Corporate Finance Commons^™

Capital Gains, Dividends, And Taxes: Market Reactions To Tax Changes, Mark Foster, Larry White, Michael T. Young

All Faculty Scholarship for the College of Business

The purpose of this study is to examine the effect of a capital gains tax reduction on the stock price of firms that have not historically paid a dividend. If markets are semi-strong-form efficient, one would expect that the market price would have already adjusted prior to the day the announcement was made, assuming no new information was included in the announcement. If markets have not already incorporated the information, there would be a possibility for abnormal returns from investing in the stocks on the date of the announcement. This paper studies the returns from companies prior to, and subsequent …

Classified Boards And Firm Value, Michael D. Frakes

Faculty Scholarship

Classified boards constitute one of the most potent takeover defenses for U.S. firms today. However, as with takeover defenses more generally, economic theory offers an ambiguous prediction as to the effect that classified boards have on bottom-line firm value. A resolution of this ambiguity will require sound and convincing empirical methodology. In an effort to address limitations in the existing empirical literature, this article approaches the relationship between corporate governance and firm value while taking various measures to account for unobserved sources of heterogeneity across firms. Using the instrumental variables model developed by Hausman and Taylor, I find evidence of …

Financial Reforms And Common Stochastic Trends In International Stock Prices: A Case Study Of Pakistan, Mohammed Nishat, Ch. Muhammad Irfan

Business Review

This study uses the co-integration and error-correction techniques to examine the linkages between Pakistan and other capital markets of developed economies (US, UK, Japan, Australia and Canada); regional markets in South Asia (India, Sri Lanka), East Asia (Indonesia, South Korea, Singapore, Malaysia, Taiwan, Philippines) and EU (Austria, Belgium, Denmark, Germany, Italy and Czech) countries. The results indicate a long-run relationship between Pakistani stock market and most of the international markets during the sample period (1997 to 2004). However, the longrun linkages were comparatively stronger with developed and EU markets. The direction of linkages in most cases, are from other regional …

Investments And Risk Management Under The New Pension Scheme, Atedo A. N. Peterside

Bullion

The Pension Reform Act 2004 ("the Act"), a compul sory contributory pension scheme ("the scheme ' or CPS") has been established for all the categories of workers in the Federal public service, Federal Capital Territory , and in the private sector ( 'applicable sectors'). This paper attempt to discuss and examine the issues of investment and risk management that are essential to the success of the new Scheme, and highlight some of the benefits and limitations of the contributory pension scheme and its investment and risk management framework. The study concluded that, the new CPS, it is also pertinent to …

Investments And Risk Management Under The New Pension Scheme., Luka A. Dalang

Bullion

Pension today, has become a topical issue. one that has engaged the commitment of government, attention of employers and workers not only in Nigeria but also in many developing and emerging economies of Africa, Asia and Latin America This paper discuss the trend of investments and pension schemes with its risks and challenges in Nigeria. The study however confirmed the non applicability of the financial reform theory hypothesized by McKinnon and Shaw in Nigeria.' . The National pension Commission guidelines as mentioned earlier, are designed to ensure transparency, integrity and objectivity in the vestment process. and to ensure that the …

Semi-Strong Form Market Hypothesis: Evidence From Cnbc's Jim Cramer's Mad Money Stock Recommendations, Elizabeth Dodson

Inquiry: The University of Arkansas Undergraduate Research Journal

Mad Money has become one of the most popular shows on CNBC. The host, Jim Cramer, has an outlandish style and personality that viewers find intoxicating. Cramer's goal for the show is to make people money. Does he succeed? This paper finds that investors can expect to gain above-average, risk adjusted returns by following Cramer's stock recommendations and trading accordingly. These findings challenge the semi-strong form market hypothesis. According to this hypothesis investors should not recognize gains trading on public information since it states that the market has already adjusted prices for that information. It also contributes to current literature …

Investor Risk Aversion And The Weekend Effect: The Basics, Michael T. Young

All Faculty Scholarship for the College of Business

This paper provides an explanation of the continued persistence of the weekend effect. Using the 23 non-holiday Wednesday closings of 1968 as a benchmark, it is postulated that negative Monday returns can be explained by risk averse investors reacting to the arrival of new information.

