Most recent bank bailouts lessons from a financial and economic policy perspective turn to be politicized. This paper keeps the focus on the effective implications of the most recent bank bailouts in the Western economy model. The common share of responsibility and bank recovery as target becomes null despite the real motives of the ongoing credit crisis. However there are some common issues shared by all these recent bank and financial institutions bailouts. Most of them relate to: global interconnections, economic downturn, liquidity boost, efficiency recovery, evade social costs, new opportunities for M&A, new risk management applications, oportunistic investment behaviour and patience.
{"title":"Recent Bank Bailouts - Lessons to Learn When Patience is a Virtue","authors":"Simona Mihai Yiannaki","doi":"10.2139/ssrn.1315523","DOIUrl":"https://doi.org/10.2139/ssrn.1315523","url":null,"abstract":"Most recent bank bailouts lessons from a financial and economic policy perspective turn to be politicized. This paper keeps the focus on the effective implications of the most recent bank bailouts in the Western economy model. The common share of responsibility and bank recovery as target becomes null despite the real motives of the ongoing credit crisis. However there are some common issues shared by all these recent bank and financial institutions bailouts. Most of them relate to: global interconnections, economic downturn, liquidity boost, efficiency recovery, evade social costs, new opportunities for M&A, new risk management applications, oportunistic investment behaviour and patience.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-12-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73320346","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
On a sample of 1105 UK cash and stock mergers over the period of 1987-2007, this study is the first to provide empirical evidence about the profitability and the risk-return characteristic of the merger arbitrage strategy in the UK market. Consistent with the findings in other markets, the UK merger arbitrage portfolios are profitable on risk-adjusted basis. The result is robust to a range of methods to control for risk. The most important contribution of this study is to show how takeover regulations can affect the risk-return characteristics of the merger arbitrage strategy. There is little evidence that the UK merger arbitrage portfolios exhibit any non-linear risk-return pattern. The finding is in line with restrictions imposed by the UK Takeover Code on the bidder's ability to renege on the bid. Combined with the US and Australian evidence under varying degree of such restrictions in these respective jurisdictions, the regulation impact is confirmed.
{"title":"UK Evidence on the Profitability and the Risk-Return Characteristics of Merger Arbitrage","authors":"P. Sudarsanam, Dzung V. Nguyen","doi":"10.2139/ssrn.1108477","DOIUrl":"https://doi.org/10.2139/ssrn.1108477","url":null,"abstract":"On a sample of 1105 UK cash and stock mergers over the period of 1987-2007, this study is the first to provide empirical evidence about the profitability and the risk-return characteristic of the merger arbitrage strategy in the UK market. Consistent with the findings in other markets, the UK merger arbitrage portfolios are profitable on risk-adjusted basis. The result is robust to a range of methods to control for risk. The most important contribution of this study is to show how takeover regulations can affect the risk-return characteristics of the merger arbitrage strategy. There is little evidence that the UK merger arbitrage portfolios exhibit any non-linear risk-return pattern. The finding is in line with restrictions imposed by the UK Takeover Code on the bidder's ability to renege on the bid. Combined with the US and Australian evidence under varying degree of such restrictions in these respective jurisdictions, the regulation impact is confirmed.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"74121398","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2008-12-01DOI: 10.1016/J.JIMONFIN.2011.07.001
R. Beetsma, A. Bovenberg, W. Romp
{"title":"Funded Pensions and Intergenerational and International Risk Sharing in General Equilibrium","authors":"R. Beetsma, A. Bovenberg, W. Romp","doi":"10.1016/J.JIMONFIN.2011.07.001","DOIUrl":"https://doi.org/10.1016/J.JIMONFIN.2011.07.001","url":null,"abstract":"","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84398674","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Franco Fiordelisi, Vincenzo Farina, Battaglia Francesca, Ornella Ricci
This paper analyses the cost and profit efficiency of Italian co-operative banks. These small financial institutions have homogeneous business model and their performance is strongly influenced by the economic conditions of their local markets. As recognised by various recent studies (Bos et al., 2008), the efficiency measurement has to account for the heterogeneity of environmental conditions. By using a sample of 2683 year observations collected between 2000 and 2005, we estimated cost and profit efficiency using the Stochastic Frontier Analysis and including various environmental variables accounting for disparities among Italian regions. Our results provide evidence that banks in the North-East of Italy are more cost efficient, taking advantage of a favourable environment, while banks in the South of Italy display a higher profit efficiency, probably due to lower competitive pressures.
