The Role of the Media in the Internet IPO Bubble by Utpal Bhattacharya, Neal Galpin, Rina Ray, Xiaoyun Yu

SSRN-The Role of the Media in the Internet IPO Bubble by Utpal Bhattacharya, Neal Galpin, Rina Ray, Xiaoyun Yu Bhattacharya, Galpin (Yes, a SBU GRAD), Ray, and Yu provide an intriguing look at the financial media. As the title suggests, the paper is centered on coverage of IPOs in and out of the Internet Bubble period, but in getting to that topic, the paper brings up many roles the media

Goldman loses in price stabilzation game

A great look at price stabilization from the NY Times. The case deals with Goldman Sachs' (and syndicate's) attempt to keep Lazard's stock price high."Last week, Goldman said in a filing that it was left with $15 million in losses after underwriting Lazard's initial public offering and trying in vain to prop up the stock as it began falling in the first days of trading"Also later on in the

Floor traders, hamburgers, and bowling balls

Newsweek has an interesting (albeit short) piece on what will happen to Wall Street (residential properties?!?!) as well as specialists after the NYSE merges with archipelago.Just a Street? - Newsweek Business - MSNBC.com:My favorite part:Thain (the CEO of the NYSE) to a group NYSE floor traders:"'You can walk out the door and get a job at McDonald's,'' noting those who add value to the new NYSE

Want to go for a bike ride? Or donate to a good cause?

I have registered to ride in the MS 150 series. It is a two day 150 mile (actually 169 mile in this case, but who is counting ;) ) bicycle ride to raise money for the MS society.It is a good cause so if you would like to learn more about the ride (or a ride near you--it is a national series that I HIGHLY recommend!!!---or if you want to donate to them, why not do it through this link. :)thanks in

FRB: Speech, Ferguson--Asset prices and monetary liquidity--May 27, 2005

With real estate prices (and possible bubbles) being on everyone's mind, Fed Governor Roger Ferguson took an opportunity to speak on the link between liquidity and asset prices.Some highlights:FRB: Speech, Ferguson--Asset prices and monetary liquidity--May 27, 2005: "...asset prices, especially the prices of equities and residential real estate....Because these assets are the most widely held by

Great advice from Free Money Finance

I am excited about this-- A new finance web site by a football fan and a serious cyclist. It is a total given that I am going to link to it and mention it. What makes this even better is that the site is really good!

It is Free Money Finance.
Free Money Finance

It is not an academic finance site, but it is excellent for those of you looking for solid information about your personal

A new spin on spin-offs

Chemmanur and Nandy provide an interesting look at Spin-offs. I will post more about it later..for now a link and a quote:"We show that the improvement in the average productivity of plants following spin-offs is driven primarily by improvements in the productivity of plants continuing with the parent firm, and not from productivity improvements in plants belonging to the spun-off entity.

How to use VAR, ETL in Excel

Estimating Risk Measures

I wish I could retroactively require an article to be read! If I could, this would be it for my Portfolio class (Fin422).

Writing in Financial Engineering News, Kevin Dowd explains how to use Excel to calculate VAR and other risk measures. This will be VERY HELPFUL in class!!!

For instance: "To estimate the daily VaR at, say, the 99 percent confidence level, we

Presidential Address

If you have 40 minutes and want to learn a great deal about finance, listen (and/or watch) Rene Stulz's presidential address. He gave this at the 2005 AFA meetings in Philadelphia.The basic theme of his speech is globalization. He points out that the world is not yet flat and the "impact of financial globabilization has been limited." Why? "...because of the “twin agency problems” that arise

SSRN-Executive Stock Options: Early Exercise Provisions and Risk-taking Incentives by Neil Brisley

SSRN-Executive Stock Options: Early Exercise Provisions and Risk-taking Incentives by Neil Brisley: "...proposed 'progressive performance vesting' can allow the firm more efficiently to rebalance risk-taking incentives for the manager."Pretty cool idea...short version: if stock price goes up significantly (you can index it if you want), then options vest earlier in order to lessen the increased

Improved Forecasting of Mutual Fund Alphas and Betas by Matthew Spiegel, Harry Mamaysky, Hong Zhang

Maybe mutual funds do beat the market more than previously reported?SSRN-Improved Forecasting of Mutual Fund Alphas and Betas by Matthew Spiegel, Harry Mamaysky, Hong ZhangSpiegel, Mamaysky, and Zhang look at measurement errors in measuring mutual fund performance and find that past researchers have not always gotten it right. In fact, when correct betas are used, it seems that find managers do

Who Gambles in the Stock Market? by Alok Kumar

Option theory meet portfolio selection. It fits the theory perfectly, even though I am less sure of some of the non economic aspects (for instance, why would Catholics be more likely to take chances), but it sure is an interesting paper that does fit with theory.Short version: the poor take bigger chances. (gee, Option theory would predict that perfectly!)SSRN-Who Gambles in the Stock Market? by

China allows some FOREX trading, but not yet the Yuan

A day after the US threatened financial penalties if the yuan is not soon allowed to float, China took what some see (although China denies), as a small step in that direction. You can now trade otehr currencies in China--but not yetthe Yuan.

Latest News and Financial Information | Reuters.com:

"China, whose currency has been pegged near 8.28 per dollar since the 1997-98 Asian financial

A quick look at three interesting stories

Hedge Funds, Sarbanes-Oxley, and SoccerADhD still too bad for a longer story ;) but three quick articles of note before I try and clean my office...1. The Washington Post has an interesting look at Hedge Funds. Not only how they have grown so much in size and number, but also how they are playing a major role in proxy votes. With the increased importance comes worries that these largely

Call for papers--New Orleans!

