Search results: 46.
The Geography of Block Acquisitions
Published: 11/11/2008, Volume: 63, Issue: 6 | DOI: 10.1111/j.1540-6261.2008.01414.x | Cited by: 346
JUN‐KOO KANG, JIN‐MO KIM
Using a large sample of partial block acquisitions, we examine the importance of geographic proximity in corporate governance and target returns. We find that block acquirers have a strong preference for geographically proximate targets and acquirers that purchase shares in such targets are more likely to engage in post‐acquisition target governance activities than are remote block acquirers. Moreover, the targets of these acquirers realize higher announcement returns and better post‐acquisition operating performance than do targets of other types of acquirers, particularly when they face greater information asymmetries.
Tunneling or Value Added? Evidence from Mergers by Korean Business Groups
Published: 12/2002, Volume: 57, Issue: 6 | DOI: 10.1111/1540-6261.00510 | Cited by: 936
Kee‐Hong Bae, Jun‐Koo Kang, Jin‐Mo Kim
We examine whether firms belonging to Korean business groups (chaebols) benefit from acquisitions they make or whether such acquisitions provide a way for controlling shareholders to increase their wealth by increasing the value of other group firms (tunneling). We find that when a chaebol‐affiliated firm makes an acquisition, its stock price on average falls. While minority shareholders of a chaebol‐affiliated firm making an acquisition lose, the controlling shareholder of that firm on average benefits because the acquisition enhances the value of other firms in the group. This evidence is consistent with the tunneling hypothesis.
The Effect of Temporal Risk Aversion on Optimal Consumption, the Equity Premium, and the Equilibrium Interest Rate
Published: 12/1989, Volume: 44, Issue: 5 | DOI: 10.1111/j.1540-6261.1989.tb02662.x | Cited by: 11
CHANG MO AHN
This paper demonstrates that temporal risk aversion makes smoothing consumption over time less attractive, while the usual risk aversion makes it more attractive. As temporal risk aversion increases, the equilibrium interest rate decreases and the equity premium increases. This paper also shows a striking and novel result that an increase in time impatience can lead to either a decrease or an increase in the interest rate, depending on the nature of the nonseparability.
Corporate M&As and Labor Market Concentration: Efficiency Gains or Power Grabs?
Published: 4/1/2026, Volume: 81, Issue: 3 | DOI: 10.1111/jofi.70035 | Cited by: 1
DAVID CICERO, MO SHEN, JAIDEEP SHENOY
Mergers of firms that share labor markets increase labor market concentration which can lead to labor efficiency gains and/or create labor market power for the merged firms. Using a novel measure based on establishment‐level employment data, we find that merger‐induced increases in labor market concentration explain value creation in a sample of completed U.S. public firm mergers from 1991 to 2016. Analysis of the stock market reactions of rival, supplier, and customer firms, as well as firm‐ and establishment‐level real effects in the merging firms, supports a labor efficiency explanation of these merger gains.
Jump‐Diffusion Processes and the Term Structure of Interest Rates
Published: 3/1988, Volume: 43, Issue: 1 | DOI: 10.1111/j.1540-6261.1988.tb02595.x | Cited by: 107
CHANG MO AHN, HOWARD E. THOMPSON
The authors investigate the term structure of interest rates when the underlying state variables and production technologies follow the jump‐diffusion processes. Even in some cases where the traditional expectations theory about the term structure is consistent with general equilibrium under diffusion processes, the traditional theory is not consistent under jump‐diffusion processes. It is shown that bond prices are strictly higher under jump risks than otherwise and that consumers with logarithmic utility functions will develop hedge portfolios in the presence of jump diffusion.
Capital Gains Tax Overhang and Price Pressure
Published: 5/16/2006, Volume: 61, Issue: 3 | DOI: 10.1111/j.1540-6261.2006.00876.x | Cited by: 107
LI JIN
I study whether the capital gains tax is an impediment to selling by some investors and if so, to what degree associated delayed selling affects stock prices. I find that selling decisions by institutions serving tax‐sensitive clients are sensitive to cumulative capital gains, a pattern not observed for institutions with predominantly tax‐exempt clients. Moreover, tax‐related underselling impacts stock prices during large earnings surprises for stocks held primarily by tax‐sensitive investors. The corresponding price reactions are less negative (more positive) with higher cumulative capital gains. This price pressure pattern is more severe when arbitrage is more costly.
