Winter 2002

Life Insurance in the Information Age
Internet Comparison Sites Create Major Marketplace Change
The dramatic decline in the price of term life insurance in the late 1990s was considered an unexplainable phenomenon-until now.
Research by Austan Goolsbee

Can the Market Add and Subtract?
Mispriced Stocks Break the Rules of Efficient Markets
According to the law of one price, identical assets should have identical prices. Driving this law is arbitrage, in which an investor buys and sells the same security for two different prices to make a profit. In a well functioning capital market, arbitrage prevents the law of one price from being broken, and in fact, violations of the law are rarely seen.
Research by Owen A. Lamont and Richard H. Thaler

Entrepreneurs: Will They Stay or Will They Go?
Understanding Entrepreneurship Requires a Look at Both Context and Individual
Small start-up or multinational corporation. Employee or founder. Organizational structure and individual roles affect the rate at which new organizations are founded and who starts them.
Research by Stanislav D. Dobrev

Tax Benefits in Acquisitions of Privately Held Corporations
The Way Companies are Organized for Tax Purposes Affects Their Selling Price in an Acquisition
Anyone who forms a company has many choices regarding how their business is organized for tax and legal purposes. The tax code defines two common organizational forms: S corporations and C corporations. Business owners choose between these forms based on the organizational form's tax features, legal requirements, and non-tax attributes.
Research by Merle Erickson