Berkeley Research Group

About: Berkeley Research Group is a based out in . It is known for research contribution in the topics: Capital market & Diversification (finance). The organization has 27 authors who have published 48 publications receiving 366 citations.

Excess Cash Flows and Diversification Discount

Abstract: We study the impact of diversification on firm cash flows and excess value. Specifically, we investigate whether there is a direct link between the discount to diversification and excess cash flow reductions around related and unrelated acquisitions. Our results provide empirical support for a positive and significant association between excess cash flow declines and excess value losses after the acquisition. Our findings also show that bidders who conduct unrelated acquisitions experience larger excess cash flow declines and valuation discounts than do bidders who engage in related acquisitions. Our results are robust to the targets' excess cash flow and valuation characteristics. The views expressed in these papers are those of the author(s), they do not reflect the opinions of LECG, LLC and should not be construed as representing the positions of other experts at LECG, LLC.

An examination of the impact of the Sarbanes–Oxley Act on the attractiveness of U.S. capital markets for foreign firms

Abstract: We examine whether voluntary deregistrations after the passage of Sarbanes–Oxley Act of 2002 (SOX) were intended to benefit common shareholders by avoiding firms’ costs of complying with SOX or to protect the control rents of managers or controlling shareholders (MCOs). We find that, compared with foreign firms that maintained their SEC registrations, foreign firms that voluntarily deregistered on average had weaker corporate governance, had a significantly less negative stock market reaction when SOX was passed, and suffered a significant price decline when they announced their decision to deregister. We also find evidence indicating that the deregistrations were (to a lesser extent) motivated by firms’ compliance costs related to SOX. Taken together, our results suggest that both agency costs (that is, private benefit of control of the MCOs) and the compliance cost of SOX play a role in motivating foreign firms to withdraw from the U.S. market.

Do Staggered Boards Harm Shareholders

Abstract: We examine Cohen and Wang’s (JFE 2013, CW) conclusion that a staggered board (SB) lowers firm value based on the stock price reaction to two 2010 Delaware court rulings in the Airgas case, the first weakening the potency of an SB and the second restoring it. We find that CW’s results, for their sample, become insignificant after excluding a few penny stocks, or stocks with value below $10 million, or over-the-counter (non-exchange) stocks. The effects of the rulings are also insignificant for an alternative sample.

The FASB's Conceptual Framework for Financial Reporting: A Critical Analysis by the American Accounting Association's Financial Accounting Standards Committee

Abstract: This paper addresses the issues that confront the FASB and IASB in developing a new conceptual framework document. First, we suggest characteristics that a conceptual framework ought to exhibit. Most of these suggestions are based on our critique of the existing framework and the FASB-IASB work in progress. Second, we present a model framework that exhibits these characteristics. We emphasize up front that this framework is quite explicit. It goes to the heart of what a framework document should do: it places specific restrictions on what constitutes admissible accounting standards. The purpose of our effort is to stimulate broad discussion of alternative approaches to foundational documents and to offer a specific example of such an alternative approach.

What do subjective assessments of financial well-being reflect?

Abstract: Subjective financial assessments are used by social scientists as a measure of financial well-being and by households as the basis for action. Financial well-being, however, increasingly requires workers to build-up savings to meet hard-to-see future needs, specifically retirement, their children’s education, and paying off student loans.This paper analyzes data from the FINRA Investor Education Foundation’s 2012 Financial Capability Survey to test whether subjective financial assessments 1) primarily reflect day-to-day, rather than distant, financial concerns; 2) increasingly reflect distant concerns if the household’s day-to-day finances are in reasonably good shape; and 3) increasingly reflect distant concerns if the worker is financially literate.The paper found that:* Subjective financial assessments primarily reflect day-to-day conditions.* This remains the case even if the household’s day-to-day finances are in reasonably good shape.* Financial literacy enhances sensitivity to the lack of a retirement plan and having a mortgage greater than the value of one’s house, but it has no noticeable effect on sensitivity to life and medical insurance deficits, having an inactive retirement plan, not saving for college, or student debt burdens. The policy implications of the findings are:* Subjective financial assessments have become a poor measure of financial well-being.* Workers by themselves cannot be expected to devote much effort to addressing distant deficits.* Initiatives to improve well-being must raise awareness – or compensate for the lack of awareness – of hard-to-see distant future deficits.