The Journal of Finance

Country Size, Currency Unions, and International Asset Returns

Published: 11/12/2013,  Volume: 68,  Issue: 6  |  DOI: 10.1111/jofi.12081  |  Cited by: 193

TAREK A. HASSAN

Differences in real interest rates across developed economies are puzzlingly large and persistent. I propose a simple explanation: bonds issued in the currencies of larger economies are expensive because they insure against shocks that affect a larger fraction of the world economy. I show that, indeed, differences in the size of economies explain a large fraction of the cross‐sectional variation in currency returns. The data also support additional implications of the model: the introduction of a currency union lowers interest rates in participating countries, and stocks in the nontraded sector of larger economies pay lower expected returns.

The Global Impact of Brexit Uncertainty

Published: 11/30/2023,  Volume: 79,  Issue: 1  |  DOI: 10.1111/jofi.13293  |  Cited by: 99

TAREK A. HASSAN, STEPHAN HOLLANDER, LAURENCE VAN LENT, AHMED TAHOUN

We propose a text‐based method for measuring the cross‐border propagation of large shocks at the firm level. We apply this method to estimate the expected costs, benefits, and risks of Brexit and find widespread reverberations in listed firms in 81 countries. International (i.e., non‐U.K.) firms most exposed to Brexit uncertainty (the second moment) lost significant market value and reduced hiring and investment. International firms also overwhelmingly expected negative first‐moment impacts from the U.K.'s decision to leave the European Union (EU), particularly related to regulation, asset prices, and labor market impacts of Brexit.

Empirical Studies in Portfolio Performance Using Higher Degrees of Stochastic Dominance

Published: 3/1980,  Volume: 35,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1980.tb03478.x  |  Cited by: 21

HASSAN TEHRANIAN

An Examination of the Impact of the Garn‐St. Germain Depository Institutions Act of 1982 on Commercial Banks and Savings and Loans

Published: 3/1990,  Volume: 45,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1990.tb05082.x  |  Cited by: 81

MARCIA MILLON CORNETT, HASSAN TEHRANIAN

This paper evaluates the effects of events leading to the passage of the Garn‐St. Germain Depository Institutions Act of 1982. The evidence suggests that the call for reform by President Reagan's Housing Commission and the Senate passage of the bill produced positive abnormal returns to stockholders of large savings and loans and commercial banks. Stockholders of small S&Ls and banks, on the other hand, generally experienced negative abnormal returns. Furthermore, when hopes of passage of the Act faded, significant negative (positive) abnormal returns were experienced by stockholders of large (small) S&Ls and banks.

Are Financial Markets Overly Optimistic about the Prospects of Firms That Issue Equity? Evidence from Voluntary versus Involuntary Equity Issuances by Banks

Published: 12/1998,  Volume: 53,  Issue: 6  |  DOI: 10.1111/0022-1082.00085  |  Cited by: 60

Marcia Millon Cornett, Hamid Mehran, Hassan Tehranian

This paper examines firm performance around announcements of common stock issues. We study the banking industry in which some stock issues are made voluntarily by managers, and other issues are involuntary. We find that banks that voluntarily issue common stock experience a significant drop in the matched adjusted operating performance following the issue, a significant drop in benchmark firms' adjusted stock prices following the issue, and systematically negative market reactions to post‐issue quarterly earnings announcements. Banks that issue common stock involuntarily experience values for these measures that are not significantly different from those of the benchmark firm(s).

Bank Performance around the Introduction of a Section 20 Subsidiary

Published: 2/2002,  Volume: 57,  Issue: 1  |  DOI: 10.1111/1540-6261.00430  |  Cited by: 92

Marcia Millon Cornett, Evren Ors, Hassan Tehranian

As of 1987, commercial banks in the United States were allowed to establish Section 20 subsidiaries to conduct investment‐banking activities. A concern of regulators was that these activities would result in a decrease in performance of commercial banks relative to the risk being undertaken. This paper examines the performance of commercial banks around the establishment of a Section 20 subsidiary. We find that Section 20 activities undertaken by banks result in increased industry‐adjusted operating cash flow return on assets, due mainly to revenues from noncommercial‐banking activities. Further, risk measures for the sample banks do not change significantly.

The Effect of Long‐Term Performance Plans on Corporate Sell‐Off‐Induced Abnormal Returns

Published: 9/1987,  Volume: 42,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1987.tb03920.x  |  Cited by: 55

HASSAN TEHRANIAN, NICKOLAOS G. TRAVLOS, JAMES F. WAEGELEIN

This study examines the association between long‐term performance plans and wealth effects accruing to stockholders of divesting firms at announcements of sell‐off proposals. The results indicate that divesting companies with long‐term performance plans experience a more favorable stock market reaction at the announcement of sell‐off proposals relative to firms without long‐term performance plans. The findings imply that long‐term performance plans serve as an effective mechanism to motivate managers to make better decisions.

Tax‐Exempt Debt and the Capital Structure of Nonprofit Organizations: An Application to Hospitals

Published: 9/1996,  Volume: 51,  Issue: 4  |  DOI: 10.1111/j.1540-6261.1996.tb04069.x  |  Cited by: 35

GERARD J. WEDIG, MAHMUD HASSAN, MICHAEL A. MORRISEY

The availability of tax‐exempt financing provides nonprofit (NP) organizations with their own tax‐based incentives to issue debt. In this article, we develop a theoretical model in which NPs gain an indirect arbitrage from tax‐exempt debt issuance, constrained by: 1) the requirement that fixed investment exceed tax‐exempt debt flows (the project financing constraint), and 2) the constraint against share issuance. These constraints cause them to impute tax benefits to projects that afford access to the tax‐exempt bond market. Empirical tests indicate that NP hospitals behave as if they have target levels of tax‐exempt debt. Debt targeting is constrained by the availability of capital projects, while excess debt capacity stimulates investment.

Capital Structure, Ownership, and Capital Payment Policy: The Case of Hospitals

Published: 3/1988,  Volume: 43,  Issue: 1  |  DOI: 10.1111/j.1540-6261.1988.tb02586.x  |  Cited by: 49

GERARD WEDIG, FRANK A. SLOAN, MAHMUD HASSAN, MICHAEL A. MORRISEY

This study examines effects of pertinent features of hospital capital payment policies on hospital capital structure decisions in a one‐period stochastic, value‐maximization model. Separate models are developed for for‐profit and not‐for‐profit hospitals. Hospital debt‐to‐assets ratios are analyzed empirically using a cross‐section of data from the American Hospital Association. Although the effect on capital structure of hospital reliance on cost‐based reimbursement cannot be signed theoretically, in both for‐profit and not‐for‐profit cases, a higher cost‐based share leads to higher leverage. Factors associated with high bankruptcy risk (e.g., earnings volatility) cause hospitals to take on less debt.