united states export subsidies in wheat strategic trade policy or expensive beggar thy neighbor tactic this paper examines the domestic and international impacts of the u s export enhancement program eep for wheat eep uses targeted in kind subsidies to expand u s exports and was designed specifically to compete with subsidized exports from the european community ec we argue eep cannot be welfare improving for the u s even considering strategic trade theory we then model eep as an in kind constrained targeted export subsidy and determine its price quantity and budgetary effects empirical results show that no exporting country gains from eep and that the intended loser the ec is only slightly harmed we find the export subsidies generate only a small increase in u s wheat exports eep is an expensive program based on our estimates for 1988 government cost of additional wheat exports under eep reached 469 per metric ton

price clustering in australian water markets the finding of clustering in financial prices on particular digits is common across a broad range of financial markets this article explores whether price clustering is also present in the case of the weekly market for seasonal water in rural victoria australia we find a similar degree of clustering in the seasonal water market this suggests that the trading activities of the market produce characteristics that are similar to more sophisticated and deeper financial markets

who trades water allocations evidence of the characteristics of early adopters in the goulburn murray irrigation district australia 1998 1999 this article applies a model of innovation to analyze the characteristics of irrigators within the goulburn murray irrigation district in australia and examines the efficiency of the early water market in the late 1990s using multinominal and binary logit analyses we identify the factors associated with irrigators who sold or bought water allocations during 1998 1999 and irrigators who at that time had never participated in any kind of water trading contrary to expectations we find that early adopters of water trading were older farmers with low farm productivity but that in line with theory they had higher levels of education had spent less time farming had larger irrigated area farm operating surplus and farm assets owned farms that were more intensively farmed and were more progressive in their planning there was only weak evidence to suggest that water moved from lower value uses to higher value uses suggesting the water allocation market had limited efficiency in its initial years

stock price clustering and discreteness stock prices cluster on round fractions clustering increases with price level and volatility and decreases with capitalization and transaction frequency clustering is pervasive price clustering will occur if traders use discrete price sets to simplify their negotiations exchange regulations require that most stocks be traded on eighths clustering on larger fractions will occur if traders choose to use discrete price sets based on quarters halves or whole numbers an econometric model of clustering is derived and estimated projections from the results suggest that traders would frequently use odd sixteenths when trading low price stocks if exchange regulations permitted trading on sixteenths article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

enforceability of non compete covenants discretionary investments and financial reporting practices evidence from a natural experiment abstract non compete covenants are widely used in employment contracts to promote employee stability using legal amendments of non compete enforceability as a natural experiment we find that as non compete enforceability increases firms display an increased likelihood of meeting short term earnings benchmarks lower discretionary expenditures and declining future performance these effects are more pronounced when ceos have lower ability or shorter tenures and when firms have more growth opportunities or operate in localized industries our results suggest that managers actively adapt investment and financial reporting practices to the changing environment that affects their contractual relations with firms

shareholder protection compulsory acquisition and the efficiency of the takeover process this paper examines public good problems connected with takeovers two broad categories of exclusion device oppression of minority interests and compulsory acquisition of shares are evaluated it is argued that inability to control the level of oppression with any precision renders the first method unsatisfactory from the policy viewpoint but that strong protection of minorities coupled with compulsory acquisition rights for the acquiror can straightforwardly generate an efficient solution to the public good problems it is shown that in the u k company law and the city code on takeovers and mergers combine to produce an approximation to this efficient solution against managements which are performing poorly in the eyes of the capital market and since the work of marris 1964 this incentive mechanism has come to play a prominent role in the economic analysis of company behaviour the usual argument is that as the market value of a particular company falls relative to the level that it is generally believed could be obtained by other managers following different policies the firm becomes increasingly vulnerable to a takeover by a raider attracted by the prospect of the capital gains that would ensue following managerial changes in turn the threat to the incumbent managers acts as a deterrent to behaviour which runs counter to shareholders interests the effectiveness of the workings of the takeover mechanism is therefore of some importance for the efficient utilisation and allocation of resources potential obstacles to the smooth functioning of the takeover process have however been recognised for quite some time as long ago as 1926 the greene committee on company law reform identified cases where a takeover had been inhibited by the actions of small minorities of shareholders much more recently grossman and hart 1980 have formalised some of the earlier points in a way that clearly highlights one of the major difficulties that freeriding strategies on the part of shareholders in firms with dispersed share ownership can prevent successful bids the argument is that shareholders of the target company believing their own actions have a trivially small effect on

credit constraints entrepreneurial talent and economic development in this paper we formalize the view that economic development requires high rates of productive entrepreneurship and this requires an efficient matching between entrepreneurial talent and production technologies we first explore the role of financial development in promoting such efficient allocation of talent which results in higher production job creation and social mobility we then show how different levels of financial development may endogenously arise in a setting in which financial constraints depend on individual incentives to misbehave these incentives depend on how many jobs are available and this in turn depends on the level of financial development such complementarity between labor market and financial market development may generate highly divergent development paths even for countries with very similar initial conditions

do foreign owners favour short term profit evidence from germany comparing domestic and foreign owned firms in germany this paper finds that foreign owned firms are more likely to focus on short term profit this influence is particularly strong if the local managers of the german subsidiary are not sent from the foreign parent company moreover the physical distance between the foreign parent company and its german subsidiary increases the probability of focusing on short term profit these findings conform to the hypothesis that foreign owners facing an information disadvantage concerning the local conditions of their subsidiaries are more likely to favor short term profit however we do not identify differences in short termism between investors from anglo saxon and other foreign countries rather results point in the direction of more general features of international business investment

framing controversial actions regulatory focus source credibility and stock market reaction to poison pill adoption we contribute to the research on organizational accounts by examining the role of different framing languages and the credibility of the frame articulator on justifying controversial organizational actions drawing on regulatory focus theory and the literature on source credibility we develop novel arguments as to how a gains versus nonlosses framing and the perceived credibility of the speaker influence stakeholder responses as well as how the effectiveness of these aspects is influenced by context we test our arguments using data on the framing of the adoption of poison pills by u s firms between 1983 and 2008 using content analysis and an event study we find that a gains framing aligned with the dominant institutional logic leads to a positive stock market reaction while statements emanating from speakers with potentially self serving interests negatively affect the stock market reaction our findings further show that the effectiveness of framing and source credibility are dependent on contextual attributes such as speaker visibility prior performance and practice prevalence

