Corporate Finance Commons^™

Venture Capitalists And Closely Held Ipos: Lessons For Family-Controlled Firms, Joseph H. Astrachan, Daniel L. Mcconaughy

Faculty and Research Publications

This study examines how the presence of venture capitalists (VCs) in closely held IPOs relates to their performance. It also identifies other factors that are related to the performance of closely held IPOs. Closely held firms in this study had an average of 88% insider ownership before the IPO. In general, we find that closely held IPOs benefit from associations with VCs. This finding suggests that VCs' outside expertise and connections are valuable assets. Because it takes time for VCs to effect changes and because beneficial changes generally occur gradually, firms contemplating IPOs must plan well in advance to maximize …

Corporate Investment Activity, Industrial And Global Diversification And Internal Capital Markets, Ozgur Berk Kan

Theses and Dissertations in Business Administration

Recent empirical studies document the average industrially diversified firm trades at a discount than a portfolio of comparable single-segment firms while geographically diversified firms are shown to face similar, if not higher, discounts. They attribute the diversification discount to inefficient allocation of capital in diversified firms. Most of this literature uses aggregate capital expenditures and cash flows data across divisions obtained from Compustat industry-segment and geographic-segment data tapes. In our first paper, we employ firm-specific data to examine the pre- and post-acquisition performance of firms engaging in diversifying and non-diversifying investments in order to determine whether the diversification discount may …

Institutional And Other Constraints To Non-Oil Exports., R. O. Madaki

Bullion

This paper examines the non-oil exports sector in Nigeria which had witnessed a lacklustre performance despite the several statements of government's interest in export-biased growth strategy and the establishment of several export facilitating institutions. The paper further observes that a major problem with Nigeria's non-oil export sector is that it is not predicated on the design and implementation of appropriate and coherent economic policies as there is no clear export promotion blue print in Nigeria. Consequently, the sector is facing a number of institutional and other domestic and external problems. The remaining part of the paper briefly highlight some of …

Emerging Trends In External Reserve Management, Nnadi C. Ben

Bullion

This paper tries to identify some of the main trends in central Banks reserve management in recent years. lt describes some significant changes, which have taken place, with regard to the objectives and investment policies of central banks, while pointing out some elements that could noticeably slow or even reverse the trends identified. The study reveals reserve management has continued to evolve broadly in the areas of securitisation, return maximization, use of derivates and performance measurement. Secondly, in response to the increasing volatility of financial variables, central banks have at the same time continued to place emphasis on liquidity constraints.

An Investigation Of Goodwill Accounting Policy Choice Within A Specific Knowledge Framework, Pearl H. N. Tan

Research Collection School Of Accountancy

This study, using Singapore data, investigates the relationship between Chief Executive Officers' (CEO) specific knowledge and the accounting method choice on capitalisation of goodwill. International Accounting Standard 22 (1987), applicable in Singapore in 1996, the year of the study, permits a choice between capitalisation with subsequent amortisation and immediate write-off of goodwill to reserves. This study proposes a positive relationship between human capital specificity of CEOs and the recognition of purchased goodwill on the balance sheet. Specific knowledge is unique to firms and is acquired through experience. Given that specialised assets arise from firm-specific circumstances, firm-specific knowledge potentially explains the …

Alternative Corporate Governance Systems In Japanese Firms: Implications For A Shift To Stockholder-Centered Corporate Governance, Toru Yoshikawa, Phillip H. Phan

Research Collection Lee Kong Chian School Of Business

In Asia, the recent catastrophic decline in regional stock markets, continuing currency crisis and failures of major financial institutions and industrial corporations have increased domestic and international interest in corporate governance. Nowhere is this greater than in Japan where financial institution reform has catapulted this to the fore. Agency theory and institutional theory, together with comparative case examples, are used in a study to derive some propositions on the dynamics of changing corporate governance systems in Japanese firms. The study argues for the co-existence of stakeholder and shareholder-centered corporate governance systems in Japan. This argument has an important implication for …

Top 10 Audit Deficiencies, Mark S. Beasley, Joseph V. Carcello, Dana R. Hermanson

Faculty and Research Publications

The article focuses on financial statement fraud based on cases wherein the U.S. Securities and Exchange Commission sanctioned auditors for their association with fraudulent financial statements. All of the cases involved public companies, most of which engaged ill fraudulent financial reporting. Only a few engaged in misappropriation of assets or defalcation. The most common problem, alleged in 90% of the cases, was the auditor's failure to gather sufficient evidence. In some instances, this failure was pervasive throughout the engagement while in other instances the allegations were more specific. For example, many of the cases involved inadequate evidence in the areas …

Berle And Means Reconsidered At The Century's Turn, William W. Bratton

All Faculty Scholarship

No abstract provided.

