Abstract: Due to its distinctive institutional background, Oman offers a valuable opportunity to examine stock price reactions to dividend announcements. In Oman, (1) there are no taxes on dividends and capital gains, (2) there is a high concentration of share ownership, (3) there is low corporate transparency, and (4) firms frequently change their dividends. Our results show that announcements of dividend increases are associated with increased stock prices, while announcements of dividend decreases cause decreases in stock prices. Firms that do not change their dividends experience insignificant negative returns. These results contradict tax-based signaling models, which argue that higher taxes on dividends relative to capital gains are a necessary condition for dividends to be informative.

Abstract: A previous study suggests that U.S. Senators trade common stock with a substantial informational advantage compared to ordinary investors and even corporate insiders. We apply precisely the same methods to test for abnormal returns from the common stock investments of Members of the U.S. House of Representatives. We measure abnormal returns for more than 16,000 common stock transactions made by approximately 300 House delegates from 1985 to 2001. Consistent with the study of Senatorial trading activity, we find stocks purchased by Representatives also earn significant positive abnormal returns (albeit considerably smaller returns). A portfolio that mimics the purchases of House Members beats the market by 55 basis points per month (approximately 6% annually).

Abstract: SYNOPSIS: This paper examines whether mandatory IFRS adoption at the country level lowers U.S. investors' propensity to overweight domestic stocks in their common stock portfolios (generally referred to as home bias). We find that, on average, U.S. home bias decreases for countries that mandate IFRS adoption, after controlling for country-fixed effects. We also find that the reduction in the U.S. home bias after the mandatory adoption of IFRS is greater for countries with larger differences between IFRS and their domestic accounting standards, for countries with a stricter rule of law and a common law legal origin, and in countries with greater incentives to report high-quality financial information. Overall, our results indicate that a common set of global accounting standards matters for portfolio holdings of U.S. investors and that U.S. investors regard the enforcement of standards to be a key factor in making investments outside the U.S. Data Availability: Data are publicly available.

Abstract: This paper examines whether mandatory IFRS adoption at the country level lowers U.S. investors’ propensity to overweight domestic stocks in their common stock portfolios (generally referred to as home bias). We find that, on average, U.S. home bias decreases for countries that mandate IFRS adoption, after controlling for country-fixed effects. We also find that the reduction in the U.S. home bias after the mandatory adoption of IFRS is greater for countries with larger differences between IFRS and their domestic accounting standards, for countries with a stricter rule of law and a common law legal origin, and in countries with greater incentives to report high-quality financial information. Overall, our results indicate that a common set of global accounting standards matter for portfolio holdings of U.S. investors and that U.S investors regard the enforcement of standards to be a key factor in making investments outside the U.S.

Abstract: We develop a model ofnancial contracting under imperfect enforcement. Financial contracts are designed to keep entrepreneurs from diverting project returns, but enforce- ment is probabilistic and penalties are limited. The model rationalizes the prevalence of straight debt and common stock, and its predictions are consistent with a host of empirical capital structure regularities { across countries, acrossrms, and across time.

Abstract: Purpose – The purpose of this paper is to examine whether stock dividend announcements create value for companies traded on the Nigerian stock market and to ascertain the nature of the information such announcements convey.Design/methodology/approach – A standard event study methodology, employing the market model, is applied to determine the abnormal returns both on and surrounding the stock dividend announcement date. A sample is broken down based on the timing of announcements and on the frequency with which the announcing companies' shares are traded. The authors also examine the information content of stock dividends by applying the χ2 technique to test the level of association between earnings, cash dividends and stock dividends.Findings – The findings suggest that companies that choose their own announcement date outside the Nigerian stock exchange announcement window experience positive abnormal returns if their stock is more frequently traded and negative abnormal returns if their stock is less f...

Abstract: Recently, the US Securities and Exchange Commission reduced resale restrictions on Rule 144 private placements from 12 months to 6 months with the intention of lowering the cost of equity capital for issuing firms. In Canada, similar regulatory changes were adopted several years ago, providing a unique opportunity to test the wealth effects of reducing private placement resale restrictions. We find that shortening resale restrictions reduces the liquidity portion of offer price discounts, and thus lowers the cost of equity capital for issuing firms, but has no significant effect on announcement-period abnormal returns after controlling for issuer type. However, there is a fundamental shift in the types of firms making private placements of common stock after the legislation-induced easing of resale restrictions. Specifically, we find that smaller firms and firms with greater information asymmetry are less likely to issue privately placed common stock after the legislative change, suggesting that the easing of resale restrictions reduces the costly signal that helps to overcome the Myers and Majluf (1984) underinvestment problem.

