Search results: 50.
DISCUSSION
Published: 5/1983, Volume: 38, Issue: 2 | DOI: 10.1111/j.1540-6261.1983.tb02277.x | Cited by: 1
CLIFFORD W. SMITH
Death and Taxes: The Market for Flower Bonds
Published: 7/1987, Volume: 42, Issue: 3 | DOI: 10.1111/j.1540-6261.1987.tb04578.x | Cited by: 7
DAVID MAYERS, CLIFFORD W. SMITH
Certain U.S. Government securities, known as flower bonds, can be redeemed at par plus accrued interest for the purpose of paying estate taxes, if held at the time of death. Thus, a flower bond, selling at a discount, is like a straight bond plus a life insurance policy. An equilibrium derived from a rational flower bond pricing model implies the existence of clienteles: individuals with the highest death probabilities hold the deepest discount flower bonds. The empirical implication, that bonds with the deepest discount should be redeemed at the fastest rate, is tested and the results support the proposition.
The Maturity Structure of Corporate Debt
Published: 6/1995, Volume: 50, Issue: 2 | DOI: 10.1111/j.1540-6261.1995.tb04797.x | Cited by: 1316
MICHAEL J. BARCLAY, CLIFFORD W. SMITH
We provide an empirical examination of the determinants of corporate debt maturity. Our evidence offers strong support for the contracting‐cost hypothesis. Firms that have few growth options, are large, or are regulated have more long‐term debt in their capital structure. We find little evidence that firms use the maturity structure of their debt to signal information to the market. The evidence is consistent, however, with the hypothesis that firms with larger information asymmetries issue more short‐term debt. We find no evidence that taxes affect debt maturity.
Bankruptcy, Secured Debt, and Optimal Capital Structure: Comment
Published: 3/1979, Volume: 34, Issue: 1 | DOI: 10.1111/j.1540-6261.1979.tb02085.x | Cited by: 91
CLIFFORD W. SMITH, JEROLD B. WARNER
The Priority Structure of Corporate Liabilities
Published: 7/1995, Volume: 50, Issue: 3 | DOI: 10.1111/j.1540-6261.1995.tb04041.x | Cited by: 232
MICHAEL J. BARCLAY, CLIFFORD W. SMITH
Most discussions of corporate capital structure effectively assume that all debt is the same. Yet debt differs by maturity, covenant restrictions, conversion rights, call provisions, and priority. Here, we examine priority structure across a sample of 4995 COMPUSTAT industrial firms from 1981 to 1991. We analyze the variation in the use of capital leases, secured debt, ordinary debt, subordinated debt, and preferred stock both as a fraction of the firm's market value and as a fraction of total fixed claims. Our evidence provides consistent support for contracting cost hypotheses, mixed support for tax hypotheses, and little support for the signaling hypothesis.
Tax Incentives to Hedge
Published: 12/1999, Volume: 54, Issue: 6 | DOI: 10.1111/0022-1082.00187 | Cited by: 320
John R. Graham, Clifford W. Smith
For corporations facing tax‐function convexity, hedging lowers expected tax liabilities, thereby providing an incentive to hedge. We use simulation methods to investigate convexity induced by tax‐code provisions. On average, the tax function is convex (although in approximately 25 percent of cases it is concave). Carrybacks and carryforwards increase the range of income with incentives to hedge; other tax‐code provisions have minor impacts. Among firms facing convex tax functions, average tax savings from a five percent reduction in the volatility of taxable income are about 5.4 percent of expected tax liabilities; in extreme cases, these savings exceed 40 percent.
Accounts Receivable Management Policy: Theory and Evidence
Published: 3/1992, Volume: 47, Issue: 1 | DOI: 10.1111/j.1540-6261.1992.tb03982.x | Cited by: 430
SHEHZAD L. MIAN, CLIFFORD W. SMITH
This paper develops and tests hypotheses that explain the choice of accounts receivable management policies. The tests focus on both cross‐sectional explanations of policy‐choice determinants, as well as incentives to establish captives. We find size, concentration, and credit standing of the firm's traded debt and commercial paper are each important in explaining the use of factoring, accounts receivable secured debt, captive finance subsidiaries, and general corporate credit. We also offer evidence that captive formation allows more flexible financial contracting. However, we find no evidence that captive formation expropriates bondholder wealth.
