bluuebunny/crossref_metadata_2025_split huggingface dataset:
THE NEW LEVERAGED LOAN SYNDICATION MARKET
Authors: Barnish Keith , Miller Steve , Rushmore Michael 
Published: April 2005

Over the past ten years, commercial lending has been transformed from a one‐off, bilateral “market” in which issuers maintained one or more separate banking relationships into a capital market in which one or more underwriters structure and price loans for syndication to groups of investors. This market‐driven evolution has been most dramatic in the leveraged lending segment (defined as loans priced at LIBOR plus 150 basis points or more), where wide margins have attracted a large and growing field of underwriters, intermediaries, and investors.Liquidity is the overriding theme in today's syndicated loan market, making the market a more user‐friendly one for corporate borrowers and deal sponsors. As a result, a record number of corporate issuers are taking advantage of the syndicated loan market to finance strategic transactions or simply to reduce their borrowing costs. Deal sponsors, too, are tapping the market to finance leveraged buyouts, recapitalizations, and acquisitions at a pace not seen since the late 1980s. But, although acquisition pricing has reached cash flow multiples that recall those of the late '80s, equity contributions by sponsors are larger and credit structures are more conservative.For banks and other investors, reduced loan pricing and more flexible credit structures have been balanced by much greater access to a large volume of diversified assets, as well as the ability to manage asset‐specific and portfolio risk more effectively. As a result of more effective portfolio management strategies, lenders today are less vulnerable to credit problems with individual issuers or a given industry segment, and the bank market as a whole should be much less subject to disruption than it proved to be in the early 1990s.
INITIAL PUBLIC OFFERINGS: GOING BY THE BOOK
Authors: Benveniste Lawrence M. , Wilhelm William J. 
Published: April 2005

In the U.S., and increasingly in other countries as well, IPO securities are marketed to investors in a process known as “book‐building”—one that amounts to polling institutional investors to establish a demand schedule for the issue and then allotting stock to individual investors according to the strength of their professed interest. Although book‐building methods require use of discriminatory tactics that have attracted strong criticism from investors and regulators, this article defends such practices by demonstrating that book‐building is more efficient than alternative methods. It effectively allows issuers to increase the net proceeds of their offerings by making better use of information about market demand conditions.In the process of explaining the efficiency of the book‐building method, this article also offers a plausible explanation for a phenomenon that has long puzzled economists: the systematic underpricing of IPOs. The key to the success of a book‐building effort lies in the use of a strategic pricing and allocation policy designed to offset the investor's incentive to understate his or her interest in an IPO. By committing to favor investors who provide strong indications of interest with relatively large allocations of underpriced shares, the investment bank can limit the distortion of investor's incentives in bidding and so increase the level of proceeds the issuing firm can expect to generate from its IPO.
EVA AND TOTAL QUALITY MANAGEMENT
Authors: Bacidore Jeffrey M. , Boquist John A. , Milbourn Todd T. , Thakor Anjan V. 
Published: April 2005

Both TQM and EVA can be viewed as organizational innovations designed to reduce “agency costs”—that is, reductions in firm value that stem from conflicts of interest between various corporate constituencies. This article views TQM programs as corporate investments designed to increase value by reducing potential conflicts among non‐investor stakeholders such as managers, employees, customers, and suppliers. EVA, by contrast, focuses on reducing conflicts between managers and shareholders by aligning the incentives of the two groups. Besides encouraging managers to make the most efficient possible use of investor capital, EVA reinforces the goal of shareholder value maximization in two other ways: (1) by eliminating the incentive for corporate overinvestment provided by more conventional accounting measures such as EPS and earnings growth; and (2) by reducing the incentive for corporate underinvestment provided by ROE and other rate‐of‐return measures.At a superficial level, EVA and TQM seem to be in direct conflict with each other. Because of its focus on multiple, non‐investor stakeholders, TQM does not address the issue of how to make value‐maximizing trade‐offs among different stakeholder groups. It fails to provide answers to questions such as: What is the value to shareholders of the increase in employees' human capital created by corporate investments in quality‐training programs? And, given that a higherquality product generally costs more to produce, what is the value‐maximizing quality‐cost combination for the company? The failure of TQM to address such questions may be one of the main reasons why the adoption of TQM does not necessarily lead to improvements in EVA.Because a financial management tool like EVA has the ability to guide managers in making trade‐offs among different corporate stakeholders, it can be used to complement and reinforce a TQM program. By subjecting TQM to the discipline of EVA, management is in a better position to ensure that its investment in TQM is translating into increased shareholder value. At the same time, a TQM program tempered by EVA can help managers ensure that they are not under investing in their non‐shareholder stakeholders.
EVA AND DIVISIONAL PERFORMANCE MEASUREMENT: CAPTURING SYNERGIES AND OTHER ISSUES
Authors: Zimmerman Jerold L. 
Published: April 2005

