The Impact of Preferred-for-Common Exchange Offers on Firm Value

This paper examines the impact of capital structure changes which have no corporate tax consequences. Specifically, exchange offers involving preferred and common stock are analyzed. We find that systematic changes in firm value occur when companies announce preferred-for-common exchange offers. Consequently, we interpret our results to be consistent with a signalling hypothesis. We also find weaker evidence suggesting the existence of agency cost effects or wealth redistributions across security classes. Our findings imply that capital structure changes need not alter the tax status of the issuing firm to affect firm value.     

Agency Problems at Dual-Class Companies

Using a sample of U.S. dual-class companies, we examine how divergence between insider voting and cash flow rights affects managerial extraction of private benefits of control. We find that as this divergence widens, corporate cash holdings are worth less to outside shareholders, CEOs receive higher compensation, managers make shareholder value-destroying acquisitions more often, and capital expenditures contribute less to shareholder value. These findings support the agency hypothesis that managers with greater excess control rights over cash flow rights are more prone to pursue private benefits at shareholders' expense, and help explain why firm value is decreasing in insider excess control rights.     

Corporate Governance and Acquirer Returns

We examine whether corporate governance mechanisms, especially the market for corporate control, affect the profitability of firm acquisitions. We find that acquirers with more antitakeover provisions experience significantly lower announcement‐period abnormal stock returns. This supports the hypothesis that managers at firms protected by more antitakeover provisions are less subject to the disciplinary power of the market for corporate control and thus are more likely to indulge in empire‐building acquisitions that destroy shareholder value. We also find that acquirers operating in more competitive industries or separating the positions of CEO and chairman of the board experience higher abnormal announcement returns.     

A Cross-Category Analysis of Shelf-Space Allocation,Product Variety,and Retail Margins

Retailers' allocation of shelf space as well as the breadth of varietyoffered varies across categories. Many researchers have developedheuristics for determining what retailers should do with regard tothese decisions. We explore how these constructs are actually relatedin practice. We utilize data obtained from Marsh Supermarkets, a largeIndianapolis-based grocery retailer, to explore the relationshipsbetween these variables. The results of this analysis are a set of rawfacts concerning the relationship between some of grocery retailers'more important category-level decisions.     

Neuromarketing and Consumer Free Will

This article examines the impact of discoveries and methods of neuroscience on marketing practices as they relate to the exercise of individual free will. Thus, our focus centers on ethical questions involving consumers’ awareness, consent, and understanding to what may be viewed as invasion of their privacy rights. After a brief introduction, the article turns to scientific literature on the brain, followed by discussion of marketing persuasion models. Ethical dilemmas within the free will paradigm and Rawlsian justice developed in moral philosophy are delineated next. The article closes with policy implications and a revised consideration of consumer privacy.