naked exclusion an experimental study of contracts with externalities this paper reports the results of an experiment designed to assess the ability of an incumbent seller to profitably foreclose a market with exclusive contracts we use the strategic environment described by rasmusen ramseyer and wiley 1991 and segal and whinston 2000 where entry is unprofitable when sufficiently many downstream buyers sign exclusive contracts with the incumbent when discrimination is impossible the game resembles a stag hunt coordination game in which the buyers payoffs are endogenously chosen by the incumbent seller exclusion occurs when the buyers fail to coordinate on their preferred equilibrium two way non binding pre play communication among the buyers lowers the power of exclusive contracts and induces more generous contract terms from the seller when discrimination and communication are possible the exclusion rate rises divide and conquer strategies are observed more frequently when buyers can communicate with each other exclusion rates are significantly higher when the buyers payoffs are endogenously chosen rather than exogenously given finally secret offers are shown to decrease the incumbent s power to profitably exclude

productivity growth in u s agriculture a postwar perspective there has been a long standing fascination with productivity trends in u s agriculture in part this stems from the historical importance of agriculture to the economy but it also reflects economists early and continued interest in quantifying the rate of return to society s sizable investment in agricultural r d the sum of government sponsored and private sector r d investment in agriculture is estimated to have been 268 million in 1953 in that year total r d investment in the economy from all sources amounted to 5 1 billion 2 excluding defense and space related r d which accounted for approximately half of the u s total in the early fifties 3 r d expenditures dedicated to agriculture equaled approximately 10 of total u s investment in r d from all sources

resolving the commitment versus flexibility trade off the role of resource accumulation lags we examine how time consuming resource accumulation influences the classic strategy trade off between commitment and flexibility in particular using 1975 95 data from the worldwide petrochemical

what makes carbon traders cluster their orders abstract the ability to trade large amounts of assets at low costs could be hindered when the size of the orders is concentrated at specific trade sizes this paper documents evidence of size clustering behavior in the european carbon futures market and analyzes the circumstances under which it happens our findings show that carbon trades are concentrated in sizes of one to five contracts and in multiples of five we have also demonstrated that more clustered prices have more clustered sizes suggesting that price and size resolution in the european carbon market are complementary and that carbon traders round both the price and the size of their orders finally the analysis of the key determinants of the size clustering reveals that traders use a reduced number of different trade sizes when uncertainty is high market liquidity is poor and the desire to open new positions and cancel old ones is very strong

agricultural trade liberalization price changes and environmental effects many analyses of agricultural trade liberalization have been undertaken but few have considered the effects on the environment for the developed countries reducing the degree of protection would result in less intensive production therefore environmental stress would be reduced a reduction of trade barriers in industrial countries would result in higher world prices and in a somewhat lower world price variability assuming initially no policy changes for developing countries the question is how the liberalization would affect the environment higher prices in developing countries increase the level of production by intensifying production particularly in the commercial sector and by an area expansion both result in negative environmental effects these could be partly offset by an increase in hired labor in the commercial sector which might reduce pressure at the frontier and on marginal lands as well as by the income effect these off setting effects may be small however the direction of the overall environmental effects cannot be determined unambiguously without empirical examination at the global level the beneficial economic effects of agricultural trade liberalization probably outweigh the expected negative environmental effects in developing countries but this cannot be unambiguously established without valuation

diversification and ownership concentration abstract if controlling shareholders can divert profits equity ownership is more concentrated the higher the stock returns correlation a higher returns correlation reduces the benefits of diversification giving rise to both a higher investment by the controlling shareholder in the asset that he controls and a lower investment by the non controlling shareholders the empirical analysis supports the predictions of the model equity ownership is more concentrated in countries where the stock returns correlation is higher moreover the intensity of the relationship between the stock returns correlation and ownership concentration is amplified by poor investor protection

dual class ipos a theoretical analysis we consider an incumbent who wishes to sell equity to outsiders at an ipo to implement his firm s project he may be talented lower cost of effort comparative advantage in project implementation or untalented the project may have high intrinsically more valuable but showing less signs of success in the near term or low near term uncertainty under a single class share structure the incumbent has a greater chance of losing control to potential rivals if he undertakes the project with high near term uncertainty since outsiders may vote for the rival if they believe the project is not progressing well a dual class share structure allows the incumbent to have enough votes to prevail against any rival but may be misused by untalented incumbents to dissipate value our results help to explain firms choices between dual class and single class ipos and the post ipo operating performance of dual class versus single class firms

the road to uruguay context and to show how its agenda and procedures as well as its problems and possible outcomes have arisen from the conjunction of developments in patterns of world trade and the evolution of the gatt itself the uruguay round has some novel features but it also strongly reflects the continuation of the trends of the last forty years the gatt has fostered the evolution of the world trading system from a highly restrictive form with two major players the us and the uk towards a more liberal and evenly balanced form the practices appropriate to the former circumstances achieved many of their objectives but they proved gradually less able to cope with the strains of the new circumstances and problems thus the gatt s traditional bilateral mode of tariff negotiations has given way first to a more multilateral form of tariff talks and then to a preoccupation with constitutional issues such as trading rules and the sectoral coverage of the gatt its procedures have become progressively more multilateral but especially when one considers trade policy implemented between gatt rounds its outcomes appear recently to have become less so it is paradoxical that whereas initially the gatt harnessed the crude power of bilateralism to achieve multilateral outcomes it has more recently adopted multilateral procedures but with more bi and pluri lateral results

buying shares and or votes for corporate control we explore how allowing votes to be traded separately of shares may affect the efficiency of corporate control contests our basic set up and the nature of the questions continue the work of grossman and hart 1980 harris and raviv 1988 and blair golbe and gerard 1989 we consider three cases with respect to the allowable price offers for shares and for votes when they can be traded separately unrestricted price offers quantity restricted price offers and price offers contingent on winning our main results are characterizations of the equilibria and of the circumstances under which vote buying is harmful we show that allowing votes to be traded separately of shares results in inefficiencies in all the cases we study similarly allowing quantity restricted offers is also harmful but allowing conditional offers is not in itself detrimental to efficiency the paper also makes a methodological contribution to the analysis of takeover games with atomless shareholders it provides a way of dealing with asymmetric equilibria that must be dealt with for a complete analysis and it proves existence of an equilibrium copyright 2012 oxford university press

