U.S. Public Safety and Firm Financial Policies Público

Abstract

With FBI Uniform Crime Reports data on local crime rates, I find that firms in dangerous areas have more PP&E and less cash holdings. The results are robust to including various controls and to analyses of coefficient movements. Case studies and additional tests are conducted to support the findings. Small firms have stronger relation between public safety and financial policies. Overall, the evidence is consistent with the hypothesis that firms could benefit from crime rate increase.

Table of Contents

I. Introduction ...…………………………………………………………………….….….1

II. Hypothesis Development ...…………………………………………………………….4

III. Data and Variables …………………………………………………………………….6

A. Data ………………………………………………………………………………….6

B. Variables ...…………………………………………………………….……….……7

C. Summary Statistics ……………………………………………………………..........9

D. Mean Differences between Dangerous and Safe Areas ……………………….……10

IV. Association between Public Safety and Financial Policies …………………….…….11

A. Analysis of PP&E ...………………………………………………………….…….12

B. Analysis of Cash Holdings …………………………………………………………14

C. Analysis of Capital Expenditures ……………………………………………….….16

D. Analysis of Other Financial Policy Variables ...……………………………………19

V. Robustness Tests ……………………………………………………………………...20

A. Control Variables ...………………………………………………………………...21

B. Analysis of Coefficient Movements ...……………………………………………...21

C. Case Studies ...……………………………………………………………………...24

D. Additional Tests for "Escape Hypothesis" ...……………………………………….25

E. Test of Public Safety and Market Return ...…………………………………………26

VI. Conclusion …………………………………………………………………………...27

Reference ………………………………………………………………………………...29

Figures and Tables ……………………………………………………………………….32

About this Master's Thesis

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School	Laney Graduate School
Department	Business
Degree	MS
Submission	Master's Thesis
Language	English
Research Field	Economics, Finance
Palabra Clave	financial policies crime rate public safety
Committee Chair / Thesis Advisor	Busse, Jeffrey, Emory University
Committee Members	Barillas, Francisco, Emory University Maturana, Gonzalo Eduardo, Emory University

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