THE VALUATION EFFECTS OF FREQUENT COMMON STOCK ISSUANCES

Previous empirical studies show that announcements of seasoned common stock registrations and issuances lead to significant reductions in common stock prices and shareholder wealth. Nevertheless, some firms issue common stock frequently. Our empirical study of nonutility firms that issued common stock four or more times within ten years shows that market reactions to announcements of offerings and to registrations are less unfavorable than typical reactions for infrequent issuers. A cross-sectional analysis reveals no unique characteristics that distinguish frequent issuers from one-time common equity issuers. In fact, the only detectable characteristic unique to the firms is that they issue common stock frequently.     

Client Importance and Audit Quality at the Individual Audit Partner,Office, and Firm Levels

We investigate whether audit partner level data provides a more powerful measure than office or firm level measures of client importance. We find that the likelihood of issuing a going-concern opinion (any and first-time) increases, and the absolute value of discretionary accruals decreases, in relation to the proportion of audit fees to the total audit fees received by audit partners from all their clients. We also find that the likelihood of issuing a going-concern opinion (any and first-time) increases, and the absolute value of discretionary accruals decreases, in relation to the proportion of non-audit services fees from a client to total non-audit service fees, and the proportion of total audit and non-audit service fees from a client to total fees from all their clients at the office and firm levels. Our findings provide evidence to regulators, audit clients, and stakeholders that audit partners do not succumb to pressure from economically more important clients as audit quality has a positive association with client importance.     

Editorial proximity equals publication success: A function of rational self-interest or good-faith economy?

This paper inquires into a recent finding that shows that proximity to the editor of a top accounting journal significantly increases one's chances of publishing in that journal. Three explanations are provided for this finding—two based on ‘rational self-interest’ and one on the ‘good-faith economy’. These explanations are further considered in light of interview data collected from individuals who worked in the same social space as these editors. While the first two of these explanations align themselves with the field's dominant methodological assumptions they alone do not fully describe actual practice in this field. Indeed, to the extent that this field's actors ignore or discount the third, good-faith explanation the field abrogates its scientific commitment to truth-seeking and objectivity, putting its faith instead in a naïve and potentially damaging vision of human behavior.     

When do managers listen to the market? Impact of learning in acquisitions of private firms

We study the influence of market signals and agency problems on the decision to cancel an announced acquisition. We find major differences between deals involving private vs. public targets. First, controlling for the value of expected synergies, acquisitions are less likely to be cancelled when the target is private rather than public. This finding supports learning rather than the alternative common-information hypothesis. Second, better manager-shareholder interest alignment makes the cancellation of a “bad” deal more likely only when the target is a private firm. This suggests bidder agency problems have a greater influence on acquisition outcome (i.e., learning) when the target is private. Third, cancellation is more likely for private targets when their post-announcement abnormal returns are low, especially if the method of payment includes stock. This indicates that it is important to control for bidder overvaluation when testing the managerial learning hypothesis. Overall, both the learning and agency hypotheses help explain observed differences in deal completion by target type.     

Economic evaluation of nivolumab for the treatment of second-line advanced squamous NSCLC in Canada: a comparison of modeling approaches to estimate and extrapolate survival outcomes

Background Lung cancer is the most common type of cancer in the world and is associated with significant mortality. Nivolumab demonstrated statistically significant improvements in progression-free survival (PFS) and overall survival (OS) for patients with advanced squamous non-small cell lung cancer (NSCLC) who were previously treated. The cost-effectiveness of nivolumab has not been assessed in Canada. A contentious component of projecting long-term cost and outcomes in cancer relates to the modeling approach adopted, with the two most common approaches being partitioned survival (PS) and Markov models. The objectives of this analysis were to estimate the cost-utility of nivolumab and to compare the results using these alternative modeling approaches.

Methods Both PS and Markov models were developed using docetaxel and erlotinib as comparators. A three-health state model was used consisting of progression-free, progressed disease, and death. Disease progression and time to progression were estimated by identifying best-fitting survival curves from the clinical trial data for PFS and OS. Expected costs and health outcomes were calculated by combining health-state occupancy with medical resource use and quality-of-life assigned to each of the three health states. The health outcomes included in the model were survival and quality-adjusted-life-years (QALYs).

Results Nivolumab was found to have the highest expected per-patient cost, but also improved per-patient life years (LYs) and QALYs. Nivolumab cost an additional $151,560 and $140,601 per QALY gained compared to docetaxel and erlotinib, respectively, using a PS model approach. The cost-utility estimates using a Markov model were very similar ($152,229 and $141,838, respectively, per QALY gained).

Conclusions Nivolumab was found to involve a trade-off between improved patient survival and QALYs, and increased cost. It was found that the use of a PS or Markov model produced very similar estimates of expected cost, outcomes, and incremental cost-utility.     

On Setting Prices and Testing Cross-Subsidy with Accounting Data

Regulators are often faced with the challenge of both setting efficient prices and avoiding cross subsidy. Successful implementation of these goals requires estimates of both marginal costs and incremental costs. We present a methodology for estimating both marginal and incremental costs for postal products. The proposed algorithms combine micro-unit accounting data and econometric estimation of the cost structure. We apply the methodology to the U.S. Postal Service and produce estimates of marginal and incremental costs for eighteen postal products and incremental costs for another four groups of products.     

In difficult times: influences of attitudes and expectations on training and redeployment opportunities in a hospital contraction programme

This article explores reasons behind the low take–up of training and redeployment opportunities in a three–year downsizing programme in a National Health Service (NHS) mental health hospital. It examines these from an interpretive paradigm, identifying social–psychological effects on barriers and motivation to training and redeployment. In reporting factors that inhibit the movement of staff from the hospital the findings indicate that the direction of even a well–planned and positively intentioned programme can be confounded by the responses of employees faced with an uncertain future. When drawing up restructuring programmes involving retraining and redeployment, managers need to take into account the anticipated profound reactions of those affected.     

Do Tax Law Changes Influence Ex-Dividend Stock Price Behavior? Evidence from 1926 to 2005

We test the Elton and Gruber model of ex-dividend stock pricing over a period spanning all US tax law changes since 1926. Our results indicate that price drop ratios (ΔP/D) and ex-day returns are related to dividend and capital gains tax rates in the theorized manner. Consistent with tax clienteles, we also find that ex-day price movements of higher dividend yield stocks are driven more by corporate tax rates, while lower yield stocks are more influenced by personal rates. Finally, we demonstrate that the positive relationship between ΔP/D and the dividend yield becomes stronger as the tax differential | t_d− t_cg | widens.