Selection of fidelity mutual funds

This study investigates the possibility of identifying those mutual funds in the Fidelity Family which might outperform the S&P 500 by using Jensen's alphas. An average of Jensen's alphas for a three-year period covering 1991–93 was computed and 1994 was used as a test case. A total of 152 Fidelity mutual funds were included in the study. Data were obtained fromAlexander Steele's Mutual Fund Expert Data Base [Steele Systems, Inc.] andHuntington Financial Optima Data Base [Huntington Associates Financial, Inc.]. It was found that it was possible to identify high performance funds. These funds had an alpha over 0.80. There were 21 funds in this group which produced an average total return of 4.44 percent, while S&P 500 had a total return of 1.32 percent in 1994.Any errors found in this paper are the sole responsibility of the author. The author would like to express sincere appreciation to Steele Systems, Inc. and Huntington Associates Financial, Inc. for providing the necessary data used in this study. Special appreciation also goes to Melissa Luo who so diligently and carefully performed all the computer work.     

Are Acquisitions Worthwhile? An Empirical Study of the Post-Acquisition Performance of Privately Held Belgian Companies

Few studies have addressed the performance of smaller unquoted companies involved in acquisitions, especially in Continental European countries. Therefore this study addresses the post-acquisition financial characteristics of privately held companies involved in 143 Belgian acquisitions between 1992 and 1994. Specifically, this paper examines the financial performance of the acquiring firm after the acquisition, using statistical analysis of industry-adjusted variables. Our findings show that following the acquisition, the profitability, the solvency and the liquidity of most of the combined companies decline. This decline is also reflected in the failure prediction scores. With respect to the added value, acquisitions are found to be accompanied by increases in the labour productivity, but this is caused by the general improvement of gross added value per employee of Belgian companies in the last 10 years. So it seems that, contrary to the general expectations and beliefs, acquisitions usually do not seem to improve the acquirer’s financial performance. This paper was presented at the European Financial Management Association Conference (June 2001, Lugano, Switzerland) and at the VVE day (October 2001, Diepenbeek, Belgium).     

Crossing takeover premiums and mix of payment: An empirical test of contractual setting in M&A transactions

The analyses of the tender offer premiums and of the means of payment should not be performed separately. In the empirical literature, these two variables are often considered independently, although they may have an endogenous relationship in a contractual setting. Using a sample of European M&As over the 2000–2010 decade, we show that these two variables are jointly set in a contractual empirical approach. The relationship between the percentage of cash and the offer premium is positive: higher premiums yield payments with more cash.     

From distress to exit: determinants of the time to exit

This paper analyses the duration of the time to exit of distressed firms, differentiating between court driven exits (mainly bankruptcies) and voluntary liquidations. It examines how long firms survive after initial signs of economic distress. The study is conducted on an extensive dataset of 5,233 Belgian distress-related exits of mature firms, the majority being privately held. The results highlight that slack resources have an opposite effect on the timing of court driven exits and voluntary liquidations. On the one hand, high levels of available and potential slack increase the time to court driven exit, as they allow distressed firms to postpone an impending court driven exit. On the other hand, high available slack resources shorten the time to voluntary liquidation, since they make voluntary liquidation easier. Further, a high level of stakeholder dependence increases the time to exit after distress, whether the firm exits through voluntary liquidation or through a court decided exit. This is explained by the fact that stakeholder dependence increases the complexity of the exit decision and the exit procedure.     

Is it Harmful to Allow Partial Cooperation?

In economics, politics and society, examples abound in economics, politics and society where agents can enter partial cooperation schemes, i.e., they can collude with a subset of agents. Several contributions devoted to specific settings have claimed that such partial cooperation actually worsens welfare compared to the no-cooperation situation. Our paper assesses this view by highlighting the forces that lead to such results. We find that the nature of strategic spillovers is central to determining whether partial cooperation is bad. Our propositions are then applied to various examples as industry wage bargaining or local public goods.
JEL classification: C 72; E 62; J 5     

The power of remittances on the international prevalence of child labor

This paper examines the relationship between remittance inflows and the prevalence of child labor. It investigates whether remittance inflows offset the effects of financial constraints and income shocks on the prevalence of child labor in receiving economies. Based on a sample of 82 developing countries and after factoring in the endogeneity of remittances, migration, and financial development, econometric results highlight that remittance inflows significantly reduce the prevalence of child labor in developing countries characterized by weak financial systems and high income growth volatility.