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The purpose of this paper is to contribute to a better understanding of the impact of market liquidity on the daily tracking error of exchange-traded funds (ETFs). It puts a special focus on the liquidity cost of individual underlying stocks as well as the process of creation/redemption of ETF shares as key determinants of tracking ability.

The study is based on daily observations of fund data for eight fully replicating German equity ETFs for July 2001-October 2013. A regression model with fund fixed effects is chosen to determine the effect of liquidity cost, creation/redemption and other control variables on daily tracking error. Data were compiled from issuer websites and Datastream. Proprietary XETRA Liquidity Measure, which was used as proxy for liquidity cost was supplied by Deutsche Börse.

The study finds daily tracking error to significantly depend on the liquidity of underlying stocks. This finding emerges even though the ETFs in this study predominantly use in-kind creation/redemption. Even after controlling for creation/redemption, the liquidity impact remains basically unchanged. One reason might be imperfect replication of index weights: Either the in-kind-basket delivered in the course of creation/redemption does not perfectly match the benchmark-weights or the internal rebalancing of weights causes liquidity cost.

To the best of the authors’ knowledge, this is the first paper that uses a specific liquidity measure for each single stock underlying an ETF. The findings extend the literature by corroborating the view that liquidity of individual stocks in the underlying portfolio has an impact on tracking error.

In this paper, we explore an extensive panel data set covering more than 4,000 listed firms in 16 European countries to study the effects of shareholder protection on ownership structure and firm performance. We document a negative firm-level correlation between shareholder protection and ownership concentration. Differentiating between shareholder types, we find that this pattern is mainly driven by strategic investors. In contrast, we find a positive correlation between shareholder protection and block ownership of institutional investors, in particular when we restrict the analysis to independent institutional investors. Finally, we find that independent institutional investors are positively associated with firm valuation as measured by Tobin’s Q. The opposite applies for strategic investors. Overall, our results are consistent with the view that (i) high shareholder protection and (ii) limited ownership by strategic investors make small investors and investors interested in security returns more confident in their investments.

This paper aims to explore the effects of illiquidity on portfolio weight and return dynamics.

Using a novel continuous-time framework, the paper makes two key contributions to the literature on asset pricing and illiquidity. The first is to study the effects of illiquidity on portfolio weight dynamics. The second contribution is to analyze how illiquidity affects the risk/return dynamics of a portfolio.

The numerical results highlight that investors should be prepared for potentially large and skewed variations in portfolio weights and can be away from optimal diversification for a long time when adding illiquid assets to a portfolio. Additionally, the paper shows that illiquidity increases portfolio risk. Interestingly, this effect gets more pronounced when the return correlation between the illiquid and liquid asset is low. Thus, there is a correlation effect in the sense that illiquidity costs, as measured by the increase in overall portfolio risk, are inversely related to the return correlation of the assets.

This is the first paper that highlights that the increase in portfolio risk caused by illiquidity is inversely related to the return correlation between the liquid and illiquid assets. This important economic result contrasts with the widely used argument that the benefit of adding illiquid (alternative) assets to a portfolio is their low correlation with (traditional) traded assets. The results imply that the benefits of adding illiquid assets to a portfolio can be much lower than typically perceived.

During December 2012, Jorge Paulo Lemann, a co-founder and partner at 3G, proposed to Warren Buffett that 3G and Berkshire Hathaway acquire H. J. Heinz Company. Lemann and Buffett, who had known each other for years, jointly decided that the Heinz turnaround had been successful and that there was significant potential for continued global growth. 3G informed Heinz CEO William Johnson that it and Berkshire Hathaway were interested in jointly acquiring his company. Johnson then presented the investors' offer of $70.00 per share of outstanding common stock to the Heinz board.

After much discussion, the Heinz board and its advisors informed 3G that without better financial terms they would not continue to discuss the possibility of an acquisition. Two days later, 3G and Berkshire Hathaway returned with a revised proposal of $72.50 per share, for a total transaction value of $28 billion (including Heinz's outstanding debt).

Following a forty-day “go-shop” period, Heinz, 3G, and Berkshire Hathaway agreed to sign the deal. But was this, in fact, a fair deal? And what might be the future consequences for shareholders, management, employees, and citizens of Pittsburgh, the location of the company's headquarters? Last, what was the role of activist investors in bringing Heinz to this deal stage?

After reading and analyzing the case, students will be able to:

• Understand the influence of investment bankers on M&A transactions

• Consider synergies that drive M&A

• Consider the role of activist investors in corporate strategic decision-making

• Understand the impact of M&A on key corporate stakeholders

• Apply core valuation techniques to support M&A valuation

Understand the influence of investment bankers on M&A transactions

Consider synergies that drive M&A

Consider the role of activist investors in corporate strategic decision-making

Understand the impact of M&A on key corporate stakeholders

Apply core valuation techniques to support M&A valuation

The purpose of this paper is to examine the effect of earnings management (EM) on the reputation of family and non-family firms in companies listed on the Tehran Stock Exchange.

Data of variables under study are gathered from audited financial statements disclosed through official websites of firms Tehran Stock Exchange market using the multiple regression model for 156 firms during a five-year period (2012–2016). Two hypotheses are developed for achieving the objectives of the study. To analyze the data, a panel data model through Stata Software is applied. F-Limer and Hausman test are employed to modify the appropriate fitting regression model. Also, basic hypotheses of each model are implemented using the White and Hadri tests.

The obtained results suggest a negative and significant relationship between discretionary accrual (DA) management and the reputation of family firms. Furthermore, it is found that there is a significant and negative relationship between real accrual management and the reputation of family firms, and subsequently, there is a significant and negative relationship between DA management and non-family firms, and there is a significant and negative relationship between real EM and the reputation of non-family firms.

In this study, due to focus on the effect of reputation and special methods of authorities on family and non-family firms and EM, a number of firms which contribute to the literature of the field are proposed.

Since the beginning of the 2000s, investors have more frequently invested into professional football clubs, thereby radically changing the industry landscape. This review's purpose is to analyze and synthesize the state of research to understand motives, roles and implications of football club investors, and to provide recommendations for further research.

The paper presents an integrative literature review by identifying relevant English articles based on the search terms investor, owner, investment, ownership, shareholder and stakeholder in combination with soccer or football. Around 2,431 articles were reviewed. A total of 129 relevant articles was analyzed and synthesized within eight subject areas.

Investors in professional club football is a young research stream with a clear European focus. Investor motives and roles are diverse and implications are multidimensional. Investors mostly aim for indirect returns rather than pure profit- or win-maximization.

Football clubs comprise an own investment class for which the identified, unique specifics must be considered to develop a financially successful investment model. Thorough academic research of investors' inherent characteristics, investor-club pairings and the pillars of long-term strategies for successful investor-club liaisons are avenues of future research. Furthermore, the results illustrate the need for research outside of Europe.

The paper is the first systematic, integrative review of existing literature in the domain of equity investments into professional club football. The findings genuinely show that, depending on the investor type and ownership structure, investors have a wide impact in professional club football.