The Errors in the Variables Problem in the Cross‐Section of Expected Stock Returns
Published: 12/1995, Volume: 50, Issue: 5 | DOI: 10.1111/j.1540-6261.1995.tb05190.x | Cited by: 87
DONGCHEOL KIM
Recent research has documented the failure of market beta to capture the cross‐section of expected returns within the context of a two‐pass estimation methodology. However, the two‐pass methodology suffers from the errors‐in‐variables (EIV) problem that could attenuate the apparent significance of market beta. This article provides a new correction for the EIV problem that is robust to conditional heteroscedasticity. After the correction, I find more support for the role of market beta and less support for the role of firm size in explaining the cross‐section of expected returns. While the EIV correction leads to a diminished role of firm size, the size variable remains a significant force in explaining the cross‐section of expected returns.
Disagreements among Shareholders over a Firm's Disclosure Policy
Published: 6/1993, Volume: 48, Issue: 2 | DOI: 10.1111/j.1540-6261.1993.tb04737.x | Cited by: 33
OLIVER KIM
This paper examines the issue of voluntary disclosure of information by firms with heterogeneous shareholders. It shows that in a rational expectations setting, better informed shareholders prefer less disclosure than less well‐informed shareholders. This is due to differences in the adverse risk‐sharing effect and the beneficial cost‐saving effect of disclosure among shareholders with different risk tolerances and information acquisition cost functions. The presence of individual liquidity shocks is shown to reduce shareholder disagreements regarding a firm's disclosure policy.
The Golden Mean: The Risk‐Mitigating Effect of Combining Tournament Rewards with High‐Powered Incentives
Published: 7/23/2022, Volume: 77, Issue: 5 | DOI: 10.1111/jofi.13169 | Cited by: 3
DUNHONG JIN, THOMAS NOE
The rewards received by financial managers depend on both relative performance (e.g., fund inflows based on fund rankings, promotions based on peer comparisons) and absolute performance (e.g., bonus payments for meeting accounting targets, hedge‐fund incentive fees). Both relative and absolute performance rewards engender risk‐taking. In this paper, we show that these two sources of risk‐taking, relative and absolute performance rewards, mitigate the risk‐taking incentives produced by the other. This mutual incentive‐reduction effect generates a number of novel predictions about the relationship of managerial risk‐taking with the structure of relative and absolute performance rewards.
Firm Value and Hedging: Evidence from U.S. Oil and Gas Producers
Published: 3/9/2006, Volume: 61, Issue: 2 | DOI: 10.1111/j.1540-6261.2006.00858.x | Cited by: 509
YANBO JIN, PHILIPPE JORION
This paper studies the hedging activities of 119 U.S. oil and gas producers from 1998 to 2001 and evaluates their effect on firm value. Theories of hedging based on market imperfections imply that hedging should increase the firm's market value (MV). To test this hypothesis, we collect detailed information on the extent of hedging and on the valuation of oil and gas reserves. We verify that hedging reduces the firm's stock price sensitivity to oil and gas prices. Contrary to previous studies, however, we find that hedging does not seem to affect MVs for this industry.
Artificial Intelligence, Education, and Entrepreneurship
Published: 12/23/2023, Volume: 79, Issue: 1 | DOI: 10.1111/jofi.13302 | Cited by: 111
MICHAEL GOFMAN, ZHAO JIN
We document an unprecedented brain drain of Artificial Intelligence (AI) professors from universities from 2004 to 2018. We find that students from the affected universities establish fewer AI startups and raise less funding. The brain‐drain effect is significant for tenured professors, professors from top universities, and deep‐learning professors. Additional evidence suggests that unobserved city‐ and university‐level shocks are unlikely to drive our results. We consider several economic channels for the findings. The most consistent explanation is that professors' departures reduce startup founders' AI knowledge, which we find is an important factor for successful startup formation and fundraising.
