James Tompkins and Robert Hendershott
Takeovers create a potential conflict of interest between target shareholders and directors. While mergers generally create value for the target shareholders, their directors will…
Abstract
Purpose
Takeovers create a potential conflict of interest between target shareholders and directors. While mergers generally create value for the target shareholders, their directors will typically lose their board seats and likely face a financial loss or loss of prestige. The purpose of this paper is to examine evidence to support or refute that directors may act in their own best interests at the expense of shareholders.
Design/methodology/approach
The authors reason that if directors act in their own best interests, then acquiring firms will seek targets with older board members who are closer to director retirement and are therefore less reluctant to give up their board seats. The paper uses data of 528 banks between 1999 and 2004 to estimate logistic regressions controlling for variables relevant to takeover probability. In the hypotheses, the authors test for the significance of the average director age on a board.
Findings
The paper finds a highly positive significant relation between the average age of a board of directors and the probability of takeover. Furthermore, this variable is more robust and has greater explanatory power in predicting takeover targets than all other financial, ownership and governance variables commonly controlled for and included in this study. This suggests that older directors are less prone to agency problems and more willing to make decisions that will likely result in the loss of their board seat.
Practical implications
These findings have important policy implications on director retirement policies such as director age versus term limits. The results also have implications on the use of director golden parachutes. Finally, the authors highlight a strategic consideration for acquiring firms seeking takeover targets.
Originality/value
This paper is the first, to the best of the authors' knowledge, to document board age as an important governance characteristic.
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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…
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.
THE CAUSES AND EFFECTS OF DISINTERMEDIATION Disintermediation is a relatively new term on the financial scene in America. The term was first coined in mid‐1966 and has since, to…
Abstract
THE CAUSES AND EFFECTS OF DISINTERMEDIATION Disintermediation is a relatively new term on the financial scene in America. The term was first coined in mid‐1966 and has since, to the dismay of many, become part of the daily vocabulary of bankers and economists. Originally, it sprang up to describe the outflow of funds from deposits at financial intermediaries (commercial banks, savings and loan associations and mutual savings banks) to investments yielding a higher return. Since that time, disintermediation, has taken on several additional forms such as fractional disintermediation, which addresses differences between the maximum interest rate that can be paid on a time deposit with a specified maturity at a financial intermediary and the interest rates prevailing on the similar instruments in the open market. Another new form of savings outflow is passbook disintermediation which will be discussed later. No matter which form of disintermediation is addressed, the same difficulty exists for the depository institutions — how to remain competitive when interest rates rise above the maximum ceiling rates allowed by law.
Arthur McLuhan and Antony Puddephatt
A common charge against qualitative researchers in general and interactionist researchers in particular is that they produce descriptive, a-theoretical accounts of group life. We…
Abstract
A common charge against qualitative researchers in general and interactionist researchers in particular is that they produce descriptive, a-theoretical accounts of group life. We consider the problem of “analytic interruptus” in contemporary symbolic interactionism – that is, a failure to move beyond analyses of individual cases – and offer a potential to a solution via the pursuit of a generic social process (GSP) research agenda. A GSP approach involves developing, assessing, and revising concepts from the close scrutiny of empirical instances across diverse contexts. By considering criticisms of GSPs from feminist and postmodernist scholars, a more informed, qualified, and better-situated approach to the framework becomes possible. We argue that GSPs remain a quintessential analytical tool to explore subcultural realities and build formal theories of the social world.
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Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…
Abstract
Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.
