One finding of recent empirical studies is that financially distressed stocks have large dispersion in their book to market value of equity (BM) ratios. In this paper we provide an explanation based entirely on rational decision making by investors. Our main argument is that the likelihood of a...

In September 2001 when Pasminco Ltd was placed in voluntary administration, it was the world's biggest zinc producer with over ten percent of global output. This paper examines the hedging strategies that Pasminco had in place in the years leading up to the firm being declared insolvent and...

Using data prior to the Jobs amp; Growth Tax Relief Reconciliation Act of 2003 Grullon and Michaely (2002) find that firms in the US are financing repurchases with funds that would otherwise have been used to increase dividends. This finding supports the hypothesis that firms are substituting...

In Australia, equal access share buybacks can be structured so that a portion of the buyback price is designated as a fully franked dividend. The tax benefits derived from this structure imply that off-market buybacks are sometimes offered to shareholders at a discount to the current market...

Private financing of large-scale infrastructure projects through Public Private Partnerships (PPPs) has grown in recent decades. Together with changes in conventional construction procedures, there have been changes in the project financing model. The use of PPPs raises questions as to the role...

Corrado and Su (1996) provide skewness and kurtosis adjustment terms for the Black-Scholes model, using a Gram-Charlier expansion of the normal density function. In this note we provide a correction to the expression for the skewness coefficient and illustrate the effect on call option prices of...

Standard techniques advocated for choosing between mutually exclusive projects of unequal lives make an implicit assumption of continued project replication. While intuitively appealing, those techniques ignore the fact that project replication is one outcome of a repeated choice situation, and...

The sub-prime crisis which emanated from the USA in 2007 has had profound effects around the world and is providing new insights into financial interlinkages and risk management issues. This paper examines the effects of the sub-prime crisis on the Australian financial sector with three...

This research studies the implications of short term debt for firm investment decisions on a sample of U.S. non-financial firms from 1985-2011. We argue that short term debt does not always help to reduce the overhang cost of leverage as is the case in Myers (1977) model. Our empirical results...

The design of national pension systems can have substantial influence upon the way in which financial sectors evolve. While economies of scale may appear to preclude certain design options involving a nascent industry comprising small private sector pension funds, collaboration provides scope...