Corporate Finance Commons^™

Analysis Of Acquirer Stock Performance In Mergers And Acquisitions In Alberta's Oil And Gas Industry, Harrison A. Zivot

CMC Senior Theses

This paper develops a framework that analyzes how mergers and acquisitions in Alberta’s oil and gas industry affect stock prices. In this experiment, a multivariate regression is applied to several industry-specific variables to determine if they have impacts on the abnormal stock returns of acquirers. The results show that abnormal returns 5 days prior to the public announcement of the transaction are, in fact, driven by several industry-specific variables. However, the returns immediately after the M & A announcements are similar to previous research done in other industries. Acquirers’ gains 2 days after the announcement are essentially unaffected by the …

Raising Venture Capital For The Serious Entrepreneur, Michele K. Masterfano

New England Journal of Entrepreneurship

Berkery, Dermot. Raising Venture Capital for the Serious Entrepreneur. New York: McGraw-Hill, 2008. ISBN 9780071496025

Raising Venture Capital for the Serious Entrepreneur is a fascinating journey through the world of venture finance. It provides an interesting, even absorbing view into the arcane world of how venture capitalists determine what companies they will finance, how they decide on the level of investment,and what they expect in return. It further provides important tips for entrepreneurs as they begin their planning for equity financing and the negotiations with VCs for that financing.

A Common Eurozone Bond, Erik Welin

WCBT Undergraduate Publications

Introduction

The sovereign bond yields of the Eurozone, or more correctly the euro area, have since the introduction of the Euro undergone a bond yield compression. However, as can be seen in table 1, these bond yields started to diverge considerably around mid 2008 following the recent financial crisis and increased sovereign risk. Yields on Greek, Irish, and Portuguese bond have diverged the most from for example German bonds. Based upon this and the ongoing economic integration within the EU and Eurozone, proposals for a common Eurozone bond have been raised. There are many pros and cons with such a …

A Comprehensive Theory Of Deal Structure: Understanding How Transactional Structure Creates Value, Michael S. Knoll, Daniel M. G. Raff

All Faculty Scholarship

No abstract provided.

The Extreme Risk Problem For Monetary Policies Of The Euro-Candidates Countries, Hubert Gabrisch, Lucjan T. Orlowski

WCBT Working Papers

We argue that monetary policies in euro-candidate countries should also aim at mitigating excessive instability of the key target and instrument variables of monetary policy during turbulent market periods. Our empirical tests show a significant degree of leptokurtosis, thus prevalence of tail-risks, in the conditional volatility series of such variables in the euro-candidate countries. Their central banks will be well-advised to use both standard and unorthodox (discretionary) tools of monetary policy to mitigate such extreme risks while steering their economies out of the crisis and through the euroconvergence process. Such policies provide flexibility that is not embedded in the Taylor-type …

Backdated Stock Options Ownership Impact On The Corporation, Management, & Shareholders, Karen Cascini, Alan Delfavero

WCBT Faculty Publications

In the post-Sarbanes-Oxley Act (SOx) world, there has been an unprecedented crackdown on fraudulent activity occurring within corporate America. During recent years, many companies have granted stock options to their executives and employees as part of compensation packages. While the issuance of stock options as a component of compensation is considered to be a legal practice, corruption has taken this corporate resource to unlawful heights. Recently, numerous corporations have been in the news for potentially backdating stock options. Accordingly, the purpose of this paper is to distinguish between legal and illegal aspects of backdating stock options, and to examine the …

Intra-Industry Effects Of Takeovers: A Study Of The Operating Performance Of Rival Firms, Rupendra Paliwal

WCBT Faculty Publications

This paper investigates whether the managers of industry rivals act to mitigate their agency exposure and improve operating performance when one of the firms in the industry is subject to a takeover attempt. The results indicate that rival firms in general decrease free cashflows, improve operating performance, reduce capital expenditures, and increase leverage in response to a control threat within the industry. In particular, rival firms with potentially higher agency costs i.e., fewer investment opportunities and high cash or high free cashflows exhibit a higher reduction in cash levels and free cashflows subsequent to a control threat in their industry. …

Moral Hazard, Firms’ Internal Governance And Management Earnings Forecasts, Jimmy Lee

Research Collection School Of Accountancy

This paper investigates the role of management earnings forecasts in mitigating information asymmetry between investors andmanagers relating to moral hazard, and explains how earnings guidance facilitates monitoring. I demonstrate that firms that are more susceptible to moral hazard problems and more difficult to monitor are also more likely to issue annual earningsforecasts and they do so more frequently. In addition, I examine how firm internal governance drives forecasting decisions andshow that stronger board governance and managerial equity incentives are associated with higher likelihood and frequency of forecast issuance. Finally, I provide robust evidence that managerial equity incentives are associated with …

Assessing The Chrysler Bankruptcy, Mark J. Roe, David A. Skeel Jr.