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Intraday volatility characteristics throughout the trading week are examined at the emerging Borsa Istanbul (BIST) stock exchange. Using five-minute (and 15-minute) intervals…
Abstract
Intraday volatility characteristics throughout the trading week are examined at the emerging Borsa Istanbul (BIST) stock exchange. Using five-minute (and 15-minute) intervals, accentuated intraday volatility patterns at the microstructure level are examined during the stock market open and close in the morning and in the afternoon sessions. Volatility is highest when markets open in the morning. The second highest is during the afternoon open. The third highest is before the market closes for the day. Volatility before the market close has increased in recent years. These characteristics are seen every trading day. There are also differences: Monday returns are lowest, Friday returns are highest, and Monday morning volatility is highest of the entire trading week. Day-of-the-week and intraday accentuated volatility smile anomalies are jointly investigated using the longest intraday sample period in the emerging country stock exchange literature. Investment companies and professionals can utilize the results for risk management and hedging by avoiding highly volatile opening and closing periods. Arbitrageurs, speculators, and risk takers should trade during these highly volatile periods. Heightened volatility is increased difficulty in price discovery, thus inefficiency. Market participants, exchanges, and public prefer efficient markets. The research presents evidence of trading days, and periods during the trading day, when the exchange becomes more efficient. This is the first research that explores day-of-the-week effect from intraday volatility perspective in an emerging market, and provides useful recommendations in designing risk management strategies at market microstructure level.
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W. Paul Spurlin, Bonnie F. Van Ness and Robert Van Ness
The purpose of this paper is to study short sales trading as part of the New York Stock Exchange (NYSE) batch open and National Association of Securities Dealers Automated…
Abstract
Purpose
The purpose of this paper is to study short sales trading as part of the New York Stock Exchange (NYSE) batch open and National Association of Securities Dealers Automated Quotations (NASDAQ) opening cross. The paper examines whether short transactions at the open can predict future returns.
Design/methodology/approach
The study tests to see if short transactions in the NYSE opening batch trade and NASDAQ opening cross are informative of future returns.
Findings
It is found that a stock's opening‐trade short volume is predictive of its short volume for the rest of trading day, positively related to its previous‐day price change, and positively related to its overnight price change at the opening trade on option‐expiration Fridays when the stock is part of the Standard and Poor (S and P) 500 index.
Originality/value
While previous research shows that intraday short sale trades are informative, this is the first paper to examine the opening trade of the day, and whether these short sales are informative.
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Justine Wang, Alla Koblyakova, Piyush Tiwari and John S. Croucher
This paper aims to explore principal drivers affecting prices in the Australian housing market, aiming to detect the presence of housing bubbles within it. The data set analyzed…
Abstract
Purpose
This paper aims to explore principal drivers affecting prices in the Australian housing market, aiming to detect the presence of housing bubbles within it. The data set analyzed covers the past two decades, thereby including the period of the most recent housing boom between 2012 and 2015.
Design/methodology/approach
The paper describes the application of combined enhanced rigorous econometric frameworks, such as ordinary least square (OLS), Granger causality and the Vector Error Correction Model (VECM) framework, to provide an in-depth understanding of house price dynamics and bubbles in Australia.
Findings
The empirical results presented reveal that Australian house prices are driven primarily by four key factors: mortgage interest rates, consumer sentiment, the Australian S&P/ASX 200 stock market index and unemployment rates. It finds that these four key drivers have long-term equilibrium in relation to house prices, and any short-term disequilibrium always self-corrects over the long term because of economic forces. The existence of long-term equilibrium in the housing market suggests it is unlikely to be in a bubble (Diba and Grossman, 1988; Flood and Hodrick, 1986).
Originality/value
The foremost contribution of this paper is that it is the first rigorous study of housing bubbles in Australia at the national level. Additionally, the data set renders the study of particular interest because it incorporates an analysis of the most recent housing boom (2012-2015). The policy implications from the study arise from the discussion of how best to balance monetary policy, fiscal policy and macroeconomic policy to optimize the steady and stable growth of the Australian housing market, and from its reconsideration of affordability schemes and related policies designed to incentivize construction and the involvement of complementary industries associated with property.
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Alan D. Smith and William T. Rupp
Online shopping phenomena are governed by a number of consumer acceptance and behaviour characteristics and grounded in theoretical aspects of consumer decision making. There are…
Abstract
Online shopping phenomena are governed by a number of consumer acceptance and behaviour characteristics and grounded in theoretical aspects of consumer decision making. There are a number of factors that affect what we buy, when we buy, and why we buy. In reference to buying online, the factors that influence consumers are marketing efforts, socio‐cultural influences, psychological factors, personal questions, post‐decision behaviour, and experience. These factors will be further discussed by way of a consumer decision‐making model for online shoppers.