Determinants of Corporate Leasing Policy
Published: 7/1985, Volume: 40, Issue: 3 | DOI: 10.1111/j.1540-6261.1985.tb05016.x | Cited by: 206
CLIFFORD W. SMITH, L. MACDONALD WAKEMAN
The existing finance literature assumes the real operating cash flows from leasing or owning are invariant to the ownership of the asset and focuses on tax‐related incentives for corporate leasing policy. Our analysis suggests that taxes are important in identifying potential lessees and lessors, but are less important in identifying the specific assets leased. We provide a unified analysis of the various incentives affecting the lease‐versus‐purchase decision. We then show how these incentives explain the use of contractual provisions such as maintenance clauses, deposits, options to purchase the asset, and metering.
A TRANSACTIONS COST APPROACH TO THE THEORY OF FINANCIAL INTERMEDIATION
Published: 5/1976, Volume: 31, Issue: 2 | DOI: 10.1111/j.1540-6261.1976.tb01882.x | Cited by: 57
Myron Scholes, George J. Benston, Clifford W. Smith
On the Determinants of Corporate Hedging
Published: 3/1993, Volume: 48, Issue: 1 | DOI: 10.1111/j.1540-6261.1993.tb04709.x | Cited by: 841
DEANA R. NANCE, CLIFFORD W. SMITH, CHARLES W. SMITHSON
Finance theory indicates that hedging increases firm value by reducing expected taxes, expected costs of financial distress, or other agency costs. This paper provides evidence on these hypotheses using survey data on firm's use of forwards, futures, swaps, and options combined with COMPUTSTAT data on firm characteristics. Of 169 firms in the sample, 104 firms use hedging instruments in 1986. The data suggest that firms which hedge face more convex tax functions, have less coverage of fixed claims, are larger, have more growth options in their investment opportunity set, and employ fewer hedging substitutes.
Estimation Bias Induced by Discrete Security Prices
Published: 9/1988, Volume: 43, Issue: 4 | DOI: 10.1111/j.1540-6261.1988.tb02608.x | Cited by: 62
CLIFFORD A. BALL
Commonly, equilibrium security prices are modeled by continuous‐state stochastic processes, while observed prices are rounded into discrete units. This paper models the rounding mechanism and examines the probabilistic structure of the resultant rounded process. We provide accurate and simple estimates of the inflation in estimated variance and kurtosis induced by ignoring rounding. In particular, the maximum‐likelihood estimate of security price volatility using rounded prices is developed, and a simulation analysis is performed to examine the small‐sample properties of this estimator. For many practical applications, a simple correction for rounding becomes available.
A NOTE ON INVESTMENT ACTIVITIES AND THE GRADUATED CORPORATE TAX
Published: 3/1957, Volume: 12, Issue: 1 | DOI: 10.1111/j.1540-6261.1957.tb04104.x | Cited by: 0
Clifford D. Clark
True Spreads and Equilibrium Prices
Published: 10/2001, Volume: 56, Issue: 5 | DOI: 10.1111/0022-1082.00390 | Cited by: 40
Clifford A. Ball, Tarun Chordia
Stocks and other financial assets are traded at prices that lie on a fixed grid determined by the minimum tick size. Observed prices and quoted spreads do not correspond to the equilibrium prices and true spreads that would exist in a market with no minimum tick size. Using Monte Carlo Markov Chain methods, this paper estimates the equilibrium prices and true spreads. For large stocks, most of the quoted spread is attributable to the rounding of prices and the adverse selection component is small. The true spread and the adverse selection component are greater for mid‐sized stocks.
On Jumps in Common Stock Prices and Their Impact on Call Option Pricing
Published: 3/1985, Volume: 40, Issue: 1 | DOI: 10.1111/j.1540-6261.1985.tb04942.x | Cited by: 307
CLIFFORD A. BALL, WALTER N. TOROUS
The Black‐Scholes call option pricing model exhibits systematic empirical biases. The Merton call option pricing model, which explicitly admits jumps in the underlying security return process, may potentially eliminate these biases. We provide statistical evidence consistent with the existence of lognormally distributed jumps in a majority of the daily returns of a sample of NYSE listed common stocks. However, we find no operationally significant differences between the Black‐Scholes and Merton model prices of the call options written on the sampled common stocks.
