a status based model of market competition this article explores the significance of status processes for generating and reproducing hierarchy among producers in a market it develops a conception of a market as a status order in which each

golden parachutes shark repellents and hostile tender offers a common view of golden parachutes and shark repellents is that they are designed by management to insulate itself from the discipline imposed by the market for corporate control and so are harmful to shareholders this paper offers an alternative view that these devicesare beneficial to shareholders because they allow better contracting between manager and shareholders evidence on the incidence of goldenparachutes and on the compensation tenure relationship for managers of golden parachute firms supports the alternative view copyright 1986 by american economic association

antitakeover charter amendments and stockholder wealth abstract many large corporations have recently adopted antitakeover charter amendments which make the transfer of corporate control more difficult this paper develops and tests competing theoretical explanations for the passage of these amendments in one view antitakeover provisions are adopted because incumbent management seeks job protection at stockholders expense the alternative hypothesis is that antitakeover provisions benefit stockholders perhaps by extracting greater payment in exchange for corporate control although inconclusive the evidence provides weak preliminary support for the hypothesis that antitakeover amendments are best explained as a device for managerial entrenchment

why the microbrewery movement organizational dynamics of resource partitioning in the u s brewing industry1 the number of small specialty brewers in the u s beer brewing industry has increased dramatically in recent decades even as the market for beer became increasingly dominated by mass production brewing companies using the resource partitioning model of organizational ecology this article shows that these two apparently contradictory trends are fundamentally interrelated hypotheses developed here refine the way scale competition among generalist organizations is modeled and improve the theoretical development of the sociological bases for the appeal of specialist organizations products especially those related to organizational identity evidence drawn from qualitative and quantitative research provides strong support for the theory the article offers a brief discussion of the theoretical and substantive issues involved in application of the model to other industries and to other cultures

a comparison of event study methodologies using daily stock returns a simulation approach accounting research studies commonly use measures of abnormal security returns to test hypotheses about accounting information and policies alternative methods are used in these studies to detect abnormal performance and thereby examine the information content of identified events the ability of these methods to detect abnormal returns using simulation techniques is examined by brown and warner 1980 1984 morse 1984 addresses this issue analytically the analytical approach presumes that the event study data is generated by the process modeled while the simulation approach uses the security return data generated by the market simulation provides a tractable means of dealing with situations where an analytical approach may yield results suggesting direction but not magnitude or where such techniques are unusually cumbersome both limitations face us in this study brown and warner 1980 use monthly data to examine the comparative abilities of several combinations of return generating models and

the impact of capital market imperfections on investment cash flow sensitivity abstract we examine the investment cash flow sensitivity of us manufacturing firms in relation to five factors associated with capital market imperfections fund flows institutional ownership analyst following bond ratings and an index of antitakeover amendments we find a steady decline in the estimated sensitivity over time furthermore we find that investment cash flow sensitivity decreases with increasing fund flows institutional ownership analyst following antitakeover amendments and with the existence of a bond rating the overall evidence suggests that investment cash flow sensitivity decreases with factors that reduce capital market imperfections

directed technological change and factor shares abstract directed technological change dtc concerns how stocks of factor augmenting knowledge evolve relative to each other we model investment in factor augmenting knowledge at firm level and show that relative investment rates depend on the relative factor shares and elasticities furthermore we argue that links between the knowledge stocks and substitution between final goods are crucial to the long run evolution of the economy

toehold acquisitions shareholder wealth and the market for corporate control this study examines the valuation consequences of control related outcomes that fol low toehold acquisitions we find evidence that toehold acquisitions facilitate valueenhancing control transfers the types of control transfers not only include takeovers but also internal mechanisms such as proxy fights and management turnovers we find that toehold targets experiencing such control transfers exhibit an abnormal increase in share value while those not experiencing such control transfers exhibit an abnormal de crease in share value the results suggest that the positive valuation effect associated with toehold acquisitions reflects the expected benefits of subsequent control transfers

rebound directed technological change and aggregate demand for energy abstract we analyse the long run role of energy in aggregate production the factor share of energy has been remarkably constant despite the relative decline in the price of energy we analyse possible explanations for this observation ruling out the idea that endogenous directed technological change has led to a failure of energy augmenting technology to keep pace with labour augmenting technology instead we propose a model in which a combination of income and substitution effects has driven both shifts in consumption patterns towards existing energy intensive goods and the emergence of new such goods

state intervention in the market for corporate control abstract this study investigates the impact of pennsylvania senate bill 1310 on the share prices of pennsylvania corporations considered the most severe of the second generation antitakeover laws the statute limits the ability of shareholders to challenge management through the proxy process and eliminates the traditional fiduciary obligation of directors to promote shareholders interests we find that pa sb1310 significantly decreased share values and estimate the loss to shareholders of pennsylvania firms at 4 billion however firms with antitakeover charter amendments already in place were less affected and firms that exempted themselves from pa sb1310 recovered a portion of shareholders wealth

the collapse of first executive corporation junk bonds adverse publicity and the run on the bank phenomenon abstract in april 1991 regulators seized the major subsidiaries of first executive corporation fe an insurer that invested heavily in junk bonds during the junk bond market turmoil of 1989 1990 adverse publicity fueled a bank run at fe forcing a 4 billion portfolio liquidation before the market rose 50 60 in 1991 1992 more traditional insurers did not receive commensurate press coverage despite their substantial exposure to real estate declines which were roughly 2 5 times the junk bond decline seizure of fe s subsidiaries was defensible although fe would have become solvent within a year given average junk bond market appreciation

voting power in the proxy process abstract the likelihood that a firm will enact a management sponsored antitakeover charter amendment depends on ownership structure this implies that the adoption of antitakeover amendments may be anticipated then announcement returns provide a biased estimate of wealth effects an estimator that corrects for the bias induced by anticipation indicates that the enactment of an antitakeover amendment is associated with a statistically significant decrease in shareholder wealth the voting power of employee stock ownership plans and the chief executive officer plays a prominent role in determining whether a firm will adopt this type of takeover defense

