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Financial Management (Financial Management Association)

Corporate finance in Europe: confronting theory with practice

Corporate finance in Europe: confronting theory with practice Dirk Brounen We present the results o fan international survey of 313 European CFOs on capital budgeting, cost of capital, capital structure, and corporate governance. We find that although large firms often use present value techniques and the capital asset pricing model to assess the feasibility o[an […]

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Financial Management (Financial Management Association)

An empirical examination of prepackaged bankruptcy

An empirical examination of prepackaged bankruptcy Brian L. Betker Prepackaged bankruptcy is an increasingly popular means of restructuring financially distressed firms. A prepackaged bankruptcy (a “prepack”) calls for a firm to negotiate a reorganization plan with its creditors, and possibly solicit acceptances of the plan, prior to filing for bankruptcy.(1) The firm then files for […]

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Financial Management (Financial Management Association)

Sources of hidden value and risk within tracking stock

Sources of hidden value and risk within tracking stock Joel T. Harper Tracking stock for a unit of a firm presumably allows the market to value and monitor that unit independently of the rest of the firm. Announcement of the creation of tracking stock elicits an abnormal share price response of 2.17% on average over […]

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Financial Management (Financial Management Association)

Rearranging residual claims: a case for targeted stock

Rearranging residual claims: a case for targeted stock Dennis E. Logue Corporate restructuring activity has grown substantially in recent years as top managers struggle to improve firm performance and enhance shareholder value. In part, these transactions reflect an overall trend toward greater corporate focus. Although a variety of techniques exist for repackaging corporate assets, liabilities, […]

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Financial Management (Financial Management Association)

The value of corporate control and the comparable company method of valuation

The value of corporate control and the comparable company method of valuation John D. Finnerty The comparable company method of valuation does not account for the value of corporate control. Therefore, the method must be adjusted if it is being used to value a company involved in a change-of-control transaction. We provide two alternative ways […]

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Financial Management (Financial Management Association)

The shareholder wealth implications of corporate lawsuits

The shareholder wealth implications of corporate lawsuits – includes appendix Sanjai Bhagat The modern corporation interacts with the external environment in many ways. Examples of external interfaces include: suppliers of raw materials, labor, and intermediate products in input markets; suppliers of funds in capital markets; customers in final product markets; and executives in managerial labor […]

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Financial Management (Financial Management Association)

Underwriter certification and the effect of shelf registration on due diligence

Underwriter certification and the effect of shelf registration on due diligence – includes appendix Ann E. Sherman In 1982, the Securities and Exchange Commission (SEC) introduced several changes intended to streamline the process of issuing seasoned securities in the US. One effect of these changes was to increase the cost of the due-diligence investigation, primarily […]

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Financial Management (Financial Management Association)

Do firms use dividends to signal large future cash flow increases?

Do firms use dividends to signal large future cash flow increases? – Special Issue: Dividends Yaron Brook A substantial theoretical literature, including Lintner (1956), Bhattacharya (1979), Miller and Rock (1985) and John and Williams (1985), suggests that corporate dividend policy is designed to reveal earnings prospects to investors. For example, Lintner (1956) and Miller (1987) […]

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Financial Management (Financial Management Association)

New Evidence on Serial Correlation in Analyst Forecast Errors

New Evidence on Serial Correlation in Analyst Forecast Errors – Statistical Data Included Stacey R. Nutt We reexamine the serial correlation of forecast errors using a method that allows analysts to react differently to good and bad news. Our method also controls for the influence of a normal non-zero, firm-specific component of forecast error. Our […]

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Financial Management (Financial Management Association)

The value of corporate control and the comparable company method of valuation

The value of corporate control and the comparable company method of valuation John D. Finnerty The comparable company method of valuation does not account for the value of corporate control. Therefore, the method must be adjusted if it is being used to value a company involved in a change-of-control transaction. We provide two alternative ways […]