The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
AFA members can log in to view full-text articles below.
View past issues
Search the Journal of Finance:
Search results: 9.
DISCUSSION
Published: 06/01/1978 | DOI: 10.1111/j.1540-6261.1978.tb00769.x
Jess B. Yawitz
EXTERNALITIES AND RISKY INVESTMENTS
Published: 09/01/1977 | DOI: 10.1111/j.1540-6261.1977.tb03316.x
Jess B. Yawitz
Optimal Regulation Under Uncertainty
Published: 09/01/1981 | DOI: 10.1111/j.1540-6261.1981.tb04892.x
WILLIAM J. MARSHALL, JESS B. YAWITZ, EDWARD GREENBERG
This paper is concerned with the problem of price regulation when demand is uncertain. Uncertainty gives rise to substantial difficulties in determining both the return a firm's owners should be provided and a set of prices capable of producing that return. We argue that conventional approaches to price regulation are incapable of attaining the economically desirable objectives of efficiency and an equitable return to investors. The deficiencies in current practices are attributable to the separation of the risk measurement‐return determination and price setting activities in the conventional approach. We present a model of the regulated firm that synthesizes contemporary financial market theory and the theory of the firm under uncertainty.1 In our approach, the income stream produced by the firm is valued ex ante in the financial market according to investors' perceptions and preferences over riskreturn characteristics. We portray the firm as producing risk and return by choosing among available production technologies to maximize its market value, given the prices set by regulators. Within this framework, it is shown that regulators can choose the lowest prices consistent with an equitable return to investors. We also show that prices so chosen induce the choice of the optimal technology by the firm.
Taxes, Default Risk, and Yield Spreads
Published: 09/01/1985 | DOI: 10.1111/j.1540-6261.1985.tb02367.x
JESS B. YAWITZ, KEVIN J. MALONEY, LOUIS H. EDERINGTON
This paper develops a model of bond prices and yield spreads that incorporates the effect of both taxes and differences in default probabilities. The tax loss consequences of default are recognized. Traditionally, tax‐free (municipal) bond yields have been viewed as linearly related to taxable yields with a slope coefficient equal to one minus the tax rate and the intercept representing differences in default risk. While our model supports the linearity assumption, it implies that the slope and intercept are both functions of both the break‐even tax rate and the default probability(ies). Clientele effects among both municipal and taxable bonds are demonstrated. Finally, the implied marginal tax rates and the implied default probabilities are estimated for different categories of municipal bonds.