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Article
Publication date: 1 December 2002

Hemantha S.B. Herath and John S. Jahera

In recent years, practitioners and academics have argued that traditional discounted cash flow (DCF) valuation models do not adequately capture the value of managerial flexibility…

1923

Abstract

In recent years, practitioners and academics have argued that traditional discounted cash flow (DCF) valuation models do not adequately capture the value of managerial flexibility to delay, grow, scale down or abandon projects. The insight is that a business investment opportunity can be conceptually compared to a financial option. The purpose of this paper is to develop a theoretical model based on option pricing theory to value managerial flexibility arising in stock for stock exchanges. The paper shows how a mergers and acquisition (M&A) deal may be optimally structured as a real options swap by including managerial flexibility of both the acquiring and target firms when stock prices are volatile. Using a recent acquisition case example from US banking industry the paper illustrates how the proposed exchange ratio swap optimize deal value and avoids earnings per share (EPS) dilution to both parties. Appropriate valuation of managerial flexibility is important given the historical premiums paid in takeovers. While the fact that such premiums exist lends some credibility to the idea that at least implicitly managerial flexibility is valued, the real options approach allows for more explicit valuation of such flexibility.

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Managerial Finance, vol. 28 no. 12
Type: Research Article
ISSN: 0307-4358

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Article
Publication date: 1 May 1995

William N. Pugh and John S. Jahera

The rise in hostile corporate takeover attempts during the 1980s motivated many states to pass antitakeover legislation, often after lobbying by the management of affected firms…

Abstract

The rise in hostile corporate takeover attempts during the 1980s motivated many states to pass antitakeover legislation, often after lobbying by the management of affected firms. Empirical attempts to assess the impact of such statutes on firm value have yielded mixed results finding either no effect or a significant negative effect. We hypothesize that, while there may be a negative market reaction associated with state antitakeover legislation, the effect is temporary. In empirically examining the effects from the actions of nineteen states, we find that any negative market reactions tend to be followed by roughly equal positive counter‐reactions, suggesting a market overreaction.

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Managerial Finance, vol. 21 no. 5
Type: Research Article
ISSN: 0307-4358

Article
Publication date: 1 February 1996

John S. Jahera and William P. Lloyd

Despite many efforts to develop a universally accepted theory of capital structure, observed capital structures do not appear to conform to existing theories. The objective of…

Abstract

Despite many efforts to develop a universally accepted theory of capital structure, observed capital structures do not appear to conform to existing theories. The objective of this research is to empirically examine capital structure decisions in terms of the relationship of debt policy with explanatory variables designed to capture the asset structure of each firm, the degree to which each firm is diversified, the agency relationships between management and owners, the level of business risk and the impact of alternative tax shields. The results suggest that the most influential factors are the asset type, the degree of firm diversification and the availability of alternative tax shields.

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Managerial Finance, vol. 22 no. 2
Type: Research Article
ISSN: 0307-4358

Content available
Article
Publication date: 20 April 2010

James Barth and John Jahera

266

Abstract

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Journal of Financial Economic Policy, vol. 2 no. 1
Type: Research Article
ISSN: 1757-6385

Content available
Article
Publication date: 31 May 2011

James Barth and John Jahera

339

Abstract

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Journal of Financial Economic Policy, vol. 3 no. 2
Type: Research Article
ISSN: 1757-6385

Article
Publication date: 1 November 1997

John S. Jahera and David A. Whidbee

The global banking environment is experiencing significant change as regulatory and geographical barriers to competition are reduced. As these barriers are removed, greater…

Abstract

The global banking environment is experiencing significant change as regulatory and geographical barriers to competition are reduced. As these barriers are removed, greater integration of banking services is developing throughout the world affecting the performance and structure of banking institutions. This research examines the stock returns and volatility of stock returns for a sample of banks in the United States, Europe, Canada and Japan. The general focus is to identify factors influencing the return and risk and to examine cross‐country differences in these factors. The results suggest that while size does not affect return volatility for any of the categories of banks, it does affect returns for banks in Japan, the U.S. and other non‐universal banking systems. Likewise, the investment in fixed assets appears consistently to adversely affect returns. A number of differences are found across country borders and across type of institutions (i.e. universal versus non‐universal banks).

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Managerial Finance, vol. 23 no. 11
Type: Research Article
ISSN: 0307-4358

Content available
Article
Publication date: 1 June 2010

James Barth and John Jahera

658

Abstract

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Journal of Financial Economic Policy, vol. 2 no. 2
Type: Research Article
ISSN: 1757-6385

Content available
Article
Publication date: 9 August 2011

James Barth and John Jahera

264

Abstract

Details

Journal of Financial Economic Policy, vol. 3 no. 3
Type: Research Article
ISSN: 1757-6385

Content available
Article
Publication date: 6 November 2009

James Barth and John Jahera

597

Abstract

Details

Journal of Financial Economic Policy, vol. 1 no. 4
Type: Research Article
ISSN: 1757-6385

Article
Publication date: 1 November 1997

James R. Barth, Daniel E. Nolle and Tara N. Rice

The purpose of this paper is to compare and contrast the structure, regulation, and performance of banks in the EU and G‐10 countries. This enables one to identify any significant…

1215

Abstract

The purpose of this paper is to compare and contrast the structure, regulation, and performance of banks in the EU and G‐10 countries. This enables one to identify any significant differences in the structure of banking in the nineteen separate countries comprising these two groups. The regulatory, supervisory, and deposit‐insurance environment in which banks operate in each of these countries is also compared and contrasted. This enables one to identify any significant differences in the regulatory environment that may help explain the structure of banking in the various countries. Beyond this, the effect of the overall structural and regulatory environment on individual bank performance is investigated in order to evaluate the appropriateness of existing regulations in individual countries and any proposals for reforming them. Hence, an exploratory empirical analysis based upon a sample of banks in the different countries is conducted to assess the effect of the different “regulatory regimes” on the performance of individual banks, controlling for various bank‐specific and country‐specific factors that may also affect bank performance. In this way, the paper attempts to contribute to an assessment of the appropriate balance between market and regulatory discipline to ensure that banks have sufficient opportunities to compete prudently and profitability in a competitive and global financial marketplace. In the process of conducting such an assessment, the paper necessarily provides information as to whether the U.S. is “out‐of‐step” with banking developments in other industrial countries.

Details

Managerial Finance, vol. 23 no. 11
Type: Research Article
ISSN: 0307-4358

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