Bank Information Monopolies and the Mix of Private and Public Debt Claims

This article examines the determinants of the mix of private and public debt using detailed information on the debt structure of 250 publicly traded corporations from 1980 through 1990. We find that the relationship between bank borrowing and the importance of growth opportunities depends on the number of banks the firm uses and whether the firm has public debt outstanding. For firms with a single bank relationship, the reliance on bank debt is negatively related to the importance of growth opportunities. In contrast, among firms borrowing from multiple banks, the relationship is positive.     

Intellectual Capital,Monitoring, and Risk: What Predicts the Adoption of Employee Stock Options?

We use empirical analysis to analyze company characteristics associated with the adoption and maintenance of broad‐based stock option plans. First, a cross‐sectional analysis evaluates what company characteristics are now associated the incidence of such plans. Second, a longitudinal analysis examines the company characteristics that predict the adoption of such plans. Our results show that firms with higher levels of intellectual capital and capital intensity are more likely to adopt and maintain employee stock option plans.     

Dividends and Profits: Some Unsubtle Foreign Influences

American corporations earn a significant share of their profits from foreign sources, out of which they appear to pay dividends at rates that are three times higher than their payout rates from domestic profits. Why firms do so is unclear, although this behavior is consistent with the use of dividends to signal profitability. This payout behavior implies that a significant part of the U.S. tax revenue generated by the foreign profits of U.S. corporations arises through the taxation of dividends received by individuals, and that the cost of capital may be higher for foreign than for domestic operations.     

Regulation and the Determination of Bank Capital Changes: A Note

The effectiveness of bank capital adequacy requirements is examined in this paper. Using empirical tests similar to those employed by Peltzman and Mingo, no significant relationship is found between changes in bank capital and the capital standards imposed by regulators. The findings conflict with those of previous studies. The conflict in findings, it is argued, results from the failure of previous studies to account for the effect of binding deposit rate ceilings.     

The Pricing Effects of Interfirm Cash Tender Offers

The tools provided by option-pricing theory are used to examine the wealth effects of interfirm cash tender offers. The analysis provides evidence consistent with the “synergy” theory of corporate takeovers and has implications concerning the economic effects of regulations of cash tender offers. The analysis further suggests that the market prices information uncertainty in a manner not captured by the standard Capital Asset Pricing Model. The study introduces a technique for unbundling the prices of a primary asset and a contingent claim when only the prices of the combination are observed.     

The Structure of Asset Prices and Socially Useless/Useful Information

This paper relates the value of additional information to asset prices in a pure exchange setting. The price structure of interest revolves around a “pricing-hypothesis”: the prices in an economy with less information are unbiased estimators of the prices that would obtain in a more informative economy. Two basic results are developed. First, if the incremental information is useless then the pricing-hypothesis applies. Second, if the pricing hypothesis is assumed valid, then the information is valuable in a weak sense. The results are also considered in the context of empirical research. The case is made for viewing statistical tests of association between prices and signals as tests of the social value of information.     

Factor Intensity Reversal in a Three-Factor,Three-Commodity Model*

The extension of the notion of factor intensity reversal is extended to three dimensions and it becomes clear that a single phenomenon in two dimensions becomes two distinct phenomena in three. It is shown that one interpretation, the degeneration of A, the coefficient matrix, is the phenomenon which causes problems in trade theory, and this case is easily extended to higher dimensions. Another interpretation uses the Minkowski and Metzler definitions of intensities, and here it is shown that while ‘reversals’ are possible they cause no difficulties unless they are also associated with a degeneration of A. Thus the heart of ‘factor intensity reversal’, i.e. degeneration of A, is easily generalized.