Marketing Strategy And The Use Of Information Technology: New Evidence From The Trucking Industry, Atreya Chakraborty

Atreya Chakraborty

Since the mid-1980s, many authors have investigated the influence of information technology (IT) on productivity. Until recently there has been no clear evidence that productivity increases as a result of IT spending. This productivity paradox is partly due to the difficulty in correctly identifying outputs, particularly in a service sector such as the trucking industry. Products are often differentiated by quality attributes of the service provided, rather than merely the physical content of the good delivered by motor carriers. A carrier's primary marketing objective, e.g. on-time performance vs. lowest-rate carrier, is precisely what differentiates a trucking firm's service. This paper …

Exponential Bonus-Malus Systems Integrating A Priori Risk Classification, Llufs Bermudez, Michel Denuit, Jan Dhaene

Journal of Actuarial Practice (1993-2006)

This paper examines an integrated ratemaking scheme including a priori risk classification and a posteriori experience rating. In order to avoid the high penalties implied by the quadratic loss function, the symmetry between the overcharges and the undercharges is broken by introducing parametric loss functions of exponential type.

Analyzing Management Fees Of Pension Funds: A Case Study Of Mexico, Tapen Sinha

Journal of Actuarial Practice (1993-2006)

Though the rates of return for public pension funds have been high over the past two decades, one critical aspect of the financing of this type of fund is often overlooked: high management fees. As a result, the rates of return for workers who have invested in these funds have not necessarily been high. Management fees charged on pension funds in Mexico result in a leakage of funds in the order of 20-30% of the fund. That is, the amount at retirement would have been 20-30% higher had there been no fees. A model is developed that includes all the …

What's So Bad About Delaware?, David A. Skeel Jr.

All Faculty Scholarship

No abstract provided.

Net-Present-Value Return On Marketing Investment Model For Arrowhead Credit Union, Tracy Jay Judy

Theses Digitization Project

No abstract provided.

Fitting Loss Distributions In The Presence Of Rating Variables, Farrokh Guiahi

Journal of Actuarial Practice (1993-2006)

This paper focuses on issues and methodologies for fitting alternative statistical models-parametric probability distributions-to samples of insurance loss data. The interactions of loss distributions, deductibles, policy limits, and rating variables in the context of fitting distributions to losses are discussed. Fitted loss distributions serve an important function in pricing insurance products. The methodology developed in this paper is applied to a sample of insurance loss data that has the lognormal as the underlying loss distribution.

A Sensitivity Analysis Of The Premiums For A Permanent Health Insurance (Phi) Model, Ben D. Rickayzen

Journal of Actuarial Practice (1993-2006)

This paper presents an analysis of the parameters used in a multi-state model for permanent health insurance (PHI). The model is a simplification of that used in the United Kingdom. To avoid using duration dependent probabilities, the model splits the sick state into several sub-states to act as a proxy for duration spent in a particular state. This enables a Markov approach to be adopted. Lapses are incorporated within the model, and the net premium for a particular policy is tested for sensitivity to the various parameters used, including their interaction with the lapse rate. One of our conclusions is …

Journal Of Actuarial Practice, Volume 9 (2001), Colin Ramsay , Editor

Journal of Actuarial Practice (1993-2006)

(The complete issue, including) ARTICLES

Analyzing Management Fees of Pension Funds: A Case Study of Mexico • Tapen Sinha 5

Premium Earning Patterns for Multi-Year Policies with Aggregate Deductibles • Thomas Struppeck 45

Exponential Bonus-Malus Systems Integrating A Priori Risk Classification • Lluis Benmidez, Michel Denuit, and Jan Dhaene 67

Fitting Loss Distributions in the Presence of Rating Variables • Farrokh Guiahi 97

Linear Empirical Bayes Estimation of Survival Probabilities with Partial Data • Mostafa Mashayekhi 131

Controlling the Solvency Interaction Among a Group of Insurance Companies • Alexandros Zimbidis and Steven Haberman 151

A Sensitivity Analysis of the Premiums …

Premium Earning Patterns For Multi-Year Policies With Aggregate Deductibles, Thomas Struppeck

Journal of Actuarial Practice (1993-2006)

