The Journal of Finance

Stapled Finance

Published: 5/7/2010,  Volume: 65,  Issue: 3  |  DOI: 10.1111/j.1540-6261.2010.01557.x  |  Cited by: 41

PAUL POVEL, RAJDEEP SINGH

“Stapled finance” is a loan commitment arranged by a seller in an M&A setting. Whoever wins the bidding contest has the option (not the obligation) to accept this loan commitment. We show that stapled finance increases bidding competition by subsidizing weak bidders, who raise their bids and thereby the price that strong bidders (who are more likely to win) must pay. The lender expects not to break even and must be compensated for offering the loan. This reduces but does not eliminate the seller's benefit. It also implies that stapled finance loans will show poorer performance than other buyout loans.

Lying to Speak the Truth: Selective Manipulation and Improved Information Transmission

Published: 8/19/2024,  Volume: 79,  Issue: 6  |  DOI: 10.1111/jofi.13375  |  Cited by: 4

PAUL POVEL, GÜNTER STROBL

We analyze a principal‐agent model in which an effort‐averse agent can manipulate a publicly observable performance report. The principal cannot observe the agent's cost of effort, her effort choice, and whether she manipulated the report. An optimal contract links compensation to the realized output and the (possibly manipulated) report. Manipulation can be beneficial to the principal because it can make the report more informative about the agent's effort choice, thereby reducing the agent's information rent. This is achieved through a contract that incentivizes the agent to selectively engage in manipulation based on her effort choice.

Boom and Gloom

Published: 9/14/2016,  Volume: 71,  Issue: 5  |  DOI: 10.1111/jofi.12391  |  Cited by: 20

PAUL POVEL, GIORGO SERTSIOS, RENÁTA KOSOVÁ, PRAVEEN KUMAR

We study the performance of investments made at different points of an investment cycle. We use a large data set covering hotels in the United States, with rich details on their location, characteristics, and performance. We find that hotels built during hotel construction booms underperform their peers. For hotels built during local hotel construction booms, this underperformance persists for several decades. We examine possible explanations for this long‐lasting underperformance. The evidence is consistent with information‐based herding explanations.

Trading Costs and Exchange Delisting: The Case of Firms that Voluntarily Move from the American Stock Exchange to the Nasdaq

Published: 12/1997,  Volume: 52,  Issue: 5  |  DOI: 10.1111/j.1540-6261.1997.tb02753.x  |  Cited by: 25

PAUL CLYDE, PAUL SCHULTZ, MIR ZAMAN

We examine 47 stocks that voluntarily left the American Stock Exchange from 1992 through 1995 and listed on the Nasdaq. We find that both effective and quoted spreads increase by about 100 percent after listing on the Nasdaq. These spread changes are consistent across stocks. In contrast, excess returns are positive when firms announce a switch from The American Stock Exchange to the Nasdaq. We are unable to explain this apparent contradiction.

SOME RECENT CHANGES IN THE EURO‐DOLLAR SYST

Published: 9/1964,  Volume: 19,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1964.tb02866.x  |  Cited by: 0

Paul Einzig

Why Do Firms Use Incentives That Have No Incentive Effects?

Published: 8/2004,  Volume: 59,  Issue: 4  |  DOI: 10.1111/j.1540-6261.2004.00674.x  |  Cited by: 507

Paul Oyer

This paper illustrates why firms might choose to implement stock option plans or other pay instruments that reward “luck.” I consider a model where adjusting compensation contracts is costly and where employees' outside opportunities are correlated with their firms' performance. The model may help to explain the use and recent rise of broad‐based stock option plans, as well as other financial instruments, even when these pay plans have no effect on employees' on‐the‐job behavior. The model suggests that agency theory's often‐overlooked participation constraint may be an important determinant of some common compensation schemes, particularly for employees below the highest executive ranks.

PSYCHOLOGICAL STUDY OF HUMAN JUDGMENT: IMPLICATIONS FOR INVESTMENT DECISION MAKING

Published: 9/1972,  Volume: 27,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1972.tb01311.x  |  Cited by: 291

Paul Slovic

THE UPWARD SLOPING IS CURVE AND THE CONTROL OF INCOME AND THE BALANCE OF PAYMENTS

Published: 6/1974,  Volume: 29,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1974.tb01493.x  |  Cited by: 5

Paul Burrows

Downward‐Sloping Demand Curves, the Supply of Shares, and the Collapse of Internet Stock Prices

Published: 1/10/2008,  Volume: 63,  Issue: 1  |  DOI: 10.1111/j.1540-6261.2008.01318.x  |  Cited by: 23

PAUL SCHULTZ

Over March and April 2000, Internet stocks lost 56%, or $700 billion. This sudden collapse has been attributed to an increasing supply of shares from lockup expirations and equity offerings. I show that Internet stocks collapsed in this period regardless of whether their lockups expired. Furthermore, daily Internet stock portfolio returns were almost unaffected by the number or dollar amount of lockup expirations that day, or by the amount of stock offered in IPOs or SEOs. Most of the Internet stock decline is explained by poor marketwide returns, particularly for growth stocks.