本文分析了意大利合作银行的成本效率和利润效率。这些小型金融机构具有同质化的经营模式，其业绩受到当地市场经济状况的强烈影响。正如最近各种研究(Bos et al.， 2008)所认识到的那样，效率测量必须考虑到环境条件的异质性。通过使用2000年至2005年间收集的2683年的观察样本，我们使用随机前沿分析估计了成本和利润效率，并考虑了意大利地区之间差异的各种环境变量。我们的结果提供了证据，表明意大利东北部的银行更具成本效益，利用了有利的环境，而意大利南部的银行表现出更高的利润效率，可能是由于竞争压力较低。
{"title":"Efficient or Fortunate? The Impact of Environmental Economic Conditions on Co-Operative Banks","authors":"Franco Fiordelisi, Vincenzo Farina, Battaglia Francesca, Ornella Ricci","doi":"10.2139/ssrn.1376217","DOIUrl":"https://doi.org/10.2139/ssrn.1376217","url":null,"abstract":"This paper analyses the cost and profit efficiency of Italian co-operative banks. These small financial institutions have homogeneous business model and their performance is strongly influenced by the economic conditions of their local markets. As recognised by various recent studies (Bos et al., 2008), the efficiency measurement has to account for the heterogeneity of environmental conditions. By using a sample of 2683 year observations collected between 2000 and 2005, we estimated cost and profit efficiency using the Stochastic Frontier Analysis and including various environmental variables accounting for disparities among Italian regions. Our results provide evidence that banks in the North-East of Italy are more cost efficient, taking advantage of a favourable environment, while banks in the South of Italy display a higher profit efficiency, probably due to lower competitive pressures.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"85972323","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Doubts about the reliability of a company's qualitative financial disclosure increase market participant expectations from the auditor's report. The auditing process is supposed to serve as a monitoring device that reduces management incentives to manipulate reported earnings. Empirical research confirms that it could be an efficient device under some circumstances and recognizes that our estimates of the informativeness of audit reports are unavoidably biased (e.g., because of a client's anticipation of the auditing process). This empirical study supports the significant role of auditors in the financial market, in particular in the prevention of earnings management practice. We focus on earnings misstatements, which auditors correct with an adjustment, using a sample of past and current constituents of the benchmark market index in Spain, IBEX 35, and manually collected audit adjustments reported over the 1997-2004 period (42 companies, 336 annual reports, 75 earnings misstatements). Our findings confirm that companies more often overstate than understate their earnings. An investor may foresee earnings misreporting, as manipulators have a similar profile (e.g., more leveraged and with lower sales). However, he may receive valuable information from the audit adjustment on the size of earnings misstatement, which can be significantly large (i.e., material in almost all cases). We suggest that the magnitude of an audit adjustment depends, other things constant, on annual revenues and free cash levels. We also examine how the audit adjustment relates to the observed market price, trading volume and stock returns. Our findings are that earnings manipulators have a lower price and larger trading volume compared to their rivals. Their returns are positively associated with the magnitude of earnings misreporting, which is not consistent with the possible pricing of audit information.
{"title":"Earnings Management and Audit Adjustments: An Empirical Study of IBEX 35 Constituents","authors":"Oriol Amat","doi":"10.2139/ssrn.1374232","DOIUrl":"https://doi.org/10.2139/ssrn.1374232","url":null,"abstract":"Doubts about the reliability of a company's qualitative financial disclosure increase market participant expectations from the auditor's report. The auditing process is supposed to serve as a monitoring device that reduces management incentives to manipulate reported earnings. Empirical research confirms that it could be an efficient device under some circumstances and recognizes that our estimates of the informativeness of audit reports are unavoidably biased (e.g., because of a client's anticipation of the auditing process). This empirical study supports the significant role of auditors in the financial market, in particular in the prevention of earnings management practice. We focus on earnings misstatements, which auditors correct with an adjustment, using a sample of past and current constituents of the benchmark market index in Spain, IBEX 35, and manually collected audit adjustments reported over the 1997-2004 period (42 companies, 336 annual reports, 75 earnings misstatements). Our findings confirm that companies more often overstate than understate their earnings. An investor may foresee earnings misreporting, as manipulators have a similar profile (e.g., more leveraged and with lower sales). However, he may receive valuable information from the audit adjustment on the size of earnings misstatement, which can be significantly large (i.e., material in almost all cases). We suggest that the magnitude of an audit adjustment depends, other things constant, on annual revenues and free cash levels. We also examine how the audit adjustment relates to the observed market price, trading volume and stock returns. Our findings are that earnings manipulators have a lower price and larger trading volume compared to their rivals. Their returns are positively associated with the magnitude of earnings misreporting, which is not consistent with the possible pricing of audit information.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-12-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86155799","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We analyze the demand of the Euromillions lottery tickets, a European lotto-like game launched in 2004 and played simultaneously in nine countries with the same rules and the same draws. Using the effective price methodology, we show that price elasticities are very different across countries. Especially, Spain and Portugal exhibit a low price elasticity and high mean sales, meaning a low sensitivity to jackpot increases. On the contrary, Ireland and the United Kingdom exhibit very high long-run elasticities and a large sensitivity to jackpot variations. The interpretations of these results are linked to lower GDP in the two former countries and, for Spain, to the large development of syndication play, and to the bookmaking activities and the highly competitive betting market in Ireland and the UK. Moreover, we show that Spanish and Portuguese players pay a much higher effective price than UK gamblers, meaning that in a certain sense the former subsidize the latter.
