SSRN-Stock Options and Long Term IPO Performance by Kuntara Pukthuanthong, Thomas Walker
Question: How cool is this?!? (answer below)
A paper by Pukthuanthong and Walker will also be presented at the European FMA Meetings. The paper examines the use of options in pay packages of IPO firms. And finds that "new public companies that have high use of stock options outperform those that have
Friday, June 25, 2004
SSRN-The Effects of Regulation Fair Disclosure on Management Forecasts by Carla Carnaghan, Ranjini Sivakumar
SSRN-The Effects of Regulation Fair Disclosure on Management Forecasts by Carla Carnaghan, Ranjini Sivakumar
In a paper to be presented this coming week at the European FMA meetings, Carnaghan and Sivakumar find evidence that shows that regulation FD did reduce information Asymmetries. Additionally they "find that the information disclosed by managers has improved in terms of frequency,
In a paper to be presented this coming week at the European FMA meetings, Carnaghan and Sivakumar find evidence that shows that regulation FD did reduce information Asymmetries. Additionally they "find that the information disclosed by managers has improved in terms of frequency,
SSRN-The Capital Asset Pricing Model: Theory and Evidence by Eugene Fama, Kenneth French
SSRN-The Capital Asset Pricing Model: Theory and Evidence by Eugene Fama, Kenneth French
Fama and French provide a great review and discussion of CAPM with all of its limitations. Why is it used in class? Great model. Main problem? It doesn't work! Paper should be (and was in my class) required reading.
oh, and yes I know this has been included in a past newsletter, but it was so good I
Fama and French provide a great review and discussion of CAPM with all of its limitations. Why is it used in class? Great model. Main problem? It doesn't work! Paper should be (and was in my class) required reading.
oh, and yes I know this has been included in a past newsletter, but it was so good I
Thursday, June 24, 2004
SSRN-Agency Costs of Overvalued Equity by Michael Jensen
SSRN-Agency Costs of Overvalued Equity by Michael Jensen
I know we talked about this one in class, but it is just so so good. Jensen talks about what led to the governance crisis we saw at Tyco, Enron, etc. A big part of teh answer may be overpriced equity. Why? A stock price that is overvalued is caused when investors have overly optimistic expectations. Thus, if the investors were to
I know we talked about this one in class, but it is just so so good. Jensen talks about what led to the governance crisis we saw at Tyco, Enron, etc. A big part of teh answer may be overpriced equity. Why? A stock price that is overvalued is caused when investors have overly optimistic expectations. Thus, if the investors were to
SSRN-Market Evaluation of Off-Balance Sheet Financing: You Can Run But You Can't Hide by Steve Lim, Steven Mann, Vassil Mihov
SSRN-Market Evaluation of Off-Balance Sheet Financing: You Can Run But You Can't Hide by Steve Lim, Steven Mann, Vassil Mihov
Super short version: using operational leases as a means of keeping debt off the balance sheet may fool bond rating agencies, but it does not seem to fool the bond market.
Lim, Mann, and Mihov (all from TCU) find that attempts to hide debt (in the form of operating
Super short version: using operational leases as a means of keeping debt off the balance sheet may fool bond rating agencies, but it does not seem to fool the bond market.
