U.S. firms commonly use preferred stocks to raise external capital. Yet this hybrid security's issuance costs and offer yields have not been previously examined in a systematic manner. We analyze a sample of 3,042 preferred stock issues by publicly traded U.S. firms between 1980 and 1999. We...

To estimate the grant-date expense of their employee stock options (ESOs), as required under the new accounting rules (FAS 123R), companies have typically had to choose among various theoretical valuation models because there is no secondary market for ESOs. Different models, all permissible...

It is widely believed that contrary to standard asset allocation theory, employees irrationally hold concentrated investments in company stock in their 401(k) plans thus bearing firm-specific risk that could otherwise have been diversified away [See for example, Benartzi (2001)]. However, in...

According to the Revised FAS Statement No. 123 issued on December 16, 2004, (FAS123R) the accounting treatment of employee stock options (ESOs) for U.S. companies will be radically different in the near future. Although, FAS 123R does not specify a particular valuation technique as preferable,...

Companies that consistently make detailed, timely, and informative disclosures face lower costs of public equity and debt capital. The study reported here investigated whether such companies also face lower interest costs on private debt contracts. Examination of a sample of 173 new private debt...

The Gramm-Leach-Bliley (GLB) Act of 1999 repealed many provisions of the Glass-Steagall Act that curtailed competition between banks and commercial firms. Significantly, however, the GLB Act did not repeal the constraint on banks from owning equity in commercial firms (quot;universal...

US firms commonly use preferred stocks to raise external capital. Yet this hybrid security's issuance costs and offer yields have not been previously examined in a systematic manner. We analyze a sample of 3,042 U.S. preferred stocks issued between 1980 and 1999. We find that convertible issues,...

Recent empirical studies have documented the dramatic growth of privatizations globally and the resultant efficiency gains. We develop a theoretical model that incorporates the costs and benefits of privatization as complex options. This framework allows us to highlight the impact of...

The exchange rates between the currencies of European Monetary System (EMS) members are essentially fixed between narrow bands mandated by the Exchange Rate Mechanism (ERM). the intent of such a fixed rate regime is to enhance policy co-ordination within the EMS. However, it has instead led to...