Crisis management—dealing with asymmetric information problems

A key component of crisis management involves the management of asymmetric information problems. Drawing on the experience of the recent severe acute respiratory syndrome (SARS) epidemic, this article examines the nature of the asymmetric information problems that typically prevail during a crisis, the costs associated with it, and the various mechanisms to address the problems. We find that the asymmetric information problems in the event of a crisis can be severe and potentially costly if the problems are not adequately resolved. © 2009 Wiley Periodicals, Inc.     

Accounting variables and stock returns： Evidence from Istanbul stock exchange

The fundamental relationship between accounting variables and stock returns is a recurring theme in financial research. One of the major purposes of accounting is to help investors provide reliable, comparable and accurate information. If accounting data are informative about fundamental values and changes in values, they should be correlated with stock price changes. This study provides theory and evidence showing how accounting variables explain stock returns and examines the relationship between the stock returns and accounting variables of listed non financial companies in ISE-100 Indice for 2006-2008 period by using panel data methodology. Empirical analysis consists of 192 observations of 64 companies in years 2006-2008 to examine the effects of inventory, accounts receivable, gross margin, operating expense, return on assets, cash flow, leverage, liquidity, price/earnings, return on equity on stock returns. The results of the study confirm that the predicted roles of fundamental factors and stock returns are significantly related to gross margin, cash flow, leverage and equity variables. The model explains about 13.35 % of the variation of annual stock returns with the leverage variable with most of the significant power.     

Are REIT Investors Overly Optimistic after Equity Offerings?: Evidence from Analyst Forecast Errors

The Journal of Real Estate Finance and Economics - Optimism around Initial Public Offerings is well documented. However, Seasoned Equity Offerings are often surrounded by less optimism. Based on...     

The Effect of Board Independence on Information Asymmetry

Boards have an important role in ensuring that investors’ interests are protected. Our paper first examines whether the independence of a firm's board affects information asymmetry among investors. We provide evidence that greater board independence leads to lower information asymmetry. Next, we provide evidence that more voluntary disclosure and greater analyst coverage are two underlying mechanisms via which greater board independence reduces information asymmetry. Of the two mechanisms, we find that analyst coverage is more significant in influencing how board independence affects information asymmetry. Overall, our paper contributes to a better understanding of the effect of board independence on information asymmetry.     

Traffic exposure near the Los Angeles–Long Beach port complex: using GPS-enhanced tracking to assess the implications of unreported travel and locations

Traffic exposure assessments could misclassify the extent and locations of exposure if traditional recall surveys and self-reported travel diaries do not record all participant activities. The Harbor Communities Time Location Study (HCTLS) examines the nature, extent and implications of underreported locations/trips in a case study which used portable Global Positioning Systems (GPS) devices to track the diurnal patterns and traffic exposure of 47 residents of communities near the Los Angeles–Long Beach port complex. Participants were similar to adults nationwide in time spent indoors, in-vehicle, and outdoors, but spent more time indoors at home (78% vs. 66%). Overall, participants did not report nearly half (49%) of the locations and trips identified in GPS-enhanced data on their activity diaries, resulting in about 3 h/day in unreported locations and 0.6 h/day in unreported trips. The probability of a location/trip being underreported was systematically correlated with participant and location/trip characteristics. Self-reported data missed about 50 min of heightened air pollution exposures during the 5 h/day on average participants spent in high-traffic areas and about 30 min during the 4 h/day near truck routes. GPS-enhanced methods provide opportunities to more precisely characterize exposure periods and tools to identify facility, roadway, and land use types of the greatest concern for mitigation efforts.     

REIT Splits and Dividend Changes: Tests of Signaling and Information Substitutability

Recent work on stock splits have attempted to relate the information value associated with splits with that from dividends signaling. This paper extends this genre of research by evaluating the issue of dividend predictability using REIT data where the self-selection issue associated with dividend payment is minimized. The use of REIT data also eliminates the “differential expectations” effect for non-dividend paying firms, thus rendering a more robust test of the information substitutability hypothesis postulated by Nayak and Prabhala (2001). To the extent that stock splits are signals of future cash flows, we further examine the question of leverage predictability associated with REIT splits, particularly for highly levered firms. We find that REITs that use dividend changes as a signaling mechanism prior to splits have smaller price responses to the private information revealed by splits than those that do not provide such signals, consistent with the notion that dividends and splits are indeed information substitutes. Further, REIT splits provide useful information about future dividend and leverage changes.