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Author: Xavier Giroud
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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This paper examines the hypothesis that firms in competitive industries should benefit relatively less from good governance, while firms in non-competitive industries - where lack of competitive pressure fails to enforce discipline on managers - should benefit relatively more. Whether we look at the effects of governance on long-horizon stock returns, firm value, or operating performance, we consistently find the same pattern: The effect is monotonic in the degree of competition, it is small and insignificant in competitive industries, and it is large and significant in non-competitive industries. By implication, the effect of governance (in non-competitive industries) reported in this paper is stronger than what has been previously reported in Gompers, Ishii, and Metrick (2003, quot;SGIMquot;) and subsequent work, who document the average effect across all industries. For instance, GIM's hedge portfolio - provided it only includes firms in non-competitive industries - earns a monthly alpha of 1.47%, which is twice as large as the alpha reported in GIM. The alpha remains large and significant even if the sample period is extended until 2006. We also revisit the argument that investors in the 1990s anticipated the effect of governance, implying that the alpha earned by GIM's hedge portfolio is likely due to an omitted risk factor. We find that while investors were indeed not surprised on average, they underestimated the effect of governance in non-competitive industries, the very industries in which governance has a significant effect in the first place.
Author: Xavier Giroud
Publisher:
ISBN:
Category :
Languages : en
Pages : 43
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Book Description
This paper examines the hypothesis that firms in competitive industries should benefit relatively less from good governance, while firms in non-competitive industries - where lack of competitive pressure fails to enforce discipline on managers - should benefit relatively more. Whether we look at the effects of governance on long-horizon stock returns, firm value, or operating performance, we consistently find the same pattern: The effect is monotonic in the degree of competition, it is small and insignificant in competitive industries, and it is large and significant in non-competitive industries. By implication, the effect of governance (in non-competitive industries) reported in this paper is stronger than what has been previously reported in Gompers, Ishii, and Metrick (2003, quot;SGIMquot;) and subsequent work, who document the average effect across all industries. For instance, GIM's hedge portfolio - provided it only includes firms in non-competitive industries - earns a monthly alpha of 1.47%, which is twice as large as the alpha reported in GIM. The alpha remains large and significant even if the sample period is extended until 2006. We also revisit the argument that investors in the 1990s anticipated the effect of governance, implying that the alpha earned by GIM's hedge portfolio is likely due to an omitted risk factor. We find that while investors were indeed not surprised on average, they underestimated the effect of governance in non-competitive industries, the very industries in which governance has a significant effect in the first place.
Author: Xavier Giroud
Publisher:
ISBN:
Category : Competition
Languages : en
Pages : 33
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Book Description
Author: John R.M. Hand
Publisher: OUP Oxford
ISBN: 0191588954
Category :
Languages : en
Pages : 558
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Book Description
Author: Alon Brav
Publisher: Now Publishers Inc
ISBN: 1601983387
Category : Business & Economics
Languages : en
Pages : 76
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Book Description
Hedge Fund Activism begins with a brief outline of the research literature and describes datasets on hedge fund activism.
Author: Harry DeAngelo
Publisher: Now Publishers Inc
ISBN: 1601982046
Category : Corporations
Languages : en
Pages : 215
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Book Description
Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.