clustering and competition in asset markets economists financial commentators regulatory agencies and the legal community have recently criticized the nasdaq stock market inc because there is greater clustering of stock quotations on even eighths on nasdaq than on the new york stock exchange or the american stock exchange a phenomenon which critics attribute to collusion or some other defect in nasdaq market structure however as this article demonstrates clustering occurs in varying degrees in many other incontestably competitive financial markets including the nyse the amex the london stock exchange the london gold market and the international foreign exchange market this article provides a competitive theory of clustering that emphasizes the effect of uncertainty the size of transactions volatility and the informational and transactional roles of quotations on the degree of clustering in addition the article examines how market structure can affect the degree of clustering and considers the relation between clustering spread

myopic investment decisions and competitive labor markets this paper analyzes an agency problem where managers are able to control an unobservable variable that affects the time distribution of returns on a firm s investments managers have an incentive to select myopic investments in order to convince the labor market that they have relatively high ability the authors demonstrate that if employment terms are determined in competitive labor markets and there are lower bounds on compensations then at the principal s second best contract managers make a myopic investment choice they also characterize the structure of the principal s second best contract and conduct comparative statics at this solution copyright 1994 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

on the optimality of partial tender offers abstract this paper analyzes the optimality of partial tender offers in acquisition of firms we show that partial offers have no impact on the acquirer s expected profit under complete information

the disciplinary role of takeovers this paper presents a theory of the disciplinary role of takeovers based on an explicit model of managerial incentive problems stemming from asymmetric information it is argued that an informed raider can reduce incentive problems by making managerial compensation more sensitive to information unavailable to shareholders the paper also highlights the importance of specifying the source of contractual inefficiencies when analyzing the effect of takeovers on incentives

the value of voting rights to majority shareholders evidence from dual class stock unifications we study 84 dual class stock unifications where superior vote shareholders gave up their superior voting status all firm stocks became one share one vote and received in most cases compensation in the form of additional shares unifications are essentially intrafirm transactions of voting rights and afford observation of the intrafirm assessed price of vote the price of vote in unifications 1 increases with the percentage vote lost by the majority shareholders 2 is higher in family controlled firms 3 decreases with institutional investor holdings and 4 is similar to the outside price of vote implicit in the market prices of stocks the value of voting rights is an intriguing topic that has attracted extensive academic and practitioner interest before most of the existing evidence comes from examinations of dual class stocks in the dual class stock system the firm issues two classes of common stock superior and inferior vote stocks previous research documents a price premium of superior vote over inferior vote stocks which illustrates the positive value of voting rights 1 inrecent years manydual classfirmsdecidedtorecapitalizetheirequity into single class stocks this was done by transforming all common stock classesinto oneshareonevote the unification ofstockclassestrendis evidenced in canada amoako adu and smith 2001 and is gaining momentum in europe as well nokia and lufthanza are recent examples we examine 84 dual class share unifications on the tel aviv stock exchange unifications are essentially sales of voting power from one class of investorstoanother bymonitoringtheprices ofthesetransactions thatis by examining the compensation paid for the loss of the superior vote status we hope to provide relatively direct inferences on the value of vote

the gains from takeover deregulation evidence from the end of interstate banking restrictions this paper uses interstate banking deregulation to explore the benefits of takeover deregulation and how these benefits are distributed across different firms we find large and significant abnormal returns around the interstate banking and branching efficiency act of 1994 which imply it created 85 billion of value in the banking industry consistent with an active market for corporate control allowing beneficial consolidation and providing needed discipline there is a strong negative relationship between banks abnormal returns and their prior performance consistent with managerial entrenchment limiting takeover discipline banks with higher insider ownership lower outside block ownership and or less independent boards have lower abnormal returns imagine an economy in which strict regulation has prohibited all takeover activity and the governing body suddenly announces that the restrictions on mergers and acquisitions will be eliminated in one year the capital market response to this announcement would establish the aggregate value added from an active corporate control market and differences between individual firms stock price reactions would reveal which firms benefit most from unrestricted consolidation and takeover discipline in some ways this hypothetical situation became reality for the u s banking industry in 1994 when congress wrote and passed the interstate banking and branching efficiency act ibbea this legislation liberalized the bank takeover market by eliminating the various state laws restricting bank mergers across state lines the ibbea was widely expected to accelerate the consolidation already occurring within the banking industry see for example american banker 10 11 94 a more active takeover market should increase firm values in at least two ways first unrestricted consolidation would allow firms to better utilize

benefits of control capital structure and company growth this paper studies the influence of the private benefits of control on the capital structure and the growth of private companies it is argued that companies in which existing owners would lose more control if they expanded have smaller equity increases are more highly levered and grow more slowly the dataset covers 8 964 private uk companies with limited liability for up to 5 years potential loss of control is measured as the difference in the probability of winning a vote for the largest owner before and after a hypothetical equity increase consistent with the private benefits of control the results show that companies with a high potential loss of control do indeed have smaller equity increases use more debt and grow more slowly

investment policy in family controlled firms abstract we explore the relation between family ownership and corporate investment policy our analysis centers on two incentives risk aversion and extended investment horizons which potentially influence the level and type of investments that family firms undertake we find that family firms devote less capital to long term investments than firms with diffuse ownership structures when dividing long term investment into its two components of r d and capital expenditures we note that family firms relative to nonfamily firms prefer investing in physical assets relative to riskier r d projects additional tests indicate that family firms receive fewer patent citations per dollar of r d investment relative to nonfamily firms overall all empirical results indicate that family preferences for lower firm risk across all family sub types affects corporate r d spending and capital expenditures

protectionist responses and declining industries abstract this paper employs a three factor ricardo viner model of a small economy to analyse the effect of a falling world import price on the domestic price of the economy s importable good in the presence of an endogenously determined tariff the outcome is seen to depend on a the way in which the recycled tariff revenue is allocated to the three factor groups and b differences in relative risk aversion across those groups however under reasonable assumptions hillman s 1982 result that a declining industry will continue to decline is seen to hold in our general equilibrium framework

lobbying incentives and the pattern of protection in rich and poor countries in seeking to explain why poor countries tend to choose policies that tax agriculture relative to manufacturing while rich countries do the opposite archetypical parameters for a poor agrarian economy and a rich industrial one are inserted in a computable general equilibrium model to simulate the medium term effects on income distribution of policies that distort the relative prices of tradables the model includes a non tradables sector and intermediate inputs realistic features that ensure even greater skewness in the distributional effects of protection than simpler models suggest the magnitude of the results helps explain the tendency for countries to change gradually from taxing to subsidizing agriculture relative to manufacturing as their economies develop the paper draws out the implications of the analysis for agricultural and trade policy reform in the 1990s this abstract was borrowed from another version of this item

