Stan Veuger

Taking my talents to South Beach (and back)

Veuger and Shoag study the local economic spillovers generated by LeBron JamesA¢Â€Â™ presence on a team in the National Basketball Association. They trace the impact a star of Mr. JamesA¢Â€Â™ caliber can have on economic activity by analyzing the impact his departures and arrivals had on business activity close to the Cleveland Cavaliers and Miami Heat stadiums.

Rules versus home rule: Local government responses to negative revenue shocks

Local governments rely heavily on sales tax revenue. We use national bankruptcies of big-box retail chains to study sudden plausibly exogenous revenue shortfalls. Treated localities respond by reducing spending on law enforcement and administrative services. We further study how cities with different degrees of autonomy vary in their response. Cities in home rule states react more swiftly by raising taxes or issuing bonds. A regression discontinuity analysis of cities in Illinois emphasizes that this effect of local autonomy is causal. Home rule cities do not abuse their discretion: their bond ratings are more likely to be strong.

Information Frictions in Uncertain Regulatory Environments: Evidence from U.S. Commercial Banks

Information frictions between firms and regulators are typically seen as a means by which firms evade enforcement. In contrast, we argue that information frictions between firms and regulators can reduce the efficiency of firms’ compliance efforts when the interpretation of regulatory standards is uncertain. We exploit plausibly exogenous variation in distance between firms and their regulators to demonstrate this for a panel of community banks in the US. We find that banks located at greater distance from regulatory field offices face significantly higher administrative costs, at a rate of 20% of administrative costs per hour of travel time. These differences do not come with reduced compliance, are not driven by endogenous regulator choice, and are stable over time. Further, the costs borne by distant firms are negatively related to the scale of the jurisdiction in which they operate, suggesting that information spillovers between firms limit uncertainty about regulatory expectations.

Dividends and Investment: Evidence of Heterogeneous Firm Behavior

This article investigates the relationship between dividend payouts and corporate investment. We find significant heterogeneity in the relationship across firms—heterogeneity that helps reconcile competing results in the literature. Drawing on financial filing data from Compustat, we first broadly replicate the statistically significant negative relationship estimated by Auerbach and Hassett. We show that this relationship does not hold if the variation is restricted to within-firm only. Our null results suggest a relatively precise zero estimate for the mean firm. Next, we investigate heterogeneity in the relationship between dividends and investment. Using quantile regression methods, we find that this negative relationship is concentrated at the top of dividends distribution: only firms from the seventieth percentile and above exhibit a strongly negative relationship, and it is these firms that drive the negative estimates of pooled ordinary least square regressions reported in prior work.

Innovation and Uncertainty in the Medical Industry: Evidence from the Case of Myriad Genetics, Inc.

We describe the broad range of uncertainties faced by the developers of medical technologies. Empirically, we estimate the asset market incidence of two realizations of uncertainties we classify as within-market policy risks. The events we analyze concern the intellectual property of Myriad Genetics, Inc., an American molecular diagnostics firm. In July 2013, the Supreme Court invalidated several of Myriads intellectual property claims. Subsequently, the Center for Medicare and Medicaid Services reevaluated the reimbursements it pays for the services at issue in this patent litigation. We estimate that these events substantially moved Myriads market capitalization, by just under 25 percent in the case of the Supreme Courts decision and nearly 20 percent in the case of CMSs reimbursement rate re-determination. Myriads exposure to the realization of these intellectual property risks reflects its unusually high reliance on revenues linked to the services at issue. We discuss the implications of these risks for the total volume of medical innovation and for its organization across firms.

Repeal of the Medicare Sustainable Growth Rate: Direct and Indirect Consequences

The Sustainable Growth Rate was replaced in 2015 by the Medicare Access and CHIP Reauthorization Act, which introduced fixed annual physician fee updates and a merit-based incentive payment system.