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Share Price (share + price)
Terms modified by Share Price Selected AbstractsCauses and Consequences of the Relation Between Split-Adjusted Share Prices and Subsequent Stock ReturnsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 1-2 2007William D. Brown Jr Abstract:, In this manuscript, we document and explain an empirical artifact , a persistent and substantial negative relation between split-adjusted share prices and subsequent stock returns , that has potentially important ramifications for capital markets research design. This relation pervades all commonly-used commercial databases and is insensitive to the choice of database used for either prices or returns. We investigate four potential causes of the empirical regularity: survivorship bias, asymmetric returns to low-priced stocks, extreme returns, and the effects of stock-split adjustments on portfolio classifications. We find that survivorship bias accounts for approximately half of the returns documented to a share-price-based hedge strategy and that re-classifications caused by stock split adjustments account for substantially all of the remaining returns. We do not find that controlling for either low-priced stocks or extreme returns is effective in purging the data of the empirical price artifact. These findings and our explanations thereof are important, as they show that there are potentially troublesome consequences of using share price as a deflator in markets-based research. In particular, we note and illustrate cause for concern when interpreting associations between share-price-scaled variables and subsequent returns as evidence of market inefficiency. [source] Shareholder Wealth Effects of European Domestic and Cross-border Takeover BidsEUROPEAN FINANCIAL MANAGEMENT, Issue 1 2004Marc Goergen G32; G34 Abstract This paper analyses the short-term wealth effects of large intra-European takeover bids. We find announcement effects of 9% for the target firms compared to a statistically significant announcement effect of only 0.7% for the bidders. The type of takeover bid has a large impact on the short-term wealth effects with hostile takeovers triggering substantially larger price reactions than friendly operations. When a UK firm is involved, the abnormal returns are higher than those of bids involving both a Continental European target and bidder. There is strong evidence that the means of payment in an offer has an impact on the share price. A high market-to-book ratio of the target leads to a higher bid premium, but triggers a negative price reaction for the bidding firm. We also investigate whether the predominant reason for takeovers is synergies, agency problems or managerial hubris. Our results suggest that synergies are the prime motivation for bids and that targets and bidders share the wealth gains. [source] On-market share buybacks, exercisable share options and earnings managementACCOUNTING & FINANCE, Issue 1 2008Balasingham Balachandran G30; G32; M41 Abstract Chan et al. (2006b) suggest that managers might announce a share buyback to manipulate investors' perceptions and capitalize on the positive price reaction usually associated with the announcement. The incentive to do so is greater when managers have exercisable options. Prior studies document that managers engage in upwards earnings management for opportunistic reasons related to option holdings (Bergstresser and Philippon, 2006). We examine the association between earnings management and exercisable option holdings for buyback firms to investigate if earnings management in the pre-buyback period is greater for firms with equity incentives to increase share price. Our results, using 138 buybacks over the period 1996,2003, support our prediction. We find that buyback firms with both exercisable options that are in-the-money prior to the buyback announcement as well as options that are exercised in the buyback period have higher discretionary current accruals than buyback firms with no exercisable options, unexercised options or with out-of-the-money options. Overall, our results are consistent with buyback firms with exercisable options using earnings management and buyback announcements to maximize option payoffs, and buyback firms without exercisable options signalling undervaluation. [source] Corporate governance, insider ownership and operating performance of Australian initial public offeringsACCOUNTING & FINANCE, Issue 3 2004Maria C. A. Balatbat We examine ownership structures and corporate governance attributes of 313 Australian initial public offerings (IPOs) between 1976 and 1993 and their relation with up to 5 years of post-listing operating performance, adjusted for similar (non-IPO) firms. Consistent with prior share price-based evidence, we find that the operating performance of Australian IPOs typically deteriorates over the first 4 post-listing years. Any evidence of a positive association between insider ownership and firm performance is confined to the fourth and fifth years after the IPO. Evidence of