Financial Management articles from December 1994

Financial Management archives from December 1994

Alternative tests of agency theories of callable corporate bonds.
December 22, 1994... One part of the capital structure puzzle yet to be solved is the corporate bond call feature: Why are some bonds callable and others not? Financial theory has rejected the role of interest rate uncertainty in a firm's decision to include a call...

Calling nonconvertible debt and the problem of related wealth transfer effects.
December 22, 1994... A well-known rule in corporate finance is that a firm should call a bond as soon as its market price reaches its call price. It follows from this "textbook" rule that the price of a callable bond should never exceed its call price. In the market,...

Event risk bond covenants, agency costs of debt and equity, and stockholder wealth.
December 22, 1994... A recent innovation in the issuance of corporate debt is the inclusion in bond indentures of event risk protection language (or "poison puts"). These provisions typically allow for redemption of a bond issue in the event of a takeover, a merger,...

Taxes and the returns to foreign acquisitions in the United States.
December 22, 1994... Scholes and Wolfson (1989, 1990, 1992) argue that changes in the U.S. tax law should have an effect on the level of foreign investments in the U.S. In particular, they predict decreased investment after the 1981 Economic Recovery Tax Act (ERTA)...

Bidder incentives for informed trading before hostile tender offer announcements.
December 22, 1994... In these circumstances, the bidding firm has an incentive to tip arbitrageurs, so that shareholders with the lowest private tendering costs own the shares necessary for the bidder to obtain a controlling interest. Inside information creates the...

Does targeted investing make sense?
December 22, 1994... Marr, Nofsinger, and Trimble (1993) argue that the practice of seeking investments with specific "local attributes" - economically targeted investments (ETIs) - poses a threat to the private pension system. They deride the financial performance...