the competitive dynamics of status and niche width us investment banking 1920 1949 by integrating the status based model of market competition and the resource partitioning model this paper develops the resource status space imagery of markets and two propositions first the paper argues that the benefit that an organization derives from an increment in status is not independent of the organization s niche width second the paper considers the implications of status based stratification for the resource partitioning model s specification of the effects of increasing market concentration using the resource status space imagery this paper posits that if expanding generalists are reluctant to lower their status or are unable to increase their status they will expand within their current status level the expanding generalists will thus encroach on the niches of similar status generalists and specialists rather than expand into the niches of generalists across the whole status spectrum we discuss implications for the sociology of markets copyright 2000 by oxford university press

the dynamics of organizational status this paper examines the growth and decline of organizational status it is argued that an organization s status is determined by two factors past performance outcomes and the status of the organization s affiliates the better the past performance outcomes and the higher the status of the affiliates the greater the organization s growth in status this basic proposition is tested in an examination of status changes among investment banks in the non investment grade market between 1981 and 1987 implications and extensions are discussed in the conclusion copyright 1996 by oxford university press

dynamic factor demands and the effects of energy price shocks a dynamic model is used to understand how sharp changes in energy prices affect investment behavior employment and energy use the authors discuss the theory behind their model selection model specifications estimation methods and data list parameter estimates and elasticities for the selected model and describe the simulations they conclude that 1 the data strongly reject the hypothesis of constant returns to scale within their specification of aggregate production 2 the data indicate adjustment costs on labor are small and 3 their results help reconcile some of the conflicting estimates of energy demand elasticities appearing in recent literature 23 references 3 figures 3 tables

moral hazard competition and contract design empirical evidence from managerial franchised and entrepreneurial businesses in norway agency theory emphasizes the role of ownership control and incentives in encouraging managers to improve efficiency owners often tie managers to contracts that reduce conflict of interest between owners and managers the differences between alternative business ownership structures have been investigated according to theory we expect managers with an outcome dependent dealer contract to be more efficient than managers with a more integrated and less performance based employee dealer contract we also analyse how competitive pressure might reduce the moral hazard problem and therefore affect contract design berle and means the modern corporation and private property macmillan new york 1932 long ago stated that the market mechanism could constrain the agency problem even so this problem has scarcely been investigated empirically this paper also considers the contractual effect of potential monitoring costs education and relationship age in a model tested on data from 175 dealer contracts in a

shark repellents and managerial myopia an empirical test since the proxy fights of the 1950s commentators have debated the welfare implications of corporate takeovers although observers such as manne 1965 jensen and meckling 1976 fama 1980 and jensen and ruback 1983 argue that the market for corporate control promotes efficiency and enhances wealth some critics such as managers of firms subject to hostile takeover attempts contend that takeovers destroy firm value the critics frequently assert that takeover pressure forces managers to sacrifice profitable but slowyielding long term investments in favor of less productive short term investments that offer immediate returns while the evidence supporting takeover induced shortsightedness is largely anecdotal a recent paper by stein 1988 develops a formal

short term projects and emergent careers evidence from hollywood the hollywood film industry is considered as a system of recurrent ties among the various major participants who usually work under short term contracts for single films this form of project based organization in seen as a response to uncertainty and risk in the film industry the paper examines the ways in which independent contractors producers directors cinematographers and actors organize and operate to reduce uncertainty and risk and to increase profits the analysis of data from 2 430 films made in the period 1965 80 establishes patterns of recurrent ties among participants who are at comparable levels of cumulative productivity with respect to earnings oscars oscar nominations and number of previous films the paper also considers the degree to which film earnings are influenced by the past productivity of the major participants

repetition reputation and raiding i develop a multitarget takeover model with bid revisions in which bidders desire a reputation for having low valuations such a reputation increases the likelihood that future targets will accept low premium bids bidders develop reputation by using low take it or leave it offers consequently tender premiums bid revision rates and success rates are lower for continuing bidders than for those considering only a single target success rates vary within a series and reputation building is more likely with highly correlated target valuations i provide an exploratory empirical analysis consistent with lower premiums from continuing bidders and discuss some resulting implications regarding raiders conglomerates and resistance strategies article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

networks as the pipes and prisms of the market1 this article draws an analytical distinction between two types of market uncertainty egocentric which refers to a focal actor s uncertainty regarding the best way to convert a set of inputs to an output desired by a potential exchange partner and altercentric which denotes the uncertainty confronted by a focal actor s exchange partners regarding the quality of the output that the focal actor brings to the market given this distinction the article considers how the value of structural holes and market status vary with these two types of uncertainty the article proposes that the value of structural holes increases with egocentric uncertainty but not with altercentric uncertainty in contrast the value of status increases with altercentric uncertainty but declines with egocentric uncertainty thus actors with networks rich in structural holes should sort into markets or market segments that are high in egocentric uncertainty high status actors should sort into markets that are low in egocentric

bringing individuals back in the effects of career experience on new firm founding because of methodological and theoretical obstacles research on organizational foundings has largely focused on societal and population level explanations this paper takes the view that understanding firm foundings also requires linking to individual level processes we suggest that careers are an important mechanism linking individual level processes to firm foundings the firm founding experience of potential founders impacts organizational foundings by influencing expectations of the liability of newness we test our explanation on the set of inventions patented by the massachusetts institute of technology over the period 1980 1996 by examining the effect of inventors career experiences on the likelihood that an invention will be commercialized through the founding of a new organization copyright 2003 oxford university press

the effects of corporate restructuring on aggregate industry specialization it has been widely argued that the purpose of corporate restructuring during the 1980s was to produce a population of more industry specialized competitive firms in response to intensifying global competition a number of studies show that corporate restructuring resulted in increased corporate focus during the 1980s however no study has yet examined whether corporate restructuring resulted in increased specialization at the industry level during the 1980s this study examines this issue first we examine whether or not aggregate industry specialization increased during the 1980s that is we ask did the average firm in any given u s industry become more or less specialized to that industry during the 1980s second we examine whether corporate restructuring was a significant determinant of change in aggregate industry specialization during the 1980s using a sample of 686 four digit sic industries and 64 two digit industry groups this study finds that aggregate industry specialization declined very slightly at both the four digit and two digit level between 1981 and 1989 this study also finds that sell offs of establishments through corporate control transactions or interfirm asset sales had no significant effect on aggregate industry specialization