a positive relation between institutional ownership and performance is restricted to the latter part of our 5-year post-listing window. Board composition (i.e. outsider versus insider control) is not associated with operating performance, although there is some evidence that independent board leadership is associated with better operating performance. [source] Do share prices matter?ACCOUNTING & FINANCE, Issue 3 2002Edward A. Dyl This paper examines whether the cross sectional variation in Australian share prices is partially explained by measures of firm size and ownership characteristics in a manner that is consistent with firms behaving in accordance with Merton's (1987) model of capital market equilibrium with incomplete information. Based on a sample of firms whose shares were traded on the ASX during 1995, we show that firms largely owned by less wealthy shareholders tend to have low stock prices, although this relation is not linear. In addition, larger, better,known, firms tend to have higher stock prices. These findings are consistent with prior evidence from US markets, and suggest the existence of a shareholder clientele effect in Australia that is related to the share price of the underlying firm. [source] Effect of Taxation on Equal Access Share Buybacks in Australia,INTERNATIONAL REVIEW OF FINANCE, Issue 3-4 2005CHRISTINE BROWN ABSTRACT In Australia, equal access share buybacks can be structured so that a portion of the buyback price is designated as a fully franked dividend. The tax benefits derived from this structure imply that off-market buybacks are sometimes offered to shareholders at a discount to the current market price. This is in contrast to the United States, which operates under a classical taxation system, and where off-market buybacks are generally executed at a premium to the market price. The situation in Australia provides a unique opportunity to add to our understanding of taxation explanations for how and why companies buy back their shares. We find that the size of the discount of the offer price to the current share price is significantly related to the proportion of the buyback price designated a franked dividend. Analysis of the after-tax benefits to shareholders leads us to conclude that the structure of many equal access buybacks in Australia is advantageous to superannuation funds holding the stock. [source] SIX CHALLENGES IN DESIGNING EQUITY-BASED PAYJOURNAL OF APPLIED CORPORATE FINANCE, Issue 3 2003Brian J. Hall The past two decades have seen a dramatic increase in the equitybased pay of U.S. corporate executives, an increase that has been driven almost entirely by the explosion of stock option grants. When properly designed, equity-based pay can raise corporate productivity and shareholder value by helping companies attract, motivate, and retain talented managers. But there are good reasons to question whether the current forms of U.S. equity pay are optimal. In many cases, substantial stock and option payoffs to top executives,particularly those who cashed out much of their holdings near the top of the market,appear to have come at the expense of their shareholders, generating considerable skepticism about not just executive pay practices, but the overall quality of U.S. corporate governance. At the same time, many companies that have experienced sharp stock price declines are now struggling with the problem of retaining employees holding lots of deep-underwater options. This article discusses the design of equity-based pay plans that aim to motivate sustainable, or long-run, value creation. As a first step, the author recommends the use of longer vesting periods and other requirements on executive stock and option holdings, both to limit managers' ability to "time" the market and to reduce their incentives to take shortsighted actions that increase near-term earnings at the expense of longer-term cash flow. Besides requiring "more permanent" holdings, the author also proposes a change in how stock options are issued. In place of popular "fixed value" plans that adjust the number of options awarded each year to reflect changes in the share price (and that effectively reward management for poor performance by granting more options when the price falls, and fewer when it rises), the author recommends the use of "fixed number" plans that avoid this unintended distortion of incentives. As the author also notes, there is considerable confusion about the real economic cost of options relative to stock. Part of the confusion stems, of course, from current GAAP accounting, which allows companies to report the issuance of at-the-money options as costless and so creates a bias against stock and other forms of compensation. But, coming on top of the "opportunity cost" of executive stock options to the company's shareholders, there is another, potentially significant cost of options (and, to a lesser extent, stock) that arises from the propensity of executives and employees to place a lower value on company stock and options than well-diversified outside investors. The author's