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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Ownership Concentration, Corporate Control Activity, and Firm Value: Evidence from the Death of Inside Blockholders
Published: 09/01/1993 | DOI: 10.1111/j.1540-6261.1993.tb04755.x
MYRON B. SLOVIN, MARIE E. SUSHKA
We analyze how ownership concentration affects firm value and control of public companies by examining effects of deaths of inside blockholders. We find shareholder wealth increases, ownership concentration falls, and extensive corporate control activity ensues. Share price responses are related to the deceased's equity stake. Control group holdings fall for two‐thirds of the firms due to either the estate's dispersal or inheritors selling stock. A majority of firms become targets of control bids: three‐quarters of bids are successful; one‐third are hostile. Our evidence is broadly consistent with Stulz's (1988) model of the relationship between ownership concentration and firm value.
Ownership Concentration, Corporate Control Activity, and Firm Value: Evidence from the Death of Inside Blockholders
Published: 09/01/1993 | DOI: 10.1111/j.1540-6261.1993.tb04755.x
MYRON B. SLOVIN, MARIE E. SUSHKA
We analyze how ownership concentration affects firm value and control of public companies by examining effects of deaths of inside blockholders. We find shareholder wealth increases, ownership concentration falls, and extensive corporate control activity ensues. Share price responses are related to the deceased's equity stake. Control group holdings fall for two‐thirds of the firms due to either the estate's dispersal or inheritors selling stock. A majority of firms become targets of control bids: three‐quarters of bids are successful; one‐third are hostile. Our evidence is broadly consistent with Stulz's (1988) model of the relationship between ownership concentration and firm value.
The Implications of Equity Issuance Decisions within a Parent‐Subsidiary Governance Structure
Published: 04/18/2012 | DOI: 10.1111/j.1540-6261.1997.tb04824.x
MYRON B. SLOVIN, MARIE E. SUSHKA
We provide evidence about the motivation for a parent–subsidiary governance structure by analyzing valuation effects of seasoned equity offerings by publicly traded affiliated units. Our results support Nanda's (1991) theoretical model which predicts equity offerings convey differential information about subsidiary and parent value. Subsidiary equity issuance has negative valuation effects on issuing subsidiaries and positive effects on parents, while parent equity issuance reduces issuing parent wealth and increases subsidiary wealth. Our evidence suggests that a parent–subsidiary organizational structure enhances corporate financing flexibility and mitigates underinvestment problems identified by Myers and Majluf (1984). There is no evidence of subsidiary wealth expropriation.
A Model of the Commercial Loan Rate
Published: 12/01/1983 | DOI: 10.1111/j.1540-6261.1983.tb03842.x
MYRON B. SLOVIN, MARIE ELIZABETH SUSHKA
This paper explores the theoretical and empirical determinants of the commercial loan rate charged by commercial banks based on a model of financial intermediary behavior which assumes monopolistic competition in asset and liability markets. The model incorporates the constraint that banks must maintain at least a minimum quantity of bonds in asset portfolios. Equations are estimated on a time series basis to explain the behavior of commercial loan rates over the period 1953 to 1980. The evidence appears consistent with the hypothesis that commercial banks operate in a market characterized by imperfect competition and that they explicitly set loan rates.
Corporate Sale‐and‐Leasebacks and Shareholder Wealth
Published: 03/01/1990 | DOI: 10.1111/j.1540-6261.1990.tb05094.x
MYRON B. SLOVIN, MARIE E. SUSHKA, JOHN A. POLONCHEK
In this paper, we examine the market valuation effects of corporate sale‐and‐leasebacks. Specifically, we test whether such transactions offer a net benefit to lessees or lessors by evaluating the impact on share prices from announcements of sale‐and‐leasebacks of major corporate assets. Our evidence indicates that the announcements are associated with positive abnormal returns to lessees. We conclude that this positive market reaction results from an overall reduction in the present value of expected taxes occasioned by the transactions. Our evidence also suggests that the gains from sale‐and‐leasebacks accrue solely to lessee firms.
The Value of Bank Durability: Borrowers as Bank Stakeholders
Published: 03/01/1993 | DOI: 10.1111/j.1540-6261.1993.tb04708.x
MYRON B. SLOVIN, MARIE E. SUSHKA, JOHN A. POLONCHEK
We examine the value of bank durability to borrowing firms. The analysis is based on theoretical models of the asset services view of intermediation which imply that private information and associated relationship‐specific activities are intrinsic to bank lending. We analyze share price effects on firms with lending relationships with Continental Illinois Bank during its de facto failure and subsequent FDIC rescue. We find the bank's impending insolvency had negative effects and the FDIC rescue positive effects on client firm share prices. We conclude that borrowers incur significant costs in response to unanticipated reductions in bank durability and thus are bank stakeholders.
Methods of Payment in Asset Sales: Contracting with Equity versus Cash
Published: 09/16/2005 | DOI: 10.1111/j.1540-6261.2005.00802.x
MYRON B. SLOVIN, MARIE E. SUSHKA, JOHN A. POLONCHEK
We analyze intercorporate asset sales where equity is the means of payment, and compare the results to cash asset sales. Equity deals are value‐enhancing for both buyers, 10%, and sellers, 3%, while cash sales generate seller returns of 1.9% and buyer returns that are not significant. Combined wealth gains are large for equity deals, but modest for cash deals. Equity‐based asset sales are not a precursor to consolidations between buyers and sellers, and do not affect buyer openness to the takeover market. We conclude that the use of buyer equity conveys favorable information about the value of assets and buyers.
The Intra‐Industry Effects of Going‐Private Transactions
Published: 09/01/1991 | DOI: 10.1111/j.1540-6261.1991.tb04630.x
MYRON B. SLOVIN, MARIE E. SUSHKA, YVETTE M. BENDECK
We demonstrate that bids to take firms private generate significantly positive valuation effects for industry rivals of target firms. These valuation effects cannot reflect either synergy or monopoly since no consolidation of operating firms is involved in such transactions. Participation by buyout specialists in the bid does not significantly affect these gains. Bids by outsiders and bids by incumbent managers generate similar valuation effects for industry rivals. The effect on share prices of industry rivals is inversely related to the capitalized values of rival firms relative to the target firm. We also report valuation effects for target firms.