looting and risk shifting in banking crises abstract we construct a model of the banking firm with inside and outside equity and use it to study bank behavior and regulatory policy during crises in our model a bank can increase the risk of its asset portfolio risk shift convert bank assets to the personal benefit of the bank manager loot or do both a regulator has three policy tools it can restrict the bank s investment choices it can make looting more costly and it can force banks to hold more equity capital regulation may increase looting and in extreme cases even risk shifting looting penalties reduce both looting and risk shifting

do takeover defense indices measure takeover deterrence many researchers use the g index or e index to measure firms takeover defenses others argue that these indices are not related to firms takeover likelihoods we find that unlike their raw values the instrumented versions of these indices are significantly and negatively related to acquisition likelihood the difference between the raw and instrumented results indicates that the g index and e index include an endogenous component and highlights the importance of accounting for endogeneity in tests that use takeover indices to measure takeover deterrence we provide data on new instruments that researchers can use to address these issues received april 13 2016 editorial decision october 14 2016 by editor david dennis

price and probability decomposing the takeover effects of anti takeover provisions we study the effects of anti takeover provisions atps on the takeover probability the takeover premium and target selection voting to remove an atp increases both the takeover probability and the takeover premium that is there is no evidence of a trade off between premiums and takeover probabilities we provide causal estimates based on shareholder proposals to remove atps and address the endogenous selection of targets through bounding techniques the positive premium effect in less protected firms is driven by better bidder target matching and merger synergies

owner managers and firm performance during the asian and global financial crises evidence from korea abstractwe examine the performance of the korean owner managers during the 1997 1998 asian financial crisis and the 2008 2009 global financial crisis to establish whether they overcome the unexpected exterior shocks better than employed managers we find that the owner managers record a significantly greater performance during the crises and especially during the latter period moreover our results suggest that such a tendency comes from the owner managers superior investment decisions our paper thus highlights the role of owner managers by studying their performance during the korean economic crisis periods jel g01 g32 g34

takeover threats and managerial myopia this paper examines the familiar argument that takeover pressure can be damaging because it leads managers to sacrifice long term interests in order to boost current profits if stockholders are imperfectly informed temporarily low earnings may cause the stock to become undervalued increasing the likelihood of a takeover at an unfavorable price hence the managerial concern with current bottom line the magnitude of the problem depends on a variety of factors including the attitudes and beliefs of shareholders the extent to which corporate raiders have inside information and the degree to which managers are concerned with retaining control of their firms

a high frequency analysis of price resolution and pricing barriers in equities on the adoption of a new currency we use ultra high frequency trade by trade data to demonstrate that equity price clustering and pricing predictability around psychologically important prices in greece switches away from drachma focused with the introduction of the euro but does not immediately switch to euro clustering the change in trader price focus around the euro introduction addresses an open debate in the clustering literature on whether the presence of clustering is a bias related to the current prices or anchoring to past prices our findings of a decline in drachma clustering but lack of switch to euro effects supports the case for clustering being a trading feature that is slow to transfer to new pricing regimes a key advantage of the ultra high frequency dataset is we are also able to demonstrate the presence of psychological pricing barriers related to each currency that are not detectable in daily data

multilateral trade negotiations european integration and farm policy reform trade negotiations and farm policy kym anderson why was it so hard to reach an agreement in the uruguay round to reduce agricultural protection after surveying the growth of agricultural protection in the 1980s i develop arguments based on political economy that imply a systematic tendency for governments to protect farmers increasingly at least up to some threshold as economic development proceeds agricultural protection growth in industrializing countries is therefore normal not exceptional liberalizing those policies before reaching that threshold is unattractive politically unless new influences e g from abroad upset the domestic political equilibrium the uruguay round provided such a force what made the early 1990s so significant a crossroads for farm policy reform was that coincidently there were other changes taking place in europe which lowered the domestic political cost of reforming the ec s common agricultural policy the paper argues that the reforms to farm policy during the rest of this decade as a result of the uruguay round agreement will at best be slow and messy but that is far preferable to the alternative of a failed uruguay round and continued growth of agricultural protection

the impact of corporate governance practices on r d efforts a look at shareholders rights cross listing and control pyramid the paper considers the impact of multiple shareholder oriented governance practices on rd decisions based on a sample of 5 528 firms belonging to 110 large french listed business groups our results substantiate the idea that shareholder oriented governance practices and a lower position in a control pyramid are better for rd investment the introduction of any additional shareholder oriented practice is found to result in more rd we show however that this anglo americanization of the french corporate governance system is only partial we provide evidence of the co existence of an old french system of corporate governance with a hybrid model of corporate governance the lack of concrete results on complementarity among shareholder oriented governance practices casts doubt on the stability of this hybrid model in the french context

agency costs and innovation some empirical evidence abstract this paper examines the empirical relation between corporate ownership structure and innovation we test the hypothesis that diffusely held firms are less innovative than firms with either a high concentration of management ownership or a significant equity block held by an outside investor overall the evidence indicates that diffusely held firms are less innovative along the dimensions we examine patent activity growth by acquisition versus internal development and timing of long term investment spending these results are consistent with the conjecture that concentrated ownership and shareholder monitoring are effective at alleviating the high agency and contracting costs associated with innovation

the effects of legal reforms on the ownership structure of listed companies a general view in the corporate governance literature is that corporate ownership structures are rather stable in time and change slowly however even if changes in ownership structures are difficult due to path dependence anecdotal evidence indicates that some sort of transition towards the us style corporate ownership could be occurring in civil law countries the aim of this article is to test the so called law and finance view which predicts that this convergence will only happen if the appropriate regulatory framework is in place we test this prediction using longitudinal data from italian listed companies assessing the effects of recent legal reforms our results show that an increase in the protection of investors rights is associated with a lower use of control enhancing mechanisms and a lower separation of control and cash flow rights while it is less evident if it is associated with a more dispersed ownership these findings carry important implications for theory and practice