All Faculty Scholarship

Chrysler entered and exited bankruptcy in 42 days, making it one of the fastest major industrial bankruptcies in memory. It entered as a company widely thought to be ripe for liquidation if left on its own, obtained massive funding from the United States Treasury, and exited via a pseudo sale of its main assets to a new government-funded entity. The unevenness of the compensation to prior creditors raised considerable concerns in capital markets, which we evaluate here. We conclude that the Chrysler bankruptcy cannot be understood as complying with good bankruptcy practice, that it resurrected discredited practices long thought interred …

The Case Against Shareholder Empowerment, William W. Bratton, Michael L. Wachter

All Faculty Scholarship

No abstract provided.

Veil-Piercing, Peter B. Oh

Articles

From its inception veil-piercing has been a scourge on corporate law. Exactly when the veil of limited liability can and will be circumvented to reach into a shareholder’s own assets has befuddled courts, litigants, and scholars alike. And the doctrine has been bedeviled by empirical evidence of a chasm between the theory and practice of veil-piercing; notably, veil-piercing claims inexplicably seem to prevail more often in Contract than Tort, a finding that flouts the engrained distinction between voluntary and involuntary creditors.

With a dataset of 2908 cases from 1658 to 2006 this study presents the most comprehensive portrait of veil-piercing …

When The Government Is The Controlling Shareholder: Implications For Delaware, Marcel Kahan, Edward B. Rock

All Faculty Scholarship

No abstract provided.

The Overstated Promise Of Corporate Governance, Jill E. Fisch

All Faculty Scholarship

Review of Jonathan Macey, Corporate Governance: Promises Kept, Promises Broken (Princeton, 2008)

Real-Time Corporate Tax Audits And Their Impact On Financial Reporting, M. Catherine Cleaveland, Kathryn K. Epps, Cassie F. Bradley

Faculty and Research Publications

The article focuses on the Compliance Assurance Process (CAP) program, a simultaneous auditing process that aims to potentially reduce audit procedures after the corporate tax filing date in the U.S. The process by which the program work is explained, which involves a corporation working an entire tax year with an account coordinator assigned by the Internal Revenue Service (IRS). Benefits of the CAP program include increased corporate tax compliance, while its disadvantages include resistance by a company to participate in a real-time audit program.

Strategic Asymmetric Multicultural Alliances In Business, Anthony James Scriffignano

Antioch University Full-Text Dissertations & Theses

Global economics and other factors make it increasingly difficult for organizations to operate within the boundaries of one country in a rational way (e.g., leveraging best practices, profitable, achieving goals). In this study, I looked at strategic business alliances, transcending simple quid pro quo relationships to deliver ongoing partner value. I refined my study to multicultural relationships, having differing cultural identities (i.e., ideas, heritage, language, or demographics from differing geographies). Finally, I considered asymmetry (i.e., inequity in working relationship). Using a mixed-methodology design, I surveyed alliance participants and interviewed participants from selected alliances. A multi-case study addresses emergent themes of …

Why Does Corporate Governance Matter? Evidence From Seasoned Bond Offerings, Fang Wang

Dissertations and Theses Collection (Open Access)

To examine the importance of corporate governance, I look at how management and investors behave in the event of seasoned bond offerings, controlling for the corporate governance structure of issuing firms. I find that companies with the weakest governance structure aggressively manipulate their earnings upwards during the two years prior to the debt issuances. And when the bond offerings are announced to the market, these same firms experienced positive abnormal returns over a three day event period, indicating that investors of poorly governed firms value a debt financing for the alleged decrease in agency cost.

Commercial Real Estate Concentrations, Elisabeta Pana

Elisabeta Pana

No abstract provided.

Commercial Real Estate Lending Concentrations: New Evidence, Elisabeta Pana

Elisabeta Pana

This study documents the management of risk used by small banks with commercial real estate lending concentrations prior to the 2007-2009 financial crisis. We show that banks with commercial real estate concentrations traded interest rate risk for credit risk. The trade-off is accompanied by a higher leverage and liquidity risk. Our findings support the argument advanced by policymakers and academic researchers that the increased scrutiny over banks’ lending standards and risk management practices is justified.

Commercial Real Estate Concentrations: Evidence On The Survival Of Small Banks, Elisabeta Pana

Elisabeta Pana

This study examines the survival of small banks with commercial real estate concentrations over the 2006-2009 period. Using data on 4646 banks, I document that commercial real estate loan concentrations increase the hazard of disappearance. The analysis of bank-specific factors reveals that bank capitalization, liquidity, and asset quality play a significant role on bank survival. I also find evidence that small banks in the Pacific Southwest and South Atlantic regions are less likely to survive as separate entities.

S&P Etfs: Arbitrage Opportunities And Market Forecasting, Steven Dolvin

Steven D. Dolvin

The article examines the pricing differences between two S&P 500 ETFs (ticker symbols SPY and IVV) and the underlying stock index. The author finds that, on average, both ETFs trade at a premium relative to the S&P 500; however, the level of the daily premium (and, on occasion, discount) varies between the two securities, which creates the opportunity for arbitrage. Since the passage of Regulation NMS in mid-2005, the pricing differences, as expected, have declined, implying that any current/future arbitrage opportunity will be confined to periods of high market volatility, such as 2008. Beyond issues related to arbitrage, the author …