Financing Strategies Of The R & D Firm, Lawrence Fogelberg, John M, Griffith

Finance Faculty Publications

This paper investigates the financing strategies of the R&D firm. Our hypotheses are based on Cho's (1992) game theory model where the firm develops a product but needs additional financing to bring it to market. The model generates a particularly rich set of hypotheses: 1) to fund the completion of its project and bring its product to market, the firm initiates negotiations with an established firm; 2) the majority of the acquisitions will be partial cash acquisitions through private secondary offerings. Confirming the model's hypotheses, we find that the majority of the acquisitions are partial cash acquisitions by significantly larger …

Boeing-Airbus Subsidy Dispute: A Sequel, Robert J. Carbaugh, John Olienyk

All Faculty Scholarship for the College of Business

After intensifying in the 1980s and 1990s, the longstanding dispute between Europe and the United States over government subsidies for the commercial jetliner industry again heated up in 2004. This time, however, the stakes were higher because both nations sued each other at the World Trade Organization over government subsidies paid to their respective commercial jetliner companies. The dispute over subsidies has heightened trade tensions between the United States and Europe, as both companies spar for dominance in the highly competitive industry of commercial aircraft.

This paper provides a sequel to "Boeing-Airbus Subsidy Dispute: An Economic and Trade Perspective," a …

Employment Generation And Opportunities In The Manufacturing Sub-Sector. The Case For The Manufacturing Of Farm Implements., Ihinodu I. I

Bullion

The modernization of agriculture has the potential to achieve the various objectives of creating employment, increasing productivity and output in both the sector and the entire economy, thus contributing to the food security goal of the government. This paper aims primarily at examining the prospects as well as the processes of manufacturing agricultural implements with a view to encouraging small/medium entrepreneurs to engage in the ventures. It examines the manufacturing activities of farm implements. It analyses the role which governments should play as well as highlighting the potential benefits of the enterprises. The paper conclude that given the stage of …

Employment Creation And Opportunities In The Manufacturing Sub-Sector: The Case For The Manufacturing Of Cotton, Textile In Nigeria., Onuoha G. Nkem

Bullion

Nigeria is the third largest producer of cotton in Africa after Egypt and Sudan. Cotton growing zones are mainly in the Northern parts of the country, though the planting of cotton started in Western Nigeria. This paper focusses on the manufacture of cotton, textile in Nigeria, sources of material available, the equipment required, manpower, the land space required, the capital outlay and Profitability of the business. The paper concludes that from the financial result of the above analysis, the project is economically viable and technically feasible. Neem Seeds as Raw Materials is in abundance and can be sourced at lower …

Review And Appraisal Of 2003 Budget And Economic Performance., Ige S. Cyril

Bullion

The first set of problems in realizing the benefits of a national budget in Nigeria, the 2003 Federal Government Budget in particular, is the delay in formulation and presentation to the National Assembly. This paper examines various definitions of the national budget as understood by some of the important stakeholder. It discusses budget implementation and management, budget 2003 and the people, strengthening programming as a basis of budgeting for development, and co-ordination of economic management in 2003. Finally, the study concludes that NEEDS is a welcome idea but its goals will prove difficult to achieve because of the flaw in …

Fiscal Policy Thrust Of The 2004 Budget., Odoko F. O

Bullion

The budget is an important tool of economic management. Usually, it presents estimates of Government revenue and expenditure for a fiscal year. The objective of this paper is to provide an overview of the fiscal policy measures in the 2004 Budget. This paper contains the background to the budget, the policy thrust and the key parameters. It highlights the revenue and expenditure estimates and identifies the policy priorities and prospects. Finally, a good monetary policy is expected to achieve macro economic stability and a sound financial sector if effectively implemented and barring fiscal shocks. Overall, socio-political stability and fiscal discipline …

Monetary And Other Financial Sector Policy Measures In 2004., Nnanna O. J

Bullion

The objective of this paper is to review the monetary and other financial sector policy measures in 2004, with a view to identifying how they assist in achieving the macroeconomic objectives of the government in fiscal 2004. This paper evaluates the financial sector and the macroeconomic developments during fiscal 2003. It examines the monetary and other financial sector policies in 2004. A good monetary policy is expected to achieve macro economic stability and a sound financial sector if effectively implemented and barring fiscal shocks. Overall, socio-political stability and fiscal discipline are critical factors for the effectiveness of monetary policy. The …