Option Momentum
Published: 10/3/2023, Volume: 78, Issue: 6 | DOI: 10.1111/jofi.13279 | Cited by: 53
STEVEN L. HESTON, CHRISTOPHER S. JONES, MEHDI KHORRAM, SHUAIQI LI, HAITAO MO
This paper investigates the performance of option investments across different stocks by computing monthly returns on at‐the‐money straddles on individual equities. We find that options with high historical returns continue to significantly outperform options with low historical returns over horizons ranging from 6 to 36 months. This phenomenon is robust to including out‐of‐the‐money options or delta‐hedging the returns. Unlike stock momentum, option return continuation is not followed by long‐run reversal. Significant returns remain after factor risk adjustment and after controlling for implied volatility and other characteristics. Across stocks, trading costs are unrelated to the magnitude of momentum profits.
Internal Capital Markets in Business Groups: Evidence from the Asian Financial Crisis
Published: 11/12/2015, Volume: 70, Issue: 6 | DOI: 10.1111/jofi.12309 | Cited by: 330
HEITOR ALMEIDA, CHANG‐SOO KIM, HWANKI BRIAN KIM
This paper examines capital reallocation among firms in Korean business groups () in the aftermath of the 1997 Asian financial crisis, and the consequences of this capital reallocation for the investment and performance of firms. We show that transferred cash from low‐growth to high‐growth member firms, using cross‐firm equity investments. This capital reallocation allowed chaebol firms with greater investment opportunities to invest more than control firms after the crisis. These firms also showed higher profitability and lower declines in valuation than control firms following the crisis. Our results suggest that chaebol internal capital markets helped them mitigate the negative effects of the Asian crisis on investment and performance.
Inflationary Effects in the Capital Investment Process: an Empirical Examination
Published: 9/1979, Volume: 34, Issue: 4 | DOI: 10.1111/j.1540-6261.1979.tb03446.x | Cited by: 6
MOON K. KIM
Miller's Equilibrium, Shareholder Leverage Clienteles, and Optimal Capital Structure
Published: 5/1982, Volume: 37, Issue: 2 | DOI: 10.1111/j.1540-6261.1982.tb03552.x | Cited by: 38
E. HAN KIM
DISCUSSION
Published: 5/1982, Volume: 37, Issue: 2 | DOI: 10.1111/j.1540-6261.1982.tb00890.x | Cited by: 0
E. HAN KIM
A MEAN‐VARIANCE THEORY OF OPTIMAL CAPITAL STRUCTURE AND CORPORATE DEBT CAPACITY
Published: 3/1978, Volume: 33, Issue: 1 | DOI: 10.1111/j.1540-6261.1978.tb03388.x | Cited by: 191
E. Han Kim
DISCUSSION
Published: 6/1978, Volume: 33, Issue: 3 | DOI: 10.1111/j.1540-6261.1978.tb00767.x | Cited by: 0
E. Han Kim
KOREAN MONETARY AND CREDIT POLICY: A STUDY OF FINANCIAL POLICY IN AN UNDERDEVELOPED COUNTRY*
Published: 3/1968, Volume: 23, Issue: 1 | DOI: 10.1111/j.1540-6261.1968.tb03011.x | Cited by: 0
Hyung K. Kim
The Theoretical Relationship between Systematic Risk and Financial (Accounting) Variables: Comment
Published: 6/1981, Volume: 36, Issue: 3 | DOI: 10.1111/j.1540-6261.1981.tb00660.x | Cited by: 2
KEE S. KIM
Transparency and International Portfolio Holdings
Published: 11/10/2005, Volume: 60, Issue: 6 | DOI: 10.1111/j.1540-6261.2005.00823.x | Cited by: 389
R. GASTON GELOS, SHANG‐JIN WEI
Does country transparency affect international portfolio investment? We examine this question by constructing new measures of transparency and by making use of a unique microdata set on portfolio holdings of emerging market funds around the world. We distinguish between government and corporate transparency. There is clear evidence that funds systematically invest less in less transparent countries. Moreover, funds have a greater propensity to exit nontransparent countries during crises.
Debt and Input Misallocation
Published: 7/1990, Volume: 45, Issue: 3 | DOI: 10.1111/j.1540-6261.1990.tb05106.x | Cited by: 25
MOSHE KIM, VOJISLAV MAKSIMOVIC
We investigate a class of agency costs of debt that arise because debt financing affects the firm's incentives to use inputs efficiently. A methodology for estimating this class of costs is presented and applied to a major industry, air transport. Our results are consistent with agency models that predict a decrease in efficiency as the debt increases. A part of the loss of efficiency that we identify is attributable to the greater use by levered firms of inputs that can be monitored and are collateralizable.
