Suchergebnisse

AbstractWe provide direct empirical evidence that share overvaluation is an important motive for firms to make stock acquisitions. We find that more overvalued firms are more likely to acquire with stock, and acquirers are more overvalued in successful stock mergers than in withdrawn mergers. Acquirers' overvaluation, on average, exceeds the targets' premium‐adjusted overvaluation. Shareholders of stock acquirers, whose overvaluation is greater than their targets' premium‐adjusted overvaluation, realize sustained wealth gains from one day before the merger announcement up to three years after the merger completion, as compared with a matching sample of similarly overvalued but nonacquiring firms.

AbstractWe demonstrate that firms that are more transparent pay less, in all components of issuance costs, to go public. We employ a sample of 334 previous leveraged buyouts and a characteristic‐matched control sample to test the hypothesis that greater firm transparency before the issue decreases the flotation costs of the initial public offering. These flotation costs are divided into initial underpricing, underwriter discount, administrative expenses, and the overallotment option required to take the firm public. Our results provide further evidence of the asymmetric information hypothesis as it applies to initial public offerings.

AbstractIn this study, financial implications of differential voting right/multiple ordinary share class capitalizations are examined using data from British dual‐class firms. Positive wealth effects are observed after announcements of plans to issue restricted voting (RV) shares, and also after announcements of RV share enfranchisement plans. The two share classes are usually created through large, noncash stock dividends or recapitalizations and, although corporate insiders hold about three times as large a fraction of superior voting (SV) shares, their RV shareholdings average a nontrivial 10.1 percent. Finally, compensation is usually paid to SV shareholders when RV shares are enfranchised.

AbstractIn this study, the abnormal return dynamics of firms undertaking premium targeted block share repurchases are examined empirically. The positive returns accruing to nonparticipating shareholders for the period encompassing the buy‐in and repurchase announcements are attributable to the expectation of subsequent acquisition activity. Firms that are not acquired realize, on average, a zero abnormal return. The probability of subsequent acquisition is not related to the targeted repurchase. Managers who engage in targeted block share repurchases frequently are expelled from corporate ranks. Firms that are acquired exhibit abnormal returns only similar to those of other merger and tender offer targets.

AbstractThe nature of the stochastic process generating the path of security prices through time plays an important role in dynamic theories of financial economics. An important consideration is the possible dependency of return variances on price levels. Using 55 years of data separated into five‐year intervals, this study demonstrates that, in general, security and portfolio variances are dependent on stock price levels and the relationship is a function of portfolio size. The relationship is unstable over time. The results suggest possible detrimental effects of diversification and financial models based on log‐normality are questionable.

AbstractThe impact of stochastic inflation on the cross‐sectional structure of nominal securities yields is examined. The analysis indicates that equilibrium required returns on debt and equity securities are affected differently by inflation and that the "Fisher Effect" is more likely to hold for equity returns than for debt yields. Implications for empirical investigations of portfolio performance and the real interest rate are explored.