isolating the symbolic implications of employee mobility price increases after hiring winemakers from prominent wineries when a firm hires a skilled employee from a prominent competitor an indirect affiliation between the two firms is created recent orga nizational research indicates that such affilia tions may influence the hiring firm s prices both substantively and symbolically e g joel m podolny 2001substantively product quality may be enhanced by the human capital the new employee transfers from their prior employer if so then the hiring firm s prices should increase symbolically because the prior employer was a prominent competitor the move signals to con sumers that the hiring firm s quality may be bet ter than previously believed accordingly prices should increase these substantive and symbolic effects are dif ficult to disentangle empirically consequently their independent effects are more theoretically advanced than empirically supported we leverage an idiosyncratic feature of wine markets to isolate the substance from symbol in the hiring of skilled winemakers because wines are aged before they are released evaluated and priced new winemakers start work as wines made by their predecessors enter the market assuming that winemakers exert little influence on the quality of wines that are already in the cellar an assumption we validate empirically then post hire pricing effects are primarily if not purely symbolic as such once we control for the propensity of wineries to hire new winemak ers we isolate signaling i e symbolic from human capital effects on wine prices following hiring events

innovation and communication signalling with partial disclosure this paper introduces a model of feedback effect equilibrium i e equilibria in which an asymmetrically informed agent is motivated to communicate its privately known attribute but can do so only through channels or signals which convey directly useful information to competing agents this revelation to the competition serves to reduce the value of the private information held by the first agent models of this kind are of obvious relevance to realistic theories of product or financial market disclosure policies of firms patenting and a host of related behavioural and regulatory issues this model is developed in the context of a set of firms engaged in research and development rivalry in which the value of privately held and disclosed information arises from its implications for the likelihood and timing of productive innovation

corporate financial policy and corporate control abstract this paper presents evidence that stockholder wealth declines on average when managers respond to attempted hostile takeovers with defensive changes in asset and ownership structure the data also indicate that these corporate restructurings are typically quite large and that many are attempts by managers to create barriers specific to the hostile bidder and or to consolidate a block of voting securities in the hands of management allies the evidence suggests that defensive motives whether beneficial or harmful influence corporate asset and ownership structure

organizational failure and intraprofessional status loss we examine variation in intraprofessional status changes for employees displaced by organizational failure we propose that failure related reductions in bargaining power are moderated by individual status characteristics that influence potential employers evaluations of job candidates and therefore individuals status loss risks treating a prominent law firm s failure as a quasi experiment we test our arguments by analyzing 224 firm partners transitions to subsequent employers most partners regained employment at firms of lower status than the failed firm but independent of their demonstrated productivity a partner s likelihood of status loss increased with tenure in the failed firm s partnership and decreased with educational prestige these results suggest not only that organizational failure can diminish cumulative career advantages but also that status characteristics that enable attainment such as education can protect individuals against status loss

valuation effects of greenmail prohibitions greenmail payments are widely viewed as actions designed by managers to perpetuate their tenure in offiee this view which suggests that greenmail prohibitions would enhance shareholder wealth receives mixed empirical support in this paper the average market reaction to charter amendments prohibiting greenmail payments is weakly nega tive suggesting there is a value to maintaining managerial flexibility nonlinear maxi mum likelihood estimation however reveals a strong positive correlation between the market reaction and the firm s abnormal stock price runup over the three months just prior to the proxy mailing date for the subsample of firms with a relatively large prior runup the precommitment not to pay greenmail is value enhancing if the prior runup reflects takeover rumors then this evidence is consistent with the proposition that greenmail pay ments amidst takeover speculations are value decreasing

risk arbitrage in takeovers this article studies the role of risk arbitrageurs in takeovers and the source of their advantage we show how the presence of arbitrageurs affects the value of the target shares since arbitrageurs are more likely to tender therefore an arbitrageur has the informational advantage of knowing he bought shares in equilibrium the number of arbitrageurs buying shares and the price they pay are determined endogenously we also present several empirical implications including the relationship among trading volume takeover premium liquidity of the shares and the number of risk arbitrageurs investing in one particular deal copyright 2002 oxford university press

labor market advantages of organizational status a study of lateral partner hiring by large u s law firms prior research demonstrates product market advantages of organizational status but largely neglects factor market advantages we propose that status is advantageous in labor markets because individuals generally consider employer status a nonpecuniary employment benefit dyadic analyses of lateral partner hiring by large u s law firms demonstrate two status based advantages in employee hiring and retention first high status firms are more likely than low status ones to hire an employee from a more profitable competitor second high status firms are most likely to lose an employee to a lower status competitor when the competitor is atypically more profitable we discuss implications of these findings for individual and organizational status attainment and for the stability of industry status hierarchies

the critical trade off identity assignment and box office success in the feature film industry researchers have begun to study markets that are structured in terms of an opposition between market identities in a manner akin to the role pairs analyzed in structural role theory in this paper we analyze the feature film market which came to have such a role structure by the mid 1990s by exploiting the contingency that pertains to the identity of newly released films and the intermediary function played by critics we assess the tendency for offerings to be assigned one or the other of the available market identitiesc independent or major an analysis of the box office success of 396 feature films released in 1997 shows that a film attracted a larger audience when critics who specialized in major releases reviewed the film and implicitly certified it as fit for the mass market such classification was particularly crucial for breaking out of the initial constraints set by theatrical exhibitors however while attaining a major identity was necessary for success in the mass market it was a handicap in penetrating the art house this trade off illustrates how market structures restrict identity in a manner akin that by which role structures place constraints on the identities available to individuals copyright 2003 oxford university press

the rise of mass consumption societies this paper studies mechanisms behind the rise of mass consumption societies the development process depicted follows the flying geese pattern in which a series of industries take off one after another as productivity improves in these industries each consumer good becomes affordable to an increasingly large number of households which constantly expand the range of goods they consume this in turn generates larger markets for consumer goods which leads to further improvement in productivity for such virtuous cycles of productivity gains and expanding markets to occur income distribution should be neither too equal nor too unequal with too much equality the economy stagnates in a poverty trap with too much inequality the development stops prematurely