Prospect Theory and Stock Market Anomalies
Published: 6/18/2021, Volume: 76, Issue: 5 | DOI: 10.1111/jofi.13061 | Cited by: 184
NICHOLAS BARBERIS, LAWRENCE J. JIN, BAOLIAN WANG
We present a new model of asset prices in which investors evaluate risk according to prospect theory and examine its ability to explain 23 prominent stock market anomalies. The model incorporates all of the elements of prospect theory, accounts for investors' prior gains and losses, and makes quantitative predictions about an asset's average return based on empirical estimates of the asset's return volatility, return skewness, and past capital gain. We find that the model can help explain a majority of the 23 anomalies.
Analysts' Selective Coverage and Subsequent Performance of Newly Public Firms
Published: 5/16/2006, Volume: 61, Issue: 3 | DOI: 10.1111/j.1540-6261.2006.00869.x | Cited by: 141
SOMNATH DAS, RE‐JIN GUO, HUAI ZHANG
This study examines the ability of analysts to forecast future firm performance, based on the selective coverage of newly public firms. We hypothesize that the decision to provide coverage contains information about an analyst's underlying expectation of a firm's future prospects. We extract this expectation by obtaining residual analyst coverage from a model of initial analyst following. We document that in the three subsequent years, initial public offerings with high residual coverage have significantly better returns and operating performance than those with low residual coverage. This evidence indicates analysts have superior predictive abilities and selectively provide coverage for firms about which their true expectations are favorable.
Broad‐Based Employee Stock Ownership: Motives and Outcomes
Published: 5/8/2014, Volume: 69, Issue: 3 | DOI: 10.1111/jofi.12150 | Cited by: 278
E. HAN KIM, PAIGE OUIMET
Firms initiating broad‐based employee share ownership plans often claim employee stock ownership plans (ESOPs) increase productivity by improving employee incentives. Do they? Small ESOPs comprising less than 5% of shares, granted by firms with moderate employee size, increase the economic pie, benefiting both employees and shareholders. The effects are weaker when there are too many employees to mitigate free‐riding. Although some large ESOPs increase productivity and employee compensation, the average impacts are small because they are often implemented for nonincentive purposes such as conserving cash by substituting wages with employee shares or forming a worker‐management alliance to thwart takeover bids.
Risk in Banking and Capital Regulation
Published: 12/1988, Volume: 43, Issue: 5 | DOI: 10.1111/j.1540-6261.1988.tb03966.x | Cited by: 661
DAESIK KIM, ANTHONY M. SANTOMERO
This paper investigates the role of bank capital regulation in risk control. It is known that banks choose portfolios of higher risk because of inefficiently priced deposit insurance. Bank capital regulation is a way to redress this bias toward risk. Utilizing the mean‐variance model, the following results are shown: (a) the use of simple capital ratios in regulation is an ineffective means to bound the insolvency risk of banks; (b) as a solution to problems of the capital ratio regulation, the “theoretically correct” risk weights under the risk‐based capital plan are explicitly derived; and (c) the “theoretically correct” risk weights are restrictions on asset composition, which alters the optimal portfolio choice of banking firms.
Financial Contracting and Leverage Induced Over‐ and Under‐Investment Incentives
Published: 7/1990, Volume: 45, Issue: 3 | DOI: 10.1111/j.1540-6261.1990.tb05105.x | Cited by: 90
ELAZAR BERKOVITCH, E. HAN KIM
This paper investigates the effects of seniority rules and restrictive dividend convenants on the over‐ and under‐investment incentives associated with risky debt. We show that increasing seniority of new debt decreases the incidence of under‐investment but increases over‐investment, and vice versa. Under symmetric information, the optimal seniority rule is to give new debtholders first claim on a new project without recourse to existing assets (i.e., project financing). Under asymmetric information, the optimal debt contract requires equating the expected return to new debtholders in the default state to the new project's cash flow in the same rate. If this is not possible, the optimal seniority rule calls for strict subordination of new debt if the expected cash flow in default is small and full seniority if it is large. With regard to dividend convenants, we show that their effect depends on whether or not dividend payments are conditioned on future investments. When they are unconditioned, allowing more dividends increases the under‐investment incentive. In contrast, conditional dividends decrease the underinvestment incentive and increase the over‐investment incentive.
