Explore publications.

Is credit card lending by credit unions within the United States primarily a service to members or a profit generating product?  This paper examines the impact of credit card lending on the performance of U.S. credit unions from 2000-2017. A panel data approach using fixed effects regression methodology is undertaken to make comparative analyses of credit union performance across several dimensions including the percentage of the firm’s assets in credit card loans and percent of members with a credit card. Credit unions are stratified into deciles by size and significant results are found using this methodology. Controlling for delinquencies and charge-offs among other variables, credit card lending significantly increases ROA for both large and small credit unions, but only after the Financial Crisis of 2008, and the establishment of the CARD Act in 2009. Interestingly, the ROA of small credit unions significantly increases with the percentage of members using the institution’s credit card.  This result suggests that small credit unions would benefit by increasing the penetration of credit cards within their membership base.

The fact that publicly traded companies incur substantial costs when issuing new equity has been extensively documented in the empirical finance literature. In particular, numerous studies show that seasoned equity offerings (SEOs) tend to be priced significantly below prevailing market prices, thereby causing issuers to leave money on the table. Offer price discounting is an indirect flotation cost borne by pre-SEO shareholders that, according to extant theoretical and empirical research, arises due to asymmetric information. A heretofore unrelated literature argues that corporate multinationalism, i.e., establishing operations in one or more foreign countries, exacerbates the asymmetric information problem via greater costs to shareholders of monitoring the activities and performance of foreign subsidiaries. Motivated by these lines of thought, I investigate the relation between SEO discounting and corporate multinationalism. Using a sample of SEOs completed by U.S. firms between 1998 and 2016, I show that offer price discounting is significantly higher in offerings conducted by multinational firms relative to those conducted by purely domestic firms after controlling for known determinants of SEO discounts. This effect is stronger for multinational firms with foreign subsidiaries spread across a greater number of countries and weaker for multinationals that hire a high-reputation underwriter to lead the underwriting syndicate. These findings suggest that asymmetric information costs borne by seasoned equity issuers are increasing in the geographic scope of a firm’s operations, which can be mitigated by certification from a highly reputed lead underwriter.