External Sector Policies In The 2004 Budget, Obadan I. Mike

Bullion

External sector problems have continued to pose serious challenges to economic management in Nigeria. There is the challenge of conducting trade policy within the framework of the World Trade Organisation's [WTO] rules and regulations without compromising the country's short and Iong-term interests. This paper discusses the policy thrusts with respect to three issues in 2004, viz: Trade policy, Exchange rate policy, and External debt management. In the last few years, the government appears to have recognized the need to conduct trade policy, specifically, trade liberalization in a sensible and orderly manner. Hence, the growing effective protection being accorded local industries. …

The New Economy And Its Implications To Investors, Elizabeth Misco

Honors Capstones

Capstone submitted as a graduation requirement for the BSU Honors Program.

The Impact Of The Operations Of The Non-Bank Financial Institutions On Financial Sector Stability, Bamisile A. Sesan

Bullion

The Banks and Other Financial institutions Act (BOFIA) defines an NBFI to mean "any individual, body, association or group of persons; whether corporate or unincorporated, other than the banks licenced under the Act which carries on the business of a discount house, finance company and money brokerage and whose principal object include factoring, project financing, equipment leasing, debt administration, fund management, private ledger services, investment management, local purchase order financing, export finance, project consultancy financial consultancy, pension fund management and such other business as the Bank may, from time to time, designate". This paper affords the opportunity to explain and …

The New Capital Accord: Challenges For The Central Bank Of Nigeria And Nigerian Banks., Imala O. Ignatius

Bullion

Capital occupies a vital position in the life of a bank, like any other business. It plays the role of a cushion for losses resulting from crystallisation of the various risks a business entity is exposed to. This paper summarises the 1988 Accord and its inadequacies. It introduces the new Accord, the need for it and its structure. It highlights the challenges to both operators and regulators, and It discusses efforts of the supervisory authorities to implement the Accord in Nigeria. The challenges highlighted in this paper are by no means exhaustive but it is believed that the attempt would …

Macroeconomics/Structural Policies And Financial Sector Stability: The Challenges, Nnanna O. J

Bullion

The financial system plays an important role in the process of economic growth and development of a country. A financial system consists of various institutions, markets, instruments and operators that interact within an economy to provide financial services. It plays the crucial roles of lubricating the payment mechanism, resource mobilisation and credit allocation. The Nigerian financial sector comprises the regulatory/supervisory authorities, deposit money banks, and other nonbank financial institutions. The objective of this paper is to examine the effect of macroeconomic/ structural policies on the financial sector, as well as the challenges of maintaining financial sector stability in Nigeria. The …

Internationalisation Of Financial Services: Challenges For Financial Sector Stability In Nigeria., Adeola Ade

Bullion

Internationalisation or Globalisation refers to the increasing integration of "economics around the world, particularly through trade and financial flows. lt is the actual movement, the capacity to move and the potential movement across nations of trade, , investment, technology, finance and labour. lt's also involves the effects of these I forces and the consequent liberalization I of the market. This paper focuses on internationalisation as it relates to the financial sector in Nigeria and its most common manifestation, which is liberalization. It aims to identify ways in which we can benefit from this process while remaining realistic about its potential …

Does The Adoption Of "Economic Value Added" Improve Corporate Performance?, Matthew Louis Bell

Inquiry: The University of Arkansas Undergraduate Research Journal

Determining how to properly measure corporate performance is one of the most important problems in contemporary corporate finance. Without a sound mechanism to evaluate managerial performance, a corporation's management has no adequate standard to be judged by. This can destroy the firm's value very quickly through poor managerial decisions. For this reason, managers need to be evaluated and compensated based on a performance measure that truly demonstrates the changes in a company's value. The interests of executives and shareholders do not always coincide, as can be seen through many of the current corporate scandals. Thus, it is almost universally argued …

Bond Rating Of Upgrades And Downgrades : The Impact On Stock Returns, C. Thaneswary Chelliah

Student Works (2000-2009)

