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Open Access Publications from the University of California

Working papers of faculty, affiliated researchers and students at the Department of Economics, University of California at Santa Barbara.

Cover page of Does Rhetoric Help Stock Returns? A Tex tAnalysis of Unicorn S-1 Documents

Does Rhetoric Help Stock Returns? A Tex tAnalysis of Unicorn S-1 Documents


This paper seeks to develop and analyze a relationship between venture capitalinvestment, rhetorical corporate strategies, and public stock performance. Examiningevery firm since 2000 that went public at a market cap of 1 billion USD or above, I analyzethe rhetoric of unicorns and its relation to risk. Using SEC archives of S-1 financialdocuments and two sentiment dictionaries, I attempt to capture levels of positive languagein firms’ business summaries and negative language in its risk factors. Using this data, Itest the correlation between a firm’s venture capital investment and its S-1 language, aswell as the relationship between a firm’s S-1 rhetoric and its ensuing stock performanceas a public company. A significant positive correlation is established between venturecapital investment and a firm’s levels of positive language in their business summaries, aswell as a significant positive correlation between venture capital investment and a firm’slevels of negative language in their risk factors. Impacts of business summary language ondaily, weekly, and monthly returns after a firm’s IPO are negligible.

Cover page of Recessions in Higher Education: A Study of Faculty Sensitivities to Changes in Funding Vis-à-vis Periods of Recession

Recessions in Higher Education: A Study of Faculty Sensitivities to Changes in Funding Vis-à-vis Periods of Recession


This paper analyzes the degree to which faculty at public universities are further impacted by the financial difficulties brought about by recessions than their private counterpart and how that trend has changed over time. Contracting state budgets for public universities and dips in endowment revenue for private universities compel these institutions to cut back on large-scale spending, such as faculty, or garner the missing revenue from other sources, such as raising the cost of tuition. We consider the number of faculty and their respective salaries as our outcomes of interest. We hypothesized that public universities would fare worse during economic downturns than private universities primarily due to specific vulnerabilities in their funding relative to private universities. Using university-level fixed effects, we consider university faculty dis-aggregated by rank, sex, and salary. This study contributes to some existing literature on recessions and their relationship to universities specifically by addressing the aspects relating to faculty counts and earnings, and covering more recessions. It considers historical data from 1983 to 2014, capturing the four previous recessions. We find that while in some instances, faculty at public higher education institutions are more vulnerable to the adverse effects of a recession, it is not always the case.

Cover page of The Effects of Knowledge and Perceptions of Campus Mental Health Services on College Students’ Academic Performance

The Effects of Knowledge and Perceptions of Campus Mental Health Services on College Students’ Academic Performance


This study investigates how knowledge and perceptions about mental health and campus services affect the academic performance of college students. Using the 2017-2018 Healthy Minds Study, this analysis focuses on the differences in prevalence of anxiety and depression, in addition to opinions and awareness of mental health services across academic degree. By using the Patient Health Questionnaire (PHQ-9), Generalized Anxiety Disorders (GAD-7), and survey data on students’ attitudes, knowledge, and utilization of campus mental health services, Grade Point Average (GPA) is evaluated to measure these effects on academic performance using Ordinary Least Squares (OLS). This study ultimately finds that knowledge and personal stigma have significance impacts on academic performance, especially when controlling for depression and anxiety prevalence. These findings can be used to help colleges and universities effectively promote the use of mental health services by destigmatizing mental health and increasing students’ awareness of the services available.

Cover page of International Competition and Industrial Upgrading Strategies in the Global Apparel Industry

International Competition and Industrial Upgrading Strategies in the Global Apparel Industry


This paper serves as an exploratory study of the global apparel manufacturing industry during the time of the phaseout of the Multifiber Arrangement system of quotas. Underlying the analysis is the goal of identifying a causal relationship between increased international competition and country-level investment in product, process, and supply-chain upgrading. To examine this association, I focus on trade data in the years shortly before and after the MFA quotas were phased out- after which countries could export free from many of the limitations in place before. The resulting surplus of clothing and textile production worldwide provides an ideal environment to study the effects of increased competition on the apparel industries in different countries. Previous literature has linked competition to upgrading; however, this paper takes a novel approach by measuring competition in relation to the shifting trade dynamics at the time of the MFA phaseout. Also, this paper departs from previous studies by examining imports of new capital equipment as one of its measure of upgrading. Country-level data on imports of clothing and textile manufacturing machinery shows that countries invested more in process upgrading after increases in competition from 2001-2007; however, neither measure of product nor supply chain upgrading had as significant of a relationship to changing levels of competition.

