Who Writes the News? Corporate Press Releases during Merger Negotiations

Firms have an incentive to manage media coverage to influence their stock prices during important corporate events. Using comprehensive data on media coverage and merger negotiations, we find that bidders in stock mergers originate substantially more news stories after the start of merger negotiations, but before the public announcement. This strategy generates a short‐lived run‐up in bidders' stock prices during the period when the stock exchange ratio is determined, which substantially impacts the takeover price. Our results demonstrate that the timing and content of financial media coverage may be biased by firms seeking to manipulate their stock price.     

Do Initial Public Offering Firms Purchase Analyst Coverage with Underpricing?

We report that initial public offering (IPO) underpricing is positively related to analyst coverage by the lead underwriter and to the presence of an all‐star analyst on the research staff of the lead underwriter. These findings are robust to controls for other determinants of underpricing and to controls for the endogeneity of underpricing and analyst coverage. In addition, we find that the probability of switching underwriters between IPO and seasoned equity offering is negatively related to the unexpected amount of post‐IPO analyst coverage. These findings are consistent with the hypothesis that underpricing is, in part, compensation for expected post‐IPO analyst coverage from highly ranked analysts.     

Vitamin supplementation practices: health/nutrition education implications

A sample of 310 supplement users, 216 nonsupplement users and 247 inconsistent (user/nonuser) supplementers were followed for 18 months to examine the consistency of supplementation. Since supplementation is often not required for a healthy diet, factors associated with persistence or stability of supplement use have implications for appropriate health/nutrition education. Consistent supplementation (at least 18 months' duration) was associated (P < 0·01) with (i) female sex, (ii) health beliefs in the efficacy of supplementation, (iii) seeking health information from physicians, nurses, dietitians and nutritionists, (iv) using periodicals, TV/radio and books for sources of nutrition information, (v) older age, (vi) higher income and (vii) higher levels of education. Nonusers were more likely to attribute health to chance on the Multidimensional Health Locus of Control scale, and inconsistent users were more likely to have experienced a change in employment status, relocation to another town/city and a higher number of ‘change’ events in the previous 18 months. Based on the characteristics of the consistent supplement user, ‘academic controversy’ may be an effective educational strategy to employ, if changes in supplementation attitudes and beliefs are desired.     

Defensive Changes in Corporate Payout Policy: Share Repurchases and Special Dividends

This paper examines defensive payouts announced in response to hostile corporate control activity. The evidence indicates that the announcement of defensive share repurchases is associated with an average negative impact on the share price of the target firm. In contrast, special dividend payments generally increase the wealth of target firm shareholders. Regardless of payout type, those firms remaining independent after the outcome of the corporate control contest experience an abnormal share price increase over the duration of the contest. Among these firms there are substantial post-contest changes in capital, asset, and ownership structure and abnormally high rates of top management turnover.     

Web‐Based Disclosure About Value Creation Processes: A Monitoring Perspective

Adopting a monitoring perspective, this study aims to explain how and why firms provide web‐based disclosure about their value creation and its underlying processes. We rely on the balanced scoreboard approach to measure disclosure. Our results suggest that costs incurred by capital markets' participants as well as monitoring by the board and the media drive disclosure. Moreover, we argue and document that a firm's disclosure is actually a part of its governance configuration and influences some board processes.     

Distributing the Gains from Waterfront Productivity Improvements

Despite significant increases in waterfront productivity in recent years, waterfront users have complained that reductions in charges have been insufficient. This paper applies an indexing method that allows us to construct 'what-if' scenarios where the contribution of productivity, price changes and changes in firm size to stevedore profitability can clearly be seen. We then calculate the distribution of the benefits of productivity improvements between customers, labour and shareholders. We find that the direct purchasers of stevedoring services have reaped gains from waterfront reform over the past five years, receiving around 67 per cent of the available 'productivity dividend' in the form of lower real stevedoring prices.     

Agency Problems,Equity Ownership,and Corporate Diversification

We provide evidence on the agency cost explanation for corporate diversification. We find that the level of diversification is negatively related to managerial equity ownership and to the equity ownership of outside blockholders. In addition, we report that decreases in diversification are associated with external corporate control threats, financial distress, and management turnover. These findings suggest that agency problems are responsible for firms maintaining value-reducing diversification strategies and that the recent trend toward increased corporate focus is attributable to market disciplinary forces.     

Endogenous Life‐Cycle Housing Investment and Portfolio Allocation

This paper develops a life‐cycle portfolio allocation model to address the effects of housing investment on the portfolio allocation of households. The model employs a comprehensive housing investment structure, Epstein–Zin recursive preferences, and a stock market entry cost. Furthermore, rather than resorting to calibration we estimate the value of the relative risk aversion and elasticity of intertemporal substitution. The model shows that housing investment has a strong crowding out effect on investment in risky assets throughout the life‐cycle. We further find that the effect of the presence of housing investment on households portfolio allocation is larger than the effect of having EZ recursive preferences.     

Regulation of Investments in Infrastructure: The Interplay between Strategic Behaviors and Initial Endowments

This paper explores the dynamic properties of price‐based policies in a model of competition between two jurisdictions. Jurisdictions invest over time in infrastructure to increase the quality of the environment, a global public good. They are identical in all respects but one: initial stocks of infrastructure. This is a dynamic type of heterogeneity that disappears in the long run. Therefore, at the steady state, usual intuitions from static settings apply: identical jurisdictions inefficiently underinvest, calling for public subsidies. In the short run, however, counterintuitive properties are established: (i) the evolution of capital stocks can be nonmonotonic and (ii) one jurisdiction can be temporarily taxed, even though it should increase its investment, whereas the other is subsidized. It is shown how these phenomena are related to initial conditions and the kind of interactions between infrastructure capitals, complementarity or substitutability.