Labor and Corporate Governance: International Evidence from Restructuring Decisions
Published: 1/23/2009, Volume: 64, Issue: 1 | DOI: 10.1111/j.1540-6261.2008.01436.x | Cited by: 307
JULIAN ATANASSOV, E. HAN KIM
Our results highlight the importance of interaction among management, labor, and investors in shaping corporate governance. We find that strong union laws protect not only workers but also underperforming managers. Weak investor protection combined with strong union laws are conducive to worker–management alliances, wherein poorly performing firms sell assets to prevent large‐scale layoffs, garnering worker support to retain management. Asset sales in weak investor protection countries lead to further deteriorating performance, whereas in strong investor protection countries they improve performance and lead to more layoffs. Strong union laws are less effective in preventing layoffs when financial leverage is high.
Credit Granting: A Comparative Analysis of Classification Procedures
Published: 7/1987, Volume: 42, Issue: 3 | DOI: 10.1111/j.1540-6261.1987.tb04576.x | Cited by: 85
VENKAT SRINIVASAN, YONG H. KIM
Financial classification issues, and particularly the financial distress problem, continue to be subject to vigorous investigation. The corporate credit granting process has not received as much attention in the literature. This paper examines the relative effectiveness of parametric, nonparametric and judgemental classification procedures on a sample of corporate credit data. The judgemental model is based on the Analytic Hierarchy Process. Evidence indicates that (nonparametric) recursive partitioning methods provide greater information than simultaneous partitioning procedures. The judgemental model is found to perform as well as statistical models. A complementary relationship is proposed between the statistical and the judgemental models as an effective paradigm for granting credit.
The Impact of Merger Bids on the Participating Firms' Security Holders
Published: 12/1982, Volume: 37, Issue: 5 | DOI: 10.1111/j.1540-6261.1982.tb03613.x | Cited by: 118
PAUL ASQUITH, E. HAN KIM
This paper investigates whether merger bids have an impact on the wealth of the participating firms' bondholders and stockholders. Monthly and daily bond and stock returns are calculated relative to the announcement date of a merger bid for a sample of conglomerate mergers. The results show that while the stockholders of target firms gain from a merger bid, no other securityholders either gain or lose. To provide direct evidence on the existence of “diversification effects” and “incentive effects,” we test whether the bondholders' returns are dependent upon the correlation between the returns of the merging firms and whether the size of the bondholders' and stockholders' returns in individual mergers are correlated. The results are consistent with a capital market that efficiently resolves conflicts of interest between stockholders and bondholders.
To Steal or Not to Steal: Firm Attributes, Legal Environment, and Valuation
Published: 5/3/2005, Volume: 60, Issue: 3 | DOI: 10.1111/j.1540-6261.2005.00767.x | Cited by: 1082
ART DURNEV, E. HAN KIM
Data on corporate governance and disclosure practices reveal wide within‐country variation that decreases with the strength of investors' legal protection. A simple model identifies three firm attributes related to that variation: investment opportunities, external financing, and ownership structure. Using firm‐level governance and transparency data from 27 countries, we find that all three firm attributes are related to the quality of governance and disclosure practices, and firms with higher governance and transparency rankings are valued higher in stock markets. All relations are stronger in less investor‐friendly countries, demonstrating that firms adapt to poor legal environments to establish efficient governance practices.
EVALUATING INVESTMENTS IN ACCOUNTS RECEIVABLE: A WEALTH MAXIMIZING FRAMEWORK
Published: 5/1978, Volume: 33, Issue: 2 | DOI: 10.1111/j.1540-6261.1978.tb04857.x | Cited by: 44
Yong H. Kim, Joseph C. Atkins
Theories of Corporate Debt Policy: A Synthesis
Published: 5/1979, Volume: 34, Issue: 2 | DOI: 10.1111/j.1540-6261.1979.tb02098.x | Cited by: 56
ANDREW H. CHEN, E. HAN KIM
CORPORATE MERGERS AND THE CO‐INSURANCE OF CORPORATE DEBT
Published: 5/1977, Volume: 32, Issue: 2 | DOI: 10.1111/j.1540-6261.1977.tb03275.x | Cited by: 111
E. Han Kim, John J. McConnell
Buyer–Supplier Relationships and the Stakeholder Theory of Capital Structure
Published: 9/10/2008, Volume: 63, Issue: 5 | DOI: 10.1111/j.1540-6261.2008.01403.x | Cited by: 563
SHANTANU BANERJEE, SUDIPTO DASGUPTA, YUNGSAN KIM
Firms in bilateral relationships are likely to produce or procure unique products—especially when they are in durable goods industries. Consistent with the arguments of Titman and Titman and Wessels, such firms are likely to maintain lower leverage. We compile a database of firms' principal customers (those that account for at least 10% of sales or are otherwise considered important for business) from the Business Information File of Compustat and find results consistent with the predictions of this theory.
