The Agency Structure of Loan Syndicates

Leaders of loan syndicates often delegate some administrative tasks to banks known as co‐agents. One reason is that co‐agents are specialized banks that help split the costs of managing the syndicate. Another reason is that co‐agents monitor the leader on behalf of syndicate members to mitigate informational asymmetry problems. Large sample tests on the Dealscan database provide support for both arguments. Evidence of repeated contracting between the same banks explains the moderate magnitude of monitoring effects.     

Economic Determinants of Multiple Accounting Method Choices in a Swiss Context

This article investigates economic determinants that may affect multiple accounting method choices made by Swiss listed companies. It intends to make a contribution to the accounting choice literature for at least four reasons. This is, to our knowledge, the first study to investigate the economic determinants of Swiss accounting method choices. Second, Swiss firms provide an interesting sample for testing accounting method choices because they can choose from a much wider range of accounting methods than their American counterparts. Third, this study examines the balance sheet effect as well as the income statement effect. Lastly, multiple accounting methods are used instead of individual choices. The empirical results exhibit that income‐accelerating accounting method choices is positively associated with the recourse to bank and private loans, the extent of assets specificity and the ownership dilution of the firm and negatively with labour force. Additionally, firms that select leverage‐ratios decreasing accounting methods, make higher recourse to debt and especially bank loans to finance their activities and exhibit a higher proportion of specific assets than other corporations. Overall, this result suggests that in a Swiss context, managers may select accounting methods to decrease both debt and political costs as well as to increase their own compensation to some extent.     

European Managerial Perceptions of the Net Benefits of Foreign Stock Listings

This study surveys the European managers on the costs, benefits, and net benefits of foreign listing. Increase in prestige and visibility, and growth in shareholders are perceived as the major benefits, and the costs of public relations and legal fees are cited as the major costs by the managers. While a majority of managers (60%) perceive that benefits outweigh the costs of foreign listing, about 30% also view the net benefits to be negative. Perceived net benefits are positively related to the increase in the total trading volume after foreign listing, the financial disclosure levels of the firm, and the dual listing on both the US and European foreign exchanges. Without the influence of these factors, the perceived net benefits are negative.     

Sentimental Preferences and the Organizational Regime of Betting Markets

We analyze the price impact of sentimental bettor preferences within a bookmaker betting market. A theoretical model demonstrates that, under reasonable assumptions about the nature of demand in a market with strong competition, the bookmaker will offer lower prices for bets with comparatively stronger demand. Using a sample of more than 16,000 English soccer matches we find evidence that more favorable odds are extended to bets on more popular clubs and that this effect is amplified on weekends when sentimental bettors face lower opportunity costs to wager. Our findings help to explain why the market for sports gambling operates as a hybrid structure with bookmakers able to attract a considerable share of the betting volume, although identical contracts are traded on exchange markets at lower costs: the organizational design of a quote‐driven market enables the dealer to take advantage of sentimental bettor preferences.     

Judicial Independence Under a Divided Polity: A Study of the Rulings of the French Constitutional Court, 1959-2006

This article analyzes whether the much-touted independence ofthe Conseil Constitutionnel (CC), the French ConstitutionalCourt, is genuine. We construct a data set that comprises allthe rulings of the CC between 1959 and 2006, taking into accountthe composition of the CC as well as the characteristics ofthe legislation reviewed by the judges. We find that the judgesmainly rendered independent rulings when the polity was dividedbetween left-wing and right-wing parties. (JEL D72, D73, K40)     

Covariance of discounted compound renewal sums with a stochastic interest rate

Formulas have been obtained for the moments of the discounted aggregate claims process, for a constant instantaneous interest rate, and for a claims number process that is an ordinary or a delayed renewal process. In this paper, we present explicit formulas on the first two moments and the joint moment of this risk process, for a non-trivial extension to a stochastic instantaneous interest rate. Examples are given for Erlang claims number processes, and for the Ho–Lee–Merton and the Vasicek interest rate models.     

Analyst forecasts and European mutual fund trading

This paper addresses the questions whether European mutual fund managers rely on sell-side analyst information and whether this behavior impacts fund performance. Results show that mutual funds significantly increase (decrease) their holdings in stocks when any of the consensus forecast measures increases (decreases) within the quarter prior to the observation period. Furthermore, mutual fund managers primarily attribute high information value to consensus forecast revisions that contain positive information, that are based on a sufficiently high number of inputs, and with more unanimous inputs to the consensus. Finally, following sell-side research seems to be beneficial for mutual fund managers since our results show that stock trades that are in line with analyst forecast revisions significantly outperform trades that are contrary to analyst research.     

Why Do European Firms Go Public?

We survey chief financial officers (CFOs) from 12 European countries regarding the determinants of going public and exchange listing decisions. Most CFOs identify enhanced visibility and financing for growth as the most important benefits of an IPO, but other motivations for IPOs differ significantly across firms, countries, and legal systems. We find strong support for the IPO theories that emphasise financial and strategic considerations, such as enhanced reputation and credibility, and financial flexibility as a major advantage of an IPO. At the same time, we find moderate support for theories that focus on exit strategy, balance of power with creditors, external monitoring, and merger and acquisition motivations. European CFOs' views on the major benefits of an IPO are generally similar to those of US managers as reported in Brau and Fawcett (2006) , but differ significantly on outside monitoring; outside monitoring is considered a major benefit by European CFOs but a major cost by US CFOs. Our evidence suggests that the decision to go public is a complex one, and cannot be explained by one single theory because firms seek multiple benefits in going public. These motivations are influenced by the firm's ownership structure, size and age as well as by the home country's institutional and regulatory environment.     

Integral and differential equations for the moments of multistate models in health insurance

The moments of the random future liabilities of health insurance policies are key quantities for studying distributional properties of the future liabilities. Assuming that the randomness of the future health status of individual policyholders can be described by a semi-Markovian multistate model, integral and differential equations are derived for moments of any order and for the moment generating function. Different representations are derived and discussed with a view to numerical solution methods.