conclusion is that grants of (slow-vesting) stock are likely to have at least three significant advantages over employee stock options: ,they are more highly valued by executives and employees (per dollar of cost to shareholders); ,they continue to provide reasonably strong ownership incentives and retention power, regardless of whether the stock price rises or falls, because they don't go underwater; and ,the value of such grants is much more transparent to stockholders, employees, and the press. [source] Causes and Consequences of the Relation Between Split-Adjusted Share Prices and Subsequent Stock ReturnsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 1-2 2007William D. Brown Jr Abstract:, In this manuscript, we document and explain an empirical artifact , a persistent and substantial negative relation between split-adjusted share prices and subsequent stock returns , that has potentially important ramifications for capital markets research design. This relation pervades all commonly-used commercial databases and is insensitive to the choice of database used for either prices or returns. We investigate four potential causes of the empirical regularity: survivorship bias, asymmetric returns to low-priced stocks, extreme returns, and the effects of stock-split adjustments on portfolio classifications. We find that survivorship bias accounts for approximately half of the returns documented to a share-price-based hedge strategy and that re-classifications caused by stock split adjustments account for substantially all of the remaining returns. We do not find that controlling for either low-priced stocks or extreme returns is effective in purging the data of the empirical price artifact. These findings and our explanations thereof are important, as they show that there are potentially troublesome consequences of using share price as a deflator in markets-based research. In particular, we note and illustrate cause for concern when interpreting associations between share-price-scaled variables and subsequent returns as evidence of market inefficiency. [source] Identifying the best companies for leaders: does it lead to higher returns?MANAGERIAL AND DECISION ECONOMICS, Issue 1 2010Greg 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] LIQUIDITY AND QUOTE CLUSTERING IN A MARKET WITH MULTIPLE TICK SIZESTHE JOURNAL OF FINANCIAL RESEARCH, Issue 2 2005Kee H. Chung Abstract We analyze market liquidity (i.e., spreads and depths) and quote clustering using data from the Kuala Lumpur Stock Exchange (KLSE), where the tick size increases with share price in a stepwise fashion. We find that stocks that are subject to larger mandatory tick sizes have wider spreads and less quote clustering. We also find that liquidity providers on the KLSE do not always quote larger depths for stocks with larger tick sizes. Overall, our results suggest that larger tick sizes for higher priced stocks are detrimental to market liquidity, although the adverse effect of larger tick sizes is mitigated by lower negotiation costs (i.e., less quote clustering). [source] Is disclosure the right way to comply with stakeholders?BUSINESS ETHICS: A EUROPEAN REVIEW, Issue 1 2008The Shell case This paper is part of an ongoing research project and builds upon a previous one in which we explain the failure of the Agency Theory through the Shell case. In that, we analysed the behaviour of Shell managers, who reclassified oil reserves, playing with the share price because they owned share options. This previous paper established an important literature framework that is continued and organized to go deeper into our analysis in this paper. The goal here is to show that the way that is supposed to be the right tool to inform stakeholders , disclosure , is not enough, and even in the Shell case, no one would have noticed the problems with the oil reserves through the mere analysis of the company disclosure during the ,strange period' (1998,2003). The methodology used in this paper is lexical analysis, which seems to be an innovative and effective approach to the analysis of Corporate Social Disclosure, given the un-codified nature of the latter. The conclusions obtained highlight the problem of lack of transparency in the contents of corporate social disclosure: some firms avoid communicating crucial contents, some others twist the results in order to camouflage advantages to shareholders or managers. If it is like this for disclosing firms, what is happening in the case of non-disclosing firms? [source] The Two Faces of Analyst CoverageFINANCIAL MANAGEMENT, Issue 2 2005John A. Doukas We find that positive excess (strong) analyst coverage is associated with overvaluation and low future returns. This finding is consistent with the view that excessive analyst coverage, driven by investment banking incentives and analyst self-interests, raises investor optimism causing share prices to trade above fundamental value. However, weak analyst coverage causes stocks to trade below fundamental values. This finding indicates that investors tend to believe that these