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Showing papers in "Journal of Financial Economics in 1990"


Journal ArticleDOI
TL;DR: The authors investigated the relation between Tobin's Q and the structure of equity ownership for a sample of 1,173 firms for 1976 and 1,093 firms for 1986 and found a significant curvilinear relation between Q and common stock owned by corporate insiders.

4,567 citations


Journal ArticleDOI
TL;DR: In this paper, the authors analyze a firm owned by atomistic shareholders who observe neither cash flows nor management's investment decisions and find that management is forced to invest too little when cash flow is low and too much when it is high.

3,687 citations


Journal ArticleDOI
TL;DR: The authors describes and analyzes the structure of VC organizations, focusing on the relationship between investors and venture capitalists and between venture-capital firms and the ventures in which they invest, and contrasts VC organizations with large, publicly traded corporations and with leveraged buyout organizations.

2,686 citations


Journal ArticleDOI
TL;DR: In this article, the authors examine the wealth effects surrounding outside director appointments and find no clear evidence that outside directors of any particular occupation are more or less valuable than others, consistent with the hypothesis that outside board members are chosen in the interest of shareholders.

2,031 citations


Journal ArticleDOI
TL;DR: In this article, the authors examine an exhaustive set of initial public offerings (IPOs) by venture-capital-backed companies between 1978 and 1987 and find that venture capitalists specialize their investments in firms to provide intensive monitoring services.

1,250 citations


Journal ArticleDOI
TL;DR: In this paper, the authors studied 111 publicly traded firms that either file for bankruptcy or privately restructure their debt between 1979 and 1985 and found that corporate default leads to significant changes in the ownership of firms' residual claims and in the allocation of rights to manage corporate resources.

1,163 citations


Journal ArticleDOI
TL;DR: In this article, the authors explore the idea that financial distress is costly because free-rider problems and information asymmetries make it difficult for firms to renegotiate with their creditors, and they present evidence that Japanese firms with financial structures in which these problems are likely to be small perform better than other firms after the onset of distress.

968 citations


Journal ArticleDOI
TL;DR: In this article, the authors investigate the incentives of financially distressed firms to restructure their debt privately rather than through formal bankruptcy, and find that firms more likely to reduce their debt have more intangible assets, owe more debt to banks, and owe fewer lenders.

918 citations


Journal ArticleDOI
TL;DR: In this article, the authors examined financial distress and its effect on organizational efficiency and showed that financial distress has benefits as well as costs, and that financial and ownership structure affect the net costs.

736 citations


Journal ArticleDOI
TL;DR: This paper examined the relation between a company's performance and its top executives' service on other boards of directors and found that top executives of companies that reduce their dividends are approximately 50% less likely to receive additional outside directorships than are top executives that do not reduce their dividend (significant at 1% level).

735 citations


Journal ArticleDOI
TL;DR: In this article, share-price responses to 95 announcements of increased research and development (R&D) spending are significantly positive on average, even when the announcement occurs in the face of an earnings decline.

Journal ArticleDOI
TL;DR: In this article, the authors present new evidence on the direct costs of bankruptcy and violation of priority of claims, and present a sample of 37 New York and American Stock Exchange firms that filed for bankruptcy between November 1979 and December 1986, showing that direct costs average 3.1% of the book value of debt plus the market value of equity.

Journal ArticleDOI
TL;DR: The authors investigated changes in operating performance after 58 management buyouts of public companies completed during 1977-1986 and found that operating returns increase significantly from the year before to the year after buyouts as measured by operating cash flows (before interest and taxes) per employee and per dollar of operating assets.

Journal ArticleDOI
TL;DR: In this paper, the authors investigate how quickly prices attain new equilibrium levels after large-block transactions and measure the associated temporary and permanent price effects, and find that prices adjust within at most three trades, with most of the adjustment occurring in the first trade.

Journal ArticleDOI
TL;DR: In this article, the authors examined the agency problem between shareholders and debtholders of Japanese and U.S. firms, and they found that the Japanese debt ratio is negatively related to the firm's potential to engage in risky, suboptimal investments, whereas Japanese debt ratios show no such relation.

Journal ArticleDOI
TL;DR: In this article, the effect of uniform price restrictions and distribution restrictions on the allocation of oversubscribed issues was studied and it was shown that underwriters, given the opportunity to allocate IPOs among both regular and retail investors, would maximize proceeds by using a combination of price and allocation discrimination.

Journal ArticleDOI
TL;DR: In this paper, the effects of leveraged buyouts on total factor productivity (TFP) and related variables using a longitudinal database including over 12,000 manufacturing plants were investigated.

Journal ArticleDOI
TL;DR: A portfolio formed from a given list of assets is defined as a numeraire portfolio for the list if (a) it is self-financing, (b) its value is always positive, and (c) zero is always the best conditional forecast of the numeraire-dominated rate of return of every asset on the list.

Journal ArticleDOI
TL;DR: In this article, the authors investigate how an established borrowing relationship affects the costs associated with initial public offerings of equity and find that IPOs of firms with previously established borrowing relationships are underpriced substantially less than other IPOs.

Journal ArticleDOI
TL;DR: In this article, the authors show that price reactions to dividend increases are significantly more positive and to dividend decreases significantly more negative for high-yield stocks than low-priced and small-firm stocks.

Journal ArticleDOI
TL;DR: This paper showed that pre-buyout bondholders, on average, suffer statistically significant wealth losses in leveraged buyouts and that bonds with strong covenant protection gain value, while those with no protection lose value.

Journal ArticleDOI
Mark J. Roe1
TL;DR: Law and politics affect the financial structure of the public corporation, perhaps as much as economics as discussed by the authors, and the stability of many of these rules also derives from the political resistance that one would expect corporate managers and benefited financial institutions to offer to any change.

Journal ArticleDOI
TL;DR: In this article, the authors show that bid-ask errors in transaction prices are the predominant source of apparent price reversals in the short run for NASDAQ firms, and they also show that security returns are positively, and not negatively, autocorrelated.

Journal ArticleDOI
TL;DR: In this paper, the influence of market microstructure on liquidity premiums was investigated and the NASDAQ appeared to have a liquidity advantage over the NYSE for small firms but not for large companies.

Journal ArticleDOI
TL;DR: In this paper, the authors examine two Anglo-Dutch groups the shares of whose parents trade on several international exchanges and find persistent deviations from these ratios on both the New York and London exchanges.

Journal ArticleDOI
TL;DR: This article examined the effect of leveraged buyouts on firms' strategic investments, buyout firms' performance under difficult economic conditions, and the frequency and costs of financial distress associated with buyouts.

Journal ArticleDOI
TL;DR: This article found that investment-banker advisory fees in tender offers average 1.29% of the value of a completed transaction, far below the levels often alluded to in the business press.

Journal ArticleDOI
TL;DR: In this paper, the authors predict that firms with greater growth opportunities, lower agency costs, and lower tax liability are more likely to consolidate control through dual-class recapitalization and leveraged buyouts.

Journal ArticleDOI
TL;DR: In this article, the authors examined the effects of employee stock ownership plans (ESOPs) on shareholder wealth and found that ESOPs established in the presence of takeover activity reduce share values, by approximately 4% on average.

Journal ArticleDOI
TL;DR: This paper investigated the underlying causes and the announcement effects of plant closings and found that firms announcing closings have lower earnings than market or industry median; earnings typically improve slightly after the announcement.