This paper examines the share market reactions to bond rating changes of upgrades and downgrades. In term of analysis the upgrade and the downgrade category has been divided into changes based on the investment and speculative groups. The market model was used in determining abnormal returns for the study. This research provides the relation of changes taken place within the group and across the group. In addition, this paper is also examining the impact of rating changes due to financial prospect and the companies' leverage. All the analysis is based in Malaysian scenario . The result suggests that there were …

Performance Of Islamic Banking Scheme At Foreign Banks : A Malaysian Case Study, Luqyan Tamanni

Student Works (2000-2009)

Using trend and ratio analysis, this study analyses the performance of Islamic banking operations at three foreign banks in Malaysia i.e. HSBC, OCBC and SCB:MB. Using the data from 1996-2000, it is possible to track progress and evaluate performances of the Islamic Banking Scheme (IBS) versus its conventional counterpart at these banks. It is also possible to examine the impacts of the Asian Crisis in 1997-98 to the Islamic banking operations, especially at the foreign banks. This study concludes that, during 1996-2000, Islamic banking operations at foreign banks have been performing considerably well, during and post the crisis. On average, …

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.

Credit-Lending Channel In The Malaysian Economy, Roza Hazli Zakaria

Student Works (2000-2009)

Credit-lending channel Is an alternative view on how the shift in monetary policy is translated into the change in loans and output. Nevertheless, this paper finds that the evidence on the existence of a distinctive credit-lending channel In the Malaysian economy is absent. Firstly, the episodes of tight monetary policy In the 1990s are Identified using the "narrative approach". Then, a preliminary analysis Is done to see the impact of tight monetary policy on banks' credit supply. It Is found that bank loans only decline In the most recent monetary tightening, September 1997 to August 1998. Next, an empirical analysis …

The Business Of Part-Time Mba Programmes In Klang Valley With Special Reference To Stamford College, Choy Fong Lee

Student Works (2000-2009)

The financial sector is poised to enter a new era of institutional development and maturity with the unveiling of both the Financial Sector Master Plan (FSMP) by Bank Negara Malaysia and the Capital Market Master Plan (CMP) by the Securities Commission in 2001. FSMP is a blueprint to chart the way forward for the country's banking, insurance and other financial sectors for the next decade from year 2001 to 2010. It aims to develop a more resilient. competitive and dynamic financial system that will be able to meet the challenges of further liberalization and globalization. CMP is a financial development …

A Comparative Analysis Of Conventional Banking System And Islamic Banking System In Malaysia In Relation To Loan Repayments, Baharin Salim Abdullah

Student Works (2000-2009)

The birth of Bank Islam Malaysia Berhad (81MB) in 1983 symbolized the Malaysian Government's initiative in establishing an Islamic banking system. After 17 years of operation in a market mainly dominated by conventional banks, 81MB has still unable to achieve its target of capturing a significant portion of th is market. In this paper, the writer tries to observe the main differences between the conventional and Islamic banking system Malaysia in relation to loan repayments. Through this observation, strengths and weaknesses of the Islamic banking system can be identified. Recommendations can be made to help enhancing BIMB's performance in achieving …

Monetary And Financial Sector Policies In The Year 2000 Budget Of The Fgn, M. O. Ojo

Bullion

The paper attempts to review the monetary and financial sector policies of CBN during the 2000 fiscal year. It also discussed the issues and problems of implementation of the policies. The paper observes that the Nigerian economy witnessed some anxious moments during the 1999 fiscal year. Severe Pressures built-up in the economy mainly because of the expansionary fiscal policy of the Federal Government during the first five months of the year. lf price of oil in the international market continue to rise above budget expectations and expenditure does not rise in tandem, finance is likely to constrain achievement of most …

The Performance Of The 1999 Federal Government Budget, An Appraisal, Edet B. Akpankpan

Bullion

The annual budget is a key instrument for implementation of Government projects, programmes and policies. This paper attempts to explain the fact that the annual budget serves three important purposes, namely; as a tool for accountability and transparency; as a tool of management, and as an instrument of economic policy. The paper conclude that Despite the macrocosmic achievement of this, Administration, basic structural imbalances persist. These include the lingering problems of import dependence, reliance on a single economic sector-oil, weak industrial base, low level of agricultural production, a weak Private sector, high external debt overhang, inefficient public utilities, low quality …