creating value by changing the old guard the impact of controlling shareholder heterogeneity on firm performance and corporate policies theory suggests that controlling shareholders can influence firm value through both shared benefits creation and private benefits consumption using negotiated control block transfers from 31 countries we look beyond ownership concentration and investigate how controlling shareholder heterogeneity influences the relative importance of these two effects we document that a control transfer precipitates positive firm outcomes particularly when the vendor has maintained control over an extended period and the acquirer displays a strong incentive to engage in restructuring in such cases we observe a sustained positive price reaction more focused corporate investments lower leverage higher operating efficiency and superior long term performance

executive compensation a modern primer this article studies traditional and modern theories of executive compensation bringing them together under a simple unifying framework accessible to the general interest reader we analyze assignment models of the level of pay and static and dynamic moral hazard models of incentives and compare their predictions to empirical findings we make two broad points first traditional theories find it difficult to explain the data suggesting that compensation results from rent extraction by ceos however more modern shareholder value theories that arguably better capture the ceo setting do deliver predictions consistent with observed practices suggesting that these practices need not be inefficient second seemingly innocuous features of the modeling setup often made for tractability or convenience can lead to significant differences in the model s implications and conclusions on the efficiency of observed practices we close by highlighting apparent inefficiencies in executive compensation and additional directions for future research

management ownership and market valuation an empirical analysis we investigate the relationship between management ownership and market valuation of the firm as measured by tobin s q in a 1980 cross section of 371 fortune 500 firms we find evidence of a significant nonmonotonic relationship tobin s q first increases then declines and finally rises slightly as ownership by the board of directors rises for older firms there is evidence that q is lower when the firm is run by a member of the founding family than when it is run by an officer unrelated to the founder

initial shareholdings and overbidding in takeover contests within the context of takeovers this paper shows that in private value auctions the optimal individually rational strategy for a bidder with partial ownership of the item is to overbid i e to bid more than his valuation this strategy however can lead to i an inefficient outcome and ii the winning bidder making a net loss further the overbidding result implies that the presence of a large shareholder increases the bid premium in single bidder takeovers at the expense of reducing the probability of the takeover actually occurring

a learning curve of the market chasing alpha of socially responsible firms abstract this paper explores stock market reactions to corporate social performance we construct a value weighted portfolio based on the list of 100 best csr companies in the world published on the forbes website by reputation institute this portfolio yields statistically significant annual abnormal returns of 1 81 and 1 26 by controlling for carhart four factors and fama french five factors respectively 2 41 and 1 84 respectively for an equal weighted portfolio moreover such abnormal returns decrease as time passes especially after the inaugural publication of the csr lists in 2013 furthermore we find that companies with better social performance are more likely to have positive earnings surprises and that their returns are more sensitive to earnings surprises the results have three implications firstly csr reputation contributes positively to a firm s short term superior equity performance secondly the csr lists facilitate market correction of mispricing intangibles such as csr reputation abnormal returns decrease as the market gradually learns about the value of firms social performance lastly the paper contributes to the socially responsible investing sri screens and provides guidance for investors who would like to do well financially by doing good socially

agency conflicts in public and negotiated transfers of corporate control we analyze control transfers in firms with a dominant minority blockholder and otherwise dispersed owners and show that the transaction mode is important negotiated block trades preserve a low level of ownership concentration inducing more inefficient extraction of private benefits in contrast public acquisitions increase ownership concentration resulting in fewer private benefits and higher firm value within our model the incumbent and new controlling party prefer to trade the block because of the dispersed shareholders free riding behavior we also explore the regulatory implications of this agency problem and its impact on the terms of block trades

dual class shares a review the majority of firms traded in the world s three largest stock exchanges london new york and tokyo follow the one share one vote principle however in other countries dual classes of shares are common place for example 50 percent of the publicly traded dutch firms have non voting equity and approximately 75 percent of the publicly traded danish finnish and swedish firms have shares that differ in their voting rights this paper reviews the arguments as to why firms create dual classes of shares their effect on firm value and the relative prices of shares that differ only in their voting rights copyright 1992 by oxford university press

managerial reputation and divisional sell offs a model and empirical test abstract this paper presents a reputation model of divestiture activity that yields a sharp cross sectional implication for event studies of sell off announcements a decision to divest a division that is known to be successful conveys good news about the division in contrast a decision to divest a division that is known for underperformance conveys no news about the division we test these hypotheses on a sample of sell off announcements for which we find stories in the wall street journal unambiguously characterizing the division being sold as either a winner or a loser the stock price reaction to the sell off of losers is indistinguishable from zero while the stock price reaction to the sell off of winners is a statistically significant 2 5 these results are strengthened when we expand the sample to include divisions whose profitability was announced in the company s annual report for this expanded sample the average stock price reaction to the announcements of sell offs of losers remains indistinguishable from zero while returns from the sell offs of winners average a highly significant 3 4

contracting with externalities the paper studies inefficiencies arising in contracting between one principal and n agents when the utility of each agent depends on all agents trades with the principal when the principal commits to a set of publicly observable bilateral contract offers the arising inefficiency is due entirely to the externalities imposed on non signers in contrast when the principal s offers are privately observed the distortion is due to the externalities given agents equilibrium trades comparison of the two externalities determines the relative efficiency of the two contracting regimes in both cases we show that when n is large each agent can be treated as non pivotal provided that appropriate continuity assumptions are satisfied we also study the case in which the principal can condition each agent s trade on other agents messages we characterize the set of such mechanisms in which each agent s participation is voluntary when the principal can commit to any such mechanism she implements the first best outcome while threatening each deviator with the harshest possible punishment however in the presence of noise that goes to zero slower than n goes to infinity in the limit we obtain a generally inefficient outcome in which each agent feels non pivotal

savings investment and the corporation in the east asian miracle abstract the east asian countries have achieved a spectacular average rate of economic growth over the last 30 to 40 years with very substantial diversification and economic development korea for example managed to transform itself from being a largely agricultural society in 1960 to the point where it became the third country after the us and japan to export 256 k memory chips developed by its own firms it is no exaggeration to say that the post wwii development of east asia including japan is the most successful story of sustained economic growth in the history of mankind how does one account for this extraordinary economic success

extreme price clustering in the london equity index futures and options markets price clustering and optimal tick sizes have recently been topics of substantial public policy interest and this paper presents evidence which is relevant to both debates around 98 of quoted and traded prices for liffe stock index derivatives are found to occur at even ticks we report that clustering increases with volatility and transaction frequency and decreases with trade size and find that the proportion of odd ticks is significantly lower near the market open and higher near the close further an inverse relationship is reported between bid ask spreads and the number of odd ticks and spreads cluster at even tick values this evidence of extreme price clustering is the first to be presented for financial derivatives the results support both the price resolution and the negotiation hypotheses of price clustering