Price Limit Performance: Evidence from the Tokyo Stock Exchange
Published: 6/1997, Volume: 52, Issue: 2 | DOI: 10.1111/j.1540-6261.1997.tb04827.x | Cited by: 312
KENNETH A. KIM, S. GHON RHEE
Price limit advocates claim that price limits decrease stock price volatility, counter overreaction, and do not interfere with trading activity. Conversely, price limit critics claim that price limits cause higher volatility levels on subsequent days (volatility spillover hypothesis), prevent prices from efficiently reaching their equilibrium level (delayed price discovery hypothesis), and interfere with trading due to limitations imposed by price limits (trading interference hypothesis). Empirical research does not provide conclusive support for either positions. We examine the Tokyo Stock Exchange price limit system to test these hypotheses. Our evidence supports all three hypotheses suggesting that price limits may be ineffective.
Predictable Stock Returns: The Role of Small Sample Bias
Published: 6/1993, Volume: 48, Issue: 2 | DOI: 10.1111/j.1540-6261.1993.tb04731.x | Cited by: 452
CHARLES R. NELSON, MYUNG J. KIM
Predictive regressions are subject to two small sample biases: the coefficient estimate is biased if the predictor is endogenous, and asymptotic standard errors in the case of overlapping periods are biased downward. Both biases work in the direction of making t‐ratios too large so that standard inference may indicate predictability even if none is present. Using annual returns since 1872 and monthly returns since 1927 we estimate empirical distributions by randomizing residuals in the VAR representation of the variables. The estimated biases are large enough to affect inference in practice, and should be accounted for when studying predictability.
A Capital Budgeting Analysis of Life Insurance Costs in the United States: 1950–1979
Published: 3/1983, Volume: 38, Issue: 1 | DOI: 10.1111/j.1540-6261.1983.tb03632.x | Cited by: 8
DAVID F. BABBEL, KIM B. STAKING
A capital budgeting procedure is applied in developing a real price index for life insurance over three decades. Individual life policies of three types are analyzed. The analysis reveals that although the cost of whole life insurance, measured in nominal values, has decreased over the past thirty years, when properly measured in present value or constant dollar terms, the cost has risen substantially. Term life insurance has been characterized by decreasing costs in both nominal and real terms. The amounts of the cost variations attributable to improving survival rates, changing policy terms, varying discount rates and differing tax status are identified.
The Working Capital Credit Multiplier
Published: 8/27/2024, Volume: 79, Issue: 6 | DOI: 10.1111/jofi.13385 | Cited by: 19
HEITOR ALMEIDA, DANIEL CARVALHO, TAEHYUN KIM
We provide novel evidence that funding frictions can limit firms’ short‐term investments in receivables and inventories, reducing their production capacity. We propose a credit multiplier driven by these considerations and empirically isolate its importance by comparing how a similar firm responds to shocks differently when these shocks are initiated in their most profitable quarter (“main quarter”). We implement this test using recurring and unpredictable shocks (e.g., oil shocks) and provide extensive evidence supporting our identification strategy. Our results suggest that funding constraints and credit multiplier effects are significant for smaller firms that heavily rely on financing from suppliers.
CEO Connectedness and Corporate Fraud
Published: 5/11/2015, Volume: 70, Issue: 3 | DOI: 10.1111/jofi.12243 | Cited by: 627
VIKRAMADITYA KHANNA, E. HAN KIM, YAO LU
We find that connections CEOs develop with top executives and directors through their appointment decisions increase the risk of corporate fraud. Appointment‐based CEO connectedness in executive suites and boardrooms increases the likelihood of committing fraud and decreases the likelihood of detection. Additionally, it decreases the expected costs of fraud by helping conceal fraudulent activity, making CEO dismissal less likely upon discovery, and lowering the coordination costs of carrying out illegal activity. Connections based on network ties through past employment, education, or social organization memberships have insignificant effects on fraud. Appointment‐based CEO connectedness warrants attention from regulators, investors, and corporate governance specialists.