a view from the macro side rebound backfire and khazzoom brookes abstract this paper attempts to delineate a few key insights extracted from theoretical macroeconomic considerations of the rebound issue the goal has been to reduce these thoughts to a clear set of assertions that if true would be useful points of reference in the ongoing discussion despite their non empirical nature

technological progress and sustainable development what about the rebound effect abstract sustainability concepts that rest on the idea of resource or energy efficiency improvements due to technological progress tend to overestimate the potential saving effects because they frequently ignore the behavioral responses evoked by technological improvements efficiency improvements also affect the demand for resources and energy and often an increase in efficiency by 1 will cause a reduction in resource use that is far below 1 or sometimes it can even cause an increase in resource use this phenomenon is commonly labeled the rebound effect which is well known among energy economists but never attracted much attention in ecological economics the paper starts with the traditional neoclassical analysis of the rebound effect in a partial equilibrium framework that concentrates on the demand of one particular energy service such as mobility or room temperature it also provides an overview of some of the main empirical studies based on this model that mostly confirm the existence of the rebound effect but are controversial about its actual importance however we have to go beyond the neoclassical single service model in order to take care of the variety of possible feedback affecting energy use the paper presents two important expansions of the single service model in order to show the potential relevance of the rebound effect to ecological economics first it is shown that in a multi services model it proves to be difficult to make general statements about the relevance of the rebound effect in this case the overall effect of an increase in energy efficiency on total energy use depends on the on the assumptions about the substitutability between the services considered and the direction of the income effect second the paper also tries to take care of the fact that changes in resource use or energy use are frequently just side effects of other forms of technological progress especially technological change of a time saving nature can have a large influence on energy use as many time saving devices for example faster modes of transport require an increase in energy consumption that is frequently reinforced by a rebound effect with respect to time this effect will be especially strong when wages are high and at the same time energy prices are low as is currently the case in most industrialized countries consequently the paper also provides a strong argument for the introduction of energy taxes

the effect of management s choice between negotiated and competitive equity offerings on shareholder wealth this paper investigates the effect on shareholder wealth of two events that change management s choice between negotiated and competitive underwritten equity offerings these two events are the suspension and termination of suspension of rule 50 this rule is based on the public utility holding company act of 1935 and requires certain utilities to use the competitive method the results indicate that the shareholders of the affected utilities experience an abnormal negative return on the announcement of the suspension of rule 50 and an abnormal positive return on the announcement of the termination of suspension this evidence is consistent with the joint hypothesis i competitive offerings are less costly than negotiated offerings and ii manager shareholder agency costs are a determinant of the corporate choice between these two methods of raising equity

structural change and convergence of energy intensity across oecd countries 1970 2005 abstract this paper uses new and unique data derived from a consistent framework of national accounts to compute and evaluate energy intensity developments across 18 oecd countries and 50 sectors over the period 1970 2005 we find that across countries energy intensity levels tend to decrease in most manufacturing sectors in the service sector energy intensity decreases at a relatively slow rate with diverse trends across sub sectors a decomposition analysis reveals that changes in the sectoral composition of the economy explain a considerable and increasing part of aggregate energy intensity dynamics a convergence analysis reveals that only after 1995 cross country variation in aggregate energy intensity levels clearly tends to decrease driven by a strong and robust trend break in manufacturing and enhanced convergence in services moreover we find evidence for the hypothesis that across sectors lagging countries are catching up with leading countries with rates of convergence that are on average higher in services than in manufacturing aggregate convergence patterns are almost exclusively caused by convergence of within sector energy intensity levels and not by convergence of the sectoral composition of economies

large shareholders and the monitoring of managers the case of antitakeover charter amendments this paper examines the role of large shareholders in monitoring managers when they propose antitakeover charter amendments we attempt to distinguish between two competing hypotheses the active monitoring hypothesis and the passive voting hypothesis we find a statistically significant positive relation between institutional ownership and the stockholder wealth effects of various types of amendments after controlling for ownership concentration among institutions managerial ownership and firm size our empirical evidence lends support to the active monitoring hypothesis proposed by demsetz 1983 and shleifer and vishny 1986 that the existence of large shareholders leads to better monitoring of managers

the economy wide rebound effect from improved energy efficiency in swedish industries a general equilibrium analysis the objective of this paper is to analyse the rebound effect from increased efficiency in industrial energy use in sweden energy efficiency improvements can have significant micro and macroeconom

explicit versus implicit contracts evidence from ceo employment agreements we report evidence on the determinants of whether the relationship between a firm and its chief executive officer ceo is governed by an explicit written or an im plicit agreement we find that fewer than half of the ceos of s p 500 firms have comprehensive explicit employment agreements consistent with contracting theory explicit agreements are more likely to be observed and are likely to have a longer du ration in situations in which the sustamabihty of the relationship is less certain and where the expected loss to the ceo is greater if the firm fails to honor the agreement when a firm hires a chief executive officer ceo it enters into a complex relationship that has significant long term implications for its stockholders establishing the terms of this relationship requires determining the ceo s responsibilities compensation perquisites and term of employment the con ditions under which either party can sever the relationship and restrictions on the ceo s outside activities among other considerations despite the com plexity of these arrangements many public companies including some of the largest choose not to put such terms in writing in 2000 less than half of the firms in the s p 500 had a comprehensive written or explicit employment agreement ea with their ceos the other firms had either no written agree ment at all or agreements that covered only limited aspects of their relationship with the ceo such as change of control nondisclosure noncompete or nonso licitation agreements these latter firms and their ceos relied on implicit eas through which the ceo was employed at will we report evidence on the determinants of whether the relationship between a firm and its ceo is contractually defined in an explicit agreement this

growth pollution policy abstract we investigate long run patterns in pollution flows in an optimally regulated growing economy in which consumption and environmental quality are imperfectly substitutable and pollution is a by product of production we show that by production implies that a scale effect will always drive increasing pollution when productivity is sufficiently low on the other hand if a clean technology exists it will always be chosen in the long run hence emissions will approach zero because for any strictly positive flow of pollution willingness to pay to reduce that flow grows without bound as consumption grows without bound whereas the cost of switching is bounded we clarify the intuition using a specified model in which pollution arises as a by product of the use of natural resource inputs

