Texas Christian University

About: Texas Christian University is a education organization based out in Fort Worth, Texas, United States. It is known for research contribution in the topics: Population & Poison control. The organization has 3245 authors who have published 8258 publications receiving 282216 citations. The organization is also known as: TCU & Texas Christian University, TCU.

Stock and Option Grants with Performance-based Vesting Provisions

Abstract: W e assemble a sample of 983 equity-based awards that include either an accelerated- or a contingent-vesting provision tied to firm performance and explore the frequency, contractual nature, usage, and implications of such awards. We find that performance-vesting (p-v) provisions specify meaningful performance hurdles and provide significant incentives for executives. The propensity to use p-v provisions is positively related to the arrival of a new CEO and the proportion of outsiders on the board of directors and negatively related to prior stock performance. Performance-vesting firms have significantly better subsequent operating performance than control firms. Abnormal accounting performance does not arise from earnings management or discernible differences in financial or investment policy. (JEL G34, J33, M52)

The Role of Venture Capital in the Creation of Public Companies: Evidence from the Going-Public Process

Abstract: Explores the nature of the venture capital investment through examination of initial public offerings (IPOs). Venture capitalists are often active investors who participate in management of the firms. The venture capital investment can be ended in a variety of ways, with the sale of the company's shares through a public offering being the most prevalent. Data used in the analysis includes 433 IPOs that were backed by venture capitalists from 1978 to 1987 and 1,123 IPOs without such backing. Results show that venture capitalists tend to focus on certain industries, in order to develop an expertise. In this case, the focus was on computer equipment, electrical and electronic components, instrumentation, and business services. The median offering size of firm IPOs backed by venture capitalists was larger than the size of those not backed. Based on analysis of the full sample, it appears that venture capitalists are able to bring public the firms they back earlier than would have otherwise been possible. This likely occurs because of the industries in which the venture capitalists focus. Venture capitalists take a monitoring role, demonstrated by serving on the board, maintaining the investment beyond the IPO, and holding a large equity position in a portfolio firm. Finally, it is determined that investor uncertainty is reduced with the quality of the venture capitalist's monitoring skill. A decrease in investor uncertainty was found to decrease IPO underpricing. These findings support the notion that venture capitalists play an important role in new enterprise. (SRD)

Knowledge management in technology-focused firms in emerging economies: Caveats on capabilities, networks, and real options

Abstract: In mature economies, technology-focused industries and the management of knowledge are widely viewed as critical to success. Increasingly, in emerging economies technology-focused industries and the management of knowledge are also viewed as important. To date, however, little is known about such activities in emerging economies. Particularly, it is not understood how knowledge management can impact efforts for corporate renewal in such environments. The literatures of the resource-based view of the firm, social capital/network theory, and real options theory are vital to providing insights for technology-focused industries and the management of knowledge in mature economies. In this paper we focus on the caveats when applying such theoretical foundations to emerging economies. To illustrate these issues we will draw on the largest emergent economy in the world, China.

Further Evidence on the Relation Between Analysts' Forecast Dispersion and Stock Returns

Abstract: Prior research reports seemingly conflicting evidence and interpretations concerning the relation between dispersion in analysts' earnings forecasts and stock returns. Diether et al. (2002) and Johnson (2004) find a negative relation between levels of dispersion in analysts' forecasts and future stock returns. Yet, changes in forecast dispersion are negatively associated with contemporaneous stock returns (L'Her and Suret 1996). We demonstrate that levels and changes in dispersion reflect different theoretical constructs. Changes in dispersion primarily reflect changes in information asymmetry whereas levels of dispersion primarily reflect levels of uncertainty. Further, the uncertainty component of dispersion levels reflects idiosyncratic risk that is negatively associated with future stock returns. These findings provide support for Johnson's (2004) explanation that dispersion levels reflect idiosyncratic uncertainty that increases the option value of the firm and generally refute Diether et al.'s (2002) explanation that dispersion levels reflect information asymmetry. In addition, we reconcile L'Her and Suret's (1996) findings with the findings of Johnson (2004). We find that the negative association between changes in dispersion and contemporaneous stock returns is not due to increased uncertainty but rather increased information asymmetry.