The Journal of Finance

Institutional Investors and Corporate Governance: The Incentive to Be Engaged

Published: 10/21/2021,  Volume: 77,  Issue: 1  |  DOI: 10.1111/jofi.13085  |  Cited by: 243

JONATHAN LEWELLEN, KATHARINA LEWELLEN

This paper studies institutional investors’ incentives to be engaged shareholders. In 2017, the average institution gains an extra $129,000 in annual management fees if a stockholding increases 1% in value, considering both the direct effect on assets under management and the indirect effect on subsequent fund flows. The estimates range from $19,600 for investments in small firms to $307,600 for investments in large firms. Institutional shareholders in one firm often gain when the firm's competitors do well, by virtue of institutions’ holdings in those firms, but the impact of common ownership is modest in the most concentrated industries.

Women in Charge: Evidence from Hospitals

Published: 4/26/2025,  Volume: 80,  Issue: 4  |  DOI: 10.1111/jofi.13455  |  Cited by: 7

KATHARINA LEWELLEN

The paper examines the decision‐making, compensation, and turnover of female CEOs in U.S. hospitals. Contrary to the literature on lower‐ranked executives and directors in public firms, there is no evidence that gender differences in preferences for risk or altruism affect decision‐making of hospital CEOs: corporate policies do not shift when women take (or leave) office, and male and female CEOs respond similarly to a major financial shock. However, female CEOs earn lower salaries, face flatter pay‐for‐performance incentives, and exhibit greater turnover after poor performance. Hospital boards behave as though they perceive female CEOs as less productive.

Risk, Reputation, and IPO Price Support

Published: 3/9/2006,  Volume: 61,  Issue: 2  |  DOI: 10.1111/j.1540-6261.2006.00850.x  |  Cited by: 82

KATHARINA LEWELLEN

Immediately following an initial public offering, underwriters often repurchase shares of poorly performing offerings in an apparent attempt to stabilize the price. Using proprietary Nasdaq data, I study the price effects and determinants of price support. Some of the key findings are (1) Stabilization is substantial, inducing price rigidity at and below the offer price; (2) I find no evidence that stocks with larger information asymmetries are stabilized more strongly; (3) Larger underwriters stabilize more, perhaps to protect their reputations with investors; and (4) Investment banks with retail brokerage operations stabilize much more than other banks, inconsistent with the view that stabilization benefits primarily institutional investors.

CEO Preferences and Acquisitions

Published: 11/12/2015,  Volume: 70,  Issue: 6  |  DOI: 10.1111/jofi.12283  |  Cited by: 270

DIRK JENTER, KATHARINA LEWELLEN

This paper explores the impact of target CEOs’ retirement preferences on takeovers. Using retirement age as a proxy for CEOs’ private merger costs, we find strong evidence that target CEOs’ preferences affect merger activity. The likelihood of receiving a successful takeover bid is sharply higher when target CEOs are close to age 65. Takeover premiums and target announcement returns are similar for retirement‐age and younger CEOs, implying that retirement‐age CEOs increase firm sales without sacrificing premiums. Better corporate governance is associated with more acquisitions of firms led by young CEOs, and with a smaller increase in deals at retirement age.

Investment Decisions of Nonprofit Firms: Evidence from Hospitals

Published: 7/23/2015,  Volume: 70,  Issue: 4  |  DOI: 10.1111/jofi.12234  |  Cited by: 77

MANUEL ADELINO, KATHARINA LEWELLEN, ANANT SUNDARAM

This paper examines investment choices of nonprofit hospitals. It tests how shocks to cash flows caused by the performance of the hospitals’ financial assets affect hospital expenditures. Capital expenditures increase, on average, by 10 to 28 cents for every dollar received from financial assets. The sensitivity is similar to that found earlier for shareholder‐owned corporations. Executive compensation, other salaries, and perks do not respond significantly to cash flow shocks. Hospitals with an apparent tendency to overspend on medical procedures do not exhibit higher investment‐cash flow sensitivities. The sensitivities are higher for hospitals that appear financially constrained.

Security Issue Timing: What Do Managers Know, and When Do They Know It?

Published: 3/21/2011,  Volume: 66,  Issue: 2  |  DOI: 10.1111/j.1540-6261.2010.01638.x  |  Cited by: 38

DIRK JENTER, KATHARINA LEWELLEN, JEROLD B. WARNER

We study put option sales on company stock by large firms. An often‐cited motivation for these transactions is market timing, and managers' decision to issue puts should be sensitive to whether the stock is undervalued. We provide new evidence that large firms successfully time security sales. In the 100 days following put option issues, there is roughly a 5% abnormal stock return, with much of the abnormal return following the first earnings release date after the sale. Direct evidence on put option exercises reinforces these findings: exercise frequencies and payoffs to put holders are abnormally low.

Reply to Pettway and Celec

Published: 9/1979,  Volume: 34,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1979.tb03461.x  |  Cited by: 11

WILBUR G. LEWELLEN

SOME OBSERVATIONS ON RISK‐ADJUSTED DISCOUNT RATES

Published: 9/1977,  Volume: 32,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1977.tb03331.x  |  Cited by: 23

Wilbur G. Lewellen

A PURE FINANCIAL RATIONALE FOR THE CONGLOMERATE MERGER

Published: 5/1971,  Volume: 26,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1971.tb00912.x  |  Cited by: 817

Wilbur G. Lewellen

Learning, Asset‐Pricing Tests, and Market Efficiency

Published: 6/2002,  Volume: 57,  Issue: 3  |  DOI: 10.1111/1540-6261.00456  |  Cited by: 288

Jonathan Lewellen, Jay Shanken

This paper studies the asset‐pricing implications of parameter uncertainty. We show that, when investors must learn about expected cash flows, empirical tests can find patterns in the data that differ from those perceived by rational investors. Returns might appear predictable to an econometrician, or appear to deviate from the Capital Asset Pricing Model, but investors can neither perceive nor exploit this predictability. Returns may also appear excessively volatile even though prices react efficiently to cash‐flow news. We conclude that parameter uncertainty can be important for characterizing and testing market efficiency.