MUlti-year policies with large aggregate deductibles or multiple triggers raise some interesting issues about the correct amount of unearned premium reserve that a company should carry. Examples in this paper illustrate some of the difficulties that arise when trying to establish such reserves. The basic approach taken here is that the pure premium portion of the unearned premium reserve should always be adequate to cover the remaining risk. This approach, however, can lead to some unusual and controversial earning patterns; there are even situations where a negative premium is earned. In addition, the earning pattern for a particular loss scenario …

Linear Empirical Bayes Estimation Of Survival Probabilities With Partial Data, Mostafa Mashayekhi

Journal of Actuarial Practice (1993-2006)

In this paper we consider linear empirical Bayes estimation of survival probabilities with partial data from right-censored and possibly left-truncated observations. Such data are produced by studies in which the exact times of death are not recorded and the length of time that each subject may be under observation cannot exceed one unit of time. We obtain asymptotically optimal linear empirical Bayes estimators, with respect to the squared error loss function, under the assumption that the probability of death under observation in a unit time interval is proportional to the length of observation. This assumption is sometimes implied by Balducci's …

Controlling The Solvency Interaction Among A Group Of Insurance Companies, Alexandros Zimbidis, Steven Haberman

Journal of Actuarial Practice (1993-2006)

Pooling of risks is an efficient risk management technique used by large employee benefit schemes of multinational companies to self-insure their retirement and other benefit obligations. This technique forms a basis for formulating a general control theoretic model for the interaction between insurance companies within a pooling network. The objective of these insurance companies is to avoid insolvency yet maintain stable premium and surplus processes. A general control system of equations that is used as a model for the interaction of m insurance companies within the network is first analyzed. An analytic solution is provided. Questions concerning the stability and …

New Evidence On The Structuring Of Ceo Incentive Pay Ratios, Rajaram Veliyath, James J. Cordeiro

Faculty and Research Publications

The model examines both determinants of CEO incentive pay ratios that are controllable by the CEO, and those that are less controllable, based on a sample of 316 Fortune 500 firms in 1992. Firm diversity, firm growth opportunities, outside blockholdings, and the number of analysts following the firm were positively related to CEO incentive compensation ratios, while firm unsystematic risk, CEO stockholdings, and industry regulation had a negative impact. Finally, industry-specific influences were evident on incentive compensation ratios.

The Very Uncertain Prospect Of 'Global' Convergence In Corporate Governance, Douglas M. Branson

Articles

Elites in the United States legal academy have been uniform in their prediction of "global" convergence on a single model of governance for large publicly held corporations. That model is, of course, the U.S. model. The evidence, though, is only of some trans Atlantic convergence with an outlier here or there. Moreover, the existing scholarship is culturally and economically insensitive. U.S. style corporate governance, with its requirements for truly independent directors who will confront and remove badly performing CEOs, and which has as an element lawsuits brought by activist shareholders, is simply inappropriate for many cultural settings. Post Confucian and …

Pricing Options Using Implied Trees, Kian Guan Lim, Da Zhi

Research Collection Lee Kong Chian School Of Business

No abstract provided.

Islands Of Conscious Power: Law, Norms, And The Self-Governing Corporation, Edward B. Rock, Michael L. Wachter

All Faculty Scholarship

No abstract provided.

Norms & Corporate Law: Introduction, Edward B. Rock, Michael L. Wachter

All Faculty Scholarship

No abstract provided.

Waves And Persistence In Merger And Acquisition Activity, Atreya Chakraborty

Atreya Chakraborty

Markov regime-switching and sine-wave models have been used to capture the apparent wave-like behavior in aggregate U.S. merger and acquisition (M and A) activity. In this paper we offer an alternative characterization of the dynamic structure in M and A activity as a strongly dependent or long-memory process.

Takeover Defenses And Dilution: A Welfare Analysis, Atreya Chakraborty

Atreya Chakraborty

Existing theory suggests that, in an unregulated market for corporate control, the level of takeovers is suboptimal because shareholders do not receive the full benefit from them. However, existing theory neglects that the threat of takeover may divert managerial effort from productive to defensive activities. This paper shows that, when this is considered, takeovers may, in fact, be excessive.

An Evaluation Of Financial Globalisation Under Fund-Manager Capitalism: The Case Of The Uk Unit Trust Industry', Colin C. Williams

Colin C Williams

Drawing upon evidence from the UK unit trust industry, this paper evaluates the extent and nature of financial globalisation. It finds that despite this rapidly growing and prominent form of fund-manager capitalism operating with increasingly mobile capital in a more inter-connected de-regulated world, this does not signal the advent of homeless capital and the end of geography.