The take-over market for privately held companies: the US experience

The volume of acquisitions involving privately held firms hasfar surpassed that of publicly traded firms in recent years;yet this segment of the take-over market remains largely unexplored.In analysing the unique features of private target take-overs,we compare the mergers and acquisitions markets for unquotedand quoted firms on several dimensions including methods ofpayment, offer premiums and bidder wealth effects. Our resultsshow that these mergers provide positive shareholder wealthbenefits for bidders and relatively high premiums for privatelyheld targets. Also, the market's reaction depends on whetherit perceives the price paid for the target as too high or toolow, a rational response given the sentiment at the time ofthe announcement.     

Developing a decision rule to predict failure: The case of savings and loan associations

The relative costs of misclassifying institutions by their financial health is an issue that concerns researchers. In this paper, a model and decision rule are developed that improve the probability of identifying those Savings and Loans that are predicted not to fail, but are actually failing. For obvious reasons, stakeholders in those institutions are very much interested in avoiding this type I error. The study also makes available evidence that the examination of Z-scores can be useful in identifying other financial institutions that may experience financial failure.     

Deterministic nonlinearity in the stock returns of major European equity markets and the United States

By using recently developed statistical tools designed to overcome some of the limitations often associated with financial data, this study attempts to detect low-dimensional deterministic chaos in five major European stock markets and the United States. Country indexes exhibiting low-dimensional deterministic chaos may contain some informational inefficiency; thus, it may be possible to use nonlinear dynamics to predict future stock returns. The results do not provide evidence of the existence of low-dimensional chaotic systems in any of the examined indexes. As such, the notion of market efficiency in the examined indexes is not threatened by the findings of this study.     

The Industry-Wide Implications of Dividend Omission and Initiation Announcements and the Determinants of Information Transfer

In examining the industry-wide implications of dividend omission and initiation announcements, this study finds distinct industry responses for these two events. Specifically, dividend omission announcements have a significantly negative impact on the valuations of industry-related firms. Factors influencing this industry reaction include the Herfindahl index of the announcing firm's industry, the two-day abnormal return of the announcing firm, and its trading status (Nasdaq or NYSE/AMEX). Unlike dividend omissions, dividend initiations evoke a competitive (or negative) response from industry-related firms. The degree of homogeneity in the announcing firm's industry, the announcing firm's abnormal return and its size affect this industry response.     

How do producer organisations enhance farmers’ empowerment in the context of fair trade certification?

ABSTRACT

In the fair trade (FT) coffee sector, collective dynamics are viewed as a prerequisite for empowerment. The question of whether and how collective organisations empower farmers in the context of FT has yet to be fully explored. Using the concepts of collective agency and empowerment, this paper analyses the case of four farmers’ groups involved in two FT certified producer organisations in Peru. The results show that collective dynamics are drivers of change in this context oand help provide a ‘power to’ change coffee-related activities. They also generate a sense of ‘power with’, which improves group visibility and capacity to build new partnerships. Farmers gain the opportunity to develop their livelihood activities and women farmers develop ‘power from within’. TDespite that, collective action still focuses primarily on coffee and members-only projects. Inclusive rural development depends on extending ‘power with’ to other agricultural domains and to networks in the social and economic spheres.     

Testing the rate forecasting consistency of major foreign currency futures

This paper examines the forecasting accuracy of currency futures markets in Canadian Dollars, British Pounds, Japanese Yen, German Marks, and Swiss Francs in predicting the actual spot rates that will exist in the spot market for these currencies. A second objective is to determine if the accuracy of the forecast is related to the time to maturity of the currency futures contract relative to the actual spot rate for that currency. The results indicate that the currency futures market appears to be a reasonably good forecaster of future currency spot rates.     

Corruption and valuation of multinational corporations

This paper examines the relationship between U.S. MNCs' valuation and corruption in countries where the MNCs' foreign subsidiaries are located. We uncover that country-level corruption has a multi-dimensional impact on MNCs' valuation. We find that the impact of intangibles is less pronounced for MNCs operating primarily in corrupt countries, consistent with the view that the lack of property rights protection and information asymmetry problems are more prevalent in corrupt environments. We also find that the expansion of a MNC network dominated by corrupt countries negatively affects MNCs' valuation, suggesting that investors may recognize it as an additional risk. However, more importantly, we find that geographic diversification in corrupt countries significantly increases firm value if the MNC has high levels of intangibles such as technological know-how and marketing expertise. Assuming that transactions costs in corrupt countries are higher, our findings are consistent with the notion that the advantages from internalizing the cross-border transfer of intangibles are greater in the presence of corruption. Our findings remain unchanged when we account for endogeneity at the country-and firm-level, when we use alternative corruption measures, and when we re-estimate models by omitting MNCs with operations in locations with big “negative” shocks during the sample period. Moreover, we show that firms with expertise in dealing with corruption enjoy greater benefits from internalization.