Actual Share Reacquisitions in Open‐Market Repurchase Programs
Published: 2/1998, Volume: 53, Issue: 1 | DOI: 10.1111/0022-1082.115194 | Cited by: 641
Clifford P. Stephens, Michael S. Weisbach
Unlike Dutch auction repurchases and tender offers, open‐market repurchase programs do not precommit firms to acquire a specified number of shares. In a sample of 450 programs from 1981 to 1990, firms on average acquire 74 to 82 percent of the shares announced as repurchase targets within three years of the repurchase announcement. We find that share repurchases are negatively related to prior stock price performance, suggesting that firms increase their purchasing depending on its degree of perceived undervaluation. In addition, repurchases are positively related to levels of cash flow, which is consistent with liquidity arguments.
Negotiated Block Trades and Corporate Control
Published: 7/1991, Volume: 46, Issue: 3 | DOI: 10.1111/j.1540-6261.1991.tb03769.x | Cited by: 283
MICHAEL J. BARCLAY, CLIFFORD G. HOLDERNESS
We identify negotiated trades of large‐percentage blocks of stock as corporate control transactions. When a block trades and the firm is not fully acquired, cumulative abnormal returns average 5.6%, and 33% of the chief executives are replaced within a year. Stock‐price increases are larger when control passes to the new blockholder, when management does not resist the blockholder's effort to influence corporate policy, and when the block purchaser eventually fully acquires the firm. These findings suggest that the specific skills and expertise of blockholders, and not just the concentration of ownership, are important determinants of firm value.
The Wealth Effects of Repurchases on Bondholders
Published: 3/21/2003, Volume: 58, Issue: 2 | DOI: 10.1111/1540-6261.00550 | Cited by: 203
William F. Maxwell, Clifford P. Stephens
Prior research has documented positive abnormal stock returns around the announcements of repurchase programs; several explanations of these returns have been suggested, including signaling, free cash flow, and wealth redistributions. This study analyzes abnormal stock, bond, and firm returns around repurchase announcements to examine these hypotheses. We find evidence consistent with both signaling and wealth redistribution. The loss to bondholders is a function of the size of the repurchase, and the risk of the firm's debt. We also find that bond ratings are twice as likely to be downgraded as upgraded after the announcement of the repurchase program.
Property Rights to Client Relationships and Financial Advisor Incentives
Published: 6/3/2021, Volume: 76, Issue: 5 | DOI: 10.1111/jofi.13058 | Cited by: 36
CHRISTOPHER P. CLIFFORD, WILLIAM C. GERKEN
We study the effect of a change in property rights on employee behavior in the financial advice industry. Our identification comes from staggered firm‐level entry into the Protocol for Broker Recruiting, which waived nonsolicitation clauses for advisor transitions among member firms, effectively transferring ownership of client relationships from the firm to the advisor. After the shock, advisors appear to tend to client relationships more by investing in client‐facing industry licenses, shifting to fee‐based advising, and reducing customer complaints. Our findings support property rights based investment theories of the firm and document offsetting costs to restricting labor mobility.
Futures Options and the Volatility of Futures Prices
Published: 9/1986, Volume: 41, Issue: 4 | DOI: 10.1111/j.1540-6261.1986.tb04553.x | Cited by: 24
CLIFFORD A. BALL, WALTER N. TOROUS
Assuming nonstochastic interest rates, European futures options are shown to be European options written on a particular asset referred to as a futures bond. Consequently, standard option pricing results may be invoked and standard option pricing techniques may be employed in the case of European futures options. Additional arbitrage restrictions on American futures options are derived. The efficiency of a number of futures option markets is examined. Assuming that at‐the‐money American futures options are priced accurately by Black's European futures option pricing model, the relationship between market participants' ex ante assessment of futures price volatility and the term to maturity of the underlying futures contract is also investigated empirically.
