Shareholder interests diverge from management (and employee) option holders' on use of corporate cash for reinvestment, dividends, and buybacks. If options equal 25% of shares, shareholders/option holders in theory quot;contractquot; to split future stock profits 80/20. Dividends, however,...

The average cash-to-assets ratio for U.S. industrial firms more than doubles from 1980 to 2006. A measure of the economic importance of this increase in cash holdings is that at the end of the sample period, the average firm can pay back all of its debt obligations with its cash holdings; in...

In this paper, we explain how enterprise risk management creates value for shareholders. In contrast to the existing finance literature, we emphasize the organizational benefits of risk management. We show how a firm should choose its risk appetite and measure risk when implementing enterprise...

Merton Miller was at the center of the transformation of academic finance from a descriptive field to a science. His principal contribution to this transformation was the introduction of arbitrage arguments which underlie most theoretical contributions in finance and remain central to the way...

The case of Evergreen Solar (ESLR) suggests counterparty risk exposure be added to the litany of misgivings on the economic efficiency, absolute performance, and governance conflicts of ASRs. Evergreen Solar in July 2008 issues a convertible, enters into an offsetting, broker-backed long...

The current study adds consideration of a $1.7 billion accelerated stock repurchase (ASR) by Hewlett-Packard (HP) to a recent analysis of 2006-2007 ASRs by Applied Materials, Cypress Semiconductor, Linear Technology, and Xilinx. The HP addition to company case studies leaves fundamental findings...

A previous study failed to identify economic benefits to explain the 2006-2007 popularity of accelerated stock repurchase programs (ASRs) funded through issuance of convertible debt. The case study of a $600 million transaction by Cypress Semiconductor did find cosmetic advantages in terms of...

Antigravity introduces a transaction so implausibly attractive it would be deemed impossible were it not that U.S. companies already float an inferior equivalent at a rate of nearly $500 billion per year. A Cashless Buyback(tm) is exactly like a cash buyback minus the risk and should be viewed...

Despite the disappearance of formal barriers to international investment across countries, we find that the average home bias of US investors towards the 46 countries with the largest equity markets did not fall from 1994 to 2004 when countries are equally weighted but fell when countries are...