Lim, Mann, and Mihov (all from TCU) find that attempts to hide debt (in the form of operating
The New York Times : New Rule on Short Selling
The New York Times > Business > Market Place: New Rule on Short Selling
Ok, time to update your notes on short selling! You can now sell on a downtick. At least temporarily and for some stocks. The SEC approved a one year trial (starting in January 2005 that will remove many of the short sale restrictions for "one-third of the stocks in the Russell 3000." However, for other stocks it may
Ok, time to update your notes on short selling! You can now sell on a downtick. At least temporarily and for some stocks. The SEC approved a one year trial (starting in January 2005 that will remove many of the short sale restrictions for "one-third of the stocks in the Russell 3000." However, for other stocks it may
The Washington Post looks at Google ownership
Following a Rich Tradition (TechNews.com)
The insiders at Google really are insiders ;)
To quote the article Google ownership is a "carefully crafted roster of early-stage investors [that] reads like a Who's Who of Silicon Valley" or as Alan Meckler states in the article: ""It is a traditional Silicon Valley old boys network,...."It is very similar to what happened in the 1990s when there were
The insiders at Google really are insiders ;)
To quote the article Google ownership is a "carefully crafted roster of early-stage investors [that] reads like a Who's Who of Silicon Valley" or as Alan Meckler states in the article: ""It is a traditional Silicon Valley old boys network,...."It is very similar to what happened in the 1990s when there were
FRB: Speech, Gramlich--Reducing Budget Deficits--June 24, 2004
FRB: Speech, Gramlich--Reducing Budget Deficits--June 24, 2004
Fed Governor Gramlich just gave a interesting and informative speech on the Federal Budget Deficit. He points out the difficulty in forecasting it, the fact that it is based on cash basis accounting which brings its own problems (example future social security problems!), and even suggests ways to improve the budgeting process. My
Fed Governor Gramlich just gave a interesting and informative speech on the Federal Budget Deficit. He points out the difficulty in forecasting it, the fact that it is based on cash basis accounting which brings its own problems (example future social security problems!), and even suggests ways to improve the budgeting process. My
Wednesday, June 23, 2004
Bank mergers create value. Why?
Penas and Unal have provided a great look at bank mergers in this forthcoming JFE piece. rather than looking at equity, they examine what happens to the merging banks'bonds. As theory would predict, they find that the bonds go up in value. Why? As the authors state: "The primary determinants of merger-related bondholder gains are diversification gains, gains associated with achieving
SSRN-Revealed Preferences for Corporate Leverage by Thomas Philippon
SSRN-Revealed Preferences for Corporate Leverage by Thomas Philippon
WOW!!! A must read! Philippon examines firms' capital structure empirically and theortically. He finds that firm value does not exactly fit the static trade-off model. Specifically he finds that low levels of debt are not accompanied by as low of firm values as would be expected. However, in other areas, what we have been
WOW!!! A must read! Philippon examines firms' capital structure empirically and theortically. He finds that firm value does not exactly fit the static trade-off model. Specifically he finds that low levels of debt are not accompanied by as low of firm values as would be expected. However, in other areas, what we have been
SSRN-Patriotism in Your Portfolio by Adair Morse, Sophie Shive
SSRN-Patriotism in Your Portfolio by Adair Morse, Sophie Shive
Ok, so maybe, just maybe rationality can not explain everything in investments. Morse and Shive find that patriotism (and not just transaction costs) helps to explain why investors overweight investments in their home country, i.e. the home country bias.
Ok, so maybe, just maybe rationality can not explain everything in investments. Morse and Shive find that patriotism (and not just transaction costs) helps to explain why investors overweight investments in their home country, i.e. the home country bias.
SEC Seeks Independent Fund Board Chairmen
Forbes.com: Update 11: SEC Seeks Independent Fund Board Chairmen
Quite the debate on this one! It is rare that the SEC is so publicly split on an issue. I think it is good however. It does strengthen investor protections somewhat. Although I do admit that some of the benefits may be less than advertised. Overall, I would agree with the SEC chairman on this one and vote that having an
Quite the debate on this one! It is rare that the SEC is so publicly split on an issue. I think it is good however. It does strengthen investor protections somewhat. Although I do admit that some of the benefits may be less than advertised. Overall, I would agree with the SEC chairman on this one and vote that having an
The New York Times > Business > Son Tries to Distance Himself at Adelphia Trial
The New York Times > Business > Son Tries to Distance Himself at Adelphia Trial: "Michael J. Rigas, the former Adelphia Communications vice president, was too busy managing the company's cable TV systems to have joined in the misdeeds that crippled the company, his lawyer said yesterday in the closing arguments of his criminal trial"
Closing arguments are being made in the Adelphia trial and it
Closing arguments are being made in the Adelphia trial and it
BBC NEWS | World | South Asia | India's economy - oil the nuts and bolts
A roadmap for India By Kaushik Basu
Professor of economics, Cornell University
Kaushik provides a fascinating look at what is wrong with the Indian Economy and how the new government should take steps to fix it. For instance, it takes 11 times longer to start a business in India than it does in Singapore.