CONSISTENT EMPIRICAL RESULTS WITH ALMON'S METHOD: IMPLICATIONS FOR THE MONETARY VERSUS FISCAL POLICY DEBATE
Published: 3/1978, Volume: 33, Issue: 1 | DOI: 10.1111/j.1540-6261.1978.tb03398.x | Cited by: 0
Charles P. Harper, Clifford L. Fry
The Stochastic Volatility of Short‐Term Interest Rates: Some International Evidence
Published: 12/1999, Volume: 54, Issue: 6 | DOI: 10.1111/0022-1082.00191 | Cited by: 96
Clifford A. Ball, Walter N. Torous
This paper estimates a stochastic volatility model of short‐term riskless interest rate dynamics. Estimated interest rate dynamics are broadly similar across a number of countries and reliable evidence of stochastic volatility is found throughout. In contrast to stock returns, interest rate volatility exhibits faster mean‐reverting behavior and innovations in interest rate volatility are negligibly correlated with innovations in interest rates. The less persistent behavior of interest rate volatility reflects the fact that interest rate dynamics are impacted by transient economic shocks such as central bank announcements and other macroeconomic news.
Were the Good Old Days That Good? Changes in Managerial Stock Ownership Since the Great Depression
Published: 4/1999, Volume: 54, Issue: 2 | DOI: 10.1111/0022-1082.00114 | Cited by: 299
Clifford G. Holderness, Randall S. Kroszner, Dennis P. Sheehan
We document that ownership by officers and directors of publicly traded firms is on average higher today than earlier in the century. Managerial ownership has risen from 13 percent for the universe of exchange‐listed corporations in 1935, the earliest year for which such data exist, to 21 percent in 1995. We examine in detail the robustness of the increase and explore hypotheses to explain it. Higher managerial ownership has not substituted for alternative corporate governance mechanisms. Lower volatility and greater hedging opportunities associated with the development of financial markets appear to be important factors explaining the increase in managerial ownership.
Value and Momentum Everywhere
Published: 5/20/2013, Volume: 68, Issue: 3 | DOI: 10.1111/jofi.12021 | Cited by: 2085
CLIFFORD S. ASNESS, TOBIAS J. MOSKOWITZ, LASSE HEJE PEDERSEN
We find consistent value and momentum return premia across eight diverse markets and asset classes, and a strong common factor structure among their returns. Value and momentum returns correlate more strongly across asset classes than passive exposures to the asset classes, but value and momentum are negatively correlated with each other, both within and across asset classes. Our results indicate the presence of common global risks that we characterize with a three‐factor model. Global funding liquidity risk is a partial source of these patterns, which are identifiable only when examining value and momentum jointly across markets. Our findings present a challenge to existing behavioral, institutional, and rational asset pricing theories that largely focus on U.S. equities.
Further Evidence on the Value of a Priori Information
Published: 3/1980, Volume: 35, Issue: 1 | DOI: 10.1111/j.1540-6261.1980.tb03481.x | Cited by: 1
GARY SMITH
COST OF PROVIDING CONSUMER CREDIT: A STUDY OF FOUR MAJOR TYPES OF FINANCIAL INSTITUTIONS*
Published: 9/1962, Volume: 17, Issue: 3 | DOI: 10.1111/j.1540-6261.1962.tb04301.x | Cited by: 0
Paul Smith
DISCUSSION
Published: 5/1970, Volume: 25, Issue: 2 | DOI: 10.1111/j.1540-6261.1970.tb00667.x | Cited by: 1
Warren Smith
Public Information, IPO Price Formation, and Long‐Run Returns: Japanese Evidence
Published: 1/23/2009, Volume: 64, Issue: 1 | DOI: 10.1111/j.1540-6261.2008.01440.x | Cited by: 60
KENJI KUTSUNA, JANET KIHOLM SMITH, RICHARD L. SMITH
The price formation process of JASDAQ IPOs is more transparent than in the United States. The transparency facilitates analysis of important issues in the IPO literature—why offer prices only partially adjust to public information and adjust more fully to negative information, and why adjustments are related to initial returns. The evidence indicates that early price information conveys the underwriter's commitment to compensate investors for acquiring and/or disclosing information. Offer prices reflect pre‐IPO market values of public companies and implicit agreements between underwriters and issuers that originate well before the offering. Underadjustment of offer prices is substantially reversed in the aftermarket.