Valuation of Underwriting Agreements for UK Rights Issues

Published: 6/1980,  Volume: 35,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1980.tb03493.x  |  Cited by: 16

PAUL MARSH

A SUGGESTION FOR THE REVALUATION OF GOLD*

Published: 3/1963,  Volume: 18,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1963.tb01621.x  |  Cited by: 1

Paul Wonnacott

THE CANADIAN DOLLAR, 1948–57*

Published: 3/1960,  Volume: 15,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1960.tb04851.x  |  Cited by: 0

Paul Wonnacott

The Choice Between Equity and Debt: An Empirical Study

Published: 3/1982,  Volume: 37,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1982.tb01099.x  |  Cited by: 519

PAUL MARSH

This empirical study of security issues by UK companies between 1959 and 1974 focuses on how companies select between financing instruments at a given point in time. It throws light on a number of interesting questions. First, it demonstrates that companies are heavily influenced by market conditions and the past history of security prices in choosing between debt and equity. Second, it provides evidence that companies appear to make their choice of financing instrument as if they have target levels of debt in mind. Finally, the results are consistent with the notion that these target debt levels are themselves a function of company size, bankruptcy risk, and asset composition.

Corporate Bond Trading Costs: A Peek Behind the Curtain

Published: 4/2001,  Volume: 56,  Issue: 2  |  DOI: 10.1111/0022-1082.00341  |  Cited by: 271

Paul Schultz

In this paper, I use institutional corporate bond trade data to estimate transactions costs in the over‐the‐counter bond market. I find average round‐trip trading costs to be about $0.27 per $100 of par value. Trading costs are lower for larger trades. Small institutions pay more to trade than large institutions, all else being equal. Small bond dealers charge more than large ones. I find no evidence that trading costs more for lower‐rated bonds.

MONEY, GROWTH, AND THE BALANCE OF PAYMENTS*

Published: 6/1968,  Volume: 23,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1968.tb00833.x  |  Cited by: 0

Paul Graeser

Convertible Bonds Are Not Called Late

Published: 9/1995,  Volume: 50,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1995.tb04058.x  |  Cited by: 59

PAUL ASQUITH

Starting with Ingersoll (1977b), the academic literature has repeatedly sought to explain why convertible bonds are called late. The findings here demonstrate there is no call delay to explain. This paper finds that most convertible bonds, given their call protection, are called as soon as possible. For those that are not, there are significant cash flow advantages to delaying. The median call delay for all convertible bonds is less than four months. If a safety premium is desired to assure the conversion value will exceed the call price at the end of call notice period, the median call period is less than a month.

Discussion

Published: 5/1983,  Volume: 38,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1983.tb02249.x  |  Cited by: 0

PAUL HALPERN

The Making of an Investment Banker: Stock Market Shocks, Career Choice, and Lifetime Income

Published: 11/11/2008,  Volume: 63,  Issue: 6  |  DOI: 10.1111/j.1540-6261.2008.01409.x  |  Cited by: 221

PAUL OYER

I show that stock market shocks have important and lasting effects on the careers of MBAs. Stock market conditions while MBA students are in school have a large effect on whether they go directly to Wall Street upon graduation. Further, starting on Wall Street immediately upon graduation causes a person to be more likely to work there later and to earn, on average, substantially more money. The empirical results suggest that investment bankers are largely “made” by circumstance rather than “born” to work on Wall Street.

Stock Splits, Tick Size, and Sponsorship

Published: 2/2000,  Volume: 55,  Issue: 1  |  DOI: 10.1111/0022-1082.00211  |  Cited by: 191

Paul Schultz

A traditional explanation for stock splits is that they increase the number of small shareholders who own the stock. A possible reason for the increase is that the minimum bid‐ask spread is wider after a split and brokers have more incentive to promote a stock. I document a large number of small buy orders following Nasdaq and NYSE/AMEX splits during 1993 to 1994. I also find strong evidence that trading costs increase, and weak evidence that costs of market making decline following splits. This is consistent with splits acting as an incentive to brokers to promote stocks.

