases the likelihood of termination. Moreover, we …nd that …nancial analyst following matter as analyst coverage reduce the chance of a longer misconduct spell, especially if the analyst is a specialist in the industry. However, the presence of too many analysts covering the same …rm signi…cantly reduce the value of analyst coverage at the margin, independent of the analysts’industry knowledge. In terms of …rm characteristics, we show that pro…table and high stock return …rms are able to maintain accounting misconduct over longer time periods. In terms of misconduct characteristics, we …nd that

Dotcom Price Spiral

We show that during the bubble implied growth rates coming from the underpricing of IPO market explains short term returns on the NASDAQ index. This result remains even if we replace actual underprice for others different instruments for underpricing that are based on predetermined variables and not correlated to market returns. We also do placebo tests to assess the relation between underpricing and NASDAQ returns over other periods. We show that growth proxies that are not contaminated by the booms and busts of the stock market are uncorrelated with the returns on the NASDAQ index in periods outside the bubble.

Organizations, Skills, and Wage Inequality

We present a model with search frictions and heterogeneous agents that allows us to decompose the overall increase in US wage inequality in the last 30 years into its within- and between-firm and skill components. We calibrate the model to evaluate how much of the overall rise in wage inequality and its components is explained by different channels. Output distribution per firm-skill pair more than accounts for the observed increase over this period. Parametric identification implies that the worker-specific component is responsible for 85 percent of this, compared to 15 percent that is attributable to firm-level productivity shifts

Dotcom Extreme Underpricing

We conjecture that the Dotcom abnormal underpricing resulted from the emergence a large cohort of firms racing for market leadership/survivorship. Fundamentals pricing at the IPO was part of their strategy. Consistent with our conjecture, firms’ strategic goals and characteristics fully explain the abnormal underpricing. Contrary to alternatives explanations, underpricing was not associated with top underwriting; there was no deterioration of issuers’ quality; and top underwriters and analysts became more selective.

Costly Information Intermediation as a Natural Monopoly

In this paper, we show that information trade has similar characteristics to a natural monopoly, where competition may be detrimental to efficiency due either to the duplication of direct costs or the slowing down of information dissemination. We present a model with two large populations in which consumers are randomly matched to providers on a period-by-period basis. Despite a moral hazard problem, cooperation can be sustained through an institution that gives incentives to information exchange. We consider different information pricing mechanisms (membership vs. buy and sell) and different competitive environments. In equilibrium, both pricing and competitive schemes affect the direct and indirect costs of information transmission, represented by directed fees paid by consumers and the expected loss due to imperfect information, respectively.

Information Production, Misconduct Effort, and the Duration of Corporate Fraud

We evaluate the determinants of the duration of accounting misconduct for …rms which were issued an Accounting and Auditing Enforcement Release (AAER) by the SEC. We …nd a strong role for the …nancial reporting and auditing process in limiting the duration of frauds. Frauds are more likely to be terminated following the release of the audited annual statements in the 4 th …scal quarter rather than following any of the interim period reports, suggesting scrutiny and monitoring pressures are particularly large in this period. Managers more skilled at fraud appear to anticipate this increased scrutiny since frauds starting in the 1 st …scal quarter (i.e., as far away from the 4 th quarter as possible) tend to be longer than the ones starting in other …scal quarters. We also …nd that the presence of a new auditor as well as any form of explanation in the auditor’s statement increases the likelihood of termination. Moreover, we …nd that …nancial analyst following matter as analyst coverage reduce the chance of a longer misconduct spell, especially if the analyst is a specialist in the industry. However, the presence of too many analysts covering the same …rm signi…cantly reduce the value of analyst coverage at the margin, independent of the analysts’industry knowledge. In terms of …rm characteristics, we show that pro…table and high stock return …rms are able to maintain accounting misconduct over longer time periods. In terms of misconduct characteristics, we …nd that