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1 – 6 of 6The purpose of this paper is to determine the extent to which Canadian companies have embraced value‐based management (VBM) methods, identify the characteristics of these…
Abstract
Purpose
The purpose of this paper is to determine the extent to which Canadian companies have embraced value‐based management (VBM) methods, identify the characteristics of these companies and of the executives responsible for the introduction of VBM in their organisations and assess the stock price performance of the companies that use VMB vs. those that do not.
Design/methodology/approach
The study is based on a survey of CEOs of a large sample of Canadian companies and examines the relation of a number of explanatory variables, including stock price performance, to the probability of using VBM versus not using VBM via a regression analysis of qualitative choice, namely logit analysis.
Findings
The study finds that value‐based management methods are widely used in Canada, with the likelihood of usage being higher for larger companies with younger and more educated executives with an accounting/finance background. The statistical analysis that follows the tabulation of survey results indicates companies that used EVA had a better stock price performance than those not using EVA. Moreover, our logit regression analysis shows that companies with better stock market performance exhibited higher likelihood of using EVA.
Practical implications
The study implies that the lower usage of EVA in Canada, especially at the corporate level, provides some explanation for the stock market under‐ performance of the Canada market vis‐à‐vis the USA in the 1990s.
Originality/value
To our knowledge, this study serves as the first widespread evaluation of VBM methods in Canada and their effect on company and stock price performance.
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Steven Graham and Wendy L. Pirie
The fact that stocks going ex‐dividend decline in price by less than the dividend amount is theoretically attributed to the differential taxation of dividend and capital gains or…
Abstract
The fact that stocks going ex‐dividend decline in price by less than the dividend amount is theoretically attributed to the differential taxation of dividend and capital gains or the differential taxation of investor groups. NYSE, Amex and Toronto Stock Exchange listed stocks, and stocks interlisted on these three exchanges, are examined to infer the tax jurisdiction of the marginal investor. The stock price changes relative to the dividends are consistent with a tax clientele effect. Further, the stock price changes are plausible given the tax rates. Ex‐dividend day behavior is different for non‐interlisted stocks on all three exchanges, suggesting each exchange has a different tax clientele. Canadian firms interlisted on US exchanges exhibit ex‐dividend day behavior consistent with the appropriate US exchange’s non‐interlisted stocks, suggesting that the marginal investors in these stocks are American.
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Behavioral researchers argue that although individuals often rely on heuristics or rules of thumb that reduce the complexity involved in predicting values, such heuristics can…
Abstract
Behavioral researchers argue that although individuals often rely on heuristics or rules of thumb that reduce the complexity involved in predicting values, such heuristics can lead to severe and systematic errors. I test this argument in an investment context by focusing on a simple heuristic whereby momentum traders are attracted to buying stocks that have recently doubled in price in anticipation of further gains. I show that such a strategy can lead to predictable disappointment for these investors and severe underperformance relative to the market (‐28% over a 4‐year period), whereas investors who avoid relying on this simple heuristic are likely to perform as expected, on average similar to the overall market. I also find that underperformance is more severe for stocks that have doubled faster. The “doubling” variable is a significant predictor of future price reversals in addition to past performance per se, as uncovered by the previous researchers.
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The purpose of this paper is to provide a model that can explain how organizations may retain their executives’ tacit knowledge in the organization especially during the…
Abstract
Purpose
The purpose of this paper is to provide a model that can explain how organizations may retain their executives’ tacit knowledge in the organization especially during the succession period. The proposed model takes into consideration three critical contexts that may assist in improving the knowledge flow during the transition period, namely, motivation context, transition context and ability context.
Design/methodology/approach
This paper presents a conceptual framework that emphasizes the importance of the will and skill of two parties involved in succession, i.e. the predecessor and successor, as well as the context of the succession. To this end, the paper advances a set of propositions that explain how these different contexts affect the quantity and quality of the knowledge acquired by the successor at the end of the succession period.
Findings
This paper advances a theoretical model that describes the antecedents and moderator of job-specific knowledge acquired during executive succession.
Research limitations/implications
This paper presents a theoretical model that explains knowledge flow during the transitory period of succession. It emphasizes the importance of the motivation and ability of the partners involved while taking into consideration the context of succession.
Practical implications
This paper contributes considerably and in a practical manner to managers in general and to human resource managers in particular. It draws the attention of concerned managers to check the motivation of both successor and predecessor in experiencing the transition, explain to the successors the job description of the position to direct their attention to learn specific knowledge and equip both parties involved in the succession with the needed skills.
Originality/value
This paper advances a new concept termed as accelerated engaged tacit knowledge acquisition. This concept complements other perspectives of knowledge flow and learning and takes into consideration the specific context of executive succession.
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The purpose of this paper is to examine whether financial analysts are sensitive to voluntary earning disclosures.
Abstract
Purpose
The purpose of this paper is to examine whether financial analysts are sensitive to voluntary earning disclosures.
Design/methodology/approach
The paper is based on a literature review of the relationship between analysts' behaviour and corporate disclosures. It is assumed first that analyst coverage both influences and is influenced by voluntary earning disclosures, and that second, French managers are expected to make voluntary disclosures in order to reduce market uncertainty. To test these hypotheses, a simultaneous equation model and an ordinary least square regression framework were estimated on a sample of 154 French‐listed firms between 1998 and 2001.
Findings
The results show that voluntary earning disclosures positively influence analyst coverage decision. They also show that voluntary disclosures improve the accuracy of analyst forecasts and reduce market uncertainty.
Research limitations/implications
The paper does not cover all forms of corporate voluntary disclosures.
Practical implications
The findings suggest that corporate disclosure policy is likely to change financial analysts' behaviour. The results are useful to both managers, wishing to meet market expectations and, to investors wishing to invest in richer informational environment firms.
Originality/value
This paper provides original results about the role of analysts in France as information intermediaries. These analysts pay little attention to French firms with a poor information environment in which minority shareholders are less inclined to ask for costly analyst coverage.
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