This article makes three basic points about divisional performance measurement that managers should keep in mind when attempting to choose between EVA and more conventional, accounting‐based measures.First, no divisional performance measure, whether it be EVA, divisional net income, or ROA, is capable of capturing synergies among divisions—those shared benefits or costs that make the sum of the parts worth more than the whole. And EVA is neither more nor less effective than more conventional financial measures in deterring divisional managers from taking actions that increase divisional profits at the expense of corporate value.Thus, there is a fundamental contradiction in the very attempt to evaluate the divisions of a multi—divisional firm as if they were independent companies. If there are synergies, divisional performance measures—even those employing transfer prices—are likely to prove inadequate in some respects (and this article recommends some methods for encouraging synergies that might be used to supplement if not replace divisional measures). But if there are no synergies, then top managers should re‐examine their business strategy and consider selling or spinning off divisions.Second, a given performance measure's degree of correlation with stock returns should not be management's sole, or even its most important, criterion in choosing to adopt a given performance measure. A better method for evaluating performance measures is to weigh the behavioral or incentive benefits of a given measure against all direct and indirect costs associated with its implementation. In making such a costbenefit analysis, the incentive benefits from the tighter linkage of rewards to share prices provided by more market‐based measures should be traded off against the greater market risk and exposure to other uncontrollables imposed by such measures as well as the costs involved in changing the firm's internal accounting and reporting systems.Third, the EVA practice of “decoupling” performance measures from GAAP accounting, while having have potentially significant incentive benefits, also has potential costs in the form of increased auditing requirements and the possibility of litigation.
CONTRACTING FOR VALUE: EVA AND THE ECONOMICS OF ORGANIZATIONS
Authors: Glassman David M. 
Published: April 2005

EVA becomes more difficult to apply the farther down in the company you go, especially in organizations with more traditional “functional” designs. Because centralized functions are not independent self‐contained entities with direct control over their own revenues, costs, and capital, the performance measures used to evaluate them are necessarily incomplete; they reveal only part of the picture. For example, Marketing may increase sales and operating income—the measures on which it is evaluated—but at the same time drive excessive use of capital in the Manufacturing plants. Manufacturing may reduce unit cost through long production runs, thereby minimizing changeovers and setups, but create excess inventory in the process. Costreducing measures could also lead to declining quality and customer satisfaction, ultimately eroding the company's reputation. In short, each critical function influences results in other parts of the company, and focusing only on activities under a manager's direct control can result in myopic and misleading measures of performance.In organizing key processes as internal EVA Centers, joint costs and benefits shared by different corporate functions or business units can be built into financial measures in a way that encourages collaboration.As one example, a firm can attempt to replicate market forces internally by requiring each marketing region to contract for capacity with the internal manufacturing group. In a traditional management system, Marketing reserves (and relinquishes) manufacturing capacity at no cost; the consequence is excessive demand for resources. An internal pricing mechanism that requires Marketing to pay a fee for capacity will force its managers to assess trade‐offs as if it were contracting with an outside party.Such a system effectively requires that functional managers take a more company‐wide view of their responsibilities. By including the cost of capital, it forces managers to define costs more carefully. By including the impacts on other functions, it also forces a broader definition of costs. And by using multi‐year contracts among different divisions, the framework extends the time horizon over which costs and benefits matter.
Insurance Derivatives: A New Asset Class for the Capital Markets and a New Hedging Tool for the Insurance Industry
Authors: Canter Michael S. , Cole Joseph B. , Sandor Richard L. 
Published: April 2005

The number and severity of natural catastrophes has increased dramatically over the last decade. As a result, there is now a shortage of capacity in the property catastrophe insurance industry in the U.S. This article discusses how insurance derivatives, particularly the Chicago Board of Trade's catastrophe options contracts, represent a possible solution to this problem. These new financial instruments enable the capital markets to provide the insurance industry with the reinsurance capacity it needs. The capital markets are willing to perform this role because of the new asset class characteristics of securitized insurance risk: positive excess returns and diversification benefits.The article also demonstrates how insurance companies can use insurance derivatives such as catastrophe options and catastrophe‐linked bonds as effective, low‐cost risk management tools. In reviewing the performance of the catastrophe contracts to date, the authors report promising signs of growth and liquidity in these markets.
INTERNATIONAL PRODUCTION LOCATION AND “PRO FORMA” FINANCIAL HEDGING OF EXCHANGE RATE RISK
Authors: O'Brien Thomas J. 
Published: April 2005