an empirical investigation of the impact of antitakeover amendments on common stock prices abstract antitakeover amendments are amendments to a corporation s charter that impede the ability of an outsider to gain control of the firm a number of individuals and institutions have onjected to such amendments on the grounds that they are not in the best interests of the shareholders of the firms that adopt them this paper employs event time methodology to investigate the impact of antitakeover amendments on the common stock prices of firms that adopt them the results indicate that the announcement of such amendments is associated with a positive revaluation of stock price contrary to the concerns of their critics we conclude that antitakeover amendments are proposed by managers who seek to increase the value of the firm and are approved by stockholders who share that objective

the induced innovation hypothesis and energy saving technological change we develop a methodology for testing hicks s induced innovation hypothesis by estimating a product characteristics model of energy using consumer durables augmenting the hypothesis to allow for the ine uence of government regulations for the products we explored the evidence suggests that i the rate of overall innovation was independent of energy prices and regulations ii the direction of innovation was responsive to energy price changes for some products but not for others iii energy price changes induced changes in the subset of technically feasible models that were offered for sale iv this responsiveness increased substantially during the period after energy efficiency product labeling was required and v nonetheless a sizable portion of efficiency improvements were autonomous

issuing costs to existing shareholders in competitive and negotiated underwritten public utility equity offerings abstract this paper presents the results of an empirical investigation of whether there is any difference in the cost incurred by public utilities if they issue new equity through a negotiated or competitive underwriting we conclude that the expected cost of a competitive offer is less than the expected cost of a negotiated offer but that the variance of the cost is substantially greater with a competitive offer these results are interesting because most public utilities use negotiated underwriting unless forced by regulation to use competitive offers this paper is also an addition to the growing agency theory literature

raiders or saviors the evidence on six controversial investors abstract carl icahn irwin jacobs carl lindner david murdock victor posner and the late charles bluhdorn are usually portrayed as corporate raiders the evidence here however shows that between 1977 and 1982 when it was first announced that they had purchased stock in a given firm stock prices on average increased significantly the investors activities in target firms for the two years following the initial stock purchase are likewise inconsistent with raiding we discuss two hypotheses that are consistent with the evidence first these investors improve the management of target firms second they are systematically able to identify under priced stocks

defensive mechanisms and managerial discretion we study a model where firms may possess free cash flow and takeovers may be disruptive we show that the possibility of a takeover combined with defensive mechanisms and the ability to pay greenmail can solve the free cash flow problem in an efficient way the payment of greenmail reveals information that generates a stock price decline that exceeds the value of the greenmail payment even though the payment of greenmail is value maximizing optimal defensive measures limit takeover attempts if the target stock price is too low we also provide cross sectional implications of the analysis

externalities and corporate objectives in a world with diversified shareholder consumers if shareholders own diversified portfolios and if companies impose externalities on one another shareholders do not want value maximization to be corporate policy instead shareholders want companies to maximize portfolio values this occurs when firms internalize between firm externalities any kind of externality pecuniary or nonpecuniary vertical or horizontal suffices what matters is simply that one company s actions affect another s value thus besides the traditional benefit of risk reduction portfolio diversifi cation offers additional benefits to shareholders through helping internalize externalities this paper documents the extent of diversification and cross ownership of stocks among companies where these externalities are likely to be large and provides a capital market test of how merger offers vary with the extent of cross ownership

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

the nestle crash on november 17 1988 the board of directors of nestle ag decided to allow foreign investors to hold nestle registered stock reversing a longstanding practice this decision had a tremendous impact on the prices of the firm s three classes of common stock as well as on the prices of several other corporations traded on the zurich stock exchange these price changes can be explained by the hypothesis that demand curves slope down

on corporate governance a study of proxy contests abstract this paper examines a sample of firms experiencing proxy contests for seats on their board of directors dissident shareholders usually fail to obtain a majority of board seats nevertheless they capture some seats via mechanisms such as cumulative voting in over half of the sample contests regardless of proxy contest outcome positive and statistically significant share price performance is associated with the contest that finding is predicted by the standard economic analysis of proxy contests in which the challenges benefit shareholders by improving corporate performance the finding runs counter to the claim of berle 1962 that the economists view of proxy contests is a wholly imaginary picture a portion of the positive share price changes taking place in the early stages of some proxy contests is not permanent however and as suggested by manne 1962 is at least partially attributable to temporary increases in the market value of the vote attached to corporate shares

deal structuring in philanthropic venture capital investments financing instrument valuation and covenants philanthropic venture capital phvc is a financing option available for social enterprises that like traditional venture capital provides capital and value added services to portfolio organizations differently from venture capital phvc has an ethical dimension as it aims at maximizing the social return on the investment this article examines the deal structuring phase of phvc investments in terms of instrument used from equity to grant valuation and covenants included in the contractual agreement by content analyzing a set of semi structured interviews and thereafter surveying the entire population of phvc funds that are active in europe and in the united states findings indicate that the non distribution constraint holding for non profit social enterprises is an effective tool to align the interests of both investor and investee this makes the investor behaving as a steward rather than as a principal conversely while backing non profit social ventures philanthropic venture capitalists structure their deal similarly as traditional venture capital as the absence of the non distribution constraint makes such investments subject to moral hazard risk both in terms of perks and stealing and social impact focus

corporate earnings and financings an empirical analysis this article examines the long term behavior of corporate earnings around three corporate financing events sales of common stock convertible bonds and straight bonds the article shows that earnings declined for all issuers and that more capital is raised the larger the earnings decline these findings indicate that external financings are motivated by earnings declines no evidence is found of a relationship between the size of the subsequent earnings downturn or the amount of capital raised and stock price reactions to the financing announcements these findings suggest that security sales did not systematically provide new information about either the magnitude of subsequent earnings downturn or the amount of financing copyright 1990 by the university of chicago

