Showing papers in "Journal of Financial Economics in 1996"

TL;DR: In this paper, the authors present evidence consistent with theories that small boards of directors are more effective, using Tobin's Q as an approximation of market valuation, and find an inverse association between board size and firm value in a sample of 452 large U.S. industrial corporations.

TL;DR: The authors examined the impact of accounting-based performance measures on the test statistics designed to detect abnormal operating performance and found that commonly used research designs yield test statistics that are misspecified in cases where sample firms have performed either unusually well or poorly.

TL;DR: This article investigated the empirical relation between monthly stock returns and measures of illiquity obtained from intraday data and found a significant relation between required rates of return and these measures after adjusting for the Fama and French risk factors and also after accounting for the effects of the stock price level.

TL;DR: In this paper, the authors study industry-level patterns in takeover and restructuring activity during the 1982-1989 period and find significant differences in both the rate and time-series clustering of these activities across 51 industries.

TL;DR: In this paper, a generalized regime-switching (GRS) model of the short-term interest rate is proposed, which allows the short rate to exhibit both mean reversion and conditional heteroskedasticity.

TL;DR: In this article, the authors developed and tested the hypothesis that young venture capital firms take companies pubic earlier than older VC firms in order to establish a reputation and successfully raise capital for new funds and found that companies backed by young VC firms are younger and more underpriced at their IPO than those of established VC firms.

TL;DR: The difference in execution costs between NASDAQ and NYSE stocks is not due to adverse information, in market depth, or in the frequency of even-eighth quotes, but rather due to internalization and preferencing of order flow and the presence of alternative interdealer trading systems.

TL;DR: The authors investigated the ability of the pecking-order model, the agency model, and the timing model to explain firms' decisions whether to issue debt or equity, the shock price reaction to their decisions and their actions afterward.

TL;DR: The authors found that the determinants of the cross-section of expected stock returns are stable in their identity and influence from period to period and from country to country and found that stocks with higher expected and realized rates of return are unambiguously lower in risk than stocks with lower returns.

TL;DR: In this article, the authors test whether the incremental use of debt is positively related to simulated firm-specific marginal tax rates that account for net operating losses, investment tax credits, and the alternative minimum tax.

TL;DR: In this paper, a negative relation between leverage and future growth at the firm level and, for diversified firms, at the business segment level was shown for firms with low Tobin's q ratio, but not for high q firms or firms in high- q industries.

TL;DR: In this article, the authors studied the relation between the premiums in takeover bids involving exchange-listed target firms from 1975-91 and the pre-announcement stock price runups.

TL;DR: In this paper, the authors study the signaling content of managers' dividend decisions for 145 NYSE firms whose annual earnings decline after nine or more consecutive years of growth and find virtually no support for the notion that dividend decisions help identify firms with superior future earnings.

TL;DR: In this article, the authors focus on how best to measure the corporate marginal tax rate, which is an important input into financial analysis of the cost of capital, financing policy, corporate hedging, and corporate reorganizations.

TL;DR: This paper examined the effect of prudent-man laws on the behavior of institutional investors and found that differences in the direction that bank and mutual fund managers choose to tilt may explain their portfolio performance differences over time.

TL;DR: In this article, the authors develop an explanation for IPO underpricing in which the issuer's demand for ownership dispersion creates an incentive to underprice, and empirical results are consistent with initial under-pricing reflecting the level of ownership disersion.

TL;DR: In this paper, the authors find that firms attracting governance proposals have poor prior performance, as measured by the market-to-book ratio, operating return, and sales growth, and that even proposals that receive a majority of shareholder votes typically do not engender share price increases or change in firm policies.

TL;DR: In this paper, the authors examined empirically the pricing of bank-underwritten securities as compared to investment-house underwritten securities over a unique period in the U.S. (pre-Glass-Steagall) when both banks and investment houses were allowed to underwrite securities.

TL;DR: In this article, the authors examine the disciplining function of hostile takeovers in the U.K. in 1985 and 1986 and report evidence of high board turnover and significant levels of post-takeover restructuring.

TL;DR: In this paper, the authors investigate whether investors price the option to abandon a firm at its exit value, and they find strong support for the predictions of abandonment option theory, using discounted earnings forecasts to proxy for expected cash flows and prior literature to categorize asset generalizability.

TL;DR: In this paper, the authors examined the correlation between the returns on individual stocks and the yield changes of individual bonds issued by the same firm, and found that they are negatively and contemporaneously correlated.

TL;DR: This paper investigated factors affecting the number of outside directorships held by CEOs and found that CEOs of firms with growth opportunities hold fewer directorships than those of firms consisting primarily of assets-in-place.

TL;DR: This paper examined the evidence that expected security returns can be forecasted by the term premium, default premium, and dividend yield, in light of recent findings that similar security return patterns are associated with Federal Reserve monetary policy developments.

TL;DR: This article examined the relation between the replacement of mutual fund managers and their prior performance using the growth rate in a fund's asset base and its portfolio returns as two separate measures of performance, and found that there is an inverse relationship between the probability of managerial replacement and fund performance.

TL;DR: In this article, the authors provide an explanation for the diversity in investment strategies and fees of open-end mutual funds, and find that aggressive funds are sensitive to cash flows and are likely to rely on fees to dissuade redemptions.

TL;DR: In this article, the United Shareholders Association (USA) provided a conduit through which small shareholders could unite and attempt to influence the governance of large US corporations, and the USA targeted large firms that underperformed the market and increased its influence from 1990 to 1993.

TL;DR: In this paper, the authors investigate the relation between trading volumes and their proxies for information flows and divergences in opinions, and find that volumes are higher on days when open interest increases than on days with declines.

TL;DR: In this article, the authors test the pecking order model of capital structure by examining the financing of firms that went public in 1983 and find that the probability of obtaining external funds is unrelated to the shortfall in internally generated funds.

TL;DR: This paper examined the accounting and market performance of reverse leveraged buyouts and found that the accounting performance of these firms is significantly better than their industries at the time of the initial public offering (IPO) and for at least the following four years, though there is some evidence of a decline in performance.

TL;DR: In this paper, the authors report that 34% of unsuccessful control contents between 1983 and 1989 experienced a change in top manager within two years following the contest and that turnover is concentrated among poorly performing firms in which outside blockholders acquire an ownership stake.