The valuation effects of overseas listings: The case of the Tokyo Stock Exchange

Shareholders of U.S. firms that listed stock on the Tokyo Stock Exchange from 1973 to 1989 are shown to have experienced no significant wealth gains. The pattern of the market's reaction to a Tokyo listing tracks closely the reactions to a domestic listing, where gains prior to listing are later erased. The findings indicate no advantages to a listing for a firm with a prior business presence in Japan, and they do not support the hypothesis of diminishing returns to foreign listings. The findings are consistent with the integration of international capital markets.     

Incorporating Ethics into Business Students' Research Projects: A Process Approach

Student research projects involving human intervention are being utilised in more and more business subjects. It therefore is essential that students understand the various ethical issues and implications related to undertaking such projects. As such academics need to integrate an ethical evaluation of student projects. While there are many attempts to "teach" ethics, the literature does not address the issue of including ethics in student research projects. A process by which this can be applied is suggested, which is based on a formal ethics approval process used at one Australian university. While the focus of this paper is student based research projects, the process described could be applied to staff research with minimal modifications, which are identified throughout the paper.     

Privatization And Economic Restructuring in Poland: An Assessment of Transition Policies

A bstract . Poland was among the first of the Central European countries to attempt to transform its economy from a centrally planned socialist system to a market-oriented one. Although its International Monetary Fund-inspired "shock therapy" approach sought to transform the economy quickly, Poland's implementation of privatization of state enterprises , a keystone of the reform strategy, lags seriously behind other economic changes. Poland's experiments with privatization were derailed by economic, political, social and administrative problems. The lessons of experience from Poland's transitional period during the early 1990s are that the development of small- and medium-sized enterprises and the spread of entrepreneurial activity were far more important than privatization of state enterprises in moving Poland toward a market system.     

Strategic Second Sourcing by Multinationals*

Multinationals often serve foreign markets by exporting as well as by investing directly in foreign production facilities. We argue that if the multinational competes in an oligopolistic market characterized by strategic complements then there are strategic reasons to use two production facilities—committing to a second source allows the firm to keep average cost low while increasing its marginal cost. The increase in marginal cost softens product market competition resulting in higher profits. We argue that this theory also has implications for the “make or buy” literature in production management and the literature on second sourcing in industrial organization.     

Institutional Investors and Executive Compensation

We find that institutional ownership concentration is positively related to the pay‐for‐performance sensitivity of executive compensation and negatively related to the level of compensation, even after controlling for firm size, industry, investment opportunities, and performance. These results suggest that the institutions serve a monitoring role in mitigating the agency problem between shareholders and managers. Additionally, we find that clientele effects exist among institutions for firms with certain compensation structures, suggesting that institutions also influence compensation structures through their preferences.     

A skeptical appraisal of asset pricing tests

It has become standard practice in the cross-sectional asset pricing literature to evaluate models based on how well they explain average returns on size-B/M portfolios, something many models seem to do remarkably well. In this paper, we review and critique the empirical methods used in the literature. We argue that asset pricing tests are often highly misleading, in the sense that apparently strong explanatory power (high cross-sectional R²s and small pricing errors) can provide quite weak support for a model. We offer a number of suggestions for improving empirical tests and evidence that several proposed models do not work as well as originally advertised.     

The marketing of seasoned equity offerings

In an accelerated seasoned equity offering (SEO), an issuer foregoes the investment bank's marketing efforts in return for a lower fee. To explain why many issuing firms choose a higher cost fully marketed offer, we posit that the marketing effort flattens the issuer's short-run demand curve. Alternatively stated, with a fully marketed offer, the issuer is paying investment bankers to create demand, making the elasticity of demand at the time of issuance an endogenous choice variable. Empirical analysis shows that both the pre-issue elasticity of the issuing firm's demand curve and the offer size are important determinants of the offer method choice. We find evidence of a large transitory increase in the elasticity of demand for issuers conducting fully marketed SEOs.