the wealth effect of merger activity and the objective functions of merging firms abstract this paper studies the net effects of the long run sequence of events leading to merger and of merger per se on shareholder wealth the appropriate measure of the wealth effect is shown to be the abnormal dollar return cumulated over time using this measure the long run wealth effect of the event sequence culminating in merger is significantly negative for acquiring firms for acquired firms the effect is negative but not significant the immediate impact of merger per se is positive and highly significant for acquired firms but larger in absolute value and negative for acquiring firms the evidence also reveals that measured abnormal rates of return to acquiring firms are sensitive to a slight variation in model specification and dependent on firm size with smaller firms earning significantly negative post merger returns

takeover defenses ownership structure and stock returns in the netherlands an empirical analysis this study empirically examines the relationships between a firm s takeover defenses and its ownership structure and stock returns analyzing data of dutch listed companies we find that multiple antitakeover defenses are increasingly adopted when firms are characterized by relatively lower ownership concentration the evidence supports the hypothesis that more concentrated ownership of shares provides more effective monitoring of managers as defense by issuing preferred share has recently been the most widely adopted mechanism in the netherlands its impact on shareholders wealth is also analyzed we observe the presence of two opposing effects of this antitakeover measure

firm value in commonly uncertain times the divergent effects of corporate governance and csr economic uncertainty disrupts firms ability to create value most related literature examines how various organizational characteristics affect value under extreme conditions the global financia

a climate change policy induced shift from innovations in carbon energy production to carbon energy savings abstract we develop an endogenous growth model with capital labor and carbon energy as production factors and three technology variables that measure accumulated innovations for carbon energy production carbon energy savings and neutral growth all markets are complete and perfect except for research for which we assume that the marginal social benefits exceed the marginal private benefits by factor four the model constants are calibrated so that the model reproduces the relevant global trends over the 1970 2000 period the model contains a simple climate module and is used to assess the impact of induced technological change itc for a policy that aims at a maximum level of atmospheric co2 concentration 450 ppmv itc is shown to reduce the required carbon tax by more than a factor 2 and to reduce costs of such a policy by half when we do not constrain aggregate r d expenditures to benchmark levels costs are further reduced numerical simulations show that knowledge accumulation shifts from energy production to energy saving technology we discuss reasons for differences between our results and earlier results reported in the literature

an antitakeover amendment for stakeholders the non financial effects nfe antitakeover amendment addresses the duties of company directors and management when faced with a possible takeover bid the nfe amendment either permits or requires managers to consider the interests of the company s stakeholders during takeover bids other types of antitakeover devices have been viewed as protecting either stockholder or management interests the nfe amendment would appear to protect a broad spectrum of interests including those of company employees creditors and the community in which the company operates positive market returns to the adoption of nfe amendments provide some evidence that investors approve the percent of both management and institutional ownership are positively related to the market reaction to the nfe amendment adoption to the extent that institutional ownership proxies for the broad spectrum of stakeholder interest nfe devices unlike some other amendments that have been studied appear to be in the interests of more than a single interest group

general equilibrium rebound from energy efficiency innovation abstract energy efficiency improvements rebound when economic responses undercut their direct energy savings i show that general equilibrium channels typically amplify rebound by making consumption goods cheaper but typically dampen rebound by increasing demand for non energy inputs to production and by changing the size of the energy supply sector improvements in the efficiency of the energy supply sector generate especially large rebound because they make energy cheaper in all other sectors quantitatively general equilibrium channels reduce rebound in u s consumption good sectors from 39 to 28 but increase rebound in the energy supply sector from 42 to 80

energy conservation more effective with rebound policy this article sketches the problem of indirect energy use effects also known as rebound of energy conservation there is widespread support for energy conservation especially when it is voluntary as this seems a cheap way to realize environmental and energy climate goals however this overlooks the phenomenon of rebound the topic of energy rebound has mainly attracted attention from energy analysts but has been surprisingly neglected in environmental economics even though economists generally are concerned with indirect or economy wide impacts of technical change and policies this paper presents definitions and interpretations of energy and environmental rebound as well as four fundamental reasons for the existence of the rebound phenomenon it further offers the most complete list of rebound pathways or mechanisms available in the literature in addition it discusses empirical estimates of rebound and addresses the implications of uncertainties and difficulties in assessing rebound suggestions are offered for strategies and public policies to contain rebound it is advised that rebound evaluation is an essential part of environmental policy and project assessments as opposed to earlier studies this paper stresses the relevance of the distinction between energy conservation resulting from autonomous demand changes and from efficiency improvements in technology equipment in addition it argues that rebound is especially relevant for developing countries

dual class recapitalizations as antitakeover mechanisms abstract we report evidence on shareholder wealth effects of 94 firms recapitalizing with dual classes of common stock with disparate voting rights we find significant negative abnormal stock price returns at the announcement of the dual class recapitalization when we consider recapitalizations separately announced since the nyse imposed a moratorium is june 1984 on the delisting of companies with dual classes of equity we find significant negative abnormal returns as compared with insignificant returns in the earlier period those firms recapitalizing from june 1986 through may 1987 experienced the most significant negative returns observed

standstill agreements privately negotiated stock repurchases and the market for corporate control abstract standstill agreements are voluntary contracts which limit a substantial stockholder s ownership interest in a corporation for a specified number of years they are often accompanied by repurchase of the substantial stockholder s shares at a premium above the market price standstills and premium buybacks reduce competition for corporate control and provide differential treatment of large block stockholders the analysis indicates a statistically significant negative average effect on non participating stockholder wealth associated with standstill agreements negotiated premium repurchases are also associated with negative but less significant stockholder returns the evidence is inconsistent with the hypothesis that these management actions are in the best interests of non participating stockholders

the rule 415 experiment equity markets rule 415 allows a firm to register all the securities it reasonably expects to sell over the next two years and then at the management s option to sell those securities over these two years whenever it chooses this paper examines whether equity offerings made under rule 415 shelf offerings differ in issuing costs from equity offerings not sold under this rule we find that shelf offerings cost 13 less for syndicated issues and 51 less for nonsyndicated issues we also investigate the empirical relevance of the market overhang argument which suggests that shelf registrations depress the price of the registering firm s shares more than traditional registrations our data does not support the market overhang argument the securities and exchange commission s sec rule 415 which was permanently adopted for large firms in november 1983 allows a firm to register all the securities that it reasonably expects to sell over the next two years and then sell those securities whenever it chooses this procedure is known as shelf registration investment bankers securities regulators and corporate issuers vigorously debate the effect of rule 415 on firms issuing cost for new securities some mostly investment bankers argue that rule 415 increases new issue costs while others mostly issuers argue that rule 415 decreases new issue costs in addition many investment bankers argue that placing common stock on the shelf depresses the price of a firm s outstanding shares of stock most issuers