From John Gill:"The American Academy of Accounting and Finance (www.aaafonline.org) will hold its 12th annual meeting in New Orleans, Louisiana, on December 8, 9 and 10, 2005 (Thursday, Friday, and Saturday). You're invited to submit a proposal, abstract, or manuscript for presentation." The submission deadline is September 30, 2005. "The annual meeting will be held at the elegant

I will return shortly

With finals etc I just needed a short break. I hope to get back at it within a day or two. Thanks to those who have asked. I am fine :) jimwho may come back with a newsletter this week

The FASB takes on block valuation

Short version: if you own a large block of shares, the selling of those shares may change the price of the shares. So how do you value them for accounting purposes?

CFO.com reports that FASB is considering allowing more judgement when it comes to the valuation of these blocks. Currently this is only for brokers and dealers, but the same logic can be applied to nearly all large block holders.

NASD Research Grant Funding

From Christine at the NASD:NASD Investor Education FoundationResearch Grant Funding AvailableImproving Disclosure to InvestorsDeadline August 26, 2005The NASD Investor Education Foundation invites eligible organizations to submit competitive grant proposals for research projects that comprehensively examine what constitutes effective and meaningful disclosure to investors.· Successful projects

The Effect of The Sarbanes-Oxley Act of 2002 on Market Liquidity by Pankaj Jain, Jang-Chul Kim, Zabihollah Rezaee

Continuing the regulation theme of the previous post, Jain, Kim, and Rezaee give evidence that market liquidity improved following the passage of the Sarbanes-Oxlet Act in 2002.

SSRN-The Effect of The Sarbanes-Oxley Act of 2002 on Market Liquidity by Pankaj Jain, Jang-Chul Kim, Zabihollah Rezaee: "We detect wider spreads, lower depths, and higher adverse selection component of spreads in the

SSRN-Do Financial Companies Benefit from SEC Regulation? by Irene Aldridge

SSRN-Do Financial Companies Benefit from SEC Regulation? by Irene AldridgeAldridge uses event study methodology to measure the impact of SEC regulations. She finds that while the volatility of Financial firms drops following new regulations, returns do not appear to change. This finding does not fit with the SEC's stated purpose nor the "existing regulation theories...Stigler (1971), Peltzman (

FRB: Speech, Greenspan--Risk Transfer and Financial Stability--May 5, 2005

Greenspan spoke today on derivatives. Really interesting, but alas I am making out finals and have no time to comment.

So in his words, the SUPER short version:
FRB: Speech, Greenspan--Risk Transfer and Financial Stability--May 5, 2005: "Perhaps the clearest evidence of the perceived benefits that derivatives have provided is their continued spectacular growth. As a consequence of the

Economics in the real world by Steven Levitt

This is an audio presentation by Steve Levitt, but it is really interesting. Levitt talks on market efficiency (in horse racing and stocks), parenting, dealing drugs for minimum wage, and even Rudoplh the Red Nose Reindeer! (Honest!!) A fun listen!

NPR : Talking 'Freakonomics' with Steven Levitt

Transfer Pricing

A cool article on transfer pricing--no it is not an oxymoron!Reichelstein, Baldenius, and Melumad look at transfer prices and remind us that transfer pricing, the price that firms charge for internal "purchases", is a balancing act between tax reduction strategies, internal controls, and incentives. “What most people think about is transfer pricing as a tax optimization issue,” Reichelstein

Forbes.com looks at Morgan Stanley

The Street Purcell Is Paving - Forbes.com

Given how much has been written on the troubles at Morgan Stanley, it is interesting to see a new angle. Forbes writes that the firm is suffering as many of the firm's stars are leaving and looking for work elsewhere.

Two key points to to take from it

1. Intangible assets can often walk away, so be careful (this has repercussions not only to

Shareholder group opposes Icahn

We just covered corporate governance and the difficulty of those opposed to management being elected to the board of directors in class. So Carl Ichan's attempt to win a seat on the Blockbuster Board is perfectly timed to encourage maximum learning ;)Shareholder group opposes Icahn - Entertainment and Leisure - Retail - Services/Consulting - Media - Company Announcements - Newsmakers: "Considered

Increased Transparency in security issuance!

HURRAY!!! Finally it seems that there will be increased transparency in security issue process. This should reduce information asymmetries and result in less negative market reactions to SEOs and less IPO underpricing. From Investment Dealers' Digest:*"The Wall Street equity underwriting process, which sets prices and allocations when companies go to market to raise capital, may seem arcane and

Two Plus Two Equals What?

Both the NY Times and the Washington Post have interesting articles on the NYSE-Archipelago and Nasdaq-Instinet Deals.

Two Plus Two Equals What?:

Highlights:

* "Former SEC chairman Arthur Levitt said he thought the NYSE's new structure would improve the independence of its regulatory arm, not weaken it, by fully removing it from any influence by brokerage and trading firms.

'By breaking up

'The World Is Flat': The Wealth of Yet More Nations

The New York Times > Books > Sunday Book Review > 'The World Is Flat': The Wealth of Yet More NationsI got to see much of Friedman's 3 hour interview on C-Span. It was very interesting! I Highly recommend it! A few of the highlights from Today's NY Times Book Review by Fareed Zakaria:*"The metaphor of a flat world, used by Friedman to describe the next phase of globalization, is ingenious. It

Susan Schmidt Bies on corporate and personal finance

Fed Governor Susan Schmidt Bies gave an interesting speech on trends in both corporate and personal finance. She also called for increased financial education.A few highlights:*"The improvement in corporate balance sheets in the past few years has been substantial. Most noteworthy are the gains achieved in balance sheet liquidity. Firms have taken advantage of low long-term interest rates to pay