Author: Adolf Augustus Berle
Publisher:
ISBN:
Category : Corporation law
Languages : en
Pages : 396
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Book Description
Author: Stijn Claessens
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
February 1995 More concentrated ownership is generally expected to improve corporate governance. Evidence from Czechoslovakia's mass privatization program supports this hypothesis. Equity prices in the Czech and Slovak Republics are higher when a domestic or foreign investor has majority firm ownership, and lower when ownership is shared among many investors. The 1992 Czechoslovakia mass privatization program involving about 1,500 enterprises and implemented through a voucher scheme with competitive bidding was a bold step in changing the ownership and governance of a large part of the economy. It represents a clear test case of one approach, and other countries may benefit from its lessons. At the time, much skepticism was voiced about mass privatization: it would lead to diffuse ownership, and no effective corporate governance would result. But innovative forces led to the emergence of investment funds that collected much of the individuals' voucher points, leading to a much more concentrated ownership structure. It has been expected that this concentrated ownership would lead to improved corporate governance. But the jury is still out. So far, only limited and largely anecdotal evidence is available on the impact investment funds have on the way firms are being managed. Too little time has passed and too many shocks have occurred (for example, the split of the Czech and Slovak Republics) to expect to find discernible changes in corporate governance on measures of actual firm performance. An alternative approach is to investigate whether firms that ended up with more concentrated ownership -- and possibly improved governance -- sell for higher prices, either in the last voucher round or in the secondary market since then. In a forward-looking financial market, one can expect prices to incorporate the effects of better ownership on future firm performance and associated dividends to shareholders. Put differently, one would expect that two firms with different shareholding structures, but otherwise identical, would trade at different prices -- with the firm with a more concentrated ownership, and presumably better corporate governance, trading at a higher price. On a cross-sectional basis, ownership structure may thus be significant in explaining (relative) share prices. Claessens explores this line of reasoning. Controlling for a number of firm and sector-specific variables, he finds that: * Majority ownership by a domestic or foreign investor has a positive influence on firm prices. * Firms with many small owners have lower prices. * Ownership by many small-scale investors makes it easier for any single investor to establish effective control, but such control does not necessarily translate into higher prices. Claessens provides two possible explanations of why higher prices appear to be associated only with majority ownership by a single investor: * The corporate legal framework and the difficulty in collecting proxy votes in the Czech and Slovak Republics may prevent a small investor from making the necessary changes in the way firms are managed, thus keeping prices low. * Commercial banks are both managers of investment funds and creditors of individual firms. Funds managers may face conflicts of interest and not be interested in increasing the value of equity alone but also the value of credits. This could explain why prices are relatively lower for those firms in which investment funds have effective control. This paper -- a product of the Private Sector and Finance Team, Technical Department, Europe and Central Asia, and Middle East and North Africa Regions -- is part of a larger effort in the Bank to study corporate governance in transition economies.
Author: Kose John
Publisher: Emerald Group Publishing
ISBN: 1783501219
Category : Business & Economics
Languages : en
Pages : 269
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Book Description
Advances in Financial Economics Vol. 16 contains a set of empirical papers by a set of global scholars who examine corporate governance and market regulation from a variety of perspectives.
Author: Jeffrey Neil Gordon
Publisher: Oxford University Press
ISBN: 0198743688
Category : Business & Economics
Languages : en
Pages : 1217
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Book Description
Corporate law and governance are at the forefront of regulatory activities worldwide, and subject to increasing public attention in the wake of the Global Financial Crisis. Comprehensively referencing the key debates, the Handbook provides a much-needed framework for understanding the aims and methods of legal research in the field.
Author: John Duns
Publisher: Edward Elgar Publishing
ISBN: 1785362577
Category : Law
Languages : en
Pages : 529
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Book Description
Comparative Competition Law examines the key global issues facing competition law and policy. This volume’s specially commissioned chapters by leading writers from the United States, Europe, Asia, South America, and Australia provide a synthesis of how these current issues are addressed by drawing on the approaches taken in different jurisdictions around the world. Expert contributors examine the regulation of core competitive conduct by comparing substantive law approaches in the US and the EU. The book then explores issues of enforcement – such as the regulator’s powers, whether to criminalize anti-competitive conduct, the degree to which private enforcement ought to be encouraged, and the extraterritorial scope of domestic laws. Finally, the book discusses how competition law is being implemented in a variety of countries, including Japan, China, Brazil, Chile, and Colombia. This scholarly analysis of the key substantive, procedural, and remedial challenges facing global competition law policymakers offers a comparative framework to facilitate a better understanding of relevant policies. This collection of global perspectives will be of great interest to scholars and students of competition law, microeconomics, and regulatory studies. Competition law regulators, policy makers, and law practitioners will also find this book an invaluable resource.