His list includes 1: Improve efficiency 2. Cut corruption 3. Establish good fiscal
Professor of economics, Cornell University
Kaushik provides a fascinating look at what is wrong with the Indian Economy and how the new government should take steps to fix it. For instance, it takes 11 times longer to start a business in India than it does in Singapore.
His list includes 1: Improve efficiency 2. Cut corruption 3. Establish good fiscal
Tuesday, June 22, 2004
What to do??
Ok, FinanceProfessors, I need some advice. I submitted a paper last july (as in July 2003) to a journal and despite several emails back and forth with the editor and several promises to have a decision "soon" (in October), "by January" (in December) or "by Monday" in April, I have yet to hear anything.
A few weeks ago I wrote asking for the paper back so that I can submit it elsewhere. (Mind
A few weeks ago I wrote asking for the paper back so that I can submit it elsewhere. (Mind
New York Post Online Edition: business
New York Post Online Edition: business: "PERELMAN'S PULL NET$ REVLON AID "
Mmm, need an example from the US of what is wrong with Japanese keirtsus? Revlon to the rescue! According to the NY Post, Ron Perelman--the controlling shareholder in Revlon and major shareholder in Citigroup, used some of his power to get Citigroup to make the loan. Why is this wrong? If the loan should have been
Mmm, need an example from the US of what is wrong with Japanese keirtsus? Revlon to the rescue! According to the NY Post, Ron Perelman--the controlling shareholder in Revlon and major shareholder in Citigroup, used some of his power to get Citigroup to make the loan. Why is this wrong? If the loan should have been
BBC NEWS | Business | US bank in $14bn takeover deal
BBC NEWS | Business | US bank in $14bn takeover deal: "The US banking industry has seen its latest round of consolidation after Wachovia agreed to buy SouthTrust for $13.7bn"
Wachovia continues its push to be a truly national bank with the announced acquisition of SouthTrust. The deal will move Wachovia strongly into the mid couth (Texas). Additionally it will save money by the elimination of
Wachovia continues its push to be a truly national bank with the announced acquisition of SouthTrust. The deal will move Wachovia strongly into the mid couth (Texas). Additionally it will save money by the elimination of
Morocco signs Free Trade Agreement with U.S
Morocco signs Free Trade Agreement with U.S
In a move that will no doubt pay dividends to both countries, Morocco and the US agreed to "immediately eliminate tariffs on more than 95 percent of bilateral trade in consumer and industrial products. All remaining tariffs on these goods are to be eliminated within nine years - the best market access package of any U.S. free trade agreement with a
In a move that will no doubt pay dividends to both countries, Morocco and the US agreed to "immediately eliminate tariffs on more than 95 percent of bilateral trade in consumer and industrial products. All remaining tariffs on these goods are to be eliminated within nine years - the best market access package of any U.S. free trade agreement with a
Merrill Lynch dropped from Google IPO
Times Online - Business
The Google IPO was in the news again. First the firm ammended its prospectus to warn that the Dutch Auction process they are using may result in a stock price decline after the issue.
The second interesting story is that they dropped Merrill Lynch from the IPO syndicate. Why? Officially no one is saying, but the speculation is that ML's computer system was unable to
The Google IPO was in the news again. First the firm ammended its prospectus to warn that the Dutch Auction process they are using may result in a stock price decline after the issue.
The second interesting story is that they dropped Merrill Lynch from the IPO syndicate. Why? Officially no one is saying, but the speculation is that ML's computer system was unable to
Friday, June 18, 2004
SSRN-Oil Imports, National Defense, and Bio-Energy by Robert Ames, Anthony Corridore, Paul MacAvoy
SSRN-Oil Imports, National Defense, and Bio-Energy by Robert Ames, Anthony Corridore, Paul MacAvoyI love articles that make me think. This is one of them! The authors suggest that it is time for America to go on a diet: a low oil diet. What would happen if we cut imports? Well we would likely see higher prices and would have to drill in some places we generally do not want to, but prices would
Race Across AMerica--No Finance Content
Welcome to Race Across AMerica
The RAAM (Race Across AMerica) starts this weekend. It is NUTS! I can not even begin to imagine. WATCH THE VIDEO!!! The video is very well done.