Evidence on the Determinants of Credit Terms Used in Interfirm Trade
Published: 6/1999, Volume: 54, Issue: 3 | DOI: 10.1111/0022-1082.00138 | Cited by: 625
Chee K. Ng, Janet Kiholm Smith, Richard L. Smith
AbstractTrade credit is created whenever a supplier offers terms that allow the buyer to delay payment. In this paper we document the rich variation in interfirm credit terms and credit policies across industries. We examine empirically the firm's basic credit policy choices: whether to extend credit or to require cash payment; and, if credit is extended, whether to adopt simple net terms or terms with discounts for prompt payment. We also examine determinants of variations in two‐part terms. Results are supportive primarily of theories that explain credit terms as contractual solutions to information problems concerning product quality and buyer creditworthiness.
ESTIMATING A GENERAL DISEQUILIBRIUM MODEL OF THE FINANCIAL SECTOR*
Published: 12/1973, Volume: 28, Issue: 5 | DOI: 10.1111/j.1540-6261.1973.tb01475.x | Cited by: 0
Gary N. Smith
GOVERNMENT FINANCIAL AID TO SMALL BUSINESS: FISCAL POLICY
Published: 6/1951, Volume: 6, Issue: 2 | DOI: 10.1111/j.1540-6261.1951.tb04453.x | Cited by: 0
Dan Throop Smith
ETHICAL DRUG INDUSTRY RETURN ON INVESTMENT*
Published: 12/1974, Volume: 29, Issue: 5 | DOI: 10.1111/j.1540-6261.1974.tb03149.x | Cited by: 0
Rodney F. Smith
THE EFFECT OF THE CORPORATE FINANCIAL PLAN ON THE CORPORATE RISK MANAGEMENT PROGRAM
Published: 5/1964, Volume: 19, Issue: 2 | DOI: 10.1111/j.1540-6261.1964.tb00772.x | Cited by: 1
W. B. Smith
Shareholder Activism by Institutional Investors: Evidence from CalPERS
Published: 3/1996, Volume: 51, Issue: 1 | DOI: 10.1111/j.1540-6261.1996.tb05208.x | Cited by: 836
MICHAEL P. SMITH
This study examines firm characteristics that lead to shareholder activism and analyzes the effects of activism on target firm governance structure, shareholder wealth, and operating performance for the 51 firms targeted by CalPERS over the 1987–93 period. Firm size and level of institutional holdings are found to be positively related to the probability of being targeted, and 72 percent of firms targeted after 1988 adopt proposed changes or make changes resulting in a settlement with CalPERS. Shareholder wealth increases for firms that adopt or settle and decreases for firms that resist. No statistically significant change in operating performance is found.
The Choice of Issuance Procedure and the Cost of Competitive and Negotiated Underwriting: an Examination of the Impact of Rule 50
Published: 7/1987, Volume: 42, Issue: 3 | DOI: 10.1111/j.1540-6261.1987.tb04580.x | Cited by: 23
RICHARD L. SMITH
Previous research suggests that firms choose negotiated issuance over competitive despite its apparently higher net interest cost. This result is shown to arise partly from failure to correct for a selectivity bias in the choice of issuance procedures. Two stage analysis is used in a model that includes qualitative and limited dependent variables to re‐estimate the net interest cost difference between competitive and negotiated issues. Results support the hypothesis that the choice of issuance procedure is consistent with shareholder wealth maximization. Examination of debt issues subject to Rule 50 of the Public Utility Holding Company Act indicates that the regulation, as applied, is not effective.
