Ownership structure and returns to defensive stock repurchase

This study investigates the wealth effect of defensive common stock repurchase (CSR) on outside shareholders. It is found that the impact varies with the type of corporate control activity that precipitates the repurchase. Outside shareholders suffer wealth losses when a CSR announcement follows an unsolicited bid for the firm. The impact of the CSR announcement following a partial acquisition is negative but not as strong. However, outside shareholders benefit from CSR following antitakeover charter amendments. This study also documents a nonlinear relationship between managerial equity ownership and changes in the value of the firm at the announcement of a defensive CSR.     

On financial guarantee insurance under stochastic interest rates

We extend the financial guarantee insurance literature by modeling, under stochastic interest rates, private financial guarantees when the guarantor potentially defaults. By performing numerical simulations under plausible parameters values, we characterize the differential impact of the incorporation of stochasticity of interest rates on the valuation of both public and private guarantees.     

Regulation of working time in SMEs of the information and communication technology sector in France

This paper focuses on the impact of the French working-time reduction law on small and medium enterprises (SMEs) in the information and communication technology sector. After a presentation of the main features of this sector, made up of a wide range of SMEs, the paper aims at describing how the actors have negotiated the application of the new legal framework at sector and company levels. The new working-time regulation outlines the status of high-skilled employees (cadres) as a very important conflict and negotiation subject.     

Official central bank interventions and exchange rate volatility: Evidence from a regime-switching analysis

In this paper, we investigate the effect of central bank interventions on the weekly returns and volatility of the DEM/USD and YEN/USD exchange rate returns. In contrast with previous analyses, we allow for regime-dependent specifications and investigate whether official interventions can explain the observed volatility regime switches. It is found that, depending on the prevailing volatility level, coordinated central bank interventions can lead to either a stabilizing or a destabilizing effect. Our results lead us to challenge the usual view that such interventions always imply increases in volatility.     

Whither IPOs? Toward an Ecosystem Perspective on Corporate Financing: A Commentary

This commentary reviews the Canadian initial public offering (IPO) market and positions it within global capital market trends. Our views and comments reflect discussions with several market participants whom we have met over the years. Essentially, the falling number of IPOs in Canada during the last decade mimics trends in other developed countries such as the United States. In our view, five underlying factors underlie that decline. The picture that emerges is that capital markets are now widely viewed as a global integrated ecosystem where all actors are interconnected and an IPO represents but one way to raise capital.     

Value relevance and timeliness of transitional goodwill-impairment losses: Evidence from Canada

Focusing on transitional goodwill-impairment losses (losses) recorded by Canadian firms following the adoption of revised standards on purchased goodwill, we investigate the value relevance and timeliness of mandatory changes in accounting principles accounted for using the retroactive method. We find a negative relationship between reported losses and share price. Such a finding is consistent with investors perceiving losses as being sufficiently reliable measurements of a reduction in the value of goodwill to incorporate them in their valuation assessments. We find also that investors put a higher valuation weight on losses reported by firms that are expected to record a loss. In addition, we show that investors perceive that there are reduced opportunities for managerial discretion when there is a more effective audit committee. Finally, our results show that returns lead losses, i.e., that losses represent a catch-up adjustment to reflect the cumulative effect of using the impairment approach for the first time. Overall, our evidence supports U.S. standard setters' decision, through SFAS 154, to favour enhanced comparability and consistency over the potential costs of frequent restatements. Our results also show that fair-value measurements can be relevant even when the financial statement elements of interest are inherently bound to measurement error and subject to significant managerial discretion. They support the notion that reliability is about faithful representation, not precision.