{"title":"The Demand for Euromillions Lottery Tickets: An International Comparison","authors":"P. Roger","doi":"10.2139/ssrn.1300436","DOIUrl":"https://doi.org/10.2139/ssrn.1300436","url":null,"abstract":"We analyze the demand of the Euromillions lottery tickets, a European lotto-like game launched in 2004 and played simultaneously in nine countries with the same rules and the same draws. Using the effective price methodology, we show that price elasticities are very different across countries. Especially, Spain and Portugal exhibit a low price elasticity and high mean sales, meaning a low sensitivity to jackpot increases. On the contrary, Ireland and the United Kingdom exhibit very high long-run elasticities and a large sensitivity to jackpot variations. The interpretations of these results are linked to lower GDP in the two former countries and, for Spain, to the large development of syndication play, and to the bookmaking activities and the highly competitive betting market in Ireland and the UK. Moreover, we show that Spanish and Portuguese players pay a much higher effective price than UK gamblers, meaning that in a certain sense the former subsidize the latter.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-11-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"82069563","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Spanish Abstract: En 2008 (hasta el 31 de octubre), la rentabilidad de la bolsa espanola fue -38%, solo hubo 3 empresas (entre 121) con rentabilidad positiva y 60 empresas tuvieron una rentabilidad inferior a -40%.Las 121 empresas destruyeron valor para sus accionistas por importe de €366 millardos.English Abstract: 118 companies out of 121 had negative return in 2008. In 2008, the 121 companies destroyed 366 billion euros (15 billion euros in 2007). The average return of the 125 companies was -39.6%.
{"title":"Rentabilidad y creación de valor de 121 empresas españolas hasta el 31 de octubre de 2008 (Shareholder Return of Spanish Companies in 2008)","authors":"Pablo Fernández, Vicente J. Bermejo","doi":"10.2139/SSRN.1118287","DOIUrl":"https://doi.org/10.2139/SSRN.1118287","url":null,"abstract":"Spanish Abstract: En 2008 (hasta el 31 de octubre), la rentabilidad de la bolsa espanola fue -38%, solo hubo 3 empresas (entre 121) con rentabilidad positiva y 60 empresas tuvieron una rentabilidad inferior a -40%.Las 121 empresas destruyeron valor para sus accionistas por importe de €366 millardos.English Abstract: 118 companies out of 121 had negative return in 2008. In 2008, the 121 companies destroyed 366 billion euros (15 billion euros in 2007). The average return of the 125 companies was -39.6%.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-11-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84291366","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
I test whether the introduction of a new pension standard (FRS 17) in the U.K., which virtually eliminated the smoothing mechanisms in pension accounting, is associated with a reallocation of assets from equities to bonds in defined benefit pension plans. My findings indicate that sample firms reduced their equity allocation by about 8 percentage points, on average, after the passage of FRS 17. Further, the magnitude of the asset reallocation depends on the financial reporting effect of FRS 17, and is positively associated with: (i) the increase in reported pension underfunding, (ii) the expected future volatility of reported actuarial gains/losses, and (iii) the increase in reported pension expense. The systematic shift away from equities after FRS 17 indicates that the smoothing mechanisms in pension accounting encourage equity investment in pension plans by enabling firms to avoid the financial reporting costs of equity volatility. This paper contributes to the ongoing debate among standard setters about the economic consequences of smoothing in pension accounting.