Does the Stock Market Overreact to Corporate Earnings Information?

Published: 12/1989,  Volume: 44,  Issue: 5  |  DOI: 10.1111/j.1540-6261.1989.tb02660.x  |  Cited by: 30

PAUL ZAROWIN

This paper tests whether the stock market overreacts to extreme earnings, by examining firms' stock returns over the 36 months subsequent to extreme earnings years. While the poorest earners do outperform the best earners, the poorest earners are also significantly smaller than the best earners. When poor earners are matched with good earners of equal size, there is little evidence of differential performance. This suggests that size, and not investor overreaction to earnings, is responsible for the “overreaction” phenomenon, the tendency for prior period losers to outperform prior period winners in the subsequent period.

Equity Rights Issues and the Efficiency of the UK Stock Market

Published: 9/1979,  Volume: 34,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1979.tb03439.x  |  Cited by: 115

PAUL MARSH

INTERRELATED MODELS OF HOUSEHOLD BEHAVIOR: A SUMMARY AND AN EXTENSION

Published: 5/1972,  Volume: 27,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1972.tb00977.x  |  Cited by: 0

Paul Wachtel

Calls of Warrants: Timing and Market Reaction

Published: 6/1993,  Volume: 48,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1993.tb04733.x  |  Cited by: 16

PAUL SCHULTZ

This paper examines the timing of, and reaction to, calls of callable warrants. Three main findings emerge. First, unlike convertible bonds or preferred stock, callable warrants are called almost as soon as possible. Second, there is a negative price reaction of about 3 percent when a call is announced. Finally, at the completion of a call, the stock price rebounds by an average of 7 percent. The total reaction from announcement through completion of the call is a positive excess return of about 4 percent.

Pseudo Market Timing and the Long‐Run Underperformance of IPOs

Published: 3/21/2003,  Volume: 58,  Issue: 2  |  DOI: 10.1111/1540-6261.00535  |  Cited by: 322

Paul Schultz

Numerous studies document long‐run underperformance by firms following equity offerings. This paper shows that underperformance is very likely to be observed ex‐post in an efficient market. The premise is that more firms issue equity at higher stock prices even though they cannot predict future returns. Ex‐post, issuers seem to time the market because offerings cluster at market peaks. Simulations based on 1973 through 1997 data reveal that when ex‐ante expected abnormal returns are zero, median ex‐post underperformance for equity issuers will be significantly negative in event‐time. Using calendar‐time returns solves the problem.

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

Personal Income Taxes and the January Effect: Small Firm Stock Returns Before the War Revenue Act of 1917: A Note

Published: 3/1985,  Volume: 40,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1985.tb04954.x  |  Cited by: 45

PAUL SCHULTZ

This paper tests the tax explanation of the January effect by examining small firm stock returns before the War Revenue Act of 1917. No evidence of a turn‐of‐the‐year effect is found. This paper also extends previous authors' work on the subject to 1918–29. A January effect is found during that period.

DISCUSSION

Published: 5/1969,  Volume: 24,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1969.tb01682.x  |  Cited by: 0

Paul S. Nadler

MONETARY POLICY AND FLUCTUATIONS IN THE EXTENSION OF TRADE CREDIT*

Published: 12/1962,  Volume: 17,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1962.tb04349.x  |  Cited by: 0

Paul Edwin Junk

FINANCIAL DETERMINANTS OF MANUFACTURING INVENTORY BEHAVIOR—A QUARTERLY STUDY BASED ON UNITED STATES ESTIMATES: 1947–61*

Published: 3/1965,  Volume: 20,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1965.tb00196.x  |  Cited by: 0

Paul W. Kuznets

COMPETITIVE INFORMATION IN THE STOCK MARKET: AN EMPIRICAL STUDY OF EARNINGS, DIVIDENDS AND ANALYSTS' FORECASTS*

Published: 5/1976,  Volume: 31,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1976.tb01911.x  |  Cited by: 24

Paul A. Griffin

THE AVAILABILITY OF CAPITAL TO SMALL BUSINESS IN CALIFORNIA IN 1945–1946

Published: 10/1947,  Volume: 2,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1947.tb00796.x  |  Cited by: 3

Paul F. Wendt

INTEREST RATES ON MORTGAGES AND DIVIDEND RATES ON SAVINGS AND LOAN SHARES: COMMENT

Published: 9/1967,  Volume: 22,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1967.tb02981.x  |  Cited by: 4

Paul A. Meyer

DISCUSSION

Published: 7/1984,  Volume: 39,  Issue: 3  |  DOI: 10.1111/j.1540-6261.1984.tb03670.x  |  Cited by: 0

PAUL M. HORVITZ

THE PUBLIC DEBT: HINDRANCE OR ADVANTAGE TO CREDIT CONTROL?

