We analyze how E/P multiples are affected when firms experience an unusual change in earnings. Those firms with earnings changes that are below the industry median have E/P ratios that are also below the median. Conversely, those firms with earnings changes above the median have E/P ratios that...

This paper examines the relation between the market reaction to primary seasoned equity offerings and alternative measures of the profitability of the issuing firm's growth opportunities. While the sample offerings display a positive relation between announcement period prediction errors and...

We report that 31% of the firms completing leveraged recapitalizations between 1985 and 1988 subsequently encounter financial distress. Following their recaps, the distressed firms exhibit (1) poor operating performance due largely to industry-wide problems, (2) surprisingly low proceeds from...

This paper compares the leveraged recapitalization of Kroger Co. with the leveraged buyout of Safeway Stores. While both transactions dramatically increased leverage, Safteway's also altered managerial ownership, board composition, and executive compensation, while Koger's did not. My analysis...

Coincident with a rise in intangible investment, operating losses have become substantially more prevalent, persistent, and greater in magnitude since 1970. Loss firms now make up over 30% of the Compustat universe and such losses continue for a median of four years. Firms with negative...

We provide evidence on the agency cost explanation for corporate diversification. We find that the level of diversification is negatively related to managerial equity ownership and to the equity ownership of outsideblockholders. In addition, we report decreases in diversification are associated...

We report a significant negative relation between the fractional equity ownership of top executives and the likelihood of top management turnover. In addition, the relation between prior firm performance and the likelihood of turnover is statistically insignificant for firms in which the top...

The use of equity incentives is significantly greater in countries with stronger insider trading restrictions, and these higher incentives are associated with higher total pay. These findings are robust to alternative definitions of insider trading restrictions and enforcement, and to panel...

We analyze capital structure decisions of U.S. firms during 1905-1924, a period characterized by two shocks that provide a unique experiment for studying the primary determinants of financing choices: (i) the introduction of corporate and individual taxes, and (ii) the onset of World War I,...

Professor David J. Denis presented the session transcribed here at the October, 2014 FMA meetings in Nashville, TN. Prof. Denis is the Roger S. Ahlbrandt, Sr. Chair and Professor of Business Administration at the Joseph M. Katz Graduate School of Business, University of Pittsburgh