Is long run IPO underperformance driven by lack of liquidity?

Is Long-run IPO underperformance driven by lack of liquidity?What a roll! Maybe it is time to talk about momentum blogging! ;) Yet another cool paper!Roychoudhury and Abbott tie long run underperformance of IPOs (See Ritter 1991 or Loughran and Ritter 1994) to a lack of liquidity (the Amihud and Mendelson 1986 idea).In Roychoudhury and Abbott's own words:"We construct portfolios of IPOs with

SSRN-Corporate Governance and Acquirer Returns by Ronald Masulis, Cong Wang, Fei Xie

SSRN-Corporate Governance and Acquirer Returns by Ronald Masulis, Cong Wang, Fei Xie:Some takeovers are good (value enhancing), others are bad (value destroying). Why the difference? One easy explanation is that managers often have incentives (such as empire building, hubris, pay tied to size, ego, diversification) to do a merger that is not in shareholders’ best interests. Masulis, Wang, and

SSRN-Strength of Analyst Coverage Following IPOs by Christopher James, Jason Karceski

James and Karceski report that firms who have poor IPO performance get more than just price stabilization in the after market. However, while price stabilization tends to end relatively quickly, the firms whose IPO did poorly also get longer term more favorable coverage in the period following their IPO. This supports the "booster shot" hypothesis."Firms with poor aftermarket performance are

KSAT.com - Money - Report: Bush Set To Name Bernanke As New Fed Chief

Seemingly a very good choice!

KSAT.com - Money - Report: Bush Set To Name Bernanke As New Fed Chief: "We're expecting to hear later today who the White House wants to succeed Alan Greenspan as head of the Federal Reserve.

An announcement is expected at 1 p.m. EDT.

Greenspan has been expected to leave his post as the nation's top central banker at the end of January."

Do managers play games with R&D?

What an interesting paper!As most anyone in industry will tell you, managers often play games with R&D spending. Whether it is for their own "pet projects" or to further some cause within the firm. Of course, this should not be surprising as no where are information assymetry probelms more severe than in R&D spending.Bange, De Bondt, and Shrider now provide empirical evidence of this game playing

Good example of diversification discount

Cendant is giving us a near perfect example of the diversification discount. The basic idea is that firms sell for less when they are made up of multiple lines of business. This has been the a edbate as to whether this is real or whether we are measuring the wrong thing. For instance we do not see the firms' apart from the start.

That said, it appears that most now acknowledge the existence

Equity Risk Premium

It is not new, but we just covered it in class and I think many of you might be interested. It is a brief overview of the Equity Risk premium through time by Clark and Silva. Short version: Expect the equity risk premium to be lower moving forward.From the paper:"Expectations for the long-run equity risk premium play an important role in asset allocation decisions because the policy asset mix

Financial Engineering News Financial History Timeline

Financial Engineering News is really increasing their product line. They have added a comic strip and a really cool timeline.

Vernimmen.com

Vernimmen.comWhat a great site!When I was gone I recieved a message from the authors of Corporate Finance by Vernimmen, Quiry, Le Fur, and Salvi.The book, newsletter, and website are all very interesting and useful. The book is 48 chapters (about 1000 pages) full of corporate finance. I have to agree with the authors "It is a book in which theory and practice are constantly set off against each

I'm back from Biloxi

Well that was quite a week! All I can say is that the destruction in the Gulf Coast region from Hurricane Katrina is awful. I went to Biloxi MS with a group from SBU. We worked with HandsonUSA. I have uploaded many pictures and am in the process of posting essays on what it was like. I would encourage you all to volunteer down there. If you are interested, a large group of us are going down

Does a "no vote" matter?

Continuing our look at some papers from the FMA Meetings, Del Guercio, Wallis, and Woidtke give us a look at whether boards of directors actually listen to their voting shareholders and if they do hear shareholders, what the reaction is.The answer may surprise you!From the abstract:"Overall, our findings support the argument that existing tools are insufficient to induce pro-shareholder change at

TradeSports Pays a fine to CFTC

Thanks to Chris Masse for pointing me to it this interesting story. TradeSports got fined for trading option contracts to US citizens without regulatory approval and oversight.From the CFTC's press release:"The U.S. Commodity Futures Trading Commission (CFTC) today announced the filing and simultaneous settlement of charges under the Commodity Exchange Act (CEA) that

The American Academy of Accounting and Finance :: 2005 Annual Meeting

Katrina shut down New Orleans, so there is a new locale for the American Academy of Accounting and Finance annual conference.

Just announced:

"The American Academy of Accounting and Finance will hold its 12th annual meeting in St. Pete Beach, Florida, on December 8, 9, and 10, 2005."

For more information check out their website.

St. Bonaventure students join relief teams

This has almost no finance content, but it is about our finance club, so some of you might be interested. It is from the Olean Times Herald.Bradford Publishing - HOME - 10/03/2005 - St. Bonaventure students join relief teams: "the St. Bonaventure Finance Club, along with members from Students in Free Enterprise, plan to take a trip to Mississippi during their mid-term break, scheduled from

Cash Holdings and Governance

What better way to start our look at conference papers than by a paper on Cash Holdings and Corporate Governance by Jarrad Harford, Sattar A. Mansi, and William F. Maxwell that will be in the first session of the FMAs in Chicago.Short Version:The authors use a corporate Governance index to examine cash holdings by firms. They report evidence that firms with weaker governance waste the cash

Midwest Finance Association 2006 Annual Meeting

Speaking of conferences, I would be remiss if I did not mention the upcoming deadline for the Midwest Finance Association's annual meeting:Midwest Finance Association 2006 Annual Meeting: "The Midwest Finance Association's 55th Annual Meeting will be held March 23 - 25, 2006 at the Chicago Marriott - Michigan Avenue in Chicago, Illinois.The MFA Distinguished Scholar Lecture will be given by .

Finance Conferences: FMA and SFA

Finance conferences are great learning opportunities. Unfortunately the vast majority of people interested in finance do not get to experience these conferences since they are largely for academics.So, I will try to bring the Financial Management Association and the Southern Finance Association's Annual meetings to you.Each is an excellent conference and the programs are now online. Over the next

Busy Day

I may or may not get anything online today. Have to make out a test and finish correcting projects. I will try.In the meantime, I suggest you check out two recent posts (or collections of posts) at FreeMoney Finance.1. Is about monkeys investing (it really can not get much better than that!). Short version: Due to market efficiency (or thereabouts) indexing, while not perfect, is good way to