Md Mosharraf Hossain, Richard Arthur Heaney and SzeKee Koh
This paper aims to address the question of whether acquiring firm directors trading, prior to a merger or acquisition (M&A) announcement, predicts the share market reaction on M&A…
Abstract
Purpose
This paper aims to address the question of whether acquiring firm directors trading, prior to a merger or acquisition (M&A) announcement, predicts the share market reaction on M&A announcement.
Design/methodology/approach
Event studies and cross-section regression were used in this analysis.
Findings
This paper finds that acquiring firms with no director trading and firms with net director purchases in the 12 months prior to the M&A announcement earn positive abnormal returns. It is also found that share market reaction to M&A announcements is considerably larger for acquiring firms whose directors do not trade relative to those companies with directors who do trade over the prior 12 months. This director non-trading result is further born out in regression analysis.
Research limitations/implications
The absence of pre-M&A announcement director trading could reflect lower agency costs for the acquiring firm and this might explain to stronger announcement day effect for this group of firms.
Practical implications
The fact that directors choose not to trade in their shares prior to a M&A transaction appears to be viewed as good news by the market.
Social implications
Director trading is value relevant for the acquiring firm and so it is critical that director trading is transparent.
Originality/value
To the best of the authors' knowledge, this question has not been addressed in the literature before, particularly the finding for firms with no director trading in the period prior to the M&A announcement.
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Are share markets too volatile? While it is difficult to ignore share market volatility it is important to determine whether volatility is excessive. This paper replicates the…
Abstract
Are share markets too volatile? While it is difficult to ignore share market volatility it is important to determine whether volatility is excessive. This paper replicates the Shiller (1981) test as well as applying standard time series analysis to annual Australian stock market data for the period 1883 to 1999. While Shiller’s test suggests the possibility of excess volatility, time series analysis identifies a long‐run relationship between share market value and dividends, consistent with the share market reverting to its fundamental discounted cash flow value over time.
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This paper analyses the value to a poorly diversified risk‐averse executive of a compensation package consisting of a risk free asset, restricted stock and stock options. The…
Abstract
This paper analyses the value to a poorly diversified risk‐averse executive of a compensation package consisting of a risk free asset, restricted stock and stock options. The Lambert, Larcker and Verrecchia (1991) model is extended to include leverage and this facilitates comparison of cost to the firm and benefits to the executive of restricted stock and stock options. It also provides insight into the impact of executive risk aversion, firm leverage and underlying as set volatility on the value of a compensation package in the hands of the executive.
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Sinclair Davidson and Thomas Josev
We investigate the effect standard time series β‐adjustments have on the OLS‐β. We report that most changes are not statistically significant and the β‐adjustments appear to have…
Abstract
We investigate the effect standard time series β‐adjustments have on the OLS‐β. We report that most changes are not statistically significant and the β‐adjustments appear to have no relationship to the extent of thin trading. Researchers using β face the difficult choice of using an estimate known to be biased by thin trading, or making an adjustment that may not be statistically significant.
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Fabrizio Rossi, Robert Boylan and Richard J. Cebula
The purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian listed…
Abstract
Purpose
The purpose of this study is to investigate the relationship between financial decisions and ownership structure by using the control contests on a sample of Italian listed companies.
Design/methodology/approach
The analysis adopts a balanced panel data set of 984 firm-year observations for the period of 2002-2013, with estimation using a generalized method of moments.
Findings
The results appear to confirm both the hypotheses of the alignment of interests and the entrenchment effect. The entrenchment and alignment effects are not found to be alternatives but rather are found to co-exist. The presence of a coalition of minority shareholders acts as a tool to control agency costs, particularly when the coalition is instrumental in the contestability of corporate control.
Practical implications
These findings suggest that minority shareholders may have a larger impact than previously identified by strategically aligning with other shareholders to form coalitions. This study provides several practical implications. First, dividend payout is not necessarily a good instrument to control and monitor agency costs. This is because the payout can be used to expropriate benefits from the minority shareholders. Second, high ownership concentration does not always reduce agency costs. Third, a non-collusive coalition can be more useful in the monitoring of agency costs than other tools, such as the debt level.