interorganizational alliances and the performance of firms a study of growth and innovation rates in a high technology industry this paper investigates the relationship between intercorporate technology alliances and firm performance it argues that alliances are access relationships and therefore that the advantages which a focal firm derives from a portfolio of strategic coalitions depend upon the resource profiles of its alliance partners in particular large firms and those that possess leading edge technological resources are posited to be the most valuable associates the paper also argues that alliances are both pathways for the exchange of resources and signals that convey social status and recognition particularly when one of the firms in an alliance is a young or small organization or more generally an organization of equivocal quality alliances can act as endorsements they build public confidence in the value of an organization s products and services and thereby facilitate the firm s efforts to attract customers and other corporate partners the findings from models of sales growth and innovation rates in a large sample of semiconductor producers confirm that organizations with large and innovative alliance partners perform better than otherwise comparable firms that lack such partners consistent with the status transfer arguments the findings also demonstrate that young and small firms benefit more from large and innovative strategic alliance partners than do old and large organizations copyright 2000 john wiley sons ltd

negotiated block trades and corporate control we identify negotiated trades of large percentage blocks of stock as corporate control transactions when a block trades and the firm is not fully acquired cumulative abnormal returns average 5 6 and 33 of the chief executives are replaced within a year stock price increases are larger when control passes to the new blockholder when management does not resist the blockholder s effort to influence corporate policy and when the block purchaser eventually fully acquires the firm these findings suggest that the specific skills and expertise of blockholders and not just the concentration of ownership are important determinants of firm value we examine 106 negotiated trades of at least 5 of the common stock of new york stock exchange nyse and american stock exchange amex listed corporations our primary objective is to assess the impact of these transactions on the firms whose shares are traded we also investigate the importance of active block investor s specific managerial expertise and incentives for firm value the emerging literature on concentrated ownership focuses on how the level of ownership affects a blockholder s incentives to undertake a variety of corporate decisions although it has been recognized that a blockholder s identity also can be important less attention has been paid to this issue several recent studies however provide evidence that blockholders incentives and expertise are not homogeneous for example holderness and sheehan 1985 find that the stock market reacts more favorably to initial block accumulations by six controversial investors who are often portrayed in the press as raiders than to initial accumulations by a random sample of investors morck shleifer and vishny 1988 find that firm value tends to be lower when the firm is run by a member of the founder s family than when it is run by an officer unrelated to the founder brickley lease and smith 1988 document that institutional blockholders are less willing to vote against management on antitakeover amendments when they are likely to have business dealings with the firm when a block trades the concentration of ownership typically does not change but the blockholder s identity does

ethical aspects of investor behavior the neoclassical paradigm assumes that shareholders utility is solely a function of their wealth and prescribes that management should act in a manner consistent with share price maximization the stakeholder view also assumes that shareholders utility derives from wealth but prescribes that managers must balance the shareholder wealth maximization objective against the rights of other constituencies thus while neoclassicists and stakeholder theorists have different prescriptives for management behavior their definitions of the shareholders interest are consistent shareholders are self interested economic agents whose utility is best served by share price maximization however if shareholders are other interested and attack importance to ethical and moral values then both the neoclassical and stakeholder view derive from invalid assumptions in this paper i present evidence that much shareholder behavior is ethically motivated as a result the basis for both the neoclassical and the stakeholder view are weakened

models of energy use putty putty versus putty clay energy use is inelastic in time series data but elastic in international cross section data two models of energy use reproduce these elasticities a putty putty model with adjustment costs developed by pindyck and rotemberg 1983 and a putty clay model in the pindyck rotemberg model capital and energy are highly complementary in both the short run and the long run in the putty clay model capital and energy are complementary in the short run but substitutable in the long run we highlight the differences in the cross section implications of the models by considering the effect of an energy tax on output in both models in the putty putty model an energy tax that doubles the price of energy leads to a fall in output in the long run of 33 in contrast the same tax in the putty clay model leads to a fall in output of only 5 3

how large is the economy wide rebound effect abstract the size of the economy wide rebound effect is crucial for estimating the contribution that energy efficiency improvements can make to reducing greenhouse gas emissions and for understanding the drivers of energy use economy wide rebound from an energy efficiency improvement includes changes in the use of energy to produce complementary and substitute goods or inputs and other flow on effects that affect energy use across the economy as well as the direct rebound due to energy users using more of an energy service that has become less costly as result of improved energy efficiency jevons first argued in 1865 that improvements in energy efficiency increase total energy use and in recent decades researchers have argued for and against this backfire hypothesis theory provides some guidance on the factors affecting rebound but does not impose much constraint on the range of possible responses historical evidence suggests that the improved energy efficiency of recent technology has not reduced energy use because consumption has shifted to more energy intensive goods and services simulations and econometric research have produced mixed results some recent general equilibrium studies find large rebound around 100 but more research is needed to confirm or refute these findings

