Considerable debate within academia and the banking community continues to focus on the role of fixed rate deposit insurance. In particular, some argue that mispriced deposit insurance creates further incentives for bank stockholders to take on additional risk. While previous studies of the...

Motivated by psychology research showing that individual mood is affected by weather and daylight savings changes respectively, Saunders (AER, 1993) and Kamstra et al (AER, 2000) find that stock prices are systematically related to these economically-neutral events. These results provide a...

We examine the stock price reaction to announcements of the intention to pursue a program of external acquisitions. Using a 1977-92 sample of 65 firms that have announcement dates which (i) can be explicitly identified and (ii) are uncontaminated by other firm-specific events, we confirm the...

Despite being rejected by finance theory, payback continues to be widelyused as a method for evaluating capital investment projects. In situations where investment can be delayed, we show that the value of waiting to invest is an increasing function of payback period. Consequently, the optimal...

Popular investment advice recommends that stock/bond and stock/wealth ratios should rise with investor risk tolerance and investment horizon respectively, prescriptions that are difficult to reconcile with the simple mean-variance model. We show that extending the mean-variance model to include...

Using data from six OECD countries, we examine the proposition that the costs associated with shareholder- debtholder agency conflicts can be reduced by allowing banks to hold equity in the firms to which they lend. Although the sensitivity of leverage to potential wealth expropriation is indeed...