Showing papers in "Journal of Corporate Finance in 2003"

TL;DR: In this paper, the role of the board of directors, the audit committee, and the executive committee in preventing earnings management was examined, and they concluded that board and audit committee activity and their members' financial sophistication may be important factors in constraining the propensity of managers to engage in earnings management.

TL;DR: A survey of the recent developments in the literature on corporate diversification can be found in this article, where the authors focus on recent contributions to that subset of the diversification literature that is in their judgment most influential in setting the agenda for financial research.

TL;DR: In this paper, the authors jointly determine the optimal number of portfolio companies and the intensity of managerial advice for each individual firm, and compare static analysis shows how optimal portfolio size responds to venture returns and other parameters.

TL;DR: In this article, the authors examine theories of leverage and debt maturity, focusing on the impact of firms' investment opportunity sets and regulatory environments in determining these policies, and identify sufficient conditions for the theory to have testable implications for reduced-form and structural-equation regression coefficients.

TL;DR: In this paper, the authors evaluate the costs and benefits of restrictive covenants in bonds issued in 1989 and 1996 and find that firms with growth opportunities are more likely to seek to preserve flexibility in future financing activities by not including dividend or debt issuance restrictions in their bond contracts.

TL;DR: In this article, a tradeoff of knowledge transfer costs and control costs is presented for value maximization, which requires either that knowledge is transferred to those with the right to make decisions, or that decision rights are transferred to the people who have the knowledge.

TL;DR: In this article, the authors compare the return surrounding a sell-side analyst's initiation of coverage to the return associated with a recommendation by an analyst who already covers the stock, and find that the initiation abnormal return correlates with the subsequent improvements in liquidity.

TL;DR: In this article, the authors examined the agency conflicts between shareholders and bondholders of multinational and non-multinational firms and provided an explanation for the puzzle that multinational firms use less long-term debt, but more shortterm debt than domestic firms.

TL;DR: In this article, a principal component analysis (PCA) is employed to mitigate such problems and a positive relationship between management participation in the board selection process and corporate performance is found.

TL;DR: The authors studied stock returns and trading volume surrounding the crash of the space shuttle Challenger and found that price discovery occurred without large trading profits and that much of the price discovery happened during a trading halt of the firm responsible for the faulty component.

TL;DR: In this paper, the authors examine the stock market announcement effect of rights issues and observe that a statistically significant stock price decline takes place when companies announce rights issues, and further stock price drop is observed during the subscription period.

TL;DR: In this article, the authors examine the effect of corporate spinoffs on the trading environment of the stock of firms that spinoff units and find that residual return variance increases following spinoffs.

TL;DR: In this paper, the authors evaluate the impact of the new share structure on the quality of the market and show that it is not associated with an improvement in market quality, and argue that this new structure to date has not improved the trading environment relative to other share structures.

TL;DR: This paper found that firms with high managerial ownership are more likely to issue units, and firms with relatively high levels of long-term debt are also likely to employ stock-warrant unit financing.

TL;DR: In this paper, the authors examined how the trading behavior of various investors impacts the market reaction to a dividend signal and found that more informed trading results in larger dividend increases, while less informed trading leads to less buy demand relative to sell demand.

TL;DR: A brief overview of the importance of market microstructure research and existing areas of research that focus on links between micro-structure and corporate finance can be found in this article.

TL;DR: In this paper, the authors examine whether mandatory auctions promote the efficient restructuring of distressed firms relative to a reorganization-based bankruptcy system such as Chapter 11, and they show that a bankruptcy system that encourages but does not mandate auctions can actually increase the likelihood that an outside bidder enters and the assets of the bankrupt firm are redeployed.

TL;DR: In this article, the authors investigated the interaction between creditor structure and reorganization law and showed that the effect of a low-cost reorganization procedure is more likely to be positive in a market-based financial system.

TL;DR: In this article, the authors proposed the hypothesis that majority insiders have an incentive to engage in insider trading around seasoned equity offerings (SEOs), primarily for the sake of preserving control.

TL;DR: In this article, a new form of call provision known as a "make-whole" call, which utilizes a floating call price based on the level of current interest rates, is analyzed.

TL;DR: In this article, the authors study how an optimal wage contract can be implemented using stock options and derive the properties of the optimal contract with stock options, and show how the exercise price and the size of the option grant should change in response to changes in exogenous parameters.

TL;DR: In this paper, the performance elasticity of average employee hourly compensation for U.S. manufacturing firms was calculated and the estimated elasticity indicates the degree of alignment between employee and shareholder objectives.

TL;DR: The authors analyzes whether judges' actions within Chapter 11 bankruptcy affect debtor firms' ability to reorganize (e.g., debt restructurings and mergers) as opposed to being liquidated in Chapter 7 bankruptcy.

TL;DR: In this article, the authors consider the effect of serial correlation on the expected cash flow and show that the effect can be significant and casts doubt on the usefulness of several standard valuation approaches and results.

TL;DR: In this article, the authors examine the nature of hostages in long-term contracts and show that hostages need to reflect marginal deterrence and operate similarly to the same principle in the criminal law.

TL;DR: In this paper, the United Shareholders Association (USA) published its Shareholder 1000 report, which ranked 1000 firms on several dimensions of corporate performance, including shareholder rights and management compensation.

TL;DR: Bro Brooke Group's actions, which included promises to cooperate in litigation against its rivals, spurred other companies to reach settlements on less favorable terms as discussed by the authors, led to massive wealth destruction within the industry but impressive returns for shareholders of Brooke Group.

TL;DR: In this article, the intensity of the value maximization incentives for average employees generated through the combination of wage, salary, and bonus mechanisms is estimated through estimation of the elasticity of average employee hourly compensation with respect to changes in firm performance.