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

structural change and the kaldor facts in a growth model with relative price effects and non gorman preferences u s data reveal three facts 1 the share of goods in total expenditure declines at a constant rate over time 2 the price of goods relative to services declines at a constant rate over time and 3 poor households spend a larger fraction of their budget on goods than do rich households i provide a macroeconomic model with non gorman preferences that rationalizes these facts along with the aggregate kaldor facts the model is parsimonious and admits an analytical solution its functional form allows a decomposition of u s structural change into an income and substitution effect estimates from micro data show each of these effects to be of roughly equal importance

managerial share ownership and the stock price effects of antitakeover amendment proposals studies that test for an average stock price effect of antitakeover amendments present different results disagreeing with respect to both the significance and the direction of the effect this study determines whether effects can be identified when managerial share ownership and amendment type are considered results suggest a negative relation between managerial share ownership and the stock price reaction to all but fair price amendment proposals managerial control over voting rights has been the focus of recent studies in the finance literature for example dann and deangelo 1988 present evidence on managerial actions taken to enhance voting control while stulz 1988 suggests ways that managers can increase control of voting rights by adopting antitakeover amendments or dual classes of common stock that reduce the voting power of outside shareholders since antitakeover amendments may be one way to effectively increase managerial control over voting rights this paper investigates the relation between managerial share ownership the type of antitakeover amendment proposed and the stock price reaction to the amendment proposal this study is motivated partially by existing evidence regarding the stock price effect of antitakeover amendments empirical studies are inconclusive regarding the amendments effects on shareholder wealth disagreeing with respect to both significance and direction deangelo and rice 1983 find statistically insignificant negative abnormal returns surrounding the amendment proposals while linn and mcconnell 1983 find statistically significant positive abnormal returns jarrell and poulsen 1987 find a statistically insignificant negative reaction to amendment proposals for exchange listed firms while mcwilliams 1988 finds an insignificant positive reaction at proposal announcement these results

getting known by the company you keep publicizing the qualifications and former associations of skilled employees when product quality cannot be ascertained in advance of purchase producers must convince relevant audiences that they are worthy of consideration as quality players we propose that quality oriented producers will selectively publicize information about their skilled employees in anticipation of signaling benefits which include the accrual of visibility and the projection of quality based identities we validate our perspective on publicizing affiliation information by analyzing how a sample of australian wine producers publicized specific career information about their skilled employees i e their winemakers including the names of certain former employers of these individuals copyright 2009 oxford university press

direct equity financing a resolution of a paradox when raising new equity capital managers have historically rejected the direct offer method favoring instead the seemingly more expensive underwritten public issue this paper provides a resolution for this equity financing paradox by demonstrating empirically that firms which engage in direct offers enjoy a comparative cost advantage that is more than sufficient to account for the absolute reported cost differences between the two methods of equity financing

stock price effects and costs of secondary distributions abstract this study does not support the view that a large number of shares can be sold at the prevailing market price and at a small cost a significant stock price decrease is observed at the initial announcement of secondary distributions the price declines are greater for offerings by officers and directors and for larger offerings but are significant for all types of sellers and for large and small offerings there is no significant price decline at the offering when secondaries are announced in advance underwriting and other selling costs are substantial and are positively related to relative offering size

the effect of discretionary price control decisions on equity values abstract the macro literature presents conflicting evidence on the effects of price controls in this study the fact that the macro economic effect of wage and price controls is the aggregation of the micro economic effects is used to implement a different approach to measure the effects of price controls the effect of price controls is inferred from examining the impact of discretionary regulatory decisions on the equity values of individual firms during phase ii of nixon s economic stabilization program the empirical results indicate that violators of the regulations incurred significant abnormal losses that were unrelated to the explicit penalties this suggests that implicit penalties were imposed on offending firms the analysis of price increase decisions provides weak evidence that these price commission decisions had an impact on equity values

differentiated bids for voting and restricted voting shares in public tender offers abstract this paper develops a model for takeover bid premiums of voting and restricted voting shares when the bidder wants 100 of the target firm for this special case a higher bid premium may be offered either to the voting or to the restricted voting shareholders we also analyze consequences of the equal offer and one share one vote principles and investigate the model s explanatory power on swedish data

employing identities in organizational ecology this paper argues for greater attention to employment based organizational identities in ecological theory and research i define and explore three dimensions of particular relevance to labor market identities sharpness resonance focus and authenticity the paper offers some speculations regarding i when labor market identities are most decisive for organizations ii how product market and labor market identities interact iii how employment based organizational identities might be operationalized and iv how greater attention to such identities would illuminate key issues in organizational ecology copyright 2004 oxford university press

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

the effect of pre emptive right amendments on shareholder wealth abstract pre emptive rights allow existing shareholders to purchase a new offering of shares before the general public this paper investigates the effect on shareholder wealth of removing pre emptive rights from corporate charters two hypotheses are constrasted 1 shareholder wealth maximization suggests that management uses this extra degree of freedom to pick the least cost method for raising new equity hence the amendment increases shareholder wealth 2 management welfare maximization holds that management will use the passage of the amendment to maximize their own welfare sometimes to the detriment of shareholders hence the amendment decreases shareholder wealth the evidence indicates that the amendment decreases shareholder wealth

takeover defenses and wealth effects on securityholders the case of poison pill adoptions abstract this is the first study to examine the valuation effects of any antitakeover amendment on both bondholders and stockholders we present new evidence documenting that on average there is a significant wealth loss experienced by bondholders at poison pill adoption announcement while stockholders are unaffected our finding of significant bondholder losses is consistent with the proposed negative signal hypothesis we document results which indicate that bondholders correctly anticipate the degree of leverage increase at the time of the announcement we also show that the proportion of insider ownership is negatively related to bondholder wealth effect at announcement this supports the notion that higher insider manager ownership leads to a greater alignment of manager stockholder interests while increasing the stockholder bondholder agency costs long run analysis of leverage and performance measures reveal that pill adopting firms are not under leveraged as compared to their industry rivals however supporting the negative signal hypothesis the leverage of sample firms rises significantly after the pill adoption performance measures reveal that sample firms significantly underperform their industry cohorts this result suggests that poison pill adoptions are motivated by poor managers attempting to immunize themselves from the disciplinary actions of the corporate control market

interpreting common stock returns around proxy statement disclosures and annual shareholder meetings numerous studies have analyzed the stock market reaction to information released in proxy statements two possible biases in proxy statement research are suggested frequently misspecification of the return benchmark and a sample selection bias from analyzing only clean events this paper presents evidence that most of the conclusions of existing studies are not affected by these potential biases a significantly positive abnormal return was found around a random sample of shareholder meeting dates the result indicates that interpreting event study results for announcements occurring around annual shareholder meetings must be conducted carefully the results are consistent with the findings of kalay and loewenstein 14 who argue that risk and expected return can increase around predictable information producing events alternatively the study can be viewed as being consistent with several recent studies that find anomalous results using daily return data and large samples