There are many considerations in a firm's choice of where to locate a production facility. One of the least understood is the implication of foreign exchange risk. The issue is complex because, in addition to the concept of operational hedging, managers must also consider economic exposure and, in cases with foreign competitors, competitive exposure. As shown in this article, a firm's competitive exposure to exchange rate changes depends upon the location of its competitors' plants as well as its own.The currency exposures of various international production strategies are demonstrated using hypothetical scenarios. The scenarios can also be used to perform a “pro forma” financial hedging analysis of currency exposure in simple “three‐outcome” cases. By implicitly accounting for the market's pricing of exchange rate risk, the financial hedging analysis provides a straightforward way for managers to evaluate various international production possibilities.
Best Practices in Corporate Governance: What Two Decades of Research Reveals
Authors: Shivdasani Anil , Zenner Marc 
Published: April 2005

This report addresses two key questions for today's top executives: Do acquisitions create value for acquirers? And under what circumstances have acquisitions created the most value for acquiring shareholders?The authors' analysis of over 1,500 completed deals by non‐financial companies in the United States over the past 12 years shows that, at announcement, acquirers' shareholders suffer small losses, on average, in the short term around the initial deal announcement. Over longer intervals, such as one or two years following the announcement of the transaction, acquirers tend to slightly outperform industry peers.The average or median market response hides tremendous variability in how the market has reacted to individual deals, however. This article provides evidence that the “right” M&A transaction can create substantial value for acquirers. One‐quarter of the transactions lead to market‐adjusted gains in excess of 5% for the acquirer and oneeighth of the transactions lead to gains in excess of 10% in the short term. However, some deals have also destroyed substantial shareholder value.Financing structure is a key driver of the stock market reaction. Stock‐financed transactions, on average, have a negative stock market reaction, while cash‐financed transactions have benefited acquirers in both the short term as well as the long term.Acquisitions of private companies or assets and units of public companies have consistently generated higher returns for acquirers than purchases of public companies.Moreover, EPS dilution is not a major driver of how the stock market reacts to a deal. Although “accretive” deals perform slightly better than “dilutive” ones in the short and long run, the difference is small and not statistically significant. Over the long run, acquiring shareholders have benefited the most from deals within the same industry and that avoid targets with relatively optimistic earnings growth projections.
ALIGNMENT EXPOSED: HOW CEOS ARE PAID, AND WHAT THEIR SHAREHOLDERS GET FOR IT
Authors: Hodak Marc 
Published: April 2005

This article begins by arguing that, for many companies, there is a significant “disconnect” between how managers are paid and what is actually achieved for shareholders. This paper answers two questions of prime importance to investors: Is there a way to know beforehand whether managers' incentives are well aligned with those of its shareholders? And does such alignment actually make a difference in the returns one is likely to see?In answering the first question, the author argues that cash bonuses and performance‐based equity grants (i.e., grants based on managers' meeting accounting‐based operating targets) are likely to provide stronger, more cost‐effective incentives than grants of stock or options because the former are generally based on measures over which managers have significantly more control than the stock price. Using this insight, the author develops a method for evaluating compensation structures based on the variability of compensation, the number and type of compensation metrics purportedly driving that variability (including the award of performance shares or options), the stability of those metrics over time, and the apparent level of discretion in the use of those metrics to either fund or distribute bonuses (including equity). All these elements are disclosed to varying degrees in the proxy statements or annual reports of companies.Using his compensation scores for 140 companies and their return history over the last eight years, the author concludes that “high alignment” companies outperform their “low alignment” peers by more than 5% per year in total shareholder returns. Furthermore, increases in alignment scores by individual companies over time tend to lead to higher total shareholder returns, and degradation of scores lead to lower returns. In short, observable improvements in compensation structure appear to pay off in the form of significant abnormal returns.
Product Costing and Inventory Accounting: A New Approach to an Old Problem
Authors: Rosson Richard D. 
Published: April 2005

Traditional methods of accounting—including full‐absorption accounting, labor and cost standards, overhead allocations, and variance analysis–can stand in the way of attempts by managers and others to improve their company's overall performance and the ability to compete globally. Many companies have recognized the need to shift the role of accounting toward higher‐value, more strategic tasks, such as financial and operational analysis, tactical decision support, and even process improvement and reengineering. But the accounting tools at their disposal often prove inadequate. In fact, there is a core conflict between the need to provide accurate and consistent financial reports for external consumption–reports that comply in all respects with GAAP, Sarbanes‐Oxley, SEC requirements, and the like–and the need for value‐relevant and informative reports for internal management purposes.The author proposes using multiple sets of financial reports, all deriving from a single, common database, to meet external reporting requirements while addressing the distortions and limitations of GAAP for internal purposes. In particular, he has developed a new approach called Value Added Accounting that eliminates the distortions of full‐absorption accounting but that uses GAAP financial statements as its starting point. The article describes the key adjustments, presents a case study, and discusses how VAA aligns with Lean Manufacturing, Quick Response Manufacturing, Just‐In‐Time, and other common process improvement initiatives.
Morgan Stanley Panel Discussion on Seeking Growth in Emerging Markets: Spotlight on China
Authors:   Financial Decision Makers' Conference
Published: April 2005

