Financial Management articles from March 2005

Financial Management archives from March 2005

Agency costs of overvalued equity.
March 22, 2005... I define and analyze the agency costs of overvalued equity. They explain the dramatic increase in corporate scandals and value destruction in the last five years; costs that have totaled hundreds of billions of dollars. When a firm's equity...

Measuring investment distortions when risk-averse managers decide whether to undertake risky projects.
March 22, 2005... We create a dynamic model in which a self-interested, risk-averse manager makes corporate investment decisions at a levered firm with characteristics typical of public US firms. We examine the magnitude of distortions in those decisions when a...

Can diversification create value? Evidence from the electric utility industry.
March 22, 2005... Despite SEC and state-level resistance, and contrary to the trend pursued by other firms, many electric utilities have diversified into non-electric and unregulated businesses. Moreover, this failure to focus has been rewarded with higher firm...

Managerial risk-taking incentives and executive stock option repricing: a study of US casino executives.
March 22, 2005... I examine the relation between managerial incentives from holdings of company stock and options and stock option repricing. Because options provide incentives to increase both risk and stock price, firms must realize that as options go...

Cross-listings and M&A activity: transatlantic evidence.
March 22, 2005... We analyze whether European firms choose to list shares in the US to facilitate acquisitions. Evidence from a sample of 547 European companies shows that cross-listed firms are significantly more active in acquiring US companies than are their...

Business school rankings and business school deans: a study of nonprofit governance.
March 22, 2005... We examine the relation between business school dean turnover and MBA program rankings from 1990-2002. We find little evidence that dean departures are related to changes in a school's overall rank in the US News & World Report rankings....