Search results

Extant literature identifies board composition and the market for takeovers as two important measures for controlling the agency problem associated with top management. This study tests the substitution hypothesis that outside directors on the board and the effectiveness of takeover markets are substitutes for each other. This is done by first identifying a group of states that are characterized as weak takeover markets on the basis of their state takeover statutes. It is then shown that for a sample of firms in these states the stock markets react negatively to the election of an insider to the board, while no significant reaction is noted when an outsider is elected to the board. These results suggest that the election of an insider to the board signals a reduction in the monitoring power of the board over top management. We interpret this result as consistent with the substitution hypothesis.

In this paper, we present a model to determine the interest cost of high‐yield (HY) bond financing. We first denmonstrate that, with a relatively high coupon rate, HY bonds have a significantly higher call risk than investment‐grade bonds, and the effective life of the bond is closer to the call deferment period. Consequently, the interest cost is more affected by the duration measure than by the years to maturity, or the call feature. Furthermore, the HY bond market is segmented by the purpose of the proceeds. The interest cost is, on average, 27 basis points higher if the fund is used to finance takeover activities. The third difference we show is that firms have to pay 11 basis points more in interest costs for every additional 1 million HY bond financing. We attribute this exception to the expected illiquidity of large‐issue HY bond in the secondary market when default risk premium increases. Furthermore, the HY bond interest cost is less sensitive to market uncertainty than the cost of treasury bonds, since bonds with high coupon rates have low price risk when the interest rate fluctuates.

The purpose of this paper is to examine the risk‐incentive effect of CEO stock options in the banking industry.

For a sample of industrial mergers, Williams and Rao find that the risk‐incentive effect of CEO stock options is associated with higher post‐merger risk. This result indicates that stock options may be effective in mitigating the agency problem of Jensen and Meckling wherein managers take too little risk on behalf of shareholders. The authors extend the method of Williams and Rao to the banking industry. In particular, they are interested in determining whether the same relationship holds for these highly regulated and leveraged firms.

Using a sample of 131 bank mergers that took place between 1993 and 2002, the authors determine that the risk‐incentive effect of CEO stock options is positively related to the post‐merger level of equity risk. The results of this study also show that the interaction of size and the risk‐incentive effect is negatively related to volatility following the merger, which agrees with the original study.

This paper extends the literature by examining an industry that is largely ignored because of its highly regulated nature.

This paper tests the mimicking propositions from signalling theory as they relate to stated firm objectives and firm performance. We classify the corporate objectives of a large sample of firms and evaluate firm performance relative to these objectives. We find that poorly performing firms more frequently cite shareholder wealth maximization as their primary objective than do better performing firms. There is no evidence that firms citing a shareholder wealth maximization objective perform any better than firms with alternative objectives. Similar evidence is found for other common corporate objectives. Overall, our results are consistent with signalling theory in that non‐enforceable signals, such as proclamations of corporate objectives, are not credible signals for investors.

In the last decade, involvement of foreign‐based firms in the United States through setting up of joint ventures and subsidiary operations has increased tremendously. Many of these subsidiaries have securities traded in the local market but have the added flexibility of raising capital outside the United States through their foreign‐based parent organisations. This paper focuses on the capital acquisition process of these foreign‐based firms in the U.S. capital markets. The optimal selection of the format of the capital financing depends on the ultimate impact on shareholders' wealth. The decision is non‐trivial since there is substantial evidence to suggest that the choice and method of capital acquisition process convey new information to investors and therefore affect stock prices. As part of this process, it is important to understand the market reaction to announcements of public issues of various securities offerings.

The purpose of this paper is to examine the factors affecting the relationships between CEO stock option compensation and earnings management.Design/methodology/approach – Regression of CEO stock option compensation and other factors on measures of discretionary accruals.Findings – A positive relationship between CEO stock option compensation and discretionary accruals was found, implying that earnings management is more likely where stock options are a larger part of CEO compensation. Earnings management is found to be moderated in large firms with stock option compensation and the relationship between stock options and earnings management has intensified in recent years. It was also found that stock options exacerbate earnings management in firms with growth opportunities.Research limitations/implications – Beyond the scope of this paper, these findings raise the following questions: What does the evidence of a size effect mean? Does it reflect information asymmetry, governance, external monitoring, or political risk? Why has the stock option effect on earnings management become more pronounced in recent years? Is it possible to mitigate the negative effects of option compensation on earnings management through the presence of stronger governance structures? Is it possible to mitigate the negative effects of option compensation on earnings management through the presence stronger governance structures? There are implications for compensation policies for corporate executives.Originality/value – This paper extends prior research on the relationship between CEO stock option compensation and earnings management. It provides new insight into the factors affecting this relationship.