primary commodity prices manufactured goods prices and the terms of trade of developing countries what the long run shows the authors revisit in this article the empirical foundation of the alleged secular decline in the prices of primary commodities relative to those of manufactures they use a newly constructed index of commodity prices and two modified indexes of manufactured good prices and find that from 1900 to 1986 the relative prices of all primary commodities fell on trend by 0 5 percent a year and those of nonfuel primary commodities by 0 6 percent a year they thus confirm the sign but not the magnitude of the trend implicit in the work of prebisch but even the more limited secular decline shown by their relative price indexes may be magnified by an incomplete account of quality improvements in manufactures they then show that the evolution of terms of trade of nonfuel primary commodities is not the same as that of the net barter terms of trade of non oil exporting developing countries finally they find that despite the decline that has probably occurred during the current century in the terms of trade of nonfuel primary commodities the purchasing power of total exports of these products has increased considerably similarly the fall that may have occurred after world war ii in the net barter terms of trade of developing countries seems to have been more than compensated for by the steady improvement in their income terms of trade

how does law affect finance an examination of equity tunneling in bulgaria abstract we model and test the mechanisms through which law affects tunneling and tunneling affects firm valuation in 2002 bulgaria adopted legal changes which limit equity tunneling through dilutive equity offerings and freezeouts following the changes minority shareholders participate equally in equity offerings where before they suffered severe dilution freezeout offer price ratios quadruple and tobin s q rises sharply for firms at high risk of tunneling the paper shows the importance of legal rules in limiting equity tunneling the role of equity tunneling risk as a factor in determining equity prices and substitution by controlling shareholders between different forms of tunneling

managerial legacies entrenchment and strategic inertia this paper argues that the legacy potential of a firm s strategy is an important deter minant of ceo compensation turnover and strategy change a legacy makes ceo replacement expensive because firm performance can only partially be attributed to a newly employed manager boards may therefore optimally allow an incumbent to be entrenched moreover when a firm changes strategy it is optimal to change the ceo because the incumbent has a vested interest in seeing the new strategy fail even though ceos have no specific skills in our model legacy issues can explain the empirical association between ceo and strategy change this paper proposes a model of ceo replacement and puts forward a novel determinant for turnover decisions the legacy potential of a firm s strategy we mean by this the extent to which a manager s decisions affect future firm cash flows potentially beyond the manager s own tenure the replacement of a ceo is arguably one of the most important decisions a firm takes yet the theoretical and empirical finance literature has relatively little to say about the firm and manager specific characteristics that lead to one manager being fired and replaced by another as brickley 2003 points out the only variable that predicts turnover empirically is poor firm performance but it has little pre dictive power theoretical papers on managerial turnover tend to reduce ceo successions to a sequence of static interactions see below for more details as such they do not distinguish between a ceo who is hired and can start a fresh project or one who is constrained in this choice because he inherits a prede cessor s long term strategy our paper focuses on this latter phenomenon and investigates turnover decisions when strategy choices have a legacy potential the fact that a dynamic link exists between a ceo and his predecessor is probably more recognized in the accounting literature than in finance pourciau both authors are from the toulouse school of economics and the institut d administration des

freeze out mergers do freeze out mergers mitigate the free rider problem of corporate takeovers we study this question in a tender offer model with finitely many shareholders under a freeze out merger minority shareholders expect to receive the original offer price whether or not they tender their shares we show that the ability to freeze out shareholders increases the raider s expected profit however as the number of shareholders gets arbitrarily large the raider s expected profit in equilibrium converges to zero for any freeze out clause with an ownership threshold that is strictly above simple majority in this sense freeze out mergers do not solve the free rider problem received september 17 2016 editorial decision june 3 2018 by editor francesca cornelli

corporate groups dual class shares and the value of voting rights abstract it is known that deviating from the one share one vote principle through the issue of non voting stock increases the value of outsiders voting rights we argue that the creation of a business group is another way to deviate from one share one vote and we show that it produces a larger voting share premium in holding companies as a consequence having both subsidiaries and non voting stock produces a multiplier effect on the voting premium the puzzling size of the premium in italy was never related to the interaction of pyramiding and non voting stock our empirical study confirms that the premium is larger for holding companies issuing non voting stock than for similar operating companies without non voting equity

staggered boards corporate opacity and firm value abstract we explore the effect of corporate opacity on the relation between staggered boards and firm value we find that through mitigating takeover pressure staggered boards become increasingly beneficial to firm value as opacity increases in addition we document that staggered boards reduce value only in transparent firms additional tests indicate that as opacity increases staggered boards bear an increasingly positive relation to research and development and ceo pay performance sensitivity taken together these results suggest that corporate opacity affects the value impact of takeover protection

growth of agricultural protection in east asia abstract japan is well known for its restrictions on food imports less well known is the fact that south korea and taiwan are also protective of their agricultural sectors this protectionism began early this century when all three countries were part of the japanese empire and it has increased rapidly during the 1960s and 1970s today food prices in east asia average two or three times higher than in international markets reflecting levels of protection that rival those in western europe

training wages and sample selection estimating sharp bounds on treatment effects this paper empirically assesses the wage effects of the job corps program one of the largest federally funded job training programs in the u s even with the aid of a randomized experiment the impact of a training program on wages is difficult to study because of sample selection a pervasive problem in applied microeconometric research wage rates are only observed for those who are employed and employment status itself may be affected by the training program this paper develops an intuitive trimming procedure for bounding average treatment effects in the presence of sample selection in contrast to existing methods the procedure requires neither exclusion restrictions nor a bounded support for the outcome of interest identification results estimators and their asymptotic distribution are presented the bounds suggest that the program raised wages consistent with the notion that the job corps raises earnings by increasing human capital rather than solely through encouraging work the estimator is generally applicable to typical treatment evaluation problems in which there is nonrandom sample selection attrition copyright wiley blackwell