Abstract: This paper studies a general equilibrium model with an investor-controlled firm. Shareholders can vote on the firm’s production plan in an assembly if they dislike management’s decision. Prior to that they may trade shares on the stock market. Since stock market trades determine the distribution of votes, trading is strategic. There is always an equilibrium, where share trading leads to an ownership structure that supports competitive behavior. But there may also be equilibria, where monopolistic behavior prevails.

Abstract: This research has investigated the effect of ownership structure on performance of listed companies in Tehran Stock Exchange. The research hypotheses are based on the type of relationship between ownership structure and corporate performance. To test each hypothesis, four models defined based on dependent variables. The sample is consisted of 68 companies during the years 1384 (April 2006) to 1388 (March 20, 2010). Statistical method used in this research was panel data. Findings indicate that there is significant and negative relationship between "the amount of ownership of biggest shareholder" and firm performance. There is a positive and significant relation between "the amount of ownership of five greater shareholders" and firm performance. The relationship between "the amount of ownership of institutional shareholders" and "the amount of ownership of managerial shareholders" and "the amount of ownership of individual shareholders" is significant and negative.

Abstract: This study compares characteristics of firms using the private placement method of issuing common stock with those using the public offering method. Results show that private placement firms are smaller in size, have more growth opportunities, and have less financial slack than public offering firms. Their issuance decisions are likely to be driven by their needs for external capital, rather than motivated by overvaluation of their stocks. These findings are consistent with the information hypothesis, which states that undervalued firms with favorable prospects and little financial slack use the private placement method to resolve the information asymmetry problem when seeking external equity capital.

Abstract: The corporate governance relates to the management of an organization and becomes the target of interest of entrepreneurs when they realize that their practices contribute to solve conflicts of interests between directors and shareholders. This study aims to evaluate whether the adoption of corporate governance practices changes the capital structure and the companies’ performance. The sample totalizes 84 companies holders of shares negotiated in BOVESPA and listed in the N1, N2 and NM. The research uses tests of differences to identify changes in structure and performance, and apply panel data regression with the purpose of assessing whether corporate governance influences variations in capital structure and the companies’ performance. The independent variables are given by the index of governance, percentage of ordinary shares of the controlling shareholder, percentage of shares of the majority shareholder, the percentage of ordinary shares of the five majority shareholders and the independence of the board. The dependent variables include the equity return, stock return and general indebtedness. The result showed a little influence exercised by the independent variables in the dependent variable, thus it cannot be inferred that the corporate governance practices adopted by the companies that joined in N1, N2 and NM have contributed expressively to variations in the performance and the capital structure of the companies, at least within the limits of this sample.

Abstract: This article details major privatization deals executed during 2010 and the first half of 2011 and surveys trends shaping the privatization landscape worldwide We document several important facts, including the following: (1) Governments raised a record $2136 billion (€1599 billion) through privatization sales of common stock in state owned enterprises during 2010; (2) Share issue privatizations (SIPs) accounted for over three-fourths of this total, and included history’s largest ever stock offering and the largest corporate security offering of any kind - the $70 billion (€524 billion) Petrobras seasoned equity offering - and the largest initial public offerings in world and US financial history, the $221 billion (€165 billion) IPO of Agricultural Bank of China and the $201 billion (€150 billion) General Motors IPO, respectively; (3) For the second year running, the United States raised more proceeds through privatization sales than any other country, followed by China, Brazil, France, Turkey, Poland, India, and the UK and; (4) The €331 billion ($442 billion) raised by EU governments represented only 206% of the worldwide total, far lower than the long-run average EU share of 436%, but European sales may well surge during 2011-12 in response to fiscal challenges

Abstract: This study uses a two-regime threshold autoregressive (TAR) model with an autoregressive unit root to examine the efficiency of the Indian stock market. Using 11 years' weekly data for two indices and 10 common stocks from the National Stock Exchange (NSE) of India, this study applies the Caner and Hensen (2001) methodology to simultaneously test for the presence of nonlinearities and unit root in the stock prices data. The main finding of this study is that Indian stock prices follow a random walk albeit the presence of nonlinearities in the data.

