Call for papers and participation

Call for papers and participation     

Escalation effects and the player draft in the AFL

This study investigates escalation effects in the Australian Football League (AFL). We use a sample of players selected in the AFL player draft (National Draft) between 1986 and 2002, and test for escalation effects by examining whether a player's draft order affects his subsequent utilisation by the club to which he was drafted. Utilisation is represented with measures of games played and tenure. Limited evidence of an escalation effect is found. Any relation between a player's draft order and his games played and tenure at the club to which he was drafted is concentrated in the early years of his career, and this apparent relation can be explained by the information about a player's ability that is contained in the player's draft order and by incentives for clubs to provide greater playing experience to higher ability players. Escalation effects in the AFL competition are therefore much weaker than have been found in studies of the US National Basketball Association (NBA). It is suggested that differences in the structure of the competitions may explain why the escalation effect in the AFL would be weaker than in the NBA.     

Stock exchange governance initiatives: Evidence from the Italian STARs

Can a stock exchange improve corporate governance and transparency by designating companies that exhibit superior corporate governance? In 2000, the Borsa Italiana created a mid-cap segment with strong listing standards, which is composed of firms (called STARS) that follow stricter standards of transparency, disclosure, monitoring and liquidity. We find that STAR firms exhibit governance characteristics not observed in non-STAR firms, such as a higher incidence of audit and executive committees and higher debt ratios. They experienced a modestly favorable share price response upon the implementation of the STAR initiative. Moreover, they experienced significantly higher buy and hold returns and transparency after the initiative. Several governance characteristics are cross-sectionally associated with performance following the STAR initiative. Overall, the results suggest that firms may be willing to improve governance when they are endorsed by a credible agency for doing so, and such improvements may lead to better performance. The STAR initiative may serve as a model that can be adapted by other stock exchanges to promote transparency and governance.     

Living next to godliness: Residential property values and churches

This article extends the analysis concerning the impact of neighborhood churches on residential property values by investigating nearly 5,000 residential property transactions in Henderson, Nevada, between January 1986 and December 1990. We find that real property values decrease, at a decreasing rate, as distance from a neighborhood church increases. This result is the opposite of that reported by Do, Wilbur, and Short in a previous edition of this journal. We bolster our findings by showing that distance from the site of a future church has little or no impact on residential property values, whereas distance from an existing church is associated with lower property values. Our evidence indicates that neighborhood churches are amenities that enhance the value of neighborhood residential property. Finally, we demonstrate that larger churches (as measured by square foot of lot size) tend to have a greaterpositive impact on residential property values.     

Re-examination of industry effects due to withdrawn mergers

We find that the announcement of a merger withdrawal elicits negative industry effects on average, which reflect a partial reversal of the favorable industry effects that had previously occurred at the time of the merger proposal. The mean reversal is about 35% of the original favorable industry effect at the time of the merger announcement. This result for the mean effect is opposite of that found by Akhigbe et al. (2000). When we break our sample into sub-periods, we find that industry effects are substantially weaker in a more recent sub-period beyond the sample period used by Akhigbe et al. (2000). We also find that the industry effects are more negative when the share price response of the target at the time of the announced withdrawal is weaker. Whether the negative impact on the target is attributed to either a reduced likelihood of takeover or weaker industry prospects, it carries over to industry rivals.     

Do Tax Law Changes Influence Ex-Dividend Stock Price Behavior? Evidence from 1926 to 2005

We test the Elton and Gruber model of ex-dividend stock pricing over a period spanning all US tax law changes since 1926. Our results indicate that price drop ratios (ΔP/D) and ex-day returns are related to dividend and capital gains tax rates in the theorized manner. Consistent with tax clienteles, we also find that ex-day price movements of higher dividend yield stocks are driven more by corporate tax rates, while lower yield stocks are more influenced by personal rates. Finally, we demonstrate that the positive relationship between ΔP/D and the dividend yield becomes stronger as the tax differential | t_d− t_cg | widens.