firms are more likely to be plagued by information asymmetries and agency problems. The results remain robust after controlling for the possible endogenous nature of analyst coverage and analysts' self-selection bias. [source] Fundamental and technical analysis: substitutes or complements?ACCOUNTING & FINANCE, Issue 1 2009Jenni L. Bettman G12; G14; M41 Abstract Although the fundamental and technical analysis literatures invest considerable effort in assessing their respective ability to explain share prices, they invariably do so without reference to each other. In this context, we propose an equity valuation model integrating both fundamental and technical analysis and, in doing so, recognize their potential as complements rather than as substitutes. Testing confirms the complementary nature of fundamental and technical analysis by showing that, although each performs well in isolation, models integrating both have superior explanatory power. While our findings relate to the valuation of shares, they also have implications for other valuation exercises. [source] Do share prices matter?ACCOUNTING & FINANCE, Issue 3 2002Edward A. Dyl This paper examines whether the cross sectional variation in Australian share prices is partially explained by measures of firm size and ownership characteristics in a manner that is consistent with firms behaving in accordance with Merton's (1987) model of capital market equilibrium with incomplete information. Based on a sample of firms whose shares were traded on the ASX during 1995, we show that firms largely owned by less wealthy shareholders tend to have low stock prices, although this relation is not linear. In addition, larger, better,known, firms tend to have higher stock prices. These findings are consistent with prior evidence from US markets, and suggest the existence of a shareholder clientele effect in Australia that is related to the share price of the underlying firm. [source] The Impact of Foreign Equity Ownership on Emerging Market Share Price VolatilityINTERNATIONAL FINANCE, Issue 1 2000Mark Coppejans We ask whether foreign equity ownership affects the stability of share prices in an emerging economy. We address the effect of ownership restrictions exogenously imposed on stock ownership and the impact of introducing or widening foreign ownership through cross-listing. A methodology for variance ratio analysis is introduced that corrects for liquidity and volume differences across stock series experiencing different degrees of foreign ownership. We find that foreign ownership does not affect volatility in the absence of cross-listing. Foreign ownership introduced or accompanied by cross-listing of a stock series raises the variance of returns. This effect is found to operate in part through increases in volume traded on the domestic market following the listing, and through an identifiable increase in the volatility of information net of volume effects. [source] Causes and Consequences of the Relation Between Split-Adjusted Share Prices and Subsequent Stock ReturnsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 1-2 2007William D. Brown Jr Abstract:, In this manuscript, we document and explain an empirical artifact , a persistent and substantial negative relation between split-adjusted share prices and subsequent stock returns , that has potentially important ramifications for capital markets research design. This relation pervades all commonly-used commercial databases and is insensitive to the choice of database used for either prices or returns. We investigate four potential causes of the empirical regularity: survivorship bias, asymmetric returns to low-priced stocks, extreme returns, and the effects of stock-split adjustments on portfolio classifications. We find that survivorship bias accounts for approximately half of the returns documented to a share-price-based hedge strategy and that re-classifications caused by stock split adjustments account for substantially all of the remaining returns. We do not find that controlling for either low-priced stocks or extreme returns is effective in purging the data of the empirical price artifact. These findings and our explanations thereof are important, as they show that there are potentially troublesome consequences of using share price as a deflator in markets-based research. In particular, we note and illustrate cause for concern when interpreting associations between share-price-scaled variables and subsequent returns as evidence of market inefficiency. [source] Accounting for Joint Ventures and Associates in Canada, UK, and US: Do US Rules Hide Information?JOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 3-4 2006Kazbi Soonawalla Abstract: Unlike US GAAP, accounting principles in Canada and the UK require disclosure of disaggregated components of joint ventures and associates. Using comparative analysis of Canadian, UK and US data, this study investigates the potential loss of forecasting and valuation relevant information from aggregating joint venture and associate accounting amounts. Findings