U.S. Public Safety and Firm Financial Policies Público

Ju, Ziqian (2017)

Permanent URL: https://etd.library.emory.edu/concern/etds/m039k5560?locale=es
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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

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