Abstract: I. INTRODUCTION II. CURRENT LAW A. The Doctrinal Sources of the Insider Trading Prohibition B. The Classical Theory 1. The Legal Standard 2. Application to Members of Congress and Other Government Employees C. The Misappropriation Theory 1. The Legal Standard 2. Application to Members of Congress and Other Government Employees D. Summation III. POLICY A. Should Members of Congress be Allowed to Inside Trade? 1. Perverse Incentives 2. Unfairness 3. Summary B. Who Should Enforce the Prohibition? 1. A Constitutional Barrier? 2. Prudential Considerations IV. THE STOP TRADING ON CONGRESSIONAL KNOWLEDGE ACT A. The Prohibition on Trading and Tipping B. Reporting Provision V. CONCLUSION A 2004 study of the results of stock trading by U.S. senators during the 1990s found that senators on average beat the market by 12% a year. In sharp contrast, U.S. households on average underperformed the market by 1.4% a year and even corporate insiders on average beat the market by only about 6% a year during that period. A reasonable inference is that some senators had access to--and were using--material nonpublic information about the companies in whose stock they trade. Under current law, it is unlikely that members of Congress can be held liable for insider trading. The proposed Stop Trading on Congressional Knowledge (STOCK) Act addresses that problem by instructing the Securities and Exchange Commission to adopt rules intended to prohibit such trading. This Article analyzes present law to determine whether members of Congress, congressional employees, and other federal government employees can be held liable for trading on the basis of material nonpublic information. It argues that there is no public policy rationale for permitting such trading and that doing so creates perverse legislative incentives and opens the door to corruption. The Article explains that the Speech or Debate Clause of the U.S. Constitution is no barrier to legislative and regulatory restrictions on congressional insider trading. Finally, the Article critiques the current version of the STOCK Act, proposing several improvements. I. INTRODUCTION The common stock investment portfolios of U.S. senators beat the market by 12% a year, on average, between 1993 and 1998, according to a study by economist Alan J. Ziobrowski and his collaborators. (1) In sharp contrast, the common stock investment portfolios of U.S. households as a whole underperformed the market on average by 1.4% a year during the relevant period. (2) Even more striking, corporate insiders investing in their own company's stock only beat the market by about 6% a year on average during that period. (3) The Ziobrowski study's results strongly imply that some members of Congress are using nonpublic information to make trading decisions. Over time, even professional investors do not systematically beat the market. (4) This basic premise of efficient capital markets theory has been confirmed by many academic studies. (5) The only important exception to the rule is corporate insiders trading in their own corporation's stock. (6) The obvious and generally accepted explanation for insiders' ability to beat the market is their access to and use of material nonpublic information about their company. (7) It seems unlikely that U.S. senators as a group have such unique investment skills that they can outperform not only the market as a whole but also corporate insiders over an extended period. Instead, it seems more reasonable to assume that the superior returns found by Ziobrowski result from senatorial access to--and use of--material nonpublic information about the companies in whose stock they traded: Looking at the timing of cumulative returns, the senators also appeared to know exactly when to buy or sell their holdings. …

Abstract: This study examines the relationship between underpricing for new issues of common stock and issue size (offer price and number of shares) after controlling for an issues risk. Both risk and offer price are found to be significant factors in explaining underpricing. Offer price dominates as an explanatory variable in cold issue markets, while risk dominates in hot issue markets.

Abstract: Purpose – This research seeks to investigate the role of key corporate governance mechanisms in determining a firm's post‐bankruptcy performance following reorganisation.Design/methodology/approach – The study is based on agency theory and uses a unique sample of 111 filing companies whose reorganisation plans have been confirmed by the Thai Central Bankruptcy Court during the period 1999‐2002.Findings – The results indicate that monitoring and incentive mechanisms are significant determinants of a firm's post‐bankruptcy performance. The key monitoring mechanism is ownership concentration, measured by shares held by the largest shareholder, whereas the critical incentive mechanisms are cash compensation and percentage of common shares held by the plan administrator. The results indicate that these mechanisms can mitigate agency problems in previously insolvent companies and increase post‐bankruptcy performance over a three year period.Originality/value – The study is timely given that many organisations a...

Abstract: Using a sample of common stocks traded on the Istanbul Stock Exchange from February 1997 to April 2008, we test whether the conditional capital asset pricing model (CAPM) accurately prices assets. ...

Abstract: This paper examines a sample of U.S. Bank Holding Companies (BHCs) to determine if there is a relationship between managerial equity ownership (insider holdings) and the level of dividends paid out by the BHC. Given the findings of prior research, the analysis is performed using Two-Stage Least Squares (2SLS) regression with three equations. The three dependent variables are DIVPAY (dividend payout), DEBT (total liabilities over total consolidated assets) and INSIDER (percentage of common stock held by officers and directors). This study finds that insider holdings has a non-linear relation with dividend payout. Initially, there is a significant negative relation between the level of insider holdings and the level of dividends paid. However, higher levels of insider holdings show a positive relation with the level of dividends paid.

Abstract: Between 1940 and 1944 the US government placed $175.066 billion of prime defence contracts with US corporations. Two-thirds of these awards went to only 100 companies and 20% to only five companies leading to charges that the prime contractors were favoured. This article examines the common stock returns of World War II prime contractors relative to broad market indices and to the returns on the non-prime contractors in the same industry. The analysis begins in 1938 with the Anschluss and ends with the 1950 outbreak of the Korean War. Little evidence is found to support the charges.

