Initial Offer Precision and M&A Outcomes

Building on recent research in social psychology, this paper analyzes the link between the precision of initial cash offers and mergers and acquisition (M&A) outcomes. About one‐half of the offers are made at the precision of one or five dollars per share, while an additional one‐third are made at the precision of a half dollar or one quarter. The practice of making offers at round price‐per‐share levels is associated with a higher purchase price for target shares and a lower probability of deal completion.     

The Distribution of Information among Institutional and Retail Investors in IPOs

This study examines investor performance in IPOs using a unique database comprising 85,384 investors and 29 offerings from Finland. The evidence indicates that on average institutional investors do not obtain larger initial returns than retail investors, as the incentive to acquire information is limited by allocation rules which favour small orders. This result is in contrast to findings by Aggarwal et al . (2002), who show that institutional investors perform better in a bookbuilding environment. Within each investor category, however, large orders are associated with the best performance, suggesting that information differences figure more importantly within rather than between categories.     

How Distance, Language, and Culture Influence Stockholdings and Trades

This paper documents that investors are more likely to hold, buy, and sell the stocks of Finnish firms that are located close to the investor, that communicate in the investor's native tongue, and that have chief executives of the same cultural background. The influence of distance, language, and culture is less prominent among the most investment-savvy institutions than among both households and less savvy institutions. Regression analysis indicates that the marginal effect of distance is less for firms that are more nationally known, for distances that exceed 100 kilometers, and for investors with more diversified portfolios.     

A missing link in modeling : The future of time-use as an illustration

A Theory of Action is formulated based on the intentionality of actions. The transformation rules from the new theory to system dynamics were developed and the methodology was then applied to certain problems of future time-use. The modeling approach used is holistic and it requires a meta-system to system dynamics in order to produce quantitative results.     

The role of ownership structure in integrated reporting policies

Integrated reporting (IR) is used to demonstrate a firm's capacity to create value in the short, medium, and long term. It can better represent existing relationships between the company and its stakeholders, with a particular focus on investors. Attention to IR has grown considerably in recent years. However, studies on the determinants of IR quality are still limited. This study aims to bridge this literature gap by being the first study to analyse the role of ownership structure in IR context. To this end, it uses agency theory and is based on a sample of 152 international companies that have adopted IR. The results indicate a positive effect of institutional ownership and a negative effect of ownership concentration, managerial ownership and state ownership on the quality of integrated reports. These results are also consistent with the level of alignment of integrated reports with the <IR> framework. To our knowledge, this is the first study that analyses the role of ownership structure in the IR policies.     

What's New in Finance?

This paper prepares a list of the 300 most cited articles published in the area of Finance during the period 2000–2006. The articles are ranked based on the ratio of the number of citations and the number of years since publication, as of August 2007. Citation data come from Google Scholar and cover all articles in 29 Finance journals and Finance articles in 21 Economics, six Accounting, and two Operations research journals. The paper also reports the number of highly cited articles by number of authors, journal, research area, and institution.     

Earnings cosmetics in a tax-driven accounting environment: evidence from Finnish public firms

Finnish firms are known to manage earnings downwards to avoid income taxes. This study suggests that they simultaneously manage earnings upwards in a smaller scale. The idea behind this behaviour is that humans may perceive a profit of, say, 301 million as abnormally larger than a profit of 298 million. Consequently, firms tend to adjust the second leftmost digit of earnings to exceed nine in order to make the first digit of earnings larger by one. Such corporate behaviour has been previously documented in New Zealand and in the USA. Our study finds a similar phenomenon in Finland. Our results show that although the largest second digits (eight and nine) are fewer than expected, only sixes and sevens are statistically significantly managed upwards.     

Credibility of linear equilibrium strategies in a discrete time fishery management game

In this article we consider a two-country dynamic game model of whaling in discrete time. We assume that the countries have exact information, with one-period time delay, about each other's whaling efforts as measured by the number of vessels involved in whaling. It is shown how strategies that linearly depend on the whaling effort of the other country can be used to support a given Pareto-optimal agreement so that there will not be a temptation for unilateral deviation from the agreed decision. The credibility of these cooperative equilibrum strategies is discussed.     

Multi-agent interaction processes: From oligopoly theory to decentralized artificial intelligence

This article examines the group processes studied in oligopoly theory and in decentralized artificial intelligence. We develop a unifying perspective for the research on the behavior of autonomous interacting agents. Among the many questions of interest in these disciplines are the ways of creating and reaching cooperation by a group of self-interested independent decentralized agents. In this respect, the models and results of oligopoly theory can also be used both in decentralized artificial intelligence and in many other areas of research, such as group decision making, negotiation support, and organizational theory. In particular, the important idea of reshaping goals with strategic information sharing and transmission—incentive communication—has received little attention outside the field of economics. On the other hand, oligopoly theory and experimental economics can especially benefit from the computational methods and tools of artificial intelligence and modern decision support technology. To demonstrate this we have built a prototype of an experimental market analysis environment. Its potential in the analysis of group processes is illustrated with examples.