Published: 5/1953,  Volume: 8,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1953.tb01153.x  |  Cited by: 0

Paul W. McCracken

A SURROGATIVE MEASURE OF BUSINESS CONFIDENCE AND ITS RELATION TO STOCK PRICES

Published: 12/1955,  Volume: 10,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1955.tb01297.x  |  Cited by: 11

Paul G. Darling

COMPETITION IN INVESTMENT BANKING*

Published: 5/1953,  Volume: 8,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1953.tb01169.x  |  Cited by: 0

Paul L. Howell

COMMERCIAL BANKING IN THE SIXTIES

Published: 5/1961,  Volume: 16,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1961.tb02819.x  |  Cited by: 0

Paul S. Nadler

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

TRENDS IN INVESTMENT POLICIES OF INDIVIDUALS

Published: 6/1949,  Volume: 4,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1949.tb02345.x  |  Cited by: 2

Paul L. Morrison

VALUATION, LEVERAGE AND THE COST OF CAPITAL IN THE CASE OF DEPRECIABLE ASSETS: COMMENT

Published: 3/1975,  Volume: 30,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1975.tb03173.x  |  Cited by: 0

Ronda S. Paul

PREMIUMS ON CONVERTIBLE BONDS: COMMENT

Published: 9/1970,  Volume: 25,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1970.tb00566.x  |  Cited by: 3

Paul D. Cretien

AN ECONOMIC STUDY OF RESEARCH AND DEVELOPMENT EXPENDITURES IN THE UNITED STATES SINCE WORLD WAR II*

Published: 3/1960,  Volume: 15,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1960.tb04843.x  |  Cited by: 0

Gino Paul Giusti

THE HUNT COMMISSION REPORT: A FURTHER COMMENT

Published: 3/1974,  Volume: 29,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1974.tb00046.x  |  Cited by: 0

Paul M. Horvitz

STIMULATING BANK COMPETITION THROUGH REGULATORY ACTION

Published: 3/1965,  Volume: 20,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1965.tb00180.x  |  Cited by: 4

Paul M. Horvitz

TERM LOANS TO SMALL BUSINESS IN CALIFORNIA, 1945–46

Published: 6/1948,  Volume: 3,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1948.tb01512.x  |  Cited by: 0

Paul F. Wendt

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

Optimal Investment, Monitoring, and the Staging of Venture Capital

Published: 12/1995,  Volume: 50,  Issue: 5  |  DOI: 10.1111/j.1540-6261.1995.tb05185.x  |  Cited by: 1768

PAUL A. GOMPERS

This paper examines the structure of staged venture capital investments when agency and monitoring costs exist. Expected agency costs increase as assets become less tangible, growth options increase, and asset specificity rises. Data from a random sample of 794 venture capital‐backed firms support the predictions. Venture capitalists concentrate investments in early stage and high technology companies where informational asymmetries are highest. Decreases in industry ratios of tangible assets to total assets, higher market‐to‐book ratios, and greater R&D intensities lead to more frequent monitoring. Venture capitalists periodically gather information and maintain the option to discontinue funding projects with little probability of going public.

Giving Content to Investor Sentiment: The Role of Media in the Stock Market

Published: 5/8/2007,  Volume: 62,  Issue: 3  |  DOI: 10.1111/j.1540-6261.2007.01232.x  |  Cited by: 3988

PAUL C. TETLOCK

I quantitatively measure the interactions between the media and the stock market using daily content from a popular Wall Street Journal column. I find that high media pessimism predicts downward pressure on market prices followed by a reversion to fundamentals, and unusually high or low pessimism predicts high market trading volume. These and similar results are consistent with theoretical models of noise and liquidity traders, and are inconsistent with theories of media content as a proxy for new information about fundamental asset values, as a proxy for market volatility, or as a sideshow with no relationship to asset markets.

PRICE DISCRIMINATION, REGIONAL LOAN RATES, AND THE STRUCTURE OF THE BANKING INDUSTRY*

Published: 3/1967,  Volume: 22,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1967.tb01652.x  |  Cited by: 2

Paul A. Meyer

LARGE‐SCALE COMMUNITY DEVELOPMENT

Published: 5/1967,  Volume: 22,  Issue: 2  |  DOI: 10.1111/j.1540-6261.1967.tb00008.x  |  Cited by: 1

Paul F. Wendt