INSTITUTIONAL ASPECTS OF INTERREGIONAL MORTGAGE INVESTMENT
Published: 5/1968, Volume: 23, Issue: 2 | DOI: 10.1111/j.1540-6261.1968.tb00811.x | Cited by: 3
Halbert C. Smith
A TRANSITION MODEL FOR PORTFOLIO REVISION*
Published: 9/1967, Volume: 22, Issue: 3 | DOI: 10.1111/j.1540-6261.1967.tb02978.x | Cited by: 4
Keith V. Smith
THE RESPONSE OF STATE AND LOCAL GOVERNMENTS TO FEDERAL GRANT‐IN‐AID PAYMENTS*
Published: 6/1968, Volume: 23, Issue: 3 | DOI: 10.1111/j.1540-6261.1968.tb00839.x | Cited by: 0
David L. Smith
THE EQUAL CREDIT OPPORTUNITY ACT OF 1974: A COST/BENEFIT ANALYSIS
Published: 5/1977, Volume: 32, Issue: 2 | DOI: 10.1111/j.1540-6261.1977.tb03298.x | Cited by: 9
James F. Smith
THE CONCEPTS OF MONEY AND COMMERCIAL BANKS
Published: 12/1966, Volume: 21, Issue: 4 | DOI: 10.1111/j.1540-6261.1966.tb00271.x | Cited by: 4
Paul F. Smith
SENSITIVITY ANALYSIS OF RATES OF RETURN: COMMENT
Published: 12/1978, Volume: 33, Issue: 5 | DOI: 10.1111/j.1540-6261.1978.tb03433.x | Cited by: 1
W. James Smith
DEMAND FOR SHORT TERM GOVERNMENT DEBT*
Published: 3/1972, Volume: 27, Issue: 1 | DOI: 10.1111/j.1540-6261.1972.tb00638.x | Cited by: 0
Charles I. Smith
OPTIMUM RATE ON TIME DEPOSITS*
Published: 12/1962, Volume: 17, Issue: 4 | DOI: 10.1111/j.1540-6261.1962.tb04336.x | Cited by: 0
Paul F. Smith
PRICING POLICIES ON CONSUMER LOANS AT COMMERCIAL BANKS
Published: 5/1970, Volume: 25, Issue: 2 | DOI: 10.1111/j.1540-6261.1970.tb00677.x | Cited by: 7
Paul F. Smith
A Theoretic Framework for the Analysis of Credit Union Decision Making
Published: 9/1984, Volume: 39, Issue: 4 | DOI: 10.1111/j.1540-6261.1984.tb03899.x | Cited by: 91
DONALD J. SMITH
This paper presents a formal theoretic framework to analyze credit union interest rates on loans and savings deposits. The unique motivational and institutional features of a credit union, in particular its structure as a financial service cooperative, are used to develop the objective function. This is based on a comparison of the credit union's rates to alternatively available market rates and includes parameters to recognize the possibility of borrower‐saver conflict. The principal result is that the optimal rates and reactions to exogenous changes depend critically on the preference of the organization toward financial gain to the borrowing and saving members.
THE POSTWAR CANADIAN MORTGAGE MARKET AND THE ROLE OF GOVERNMENT*
Published: 9/1966, Volume: 21, Issue: 3 | DOI: 10.1111/j.1540-6261.1966.tb00266.x | Cited by: 0
Lawrence B. Smith
Trade Credit and Informational Asymmetry
Published: 9/1987, Volume: 42, Issue: 4 | DOI: 10.1111/j.1540-6261.1987.tb03916.x | Cited by: 640
JANET KIHOLM SMITH
Commonly used trade credit terms implicitly define a high interest rate that operates as an efficient screening device where information about buyer default risk is asymmetrically held. By offering trade credit, a seller can identify prospective defaults more quickly than if financial institutions were the sole providers of short‐term financing. The information is valuable in cases where the seller has made nonsalvageable investments in buyers since it enables the seller to take actions to protect such investments.
Structural Disequilibrium and the Banking Act of 1980
Published: 5/1982, Volume: 37, Issue: 2 | DOI: 10.1111/j.1540-6261.1982.tb03560.x | Cited by: 0
PAUL F. SMITH
THE OUTLOOK FOR FEDERAL RESERVE AND TREASURY POLICY*
Published: 5/1959, Volume: 14, Issue: 2 | DOI: 10.1111/j.1540-6261.1959.tb01588.x | Cited by: 0
Warren L. Smith
AN ANALYSIS OF THE EFFECTS OF THE REMOVAL OF THE YIELD CEILING ON FEDERALLY INSURED MORTGAGES IN CANADA
Published: 3/1977, Volume: 32, Issue: 1 | DOI: 10.1111/j.1540-6261.1977.tb03254.x | Cited by: 0
Lawrence B. Smith
UNCERTAINTY, INFORMATION AND INVESTMENT DECISIONS
Published: 3/1971, Volume: 26, Issue: 1 | DOI: 10.1111/j.1540-6261.1971.tb00589.x | Cited by: 6
R. G. E. Smith