If it weren't a race, it would be unreal fun, but the competion seems to take the fun away. Check out what the neck contraptions they use to hold their neck's up. AMAZING!
Sleep is just a rumor, can you imagine
The RAAM (Race Across AMerica) starts this weekend. It is NUTS! I can not even begin to imagine. WATCH THE VIDEO!!! The video is very well done.
If it weren't a race, it would be unreal fun, but the competion seems to take the fun away. Check out what the neck contraptions they use to hold their neck's up. AMAZING!
Sleep is just a rumor, can you imagine
Thursday, June 17, 2004
It pays to be good!
Durnev and Kim in a forthcoming Journal of Finance article provide further evidence that it pays to be good. Why? Becuase firms with stronger shareholder protections are generally rewarded with a higher valuation (and hence lower cost of capital) than their peers. MOrevoer, the authors show that the cost of being bad is higher when there are many growth opportunities and when the country has
Prosecutor says Adelphia bankrupted by founder's greed - Jun. 16, 2004
Prosecutor says Adelphia bankrupted by founder's greed - Jun. 16, 2004
Closing arguments are underway in the Adelphia Trial. It is approaching 4 months since the trial began. Interesting, although not surprisingly, the Rigases did not take the stand (if this were Letterman, he would say it was the only thing they didn't take--just kidding!!!). Of course, they are innocent until proven guilty,
Closing arguments are underway in the Adelphia Trial. It is approaching 4 months since the trial began. Interesting, although not surprisingly, the Rigases did not take the stand (if this were Letterman, he would say it was the only thing they didn't take--just kidding!!!). Of course, they are innocent until proven guilty,
Wednesday, June 16, 2004
BBC NEWS | Programmes | From Our Own Correspondent | Meet the world's second richest man
BBC NEWS | Programmes | From Our Own Correspondent | Meet the world's second richest man: While I knew Buffett was a very down to earth guy, I ddi not know he lived "ordinary suburban home on an ordinary tree-lined road."
The rest of the article centers on last month's Berkshire Hathaway annual meeting
The rest of the article centers on last month's Berkshire Hathaway annual meeting
BBC NEWS | Business | Mr Greenspan's balancing act
BBC NEWS | Business | Mr Greenspan's balancing actWhy does inflation seem higher than economists are reporting? A big reason is that economists are more concerned with what is called teh core inflation rate. This core ignores volatile food and energy prices. You and I however have to eat and drive, so those prices appear in our mental calculation of inflation.
MSNBC - Martha Stewart sells some of her stock
MSNBC - Martha Stewart sells some of her stock
Interesting, although not earth shattering. Really this is just a test story to see how I can publish to the blog.
Interesting, although not earth shattering. Really this is just a test story to see how I can publish to the blog.
Books, Bikes, and Bonas
Hi everyone. I am just getting used to this thing and have to write something to test it, so here are some random musings and an update as to what i have been doing lately.
Had a GREAT time biking htis past weekend. I did the MS 150 (although I chose the 164 mile option) from Pittsburgh to Lake Erie. It was super fun and even went faster than I expected. I was sad to see it end! Would haev
Had a GREAT time biking htis past weekend. I did the MS 150 (although I chose the 164 mile option) from Pittsburgh to Lake Erie. It was super fun and even went faster than I expected. I was sad to see it end! Would haev
Welcome to FinanceProfessor.com's new Blog
I decided to try again. I have heard that this is pretty easy to use and if it works, a GIANT IF, then maybe I can save some time communicating with many people and hopefully working on teh newsletter at the same time.
I shouyld probably warn you, that this will have more than just finance on it. Sort of random stuff aas well. Of course FinanceProfessor.com has some stuff that is not
I shouyld probably warn you, that this will have more than just finance on it. Sort of random stuff aas well. Of course FinanceProfessor.com has some stuff that is not