We examine changes in managers' investment in the firm around leveraged buyouts and find agency costs counter to those described in extant literature. In majority of deals during 1997-2008, managers divested a portion of their pre-LBO shareholdings while maintaining an ownership stake in the...

Does financial innovation improve market efficiency? Innovations that facilitate arbitrage are good examples. We use the stocks listed on the newly established single stock futures (SSF) exchanges to introduce a new approach to test for market efficiency. The measure is based on the reduction in...

We provide direct empirical evidence that stocks' overvaluation is an important motive for firms to make acquisitions with their stocks, supporting the market driven acquisition theory (Shleifer and Vishny, 2002). Overvaluation increases the probability of firms becoming acquirers and the...

This paper examines international differences in analyst forecast properties using 42 countries. Properties of the forecasts, specifically dispersion and error, are hypothesized to be a function of country-specific, firm-specific, and discretionary components, the latter component including...

This study seeks to determine the relation between stock returns and analyst forecast properties, specifically, the dispersion and error of annual earnings forecasts. The results of portfolio sorts, Fama-MacBeth cross-sectional regression models, and Fama and French (1993) factor models indicate...

Conrail, nationalized in 1976 and privatized in 1987, was the most significant nationalization and privatization by the US government in recent years. It provides a specific example to examine the financial impacts of politics. We show that at key points in the nationalized and privatized time...

This paper provides a link that integrates public finance and corporate finance. We analyze a world in which costly tax avoidance or evasion could occur. The class of solutions considered here involve changes in the tax system that economize on the deadweight costs of avoiding taxes and...