Abstract: Each year many firms repurchase shares of their common stock. Research evidence shows that when firms announce the repurchase of common stock, their share prices typically rise. Numerous studies attribute these increases to a signaling effect. But some firms that announce their intention of repurchasing shares of common stock either repurchase no shares at all or repurchase fewer shares than initially announced. Although the practice of firms intentionally announcing the repurchase of more shares than they expect to repurchase is illegal, the expected increase in share prices may give firms an incentive to make such false announcements. This study surveys top financial executives to learn the extent that firms repurchase fewer shares than announced, identify the reasons for this activity, and learn how managers view this activity. We surveyed 642 firms that conducted common stock repurchases from January 1998 to September 1999. Based on 218 responses, we find that while managers are uncertain about the legality of this activity, they believe that the intentional repurchase of fewer shares than announced is unethical, sends a false signal to the market, and damages the firm’s credibility with its stockholders. Managers also believe that firms repurchasing fewer shares than announced should publicly reveal both the reason for not repurchasing all shares and the amount by which the repurchase fell short of the firm’s announced intentions. Despite these beliefs, managers report that repurchasing fewer shares than announced is a common practice.

Abstract: A bank’s stock price is modeled as a call option on the spread of random assets over random liabilities. The logarithm of assets and liabilities are jointly modeled as driven by four variance gamma processes and this model is estimated by calibrating to quoted equity options seen as compound spread options. On de…ning riskweighted assets as asset value less the bid price plus the ask price of liabilities less the liability value we endogenize capital adequacy ratios following the methods of conic …nance for the bid and ask prices. All computations are illustrated on CSGN.VX, ADRed into USD on March 29 2011. 1 Introduction Contingent capital notes are a …nancial innovation occuring in response to the …nancial crisis of 2008. The issuance of such securities was recommended by the Squam Lake Report (2010) and the authors of this report encouraged regulators to require …nancial institutions to invest in “regulatory hybrid securities.”These are long-term debt obligations converting automatically to equity in times of …nancial stress for the issuing entity. Such securities are seen as providing avenues for automatic recapitalization in times of need (Du¢ e (2010)). A variety of such notes are described in Madan and Schoutens (2011). In November 2009, Lloyds Banking Group was the …rst to issue such a security. It was a Lower Tier 2 hybrid capital instrument called Enhanced Capital Notes. They include a contingent capital feature with the notes converting to ordinary shares if Lloyds’published consolidated core Tier 1 ratio falls below 5%. In mid 2010 Rabobank issued a contingent core note and in October 2010, a We thank Matthew Evans at Morgan Stanley for his encouragement on accomplishing the analysis presented in this paper.

Abstract: This paper documents the purposes of issuer tender offers to repurchase stock, as stated in Securities and Exchange Commission (SEC) disclosures, over the period 1994-2006. We explore whether stated purposes relate to announcement period returns and find returns are significantly lower when repurchases replace dividends, distribute cash from unspecified sources, or occur subsequent to third-party tender offers. Announcement period returns are significantly higher when repurchases are viewed by management as the best investment opportunity available or when they occur subsequent to previous repurchase programs. Finally, we find evidence in support of signaling theory and Jensen's (1986) agency cost of free cash flow theory.

Abstract: This paper studies the predictability of returns in the French stock market. It provides an analysis of predictable components of monthly common stock returns. We study a single-beta conditional model and we show that stock market risk premium is variable over time and is important for capturing predictable variations of stock returns. We find also that the expected excess returns on small and medium capitalisation stocks are more sensitive to changes in the predetermined variables such as dividend yields, default spread and term spread, than expected excess returns on large capitalisation stocks.

Abstract: When theory and data conflict, Black argued that the safest course is to assume the theory is correct. As splits do not alter cash flows, one such conflict is findings of negative abnormal long-horizon returns following reverse splits. The extant literature has concluded reverse splits destroy shareholder value. We reconcile the data with the theory by finding no evidence that a portfolio of common stock reverse splits over the 2002 through 2006 period experienced negative abnormal returns. While the price of a stock declines anomalously over the ten days following a reverse split, we propose to explain this via market microstructure. We model the stock of an ex-split firm as a call option on the firm’s assets, and assume a stock priced below $3.00 and above $4.99 is out-of-the-money and in-the-money, respectively. We find the frequency of deletions from the CRSP database due to poor performance is inversely related to option moneyness, with firms priced below $3.00 on the ex-split date exhibiting severe financial distress. Multiple reverse splits occurring within a 5-year window are analyzed separately and modeled as deep out-of-the-money options. We propose an alternative set of risk factors that include option time to maturity, moneyness, and implied volatility, and validate our findings out of sample. Our results are consistent with market efficiency.