We examine neighborhood externalities that arise from the perceived risk associated with the proximity of a registered sex offender's residence. We find large negative externality effects on a property's price and liquidity, employing empirical techniques that include a fixed-effects OLS model, a correction for sample selection bias and censoring using a Heckman treatment, and a three-stage least-squares model to account for simultaneity bias in the joint determination of a home's sale price and liquidity. Additionally, we find amplified effects for homes with more bedrooms (a proxy for children) and if the nearby offender is designated by the state as "violent."
This paper examines whether tax uncertainty can alter investment decisions, focusing primarily on the timing of large capital investments. Empirically, we exploit the staggered implementation of Schedule UTP, a discrete policy change expected to increase tax uncertainty, finding that, on average, firms responded by delaying large capital investments. This effect is stronger among firms at which the policy treatment is particularly germane, that is, for firms with more material UTBs or with low-to-moderate quality public accounting information. We also test the underlying mechanism, finding that managers buffer against higher tax uncertainty with cheaper sources of financing (cash) and that the investment effect is concentrated among financially constrained firms. The results show that Schedule UTP also reduces the sensitivity of investment to growth opportunities (investment-Q sensitivity) in line with a higher hurdle rate for firms facing higher tax uncertainty. This paper was accepted by Brian Bushee, accounting.
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