This study examines the impact of capital structure on agency costs in 211 non-financial Chinese listed firms for the period 1999-2001. There are two main findings. (1) Firms with high debt to asset ratio have high ratio of annual sales to total assets and high ratio of return-on-equity. If a firm has a high debt to asset ratio, creditors are much more concerned about the payment of interest an...

In this study, it is examined whether changes in the stock market index can be explained by the change in financial ratios. Financial statements of 11 conventional and 2 participation banks for a total of 13 banks (representing the essential part of the Turkish Banking Sector and constituting the BIST XBANK Stock Index) announced on a quarterly basis from 2002 to 2013 were extracted from the Pu...

Many acquisitions by private equity (PE) firms are conducted by “clubs,” where a number of PE firms join together to submit a single bid. We present a novel analysis of the economics of club bidding by private equity firms based on the notion that club formation may create value at the target firm by allowing the different dimensions of value creation of each individual PE firm to be aggregated...

Management sometimes exploits the quest of shareholders for higher return on equity capital, by taking advantage of accounting rules gaps or violating them. The Beneish earnings detection manipulation model, is an attempt to reveal such illegal or at least unethical practices. Evidence regarding the use of “creative” accounting practices, based on that model, during the massive equity fund rais...

The existing literature on law and finance generally assumes that firms are passive recipients of the influence of investor protections on their ability to raise external financing. In this paper, we empirically identify a commitment mechanism, i.e., dividend payouts, which firms use to establish a reputation for better treatment of outside shareholders in order to compensate for country-level ...

We use a bargaining framework to examine empirically the relations between director compensation and board-of-director independence. Our evidence suggests that independent directors have a bargaining advantage over the CEO that results in compensation more closely aligned with shareholders’ objectives. Firms with more outsiders on their boards award directors more equity-based compensation. Whe...

We integrate heterogeneity and uncertainty in investor valuations into a model of takeovers. Investors have dispersed valuations, holding shares in firms they value more highly, and a successful offer must win approval from the median target shareholder. We derive the consequences for an acquiring firm’s takeover offer—its size and cash/equity structure—and implications for takeover premia and ...

This paper reports on the initial stages of an ongoing study of 19th century Wisconsin bank sources and uses of funds. Data on 19th century Wisconsin state, private, and national bank shareholders, and owners from 1860 through 1900 are used to explore the following questions: (1) Where did the equity capital invested in Wisconsin banks originate and how did this and other shareholder characteri...