National Semiconductor states that its stock repurchase program's goal is to contribute to increasing the firm's return on invested capital for the benefit of shareholders and employees. Which measure of return on capital is National watching? A review of four return on capital ratios suggest...

We survey the theory and evidence of behavioral corporate finance, which generally takes one of two approaches. The market timing and catering approach views managerial financing and investment decisions as rational managerial responses to securities mispricing. The managerial biases approach...

This report expands through early 2011 studies of the raw performance (profitability) of $383.5 billion of buybacks executed since 2000 by a sample of 252 corporations. The sample companies, drawn mainly from the technology sector, enjoy total equity market value today of $1.240 trillion. 69.8%...

Theory suggests that management may be able to increase firm value through the strategic use of debt when facing contingent liabilities. This paper examines whether managers strategically use financial policy when facing the risk of one such liability – litigation claims. I find that greater...

The paper provides review of Modigliani-Miller capital structure irrelevance proposition and its development since 1958. The paper suggests some pedagogical insights and introduce risk-shifting interpretations of the MM model. We also discuss shapes of cost of debt and cost of equity functions...

This report expands into early 2013 studies of the raw performance (profitability) of $457.6 billion of buybacks executed since 2000 by a sample of 232 corporations. The sample companies, drawn mainly from the technology sector, enjoy total equity market value today of $1.221 trillion. 75.0% of...

Using a sample of U.S. firms from 1995 to 2002, we examine corporate payout policy in dual-class firms. The expropriation hypothesis predicts that dual-class firms pay out less to shareholders because entrenched managers want to maximize the value of assets under control and the private benefits...

Large cash reserves have typically been associated with agency problems and poor investment decisions. I explore the cross sectional variation on the sources of cash holdings (internal vs. external to the firm) and find that previous evidence on overinvestment is mainly driven by firms that...

We show firms pay more dividends and repurchase more shares when they have higher levels of institutional ownership, even if the institutions are not activist investors. We also find evidence of an effect of institutional ownership on proxy voting, profitability, R&D, and CEO compensation. Our...