The Journal of Finance

The Effect of Voluntary Sell‐off Announcements on Shareholder Wealth

Published: 03/01/1985   |   DOI: 10.1111/j.1540-6261.1985.tb04945.x

PREM C. JAIN

Sell‐off activities arise when a firm sells part of its assets (e.g., a segment, a division, etc.) but continues to exist in essentially the same form. This study investigates the effect of voluntary sell‐offs on stock returns. From a sample of over 1000 sell‐off events (first public announcements), the evidence shows that both sellers and buyers earn significant positive excess returns from these transactions. The excess returns earned by buyers are smaller than those earned by sellers. There is also evidence that sell‐off announcements are preceded by a period of significant negative returns for the sellers which suggests that the sellers, on average, performed poorly prior to their sell‐off activities.

An Analysis of the Recommendations of the “Superstar” Money Managers at Barron's Annual Roundtable

Published: 09/01/1995   |   DOI: 10.1111/j.1540-6261.1995.tb04057.x

HEMANG DESAI, PREM C. JAIN

We examine the performance of common stock recommendations made by prominent money managers at Barron's Annual Roundtable from 1968 to 1991. To avoid survivorship bias, we examine the performance of recommendations by all the participants. The buy recommendations earn significant abnormal returns of 1.91 percent from the recommendation day to the publication day, a period of about 14 days. However, the abnormal returns are essentially zero for one to three year postpublication day holding periods. Thus, an individual investing according to the Roundtable recommendations published in Barron's would not benefit from the advice.

Truth in Mutual Fund Advertising: Evidence on Future Performance and Fund Flows

Published: 12/17/2002   |   DOI: 10.1111/0022-1082.00232

Prem C. Jain, Joanna Shuang Wu

We examine a sample of 294 mutual funds that are advertised in Barron's or Money magazine. The preadvertisement performance of these funds is significantly higher than that of the benchmarks. We test whether the sponsors select funds to signal continued superior performance or they use the past superior performance to attract more money into the funds. Our analysis shows that there is no superior performance in the postadvertisement period. Thus, the results do not support the signaling hypothesis. On the other hand, we find that the advertised funds attract significantly more money in comparison with a group of control funds.