On the Existence of an Optimal Capital Structure: Theory and Evidence
Published: 7/1984, Volume: 39, Issue: 3 | DOI: 10.1111/j.1540-6261.1984.tb03680.x | Cited by: 1418
MICHAEL BRADLEY, GREGG A. JARRELL, E. HAN KIM
A Test of the Errors‐in‐Expectations Explanation of the Value/Glamour Stock Returns Performance: Evidence from Analysts' Forecasts
Published: 10/2002, Volume: 57, Issue: 5 | DOI: 10.1111/1540-6261.00491 | Cited by: 105
John A. Doukas, Chansog (Francis) Kim, Christos Pantzalis
Several empirical studies show that investment strategies that favor the purchase of stocks with low prices relative to conventional measures of value yield higher returns. Some of these studies imply that investors are too optimistic about (glamour) stocks that have had good performance in the recent past and too pessimistic about (value) stocks that have performed poorly. We examine whether investors systematically overestimate (underestimate) the future earnings performance of glamour (value) stocks over the 1976 to 1997 period. Our results fail to support the extrapolation hypothesis that posits that the superior performance of value stocks is because investors make systematic errors in predicting future growth in earnings of out‐of‐favor stocks.
Time‐Series Variation in Dividend Pricing
Published: 12/1994, Volume: 49, Issue: 5 | DOI: 10.1111/j.1540-6261.1994.tb04775.x | Cited by: 38
KENNETH M. EADES, PATRICK J. HESS, E. HAN KIM
Ex‐dividend day returns vary over time. The ex‐day returns of high‐yield stocks are persistently positive for some time periods and negative for others; in contrast, ex‐day returns of low‐yield stocks are always positive and less variable. We are unable to explain the variation with changes in the tax code, but we do find a strong effect for the introduction of negotiated commissions. We find evidence that corporate dividend capturing is affecting ex‐day returns and confirm the findings of Gordon and Bradford (1980) that the price of dividends is countercyclical.
CAPITAL STRUCTURE REARRANGEMENTS AND ME‐FIRST RULES IN AN EFFICIENT CAPITAL MARKET
Published: 6/1977, Volume: 32, Issue: 3 | DOI: 10.1111/j.1540-6261.1977.tb01989.x | Cited by: 37
E. Han Kim, John J. McConnell, Paul R. Greenwood
Employee Costs of Corporate Bankruptcy
Published: 6/22/2023, Volume: 78, Issue: 4 | DOI: 10.1111/jofi.13251 | Cited by: 84
JOHN R. GRAHAM, HYUNSEOB KIM, SI LI, JIAPING QIU
An employee's annual earnings fall by 13% in the first full calendar year after her firm's bankruptcy, and the present value of lost earnings from bankruptcy to six years following bankruptcy is 87% of pre‐bankruptcy annual earnings. More worker earnings are lost in thin labor markets and among small firms. Ex ante compensating wage differentials for this “bankruptcy risk” are up to 2% of firm value for a firm whose credit rating falls from AA to BBB, comparable in magnitude to debt tax benefits. Thus, wage premia for expected costs of bankruptcy are sufficiently large to be an important consideration in capital structure decisions.
Analyzing the Analysts: When Do Recommendations Add Value?
Published: 6/2004, Volume: 59, Issue: 3 | DOI: 10.1111/j.1540-6261.2004.00657.x | Cited by: 737
Narasimhan Jegadeesh, Joonghyuk Kim, Susan D. Krische, Charles M. C. Lee
We show that analysts from sell‐side firms generally recommend “glamour” (i.e., positive momentum, high growth, high volume, and relatively expensive) stocks. Naïve adherence to these recommendations can be costly, because the level of the consensus recommendation adds value only among stocks with favorable quantitative characteristics (i.e., value stocks and positive momentum stocks). In fact, among stocks with unfavorable quantitative characteristics, higher consensus recommendations are associated with worse subsequent returns. In contrast, we find that the quarterly change in consensus recommendations is a robust return predictor that appears to contain information orthogonal to a large range of other predictive variables.