Relevance of culture in studies of leadership: ignored or dismissed?

Asia Pacific Journal of Management - Until recently, conclusions drawn about leadership have been made from a decidedly Western perspective, primarily based on theory developed in the U.S. using...     

An analysis of efficiency in the delivery of financial services: The case of life insurance agencies

Scale and scope economies are examined for life insurance agencies that distribute multiple financial products. The results of this study suggest that there are significant administrative returns to scale for firms that sell a mix of financial products. The findings for scope estimates are inconsistent, suggesting that there are positive and negative cost complementaries for pairs of products. Subadditivity can be rejected, suggesting that joint distribution of financial products is not necessarily more efficient than specialization and that different-sized agencies are not necessarily at a cost disadvantage.     

The Emergence of Corporate Governance from Wall St. to Main St.: Outside Directors, Board Diversity, Earnings Management, and Managerial Incentives to Bear Risk

Recent corporate events have brought a heightened public awareness to corporate governance issues. Much work has been accomplished to date, but it is clear that much more remains to be done. This paper provides a review of empirical research in four relevant areas of corporate governance. Specifically, the paper provides an overview of (a) the role that outside directors play in monitoring managers, (b) the emerging literature on the impact of board diversity, (c) the existence of and incentives for corporate executives to manage firm earnings, and (d) managerial incentives to bear risk.     

AN EMPIRICAL INVESTIGATION OF STOCK DIVIDENDS-IN-KIND

We investigate share price reactions to announcements of dividends payable in the common stock of corporations different from the issuing firm. We find that firms that declare these dividends (typically investment companies) experience positive abnormal returns upon announcement. We also find that such dividends are more likely to be declared when the shares to be distributed have peaked in value. Consistent with this finding, we document negative announcement-period abnormal returns for firms having their shares distributed. Additional tests reveal that prices respond more negatively when the information signal is strongest, when outside ownership is more dispersed, and when management is more entrenched.     

INCOME INEQUALITY IN URBAN COLOMBIA: A DECOMPOSITION ANALYSIS

The persistence of poverty and income inequality in less developed countries (LDCs) is a source of serious concern to development economists. To understand the structure of inequality, several researchers using a variety of methodologies have measured the importance of various contributory factors to overall income variability. The available literature—which now includes studies of Brazil, Mexico, Iran, the Philippines, Taiwan, Thailand, Pakistan, and Colombia-has been reviewed elsewhere (Fields, forthcoming). This paper presents additional evidence for urban Colombia, in the process raising some important methodological issues which bear on the design of future research studies.
The data set used in this paper is described in Section I. The decomposition of Colombian inequality by functional income source is presented in Section 11 for micro data. Section I11 examines the robustness of source decomposition procedures to data aggregation. Section IV presents inequality decompositions by city, and Section V by other income-determining characteristics. Conclusions appear in Section VI.     

Board quality and the cost of debt capital: The case of bank loans

We analyze the relation between comprehensive measures of board quality and the cost as well as the non-price terms of bank loans. We show that firms that have higher quality boards with a greater advisory presence borrow at lower interest rates. This relation exists even after controlling for ownership structure, CEO compensation policy, and shareholder protection, as well as the size and financial characteristics of the borrower and of the loan. We also show evidence that board quality and other governance characteristics influence the likelihood that loans have covenant requirements, but the relations differ by covenant type. When we combine the direct and indirect costs of bank loans we find that firms with large, independent, experienced, and diverse boards and lower institutional ownership borrow more cheaply. Overall, the evidence indicates that board quality impacts the cost of bank debt.     

Junk bonds,life insurer insolvency,and stock market reactions: The case of first executive corporation

The First Executive Corporation was the largest failure in the history of the life insurance industry. The company was one of the most aggressive purchasers of junk bonds through the 1980s and was the first of several large failures in the staid life insurance industry. In this article, we examine the effect of First Executive's failure on the value of companies in the life insurance industry. We find that the price of other life insurance companies' stock is negatively affected by the earnings announcement that preceded First Executive's failure. The magnitude of an individual company's reaction to First Executive's loss varies according to the proportion of the company's assets invested in junk bonds, the proportion of the company's assests invested in real estate, and the financial strength of the company as measured by A.M. Best's rating.