Originality/value
This study shows that there is considerable value to the firm when individual blockholders come together in a contestable environment and become instrumental in making business decisions. The results support the contention that contestability is an excellent deterrent to dampen the expropriation of benefits to minority shareholders. This study also provides evidence that cash holding can be a good substitute for dividends and debt in the effort to limit agency costs.
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Silva Karkoulian, Wassim Mukaddam, Richard McCarthy and Leila Canaan Messarra
Organizational downsizing, right sizing, layoffs, and restructuring that attempt to reduce labour cost and increase competitiveness, have generated considerable feelings of job…
Abstract
Purpose
Organizational downsizing, right sizing, layoffs, and restructuring that attempt to reduce labour cost and increase competitiveness, have generated considerable feelings of job insecurity among today's employees. Conversely, the rapidity of change in the Middle Eastern region, coupled with the unpredictability of economic conditions, the inevitable need to survive and the ever‐lasting craving for organizational success merge to aggravate the adverse effects of job insecurity. The purpose of this paper is to study the relationship between job insecurity and powerlessness, management trust, peer trust and job satisfaction within Lebanon.
Design/methodology/approach
Employees working within medium‐sized organizations in Lebanon were surveyed to measure their perceptions of job insecurity, job satisfaction, powerlessness, and interpersonal trust. Statistical analyses were performed using Pearson correlation matrix and linear regression tests.
Findings
The study identified significant positive relationship between job insecurity and powerlessness, and negative relationships between job insecurity and management trust and job satisfaction. No significant relationship was found between job insecurity and peer trust.
Research limitations/implications
The study adds to the existing job insecurity literature by empirically testing the relationship between job insecurity and powerlessness, peer trust, management trust and job satisfaction within Lebanese organizations. The researchers hope that this study will assist managers in understanding the importance of earning their subordinates' trust and its implications on job insecurity which could also negatively affect job satisfaction. Also, the issue of powerlessness should be seriously considered by management since it triggers the feeling of job insecurity.
Originality/value
Western organizational behavior literature has given the topic of job insecurity significant attention. However, no scholarly research has yet examined the topic of job insecurity within the Middle East. This paper sheds light on important results regarding job insecurity and its consequences. Powerlessness predicts and aggravates job insecurity, and is affected by the nature of the job; trust in management has a negative effect on job insecurity, while peer trust has no influence. Also, job satisfaction is influenced by the perceptions of job insecurity.
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Duncan Birrell, Milena Dobreva, Gordon Dunsire, Jillian R. Griffiths, Richard J. Hartley and Kathleen Menzies
The purpose of this paper is to present the outcomes of digitisation of special collections: mapping, assessment, prioritisation (DiSCmap), a JISC and RIN‐funded project which…
Abstract
Purpose
The purpose of this paper is to present the outcomes of digitisation of special collections: mapping, assessment, prioritisation (DiSCmap), a JISC and RIN‐funded project which studied users' priorities for the digitisation of special collections within the context of UK Higher Education Institutions (HEIs).
Design/methodology/approach
The project produced a list of 945 collections nominated for digitisation by intermediaries and end users and a user‐driven prioritisation framework. Data were gathered via web questionnaires. Focus groups and telephone interviews with end users provided additional insights on the views of those working within particular domains or disciplines. Over 1,000 intermediaries and end users contributed by nominating collections for the “long list” and providing opinions about digitisation priorities.
Findings
The long list of collections nominated for digitisation provides evidence of identified user interest and is not merely a “snapshot” but a significant outcome. A user‐driven framework for prioritising digitisation was also produced. The project suggests a flexible approach for prioritising collections for digitisation based on the use of the framework in combination with the long list of collections.
Research limitations/implications
The project did not undertake a representative study; the participation of intermediaries and end users was a matter of goodwill. Yet 44 per cent of HEIs in the UK nominated special collections to the long list.
Originality/value
The paper provides new insights and evidence on user priorities for the digitisation of special collections. It also suggests a user‐driven digitisation prioritisation framework of benefit in future decision making, both locally and nationally.