show that aggregating joint venture and associate investment numbers, and aggregating joint venture revenues and expenses, each leads to loss of forecasting and valuation relevant information. Thus, current US accounting principles likely mask information that financial statement users could use to predict future earnings and explain share prices. [source] On the influence of oil prices on economic activity and other macroeconomic and financial variables,OPEC ENERGY REVIEW, Issue 4 2008François Lescaroux The aim of this paper is to investigate the links between oil prices and various macroeconomic and financial variables for a large set of countries, including both oil-importing and oil-exporting countries. Both short-run and long-run interactions are analysed through the implementation of Granger-causality tests, evaluation of cross correlations between the cyclical components of the series in order to identify lead/lag relationships and cointegration analysis. Our results highlight the existence of various relationships between oil prices and macroeconomic variables and, especially, an important link between oil and share prices on the short run. Turning to the long run, numerous long-term relationships are detected, the Granger-causality generally running from oil prices to the other variables. An important conclusion is relating to the key role played by the oil market on stock markets. [source] Value-Enhancing Capital Budgeting and Firm-specific Stock Return VariationTHE JOURNAL OF FINANCE, Issue 1 2004Art Durnev ABSTRACT We document a robust cross-sectional positive association across industries between a measure of the economic efficiency of corporate investment and the magnitude of firm-specific variation in stock returns. This finding is interesting for two reasons, neither of which is a priori obvious. First, it adds further support to the view that firm-specific return variation gauges the extent to which information about the firm is quickly and accurately reflected in share prices. Second, it can be interpreted as evidence that more informative stock prices facilitate more efficient corporate investment. [source] The Enron story: you can fool some of the people some of the time ,BUSINESS ETHICS: A EUROPEAN REVIEW, Issue 1 2003Alyson Tonge This article unravels the complex set of financial dealings that are at the heart of the Enron story and follows the story through the highs and lows of Enron share prices. The key players are identified and their roles described. Apart from the financial and accounting issues, the Enron story also raises a wide range of ethical issues including corporate governance, organisational culture and ethical leadership and scrutiny. These are discussed in the article. It might be argued that Enron could never have got away with some of its practices if it had been operating in Europe. The article concludes that this view may be naïve, particularly in the light of recent media disclosures of the UK Labour government's continuing flirtation with business donations. The Enron story raises serious considerations in a whole host of financial, economic, political and ethical areas. As the Enron story continues to unfold, an article of this type can only begin to scratch the surface of some of these issues and to lay them out for further investigation. [source] The effect of additions to or deletions from the TSE 300 Index on Canadian share pricesCANADIAN JOURNAL OF ECONOMICS, Issue 2 2000Isidore Masse In this paper we examine shares that have been added to or deleted from the TSE 300 Index to determine whether abnormal price movements have occurred. We apply the dummy variable approach to event study methodology and adjust the estimated standard errors for arbitrary heteroscedasticity and clustering of events. We also use a non-parametric method of inference. Like authors of U.S. studies, we find that the market reacts positively to inclusion and negatively to deletion, albeit not significantly in the latter case. The information content of inclusion does not account for the entire share price response, lending support to the hypothesis of increased purchases by index funds. JEL Classification: G14 Ce texte examine les titres qui ont été ajoutés ou soustraits de l'indice TSE 300 pour déterminer si des mouvements anormaux de prix s'en sont suivis. On utilise l'approche des variables fictives dans le cadre d'une méthodologie qui étudie l'impact d'événements, et on ajuste les erreurs standards pour tenir compte de l'hétéroskédasticité arbitraire et de l'agglomération d'événements. On utilise aussi une méthode non-paramétrique d'inférence. Comme dans des études américaines du même type, on découvre que les marché réagit positivement à l'inclusion et négativement à la soustraction d'un titre, mais que l'effet n'est pas significatif dans ce dernier cas. Le contenu informationnel de l'inclusion n'explique pas entièrement le mouvement dans le prix du titre, ce qui apporte un support à l'hypothèse de l'impact des achats accrus par des fonds indexés. [source] | |||||||||||||||||||||||||