REPLY

Published: 9/1973,  Volume: 28,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1973.tb01428.x  |  Cited by: 1

Robert W. Johnson, Wilbur G. Lewellen

ANALYSIS OF THE LEASE‐OR‐BUY DECISION

Published: 9/1972,  Volume: 27,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1972.tb01313.x  |  Cited by: 39

Robert W. Johnson, Wilbur G. Lewellen

MANAGEMENT AND OWNERSHIP IN THE LARGE FIRM

Published: 5/1969,  Volume: 24,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1969.tb01684.x  |  Cited by: 4

Myron J. Gordon, Wilbur G. Lewellen

On the Matter of Parity among Financial Obligations

Published: 3/1981,  Volume: 36,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1981.tb03537.x  |  Cited by: 10

WILBUR G. LEWELLEN, DOUGLAS R. EMERY

The lessons of the leasing literature concerning the impact of leases on the debt capacity of a firm are reviewed and summarized to establish an approach to the analysis of the corporate bond refunding decision. A general proposition regarding financial obligation parity is established, and from that a clear bond refunding decision rule is developed. Previous debates in the literature about appropriate discount rates and about the appropriate cash flows to be discounted for refunding decisions are clarified.

Debt Management under Corporate and Personal Taxation

Published: 12/1987,  Volume: 42,  Issue: 5  |  DOI: 10.1111/j.1540-6261.1987.tb04366.x  |  Cited by: 14

DAVID C. MAUER, WILBUR G. LEWELLEN

The presence of long‐term debt in a corporation's capital structure is shown to give rise to a valuable tax‐timing option that can be exercised by the firm on behalf of its shareholders. This option, which is not available if the firm is fully equity financed, implies that leverage will have a positive tax effect on total firm value even if there is no such effect associated with the tax deductibility of the coupon interest payments on debt. The more volatile interest rates and bond prices are, the more valuable the tax‐timing option and the larger the favorable impact of debt on shareholder wealth.

Evidence on Tax‐Motivated Securities Trading Behavior

Published: 3/1991,  Volume: 46,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1991.tb03755.x  |  Cited by: 33

S. G. BADRINATH, WILBUR G. LEWELLEN

Tax‐loss selling by investors in common stocks near the end of calendar years has been proposed as an explanation for the turn‐of‐the‐year effect in stock returns. Past analyses of this hypothesis have relied on inferential data. We provide here some direct data from a compilation of over 80,000 actual common stock investment round trips by a sample of 3000 individual investors. We find strong evidence of a concentration of loss‐taking trades late in the year and milder evidence of a concentration just prior to the dates when investments become eligible for long‐term tax treatment.

The Interaction of Financing and Investment Decisions When the Firm has Unused Tax Credits††

Published: 5/1983,  Volume: 38,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1983.tb02267.x  |  Cited by: 2

WILBUR G. LEWELLEN, IAN COOPER, JULIAN R. FRANKS

THE COMMON‐STOCK‐PORTFOLIO PERFORMANCE RECORD OF INDIVIDUAL INVESTORS: 1964–70

Published: 5/1978,  Volume: 33,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1978.tb04859.x  |  Cited by: 39

Gary G. Schlarbaum, Wilbur G. Lewellen, Ronald C. Lease

THE INDIVIDUAL INVESTOR: ATTRIBUTES AND ATTITUDES

Published: 5/1974,  Volume: 29,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1974.tb03055.x  |  Cited by: 111

Ronald C. Lease, Wilbur G. Lewellen, Gary G. Schlarbaum

ASSET LEASING IN COMPETITIVE CAPITAL MARKETS

Published: 6/1976,  Volume: 31,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1976.tb01923.x  |  Cited by: 86

Wilbur G. Lewellen, Michael S. Long, John J. McConnell

INDIVIDUAL INVESTOR RISK AVERSION AND INVESTMENT PORTFOLIO COMPOSITION

Published: 5/1975,  Volume: 30,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1975.tb01834.x  |  Cited by: 274

Richard A. Cohn, Wilbur G. Lewellen, Ronald C. Lease, Gary G. Schlarbaum

SOME DIRECT EVIDENCE ON THE DIVIDEND CLIENTELE PHENOMENON

Published: 12/1978,  Volume: 33,  Issue: 5  |  DOI: 10.1111/j.1540-6261.1978.tb03427.x  |  Cited by: 70

Wilbur G. Lewellen, Kenneth L. Stanley, Ronald C. Lease, Gary G. Schlarbaum

The Anatomy of the Transmission of Macroprudential Policies

Published: 8/23/2022,  Volume: 77,  Issue: 5  |  DOI: 10.1111/jofi.13170  |  Cited by: 96

VIRAL V. ACHARYA, KATHARINA BERGANT, MATTEO CROSIGNANI, TIM EISERT, FERGAL MCCANN

We analyze how regulatory constraints on household leverage—in the form of loan‐to‐income and loan‐to‐value limits—affect residential mortgage credit and house prices as well as other asset classes not directly targeted by the limits. Loan‐level data suggest that mortgage credit is reallocated from low‐ to high‐income borrowers and from urban to rural counties. This reallocation weakens the feedback between credit and house prices and slows house price growth in “hot” housing markets. Banks whose lending to households is more affected by the regulatory constraint drive this reallocation, but also substitute their risk‐taking into holdings of securities and corporate credit.