Purpose – The purpose of this paper is to examine the risk‐incentive effect of CEO stock options in the banking industry. Design/methodology/approach – For a sample of industrial mergers, Williams and Rao find that the risk‐incentive effect of CEO stock options is associated with higher...

Extant literature identifies board composition and the market for takeovers as two important measures for controlling the agency problem associated with top management. This study tests the substitution hypothesis that outside directors on the board and the effectiveness of takeover markets are...

In this paper, we present a model to determine the interest cost of high‐yield (HY) bond financing. We first denmonstrate that, with a relatively high coupon rate, HY bonds have a significantly higher call risk than investment‐grade bonds, and the effective life of the bond is closer to the...

In the last decade, involvement of foreign‐based firms in the United States through setting up of joint ventures and subsidiary operations has increased tremendously. Many of these subsidiaries have securities traded in the local market but have the added flexibility of raising capital outside...

This paper tests the mimicking propositions from signalling theory as they relate to stated firm objectives and firm performance. We classify the corporate objectives of a large sample of firms and evaluate firm performance relative to these objectives. We find that poorly performing firms more...