Bank Growth Choices and Changes in Market Performance

Changes in bank market performance are compared for banks that choose not to grow, to branch, bank acquire, product expand, or some combination. Using the change in market value‐to‐book value ratios, banks that include acquiring other banks as part of their growth strategy have significant positive changes in performance. Positive performance by bank acquirers is in contrast to many studies, but prior research has not reviewed other growth activities in a single model, nor used market‐based measures to review performance over longer time periods following bank expansion.     

Investor protection and price informativeness about future earnings: international evidence

This study draws on the investor protection literature to identify structural factors in a country’s information environment that are likely to explain cross-country differences in the extent to which future earnings information is capitalized in current stock returns. Using a sample of 55,900 firm-years from 32 countries, we find that greater financial disclosure, higher quality earnings, and greater information dissemination through news media are associated with stock prices that are more informative about future earnings, whereas strong enforcement of insider trading laws is associated with stock prices that are less informative about future earnings. We also find that, on average, price informativeness about future earnings is greater in countries with strong investor protection. Our results illuminate the importance of structural factors constituting a country’s information environment in explaining cross-country variation in price informativeness about future earnings.     

Seemingly altruistic behavior: selfish genes or cooperative organisms?

A largely unrecognized agency problem is embedded in Dawkins’s selfish gene theory, which treats an organism as an agent of its genes; the economic view of this problem is brought to bear on the theory and is used to offer an explanation of the correlation between altruistic behavior and biological closeness of interacting organisms that differs from that given by selfish gene theory. The essay also discusses differences between empirical implications of selfish gene theory and those of a reciprocity theory of seemingly altruistic behavior.     

THE COST OF THE U.S. SUGAR PROGRAM REVISITED

The article analyzes the welfare cost of the U.S. sugar program using a multimarket model of U.S. sweetener markets. The latter includes raw crops, sugar extraction and refining, and sweetener users (food-processing industries and final consumers). The authors address the industrial organization of food industries using sweeteners and treat the United States as a large importer. With the removal of the program, this article estimates (all figures in 1999 dollars) that in 1998 cane growers, sugar beet growers, and processors would have lost $307, $650, and $89 million, respectively; sweetener users would have gained $1.9 billion. World prices would have increased by 13.2%. The deadweight loss of the program is estimated at $532 million.     

What's In It for Me? CEOs Whose Firms Are Acquired

We study benefits received by target chief executive officers(CEOs) in completed mergers and acquisitions. Certain targetCEOs negotiate large cash payments in the form of special bonusesor increased golden parachutes. These negotiated cash paymentsare positively associated with the CEO's prior excess compensationand negatively associated with the likelihood that the CEO becomesan executive of the acquiring company. Regression estimatessuggest that target shareholders receive lower acquisition premiain transactions involving extraordinary personal treatment ofthe CEO. Target CEOs experience very high turnover rates bothat the time of acquisition and, for those who remain employed,for several years thereafter.