Cover page of Social Media Activism's Impact on Global Retailers

Social Media Activism's Impact on Global Retailers


This paper investigates the impact of social media movements on shareholders' wealth. The #WhoMadeMyClothes Twitter campaign is an annual social media movement that emerged after the collapse of the Rana Plaza, a building in Bangladesh that housed five garment factories, in April 2013. The global campaign serves as a remembrance day for the factory victims and gives social media users an outlet to address ethical concerns towards apparel retail companies that were buyers of the Rana Plaza factories. My research investigates how this Twitter campaign, in specially April 2015, impacted the stock returns of the companies involved in the Rana Plaza collapse. My analysis is based on 180 publicly traded, global apparel and retail firms. I find an overall negative stock market reaction towards the US firms, regardless of their relationship to the factories, when aggregating over the all active campaign days. However, when pooling firms from all represented countries, I find that only firms involved in the collapse experienced significant negative returns. These firms are also more likely to experience negative returns after the campaign day, compared to the other firms that were not involved in the collapse. On a global perspective, shareholders may have punished firms that had significant ties to the collapse during and after the campaign day. Isolating US firms, a spillover effect might explain the negative returns for apparel and retail firms in general, regardless of their relation to the collapse

Cover page of Drought and Disparity: Labor Market Spillover in the 2012 to 2016 California Drought

Drought and Disparity: Labor Market Spillover in the 2012 to 2016 California Drought


Natural events such as drought can sometimes create ripple effects within closely related industries in local economies, reducing income and welfare. From 2012 to 2016 California experienced its most hydrologically severe occurrence of drought in the last 1,200 years. I investigate the impact of this drought by comparing heavily impacted agricultural counties to agriculturally similar counties in the Central Valley of California. Using a difference in difference strategy to analyze changes during the occurrence of the drought, I find substantial decreases in agricultural employment and wages in the affected counties. Despite this, I find no relative contractions overall in closely related tradable or non-tradable industries. When this impact is dissected, I observe substantial reductions in Hispanic worker employment and income. I also find evidence of a proportionate increase in construction employment, raising the possibility that these occupations were substituted to reduce impact during the drought.

Cover page of Experimental Evidence of Magical Thinking in Public Goods Experiments

Experimental Evidence of Magical Thinking in Public Goods Experiments


Consistent behavior in public goods games is well documented. Typically, participants begin with large contributions to the public good, but contribution rates decline as more iterations of the game are played. However, the impact of magical thinking on contributions to a public goods game has yet to be examined. We hypothesize that, when participants erroneously believe they can use their contribution to set a social norm, contribution rates will be higher. To test this hypothesis, we had participants play a public goods game, and gave them either no additional information or told them that there is a real probability that their contribution would be recorded first. We found no significant difference in contributions between the treatment and control groups. However, magical thinking was ubiquitous across groups, suggesting that magical thinking is a normative feature of behavior in public goods games that is robust to certain manipulations.

Cover page of Does Trouble in the Economy Lead to Trouble at School?

Does Trouble in the Economy Lead to Trouble at School?


In this study, I attempt to identify whether deteriorating macroeconomic health can lead primary and secondary students to get into more trouble at school. Previous literature suggests that family-level job loss increases child problem behavior, mostly by increasing internalizing problem behaviors such as anxiety, depression, and social withdrawal. I suggest that this follows children into the classroom, leading to increased disciplinary actions by schools. Using county-level data in Arkansas from the fifteen school years between 2004 and 2018, I employ multiple regression and fixed-effect models to examine the effects of changes in unemployment on various disciplinary outcomes (out-of-school suspensions, in-school suspensions, expulsions, and corporal punishment) for students in primary and secondary schools. Due to inconsistencies in Arkansas' discipline data, the results presented in this paper should be approached with skepticism. Only one result is consistent among the regression models I test|when county unemployment rises the usage of corporal punishment rises. This may not be evidence that student misbehavior increases when the economy is poor, rather it may suggest that teachers and administrators are substituting other disciplinary measures with corporal punishment.

Cover page of Return to English Fluency Among Race and Education

Return to English Fluency Among Race and Education


Language fluency is defined as an important factor of human capital for immigrant workers. The fluency premium (FP) is the incremental payment for English proficiency between similar workers. Using data from the American Community Survey, this paper investigates the overall English fluency premium for immigrant workers and the difference in the return to English fluency among 4 major race groups while controlling for counties, jobs, and year fixed effects It is determined with OLS that generally, the FP is about 14.5% for all immigrants and around 5% for immigrants who arrived before their 18th birthday. After applying IV, the FP is measured at 23.5%. There are also significant differences in the FP in both samples among the 4 major race groups and skill levels.

Cover page of The Age-Position Effect in the NFL Free-Agent Labor Market

The Age-Position Effect in the NFL Free-Agent Labor Market


The National Football League (NFL) is a unique economic environment for athletes and teams that fails to conform to typical labor-wage markets. Athletes in the National Football League have extremely short careers due to the physically demanding nature of football, creating a unique trajectory of earnings. Varying importance of positions and different career lengths as a result of disproportionate amount of contact leads to a difference in pay amongst position groups, despite apparent differences in skill. This paper examines the factors that go into determining contract length and amount (primary focus on age and position), as well as the discrepancy of earnings between position groups