tariffs as insurance optimal commercial policy when domestic markets are incomplete free trade is not optimal for a small country that faces uncertain terms of trade if some factors are immobile ex post and markets for contingent claims are incomplete the government can improve social welfare by using commercial policy that serves as a partial substitute for missing insurance markets using a combination of analytical and simulation techniques we demonstrate that optimal policy for this purpose will often have an anti trade bias we also show that the usual preference by economists for factor or product taxes and subsidies over tariffs and export subsidies may not be justified in this context this abstract was borrowed from another version of this item

investor protection and equity markets we present a simple model of an entrepreneur going public in an environment with poor legal protection of outside shareholders the model incorporates elements of becker s j political econ 106 1968 172 crime and punishment framework into a corporate finance environment of jensen and meckling j financial econ 3 1976 305 we examine the entrepreneur s decision and the market equilibrium the model is consistent with a number of empirical regularities concerning the relation between investor protection and corporate finance it also sheds light on the patterns of capital flows between rich and poor countries and on the politics of reform of investor protection r 2002 elsevier science b v all rights reserved

rational expectations analysts forecasts of earnings and sources of value gains for takeover targets abstract value gains to target firm shareholders in takeover bids may be due to potential synergy between bidder and target and or potential target restructuring based on new information released by the bid since these two models have different implications for the anticipated earnings of the target as a stand alone entity analysts earnings forecast revisions afr for the target during the bid may provide evidence for the new information hypothesis for 326 uk targets of takeover bids during 1987 1993 we estimate analysts earnings forecast revisions using the institutional brokers estimate system ibes and relate them to bid premia paid to target shareholders analysts revise their forecasts significantly up on bid announcement for failed especially failed hostile bids the earnings forecast revision and bid premium are more positively correlated than for successful and friendly bids this is consistent with the rational expectations behaviour of target shareholders modelled by grossman and hart s j grossman o d hart bell journal of economics 11 1 1980 42 s j grossman o d hart journal of finance 36 1981 253

ownership dynamics and asset pricing with a large shareholder we analyze the optimal trading and ownership policy of a large shareholder who must trade off diversification and monitoring incentives without commitment the problem is similar to durable goods monopoly the share price today depends on expected future trades we show that the large shareholder ultimately trades to the competitive price taking allocation even though it entails inefficient monitoring with continuous trading the large shareholder trades immediately to this allocation if moral hazard is weak enough that her private valuation of a share is decreasing in her stake otherwise the large shareholder adjusts her stake gradually we consider implications for asset pricing ipo underpricing and lockup provisions

earnings manipulation and the cost of capital the cost of capital the widespread use of accounting information by investors and financial analysts to help value stocks creates an incentive for managers to manipulate earnings in an attempt to influence short term stock price performance this paper examines the role of earnings management in affecting a firm s cost of capital using an agency model with multiple firms whose cash flows are correlated we demonstrate that the extent of earnings manipulation varies across the business cycle depending on a firm s earnings profile it can have stronger incentives to overstate its performance in good times or in bad times because of this dependence on the state of the economy earnings manipulation can influence a firm s cost of capital despite the forces of diversification

family firms and r d behavior new evidence from a large scale survey abstract this paper analyzes how founders and their families influence r d intensity information on r d comes from a large scale bi annual survey among listed german firms we find that r d intensity is higher in firms that are actively managed by the family the impact of family control via voting rights is negative but mostly not significant while this negative family control effect is in line with hitherto existing literature the positive impact of family management is surprising indeed this positive effect disappears if we follow previous research and use r d information from financial statements we show that this puzzling result is related to corporate opacity opaque family managed firms report too conservative r d expenditures especially if they face financial constraints this leads to an under estimation of r d intensity in these firms if accounting figures are used

exclusive dealing investment promotion may facilitate inefficient foreclosure this paper studies a model whereby exclusive dealing ed can both promote investment and foreclose a more efficient supplier since ed promotes the incumbent seller s investment the seller and the buyer realize a greater surplus from bilateral trade under exclusivity hence the parties involved may sign an ed contract that excludes a more efficient entrant in circumstances where ed would not arise absent investment the paper therefore invites a more cautious attitude towards accepting possible investment promotion arguments as a defense for ed

r d investment of electricity generating firms following industry restructuring abstract since electricity market restructuring questions over adequate levels of r d investments persisted using an unbalanced panel data of 70 electricity generating firms across 15 organisations of economic co operation and development countries from 1990 to 2008 this paper empirically examines the impacts of entry liberalization allowing third party access establishing a wholesale market and deregulating a retail market vertical unbundling privatization and firm size on r d investments entry liberalization is associated with a decline in r d investment establishing a wholesale market exhibits the greatest negative effects on r d investment regulated tpa and retail market deregulation also decrease r d the effect of privatization is not independently salient but interacts with a wholesale pool to lower r d investments large firms spend more on r d investment than small firms results indicate that the restructuring of the electricity industry reduces r d investment which may be detrimental to the reliability and the efficiency of the electricity system as well as to the creation and maintenance of the innovation capabilities necessary to address demand and environmental concerns

the effect of poison pill securities on shareholder wealth abstract this paper examines empirical evidence about the effect of poison pill takeover defenses on shareholder wealth i find evidence that announcements of the most restrictive forms of the pill defense are associated with stock price declines also the most restrictive forms of the pill defense are associated with abnormally high rates of defeat of unsolicited tender offers although this evidence is consistent with managerial entrenchment the evidence implies that on average poison pill defenses have seemingly had only a modest effect on firm valuation

why higher takeover premia protect minority shareholders posttakeover moral hazard by the acquirer and free riding by the target shareholders lead the former to acquire as few sharcs as necessary to gain control as moral hazard is most severe under such low ownership concentration inefficiencies arise in successful takeovers moreover share supply is shown to be upward sloping rules promoting ownership concentration limit both agency costs and the occurrence of takeovers furthermore higher takeover premia induced by competition translate into higher ownership concen tration and are thus beneficial finally one share one vote and simple majority are generally not optimal and socially optimal rules need not emerge through private contracting

coordination and discrimination in contracting with externalities divide and conquer abstract the paper studies bilateral contracting between n agents and one principal whose trade with each agent generates externalities on other agents it examines the effects of prohibiting the principal from i coordinating agents on her preferred equilibrium and ii making different contracts available to different agents these effects depend on whether an agent is more or less eager to trade when others trade more the prohibitions reduce the aggregate trade in the former case and have little or no effect in the latter case the inefficiencies under different contracting regimes are linked to the sign of the relevant externalities and are shown to be typically reduced by both prohibitions