Congenital hearing disabilities among children are associated with lifetime discrepancies in the attainment of speech, poor academic-performance, socio-individual isolation and emotional-maladjustments. The present study aims to combine evidence from randomized, controlled trials to assess the accuracy of hearing-screening procedures and relative diagnostic-tests concomitant with partial/permanent hearing loss (HL) among neonatal and under-five children.

The steps in this process were conducted according to the PRISMA (Preferred-Reporting-Items-for-Systematic-reviews-and-Meta-Analysis) guidelines. The PubMed, ProQuest, Science-Direct, Cochrane-Library and secondary reference databases were searched. Analyses were carried out by using fixed/random-effects-models for calculating the summary estimates on hearing-screening and test-procedure. Meta-regression-analysis is performed to explore the influence of confounders on the net-pooled effect.

A total of 1,656 articles were identified, and 1,575 were excluded as they were not relevant to the purpose of the study. Further, out of 81 studies, 67 were excluded with reasons and 14 were included in the final analysis. Three independent reviewers have assessed the titles/abstracts for their potential relevance. The results from meta-analysis indicate that hearing-screening was significantly higher in the intervention group (n 8,102; OR 0.52, 95% CI 0.34, 0.79; p < 0.00001), as depicted via forest plot. Meta-regression analysis indicates a positive relationship between the age and effect size (regression-coefficient 0.638, 95% CI 0.005, 0.731; p < 0.05).

The evidence from the present study can be used as reference for identifying the associated risk indicators, improved hearing-screening and reduction of hearing disability among under-five children.

The results of this review will be used for implementation of a new-born hearing screening, diagnostic accuracy and understanding the risk indicators for HL among under-five children in the South-Asian region. The evidence will be helpful for strategic directions for improved hearing screening and reduction of hearing disability among under-five children.

By understanding the underlying dynamics of hearing-screening procedures, hearing-impairments can be identified at an early stage and required treatment can be provided to the children.

The findings of this study indicate that early detection, screening and diagnosis of the HL among the children, especially among the infants and new-born (0–2 years of age), will be of utmost importance in reducing the prevalence of HL, especially among the South-Asian region. This study can be used as a reference for other future studies in the area of hearing-screening, diagnostic accuracy and associated risk indicators among children.

Gives a bibliographical review of the finite element methods (FEMs) applied for the linear and nonlinear, static and dynamic analyses of basic structural elements from the theoretical as well as practical points of view. The range of applications of FEMs in this area is wide and cannot be presented in a single paper; therefore aims to give the reader an encyclopaedic view on the subject. The bibliography at the end of the paper contains 2,025 references to papers, conference proceedings and theses/dissertations dealing with the analysis of beams, columns, rods, bars, cables, discs, blades, shafts, membranes, plates and shells that were published in 1992‐1995.

Software process tailoring (SPT) plays a critical role in contemporary software development. Because SPT determines how a software project proceeds, its effectiveness should be investigated. Specifically, SPT is a collaborative yet highly conflictual process, and the existing literature has paid little or no attention to how team members coordinate and to how power distance (PD) influences coordination under this conflictual situation for the purpose of fostering SPT effectiveness.

A propositional research method is utilized by reviewing the extant literature regarding SPT, team coordination and PD. Accordingly, several propositions are developed to theorize the contributive and moderating effects of team coordinative capabilities and PD on SPT effectiveness.

This study advances the understanding of the underlying mechanisms of the four distinct coordination capabilities in performing SPT, which will help software firms comprehend the moderating effects of PD on the relationships among coordinative capabilities and SPT effectiveness.

This study extends coordination theory and reveals four coordination capabilities that nurture SPT effectiveness. Moreover, this study demonstrates how power plays a role in the coordination of a team through the collaborative yet divergent SPT decision process to yield an integrative tailoring solution. In particular, we take a fresh viewpoint of PD considering the member-member relationship in exploring its moderating effects in the SPT context.

Asset sales can have opposing effects on firm credit quality. On the one hand asset sales could signal increased credit risk resulting from distress or on the other hand they could improve internal liquidity and hence credit quality. Therefore the impact potential asset sales can have on credit quality is an empirical question and one that has previously not been examined in the literature. The paper aims to discuss these issues.

Using credit ratings as a measure of firm credit quality, in ordered probit regressions, this study finds evidence consistent with the internal liquidity view of the asset sales-credit risk relationship.

Results from ordered probit regressions of credit ratings show that the likelihood of higher credit ratings is increasing in industry-level turnover of real assets

Credit-rating agencies often cite the impact of asset sales on firm credit quality as a motivation for their rating assignments. Distress-driven asset sales could reduce firm credit quality whereas other asset sales could result in increased internal firm liquidity and hence improve firm credit quality. This bi-directional expectation leaves the question of how asset sales affect credit quality to be answered empirically and has not been previously tested in the literature.