Stock price reactions to increases in loan-loss reserves: A broader perspective

Loan loss reserves (LLR) provide a cushion to absorb operating losses. Several studies have focused on the market's reaction to increases in LLR in response to a specific event related to the international debt crisis. This study takes a broader view of LLR by examining, over a six year period, the market's reaction to announcements of increases to LLR that are above the expected annual reserve and that are a result of factors other than the international debt crisis. We find a negative reaction in the market, indicating that the negative signal from identifying unanticipated risk in the loan portfolio appears to dominate the positive cash flow effects.     

Lowering the age requirement for adult courts: An analytical framework

The influence of drugs, drug money, gang-related incidents and the ease of acquiring a lethal weapon are all contributing factors to the juvenile crime problem. In the past, we have tried two approaches to reducing the inordinate amount of crime: increasing the budget for law enforcement and imposing more stringent statutes and stiffer penalties on those apprehended. However, one particularly effective way to increase the sentence or fine for juvenile offenses, that has not been considered generally, is to reduce the age requirement for adult courts.     

The Effect of Golden Parachutes on Shareholder Wealth and Takeover Probabilities

This study seeks to determine whether stockholders experience increases in wealth due to a company's adoption of a golden parachute and resulting increased takeover bid probability. Market reaction to golden parachute adoption is examined by employing event analysis, logit analysis and metric regression. Our findings indicate that the adoption of a golden parachute does not signify an increased probability of a takeover bid, and stockholders experience a decrease in wealth.