the balance of power in closely held corporations abstract we analyze a closely held corporation characterized by the absence of a resale market for its shares we show that the founder of the firm can optimally choose an ownership structure with several large shareholders to force them to form coalitions to obtain control by grouping member cash flows a coalition internalizes to a larger extent the consequences of its actions and hence takes more efficient actions than would any of its individual members the model has implications for the optimal bundling of cash flow and voting rights and for the optimal number and size of shareholders

movers and shakers most projects in most walks of life require the participation of multiple parties while it is difficult to unite individuals in a common endeavor some people who we call movers and shakers seem able to do it the paper specifically examines moving and shaking of an investment project whose return depends both on its quality and the total capital invested in it we analyze a model with two types of agents managers and investors managers and investors initially form social connections managers then bid to buy control of the project and the winning bidder puts effort into making investors aware of it finally a subset of aware investors are given the chance to invest and they decide whether to do so after receiving private signals of the project s quality we first show that connections are valuable since they make it easier for a manager to move and shake the project i e obtain capital from investors when we endogenize the network we find that while managers are identical ex ante a single manager emerges as most connected he consequently earns a rent in extensions we move away from the assumption of ex ante identical managers to highlight forces that lead one manager or another to become a mover and shaker our theory sheds light on a range of topics including entrepreneurship venture capital and anchor investments

an empirical analysis of the reincorporation decision the literature suggests two competing explanations for reincorporations efforts at managerial entrenchment and attempts to improve contractual efficiency the empirical evidence to date is inconclusive to seek further evidence we examine a large sample of firms that changed their state of incorporation over the period 1980 1992 we find that shareholder wealth is decreased by reincorporations that erect takeover defenses but is increased by reincorporations that establish limits on director liability firms that claim they reincorporate to limit the personal liability of their board members and thereby attract better qualified outside directors do in fact expand the outside representation on their boards whereas firms citing other motives do not

an analysis of intraday patterns in price clustering on the tokyo stock exchange abstract stock prices tend to cluster at round numbers a phenomenon observed in many markets using tick by tick transaction data this article studies price clustering on the tokyo stock exchange which is a computerized limit order market as for the intraday pattern the degree of price clustering is greatest at the market opening then it decreases during the first half hour and reaches a stable level it does not increase again near the market closing there is no clear difference in clustering between call auctions and continuous auctions

enjoying the quiet life corporate governance and managerial preferences much of our understanding of corporations builds on the idea that managers when they are not closely monitored will pursue goals that are not in shareholders interests but what goals would managers pursue this paper uses variation in corporate governance generated by state adoption of antitakeover laws to empirically map out managerial preferences we use plant level data and exploit a unique feature of corporate law that allows us to deal with possible biases associated with the timing of the laws we find that when managers are insulated from takeovers worker wages especially those of white collar workers rise the destruction of old plants falls but the creation of new plants also falls finally overall productivity and profitability decline in response to these laws our results suggest that active empire building may not be the norm and that managers may instead prefer to enjoy the quiet life

auctions versus negotiations which is the more profitable way to sell a company an auction with no reserve price or an optimally structured negotiation with one less bidder we show under reasonable assumptions that the auction is always preferable when bidders signals are independent for affiliated signals the result holds under certain restrictions on the seller s choice of negotiating mechanism the result suggests that the value of negotiating skill is small relative to the value of additional competition the paper also shows how the analogies between monopoly theory and auction theory can help derive new results in auction theory jel d44 g34 there are close analogies between standard price theory and the theory of auctions in an absolute english auction in which the price rises continuously until only one bidder remains and the seller is required to accept the final bid the sale price equals the lowest competitive price at which supply equals demand in the theory of optimal auctions the seller is treated as a monopolist who can choose any

uncertainty duality and perversity an empirical test of the schultz baron hypothesis it has been suggested that supply curves may be negatively sloped under conditions of output price uncertainty and risk aversion if the effect of an increase in expected price is offset by the effect of an associated increase in uncertainty risk this hypothesis first articulated by schultz and given a more rigorous theoretical exposition by baron is tested using aggregate time series data to estimate a stochastic model of us agriculture based on a generalized leontief certainty equivalent profit function evidence of risk aversion and a positive correlation between mean output price and its variance are found however these factors are not strong enough to generate perversity thus the own price elasticity of supply of agricultural output is found to be positive with a value of 0 25 although no evidence of perversity is found the empirical results suggest that ignoring price uncertainty may bias estimates of aggregate supply response downwards by between 5 and 47 as well as testing the schultz

public trading and private incentives this article studies the link between public trading and the activity of a firm s large shareholder who can affect firm value public trading results in the formation of a stock price that is informative about the large shareholder s activity this increases the latter s incentives to engage in value increasing activities indeed if he has to liquidate part of his stake before the effect of his activity is publicly observed a more informative price rewards him for his activity implications are derived for the decision to go public capital structure and security design we consider a firm with a large shareholder and otherwise dispersed shares which are publicly traded the block holder is an insider in the sense that he can undertake actions that directly affect the firm s value moreover the insider might not take all value increasing actions as at least some of them involve a private cost for him in other words there is an incentive problem the article s main premise is that public trading as part of the price formation process generates information not only about exogenous factors affecting firm value but also about the insider s activity for instance as a result of public trading a firm s stock price will incorporate the market s evaluation of how a controlling shareholder allocates corporate resources we identify two sources of incentives for the insider to engage in activities that will increase firm value the first one is his stake in the firm since the insider participates in a value increase in proportion to his equity stake a larger stake increases the benefit to him from the firm value being high the view that large shareholders affect firm value is indeed widespread shleifer and vishny 1997 they alleviate the free rider problem pervasive in firms with passive dispersed investors unable or unwilling to affect the firm s operations that is outsiders

price clustering and natural resistance points in the dutch stock market a natural experiment abstract this paper focuses on the tendency of stock prices to cluster at round numbers like 10 20 30 etc and to a lesser extent 5 15 25 etc and the related effect of round number price barriers prices pass round numbers less frequently than other numbers two competing hypotheses are tested using data from the dutch stock market of the period 1990 2001 after 1 january 1999 stock prices were listed in euros while guilders were still the currency of daily life until 2002 the aspiration level hypothesis predicts that round number effects in guilders will only slowly disappear the odd price hypothesis predicts an abrupt change in round number effects after 1 january 1999 generally the results are consistent with the odd price hypothesis