Board Composition, Board Effectiveness, and the Observed Form of Takeover Bids

We show that bidding firms consider target board characteristicswhen deciding takeover offer types and initial offer premiums.We study a sample of 436 proposed negotiated mergers and bypassoffers. Firms with individuals holding the titles of both chiefexecutive officer (CEO) and board chair are more likely to receivebypass offers. These offers are more likely to be successfuland generate higher target shareholder gains over the takeoveroffer period. When the target's board is independent, the targetis less likely to receive a high premium and the offer is lesslikely to succeed.     

Benchmarking the performance of recommended allocations to equities,bonds, and cash by international investment houses

We conduct performance tests of the recommended asset allocations made by a panel of international investment houses (the “Houses”) from 1982 through 2005. We compare the returns and Sharpe Ratios from the recommended-weight portfolio against those of several benchmark portfolios and to a set of 10,000 returns and Sharpe Ratios from randomly shuffled-weight and shuffled-weight change portfolios. We find that the Houses generally fail to outperform the benchmarks. The shuffled-weight change benchmark exhibits a robust “style-preserving” property in that the average portfolio standard deviation is nearly equal to the portfolio standard deviation from the actual recommended weights.     

Risk management strategies using seasonal climate forecasting in irrigated cotton production: a tale of stochastic dominance

Decision-making in agriculture is carried out in an uncertain environment with farmers often seeking information to reduce risk. As a result of the extreme variability of rainfall and stream-flows in north-eastern Australia, water supplies for irrigated agriculture are a limiting factor and a source of risk. The present study examined the use of seasonal climate forecasting (SCF) when calculating planting areas for irrigated cotton in the northern Murray Darling Basin. Results show that minimising risk by adjusting plant areas in response to SCF can lead to significant gains in gross margin returns. However, how farmers respond to SCF is dependent on several other factors including irrigators' attitude towards risk.