The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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Dutch Auction Repurchases: An Analysis of Shareholder Heterogeneity
Published: 03/01/1992 | DOI: 10.1111/j.1540-6261.1992.tb03979.x
LAURIE SIMON BAGWELL
This paper documents that firms face upward‐sloping supply curves when they repurchase shares in a Dutch auction, and it analyzes the market reaction to these offers. The announcement price increase is highly correlated with the ultimate repurchase premium. Prices decline at expiration only for pro‐rated offers. The cumulative return is positive and highly correlated with the repurchase premium, excepting pro‐rated offers. Much of this price increase is consistent with movement along an upward‐sloping supply curve. Trading volume around the Dutch auction parallels fixed‐price repurchases. Supply elasticity is larger for firms with large trading volume, firms included in the S&P 500 Index, and takeover targets.
Influence Costs and Capital Structure
Published: 07/01/1993 | DOI: 10.1111/j.1540-6261.1993.tb04027.x
LAURIE SIMON BAGWELL, JOSEF ZECHNER
This paper analyzes the role of capital structure in the presence of intrafirm influence activities. The hierarchical structure of large organizations inevitably generates attempts by members to influence the distributive consequences of organizational decisions. In corporations, for example, top management can reallocate or eliminate quasi rents earned by their employees, while at the same time, they must rely on these employees to provide them with information vital to their decision making. This creates the opportunity for lower level managers to influence top management's discretionary decisions. As a result, divisional managers may attempt to inflate the corporate perception of their relative contributions to the firm, or to take actions that make the elimination of their rents more costly for the firm. This incentive to influence is especially acute when managers fear losing their jobs, for example in the event of a divestiture.