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Period Returns (period + return)

Distribution by Scientific Domains

Business, Economics, Finance and Accounting	100%

Selected Abstracts

Board Monitoring, Regulation, and Performance in the Banking Industry: Evidence from the Market for Corporate Control

CORPORATE GOVERNANCE, Issue 5 2010
Jens Hagendorff
ABSTRACT Manuscript Type: Empirical Research Question/Issue: The specific monitoring effect of boards of directors versus industry regulation is unclear. In this paper, we examine how the interaction between bank-level monitoring and regulatory regimes influences the announcement period returns of acquiring banks in the US and twelve European economies. Research Findings/Insights: We study three board monitoring mechanisms , independence, CEO-chair duality, and diversity , and analyze their effectiveness in preventing underperforming merger strategies under bank regulators of varying strictness. Only under strict banking regulation regimes, do board independence and diversity improve acquisition performance. In less strict regulatory environments, corporate governance is virtually irrelevant in improving the performance outcomes of merger activities. Theoretical/Academic Implications: Our results indicate a complementary role between monitoring by boards and bank regulation. This study is the first to report evidence consistent with complementarity by investigating the effectiveness (rather than the prevalence) of governance arrangements across regulatory regimes. Practitioner/Policy Implications: Our work offers insights to policymakers charged with improving the quality of decision-making at financial institutions. Attempts to improve the ability of bank boards to critically assess managerial initiatives are most likely to be successful if internal governance is accompanied by strict industry regulation. [source]

Investor Reaction to Inter-corporate Business Contracting: Evidence and Explanation

ECONOMIC NOTES, Issue 3 2006
Fayez A. Elayan
We examine the stock market reaction to 1227 inter-corporate ordinary business contract announcements reported by Dow Jones between January 1, 1990 and December 31, 2001. Around contract announcement dates, we find statistically significant positive average abnormal returns and abnormal trading volume for contractors, but insignificant positive abnormal returns and negative abnormal volume for contractees. Cross-sectionally, contract announcement period returns are higher for contractors who are small relative to the contract size, have higher return volatility, larger market-to-book ratios and higher profitability. The announcement period returns of contract-awarding firms are not significant and are only marginally related to cross-sectional explanatory factors. The results are consistent with two explanatory stories: contractor quasi-rents induced by the winner's curse and information signalling about contractor production costs. The results are not consistent with perfect competition, with contracts having positive net present values for both parties, and with a version of incomplete contracting theory. [source]

Executive Stock Options: To Expense or Not?

FINANCIAL MANAGEMENT, Issue 1 2006
Sanjay Deshmukh
In analyzing the decision to expense stock options, we find a greater likelihood of options expensing for firms with greater transparency and a closer alignment of interests between managers and shareholders. These results provide indirect evidence that expensing is more likely in firms that practice good corporate governance. We show that firms are less likely to expense when option usage is higher and that this negative relation is stronger for firms that are smaller, have high growth, and are less profitable. We also find that the announcement period returns are not significantly different from zero. [source]

Why Do Firms Issue Equity after Splitting Stocks?

FINANCIAL REVIEW, Issue 3 2003
Ranjan D'Mello
G14/G30/G32 Abstract This paper examines the motivations of firms that conduct seasoned equity offerings (SEOs) after splitting stocks. We find no difference in equity announcement and issue period returns between these firms and other equity-issuing firms, suggesting that firms do not split stocks to reveal information and reduce adverse selection costs at the subsequent SEO. However, because investors react positively to split announcements, firms that issue equity after splitting stocks sell new shares at a higher price and raise more funds. We also find that firms split stocks to make the subsequent SEO more marketable to individual investors who are attracted to low-priced shares. [source]

Identifying the best companies for leaders: does it lead to higher returns?

MANAGERIAL AND DECISION ECONOMICS, Issue 1 2010
Greg Filbeck
Since 2002, Chief Executive magazine, in conjunction with the Hay Group, has published a list of the Top 20 Companies for Leaders. In this paper, we examine the performance of those companies listed as being the best for leaders. We examine the announcement impact on share price associated with the press releases for firms included in the list and holding period returns between subsequent survey releases. While we generally do not find a significant difference in the performance of the Best Leader sample compared with either the market or the matched sample, we do find that the Best Leader sample outperforms other benchmarks on a raw and risk-adjusted basis during times of high market volatility. Copyright © 2009 John Wiley & Sons, Ltd. [source]

Do tax-exempt yields adjust slowly to substantial changes in taxable yields?

THE JOURNAL OF FUTURES MARKETS, Issue 8 2008
Donna Dudney
This paper examines the profitability of two futures trading strategies: a municipal bond futures contract strategy and a spread strategy consisting of a municipal bond futures contract and a Treasury bond futures contract. Both strategies are designed to exploit a slow municipal yield adjustment following changes in Treasury yields. We find economically significant profits to both strategies. Average holding period returns per trade for both strategies tend to increase with the magnitude of the Treasury yield change. Profit distributions associated with various Treasury yield change thresholds tend to be positively skewed, and median profits are significantly lower than average profits. The profitability results are consistent with slow municipal yield adjustments. © 2008 Wiley Periodicals, Inc. Jrl Fut Mark 28:763,789, 2008 [source]