{"title":"Does Smoothing in Pension Accounting Encourage Equity Investment in Corporate Pension Plans? Evidence from the U.K.","authors":"Shamin Mashruwala","doi":"10.2139/ssrn.1405494","DOIUrl":"https://doi.org/10.2139/ssrn.1405494","url":null,"abstract":"I test whether the introduction of a new pension standard (FRS 17) in the U.K., which virtually eliminated the smoothing mechanisms in pension accounting, is associated with a reallocation of assets from equities to bonds in defined benefit pension plans. My findings indicate that sample firms reduced their equity allocation by about 8 percentage points, on average, after the passage of FRS 17. Further, the magnitude of the asset reallocation depends on the financial reporting effect of FRS 17, and is positively associated with: (i) the increase in reported pension underfunding, (ii) the expected future volatility of reported actuarial gains/losses, and (iii) the increase in reported pension expense. The systematic shift away from equities after FRS 17 indicates that the smoothing mechanisms in pension accounting encourage equity investment in pension plans by enabling firms to avoid the financial reporting costs of equity volatility. This paper contributes to the ongoing debate among standard setters about the economic consequences of smoothing in pension accounting.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"84053720","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Spanish Abstract: Este documento contempla con perspectiva historica el reciente descenso del IBEX 35 y de las acciones espanolas. El IBEX cayo un 50,4% desde su maximo historico (15.945,7 puntos el 8/nov/2007) hasta 7.905 puntos el 28/oct/2008. Pero el mayor descenso del IBEX (58%) se produjo entre el 6/mar/2000 (12.816,8 puntos) y el 1/oct/2002 (5.368,6 puntos).Por otro lado, el IGBM descendio un 72,9% entre abril de 1973 y abril de 1980 (el IGBM deflactado descendio un 92,6%).English Abstract: We analyze the movement of the IBEX 35 between December 1990 and October 2008, the movement of the IGBM between December 1940 and October 2008 and movement of the S&P 500 between January 1926 and October 2008.
{"title":"El descenso bursátil de 2008 (The Stock Market Crash of 2008)","authors":"Pablo Fernández, Vicente J. Bermejo","doi":"10.2139/SSRN.1291873","DOIUrl":"https://doi.org/10.2139/SSRN.1291873","url":null,"abstract":"Spanish Abstract: Este documento contempla con perspectiva historica el reciente descenso del IBEX 35 y de las acciones espanolas. El IBEX cayo un 50,4% desde su maximo historico (15.945,7 puntos el 8/nov/2007) hasta 7.905 puntos el 28/oct/2008. Pero el mayor descenso del IBEX (58%) se produjo entre el 6/mar/2000 (12.816,8 puntos) y el 1/oct/2002 (5.368,6 puntos).Por otro lado, el IGBM descendio un 72,9% entre abril de 1973 y abril de 1980 (el IGBM deflactado descendio un 92,6%).English Abstract: We analyze the movement of the IBEX 35 between December 1990 and October 2008, the movement of the IGBM between December 1940 and October 2008 and movement of the S&P 500 between January 1926 and October 2008.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-10-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"75688770","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We show that female directors have a significant impact on board inputs and firm outcomes. In a sample of US firms, we find that female directors have better attendance records than male directors, male directors have fewer attendance problems the more gender-diverse the board is, and women are more likely to join monitoring committees. These results suggest that gender-diverse boards allocate more effort to monitoring. Accordingly, we find that CEO turnover is more sensitive to stock performance and directors receive more equity-based compensation in firms with more gender-diverse boards. However, the average effect of gender diversity on firm performance is negative. This negative effect is driven by companies with fewer takeover defenses. Our results suggest that mandating gender quotas for directors can reduce firm value for well-governed firms.
{"title":"Women in the Boardroom and Their Impact on Governance and Performance","authors":"Renée B. Adams, Daniel Ferreira","doi":"10.2139/ssrn.1107721","DOIUrl":"https://doi.org/10.2139/ssrn.1107721","url":null,"abstract":"We show that female directors have a significant impact on board inputs and firm outcomes. In a sample of US firms, we find that female directors have better attendance records than male directors, male directors have fewer attendance problems the more gender-diverse the board is, and women are more likely to join monitoring committees. These results suggest that gender-diverse boards allocate more effort to monitoring. Accordingly, we find that CEO turnover is more sensitive to stock performance and directors receive more equity-based compensation in firms with more gender-diverse boards. However, the average effect of gender diversity on firm performance is negative. This negative effect is driven by companies with fewer takeover defenses. Our results suggest that mandating gender quotas for directors can reduce firm value for well-governed firms.","PeriodicalId":47599,"journal":{"name":"European Journal of Finance","volume":null,"pages":null},"PeriodicalIF":2.5,"publicationDate":"2008-10-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83280806","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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