Valuation effects of new capital issues by large bank holding companies

Bank regulators in the United States and other major industrial nations have agreed on a framework for regulating bank capital, proposing that all banking organizations maintain common equity and perpetual preferred capital equal to 4 percent of risk-adjusted assets. This proposal raises important questions about the effect of different capital definitions on banking organizations. This article examines the stock market valuation effects of banks' issuing securities that are considered regulatory capital over the 1982–1986 period. The results are consistent with Myers and Majluf's securities overvaluation hypothesis.     

Public Scholarship and Economics: Engaging Students in the Democratic Process

Public scholarship is an emerging pedagogical practice that integrates teaching, research, and service in ways that expand student learning by tackling critical, topical problems and generating real solutions. This paper describes the use of a course on women and the economy in two widely disparate institutions to demonstrate the process of integrating public scholarship in economics.     

Lessons from successful hospital consolidations

Today, more than ever, the nation's independent community hospitals are facing the critical decision of whether to remain independent or to align with a strategic partner. Hospital leaders should keep in mind that successful consolidations require a common vision and shared values, and that the most competitive parties within a market are often the best partners for alignment. They should not allow competing interests of independent physicians to influence the outcome of such transactions. The senior finance leader's goal, in particular, should be to uncover potential issues early to avoid surprises surfacing during the due diligence process.