The treasurer of McDonald's discusses investment opportunities in China with Morgan Stanley's chief economist and its head of investment banking in China. The consensus is that the economic outlook for the country is strong, subject to some concerns about the currency, and that ongoing reforms are expected to bring about greater stability and productivity. Progress in raising Chinese banks to international capital adequacy standards, and imposing transparency and accounting requirements, has been particularly impressive.McDonald's first went to mainland China in the early 1990s. Thanks to its success in attracting suppliers and local financing and partners, it now has 600 restaurants and an ambitious expansion plan. For other U.S. and overseas companies, China's position as a global manufacturing center, its R&D capabilities, and its potential consumer market will lead to acquisitions of local companies, joint ventures, and other forms of direct investment. China's accession into the World Trade Organization has also opened a number of sectors that were previously restricted to foreign investors, including financial services.
Incorporating Competition into the APV Technique for Valuing Leveraged Transactions
Authors: Ehrhardt Michael C. 
Published: April 2005

According to a recent survey, the discounted cash flow approach is the valuation technique most widely used by companies evaluating acquisition targets. But because the DCF approach is inappropriate when the capital structure is changing during the forecast period, many analysts turn to the adjusted present value (APV) approach, which can easily accommodate a changing capital structure. Still, the finance literature has not shown how to incorporate assumptions about the effect of competition in the post‐forecast period into an APV analysis.This paper provides two new tools for calculating horizon values with changing leverage and competition. First, it provides a new model, based on more realistic assumptions, for valuing a growing annuity of free cash flows when ROIC is expected to decline due to competition. Second, it provides a model for valuing tax shields that correctly incorporates the impact of competition in the post‐forecast period. When used together with the APV approach, these two new tools allow an analyst to estimate the value of a company with a changing capital structure that faces competition in the post‐forecast period.
A Framework for Corporate Treasury Performance Measurement
Authors: Kalotay Andrew 
Published: April 2005

Corporations generally do not have a formal process for evaluating the effectiveness of their treasury departments in managing debt. To the extent that corporate borrowing decisions are predicated on “market timing” rather than matching the interest rate sensitivity of the firm's liabilities to that of its assets, the firm is effectively making bets on interest rates that should be monitored and evaluated.The author has developed an approach that allows for periodic reporting of treasury's performance to investors and that also provides a framework for treasury to compare and choose among alternatives in the capital markets. The basic idea is to calculate a company's liability return and then establish a benchmark portfolio that allows measurement of relative performance. For a nonfinancial corporation, a useful benchmark can be constructed using the collective debt obligations of the company's industry peers. The assumption underlying this benchmark is that the financing of the industry as a whole is designed to produce an “optimal” asset‐liability configuration and net exposure to interest rates.
Functional Characterization of an α-Factor-Like
Sordaria macrospora
Peptide Pheromone and Analysis of Its Interaction with Its Cognate Receptor in
Saccharomyces cerevisiae
Authors: Mayrhofer Severine , Pöggeler Stefanie 
Published: April 2005

ABSTRACT

The homothallic filamentous ascomycete
Sordaria macrospora
possesses genes which are thought to encode two pheromone precursors and two seven-transmembrane pheromone receptors. The pheromone precursor genes are termed
ppg1
and
ppg2.
The putative products derived from the gene sequence show structural similarity to the α-factor precursors and
a
-factor precursors of the yeast
Saccharomyces cerevisiae.
Likewise, sequence similarity has been found between the putative products of the pheromone receptor genes
pre2
and
pre1
and the
S. cerevisiae
Ste2p α-factor receptor and Ste3p
a
-factor receptor, respectively. To investigate whether the α-factor-like pheromone-receptor pair of
S. macrospora
is functional, a heterologous yeast assay was used. Our results show that the
S. macrospora
α-factor-like pheromone precursor PPG1 is processed into an active pheromone by yeast
MATα
cells. The
S. macrospora
PRE2 protein was demonstrated to be a peptide pheromone receptor. In yeast
MAT
a
cells lacking the endogenous Ste2p receptor, the
S. macrospora
PRE2 receptor facilitated all aspects of the pheromone response. Using a synthetic peptide, we can now predict the sequence of one active form of the
S. macrospora
peptide pheromone. We proved that
S. macrospora
wild-type strains secrete an active pheromone into the culture medium and that disruption of the
ppg1
gene in
S. macrospora
prevents pheromone production. However, loss of the
ppg1
gene does not affect vegetative growth or fertility. Finally, we established the yeast assay as an easy and useful system for analyzing pheromone production in developmental mutants of
S. macrospora
.