We consider a setting in which insiders have information about income that outside shareholders do not, but property rights ensure that outside shareholders can enforce a fair payout. To avoid intervention, insiders report income consistent with outsiders’ expectations based on publicly available information rather than true income, resulting in an observed income and payout process that adjust...

This study shows that individual investors prefer to invest in high dividend yield stocks and in dividendpaying firms whereas relatively lower-taxed institutional investors tend to prefer low dividend yield stocks and non-paying firms. Consistent with Brennan and Thakor’s [Brennan, M. J., & A. V. Thakor. (1990). Shareholder preferences and dividend policy. Journal of Finance, 45, 993–1018] adve...

We document that market reactions to insider purchases and sales are different in terms of price and volume. With an extensive data set that covers the period from 1991 to 2006, we systematically segregate the asymmetric effects of these two types of insider transactions. We follow the design of previous studies (e.g., Basu, 1997; Ball and Shivakumar, 2005, Leone et al. 2006) to understand the ...

The average cash holdings of Chinese-listed firms decreased significantly after the split share structure reform in China, which specified a process that allowed previously nontradable shares held by controlling shareholders to be freely tradable on the exchanges. The reduction in cash holdings is greater for firms with weaker governance and firms facing more financial constraints prior to the ...

Using an objective measure of executive facial attractiveness we find that shareholders value beauty. Specifically, more attractive executives are associated with a higher abnormal return around the announcement of their appointment as CEO. These results are strongest for insider appointments and relatedly, more attractive facial features increase the likelihood of an executive winning a tourna...

This article examines founding family influence on pay-out policies for Swiss listed firms over the period 2003-2010. We find that founding family firms have higher dividends and total pay-outs than non-family firms. There is no significant difference between stock repurchases for the two types of firms. We show that specific firm characteristics such as active involvement of family members, th...

Article history: Received 7 January 2010 Accepted 13 August 2010 Available online 21 August 2010 This paper simultaneously analyses optimal dividend, debt and investment policy within a conventional multi-period DCF framework, and takes account of differential personal taxation over both investors and types of income, the effect of dividends and interest on the level of share issues and hence s...

This paper seeks to encompass elements of both the Modigliani and Miller (1958, 1963) and Jensen and Meckling (1976) approaches to optimal capital structure within a unified framework with shadow costs of incomplete information. Making the most of the major work of Merton (1987), Leland (1996, 1998) and Bellalah (2001a), we put forward a model that reflects the interaction of financing decision...

This paper looks at the effect of shareholder horizon on corporate behavior. In perfect capital markets, corporate behavior should be insensitive to shareholder horizon, but when investment opportunities are not well valued by the market, shareholder horizon matters. We first present a simple framework to show that shareholder horizon should be looked at in conjunction with stock misvaluation. ...