Finance - Research Publications

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    Takeovers, Ownership, and Shareholder Wealth — The Australian Evidence
    Shekhar, C ; Torbey, V (Emerald, 2005-03-01)
    We examine the relationship between value, ownership, and governance structures for a set of acquisitions by Australian companies over the period of 1994–2001. We find that the propensity to diversify increases with the equity ownership of firms' directors, whereas the composition of the board, the presence of block holders and their ownership does not materially affect the decision to diversify. Board size has a positive but weak impact on the tendency to diversify. We also find no significant negative wealth effects for the shareholders of diversifying firms, although in comparison the shareholders of non‐diversifying acquirers experience significantly positive upward revisions of firm values. Although method of payment influences acquirer returns, ownership and governance do not have any impact on announcement period returns. Our results support the notion that capital markets may consider the ownership and governance structures as exerting enough influence to overcome any costs imposed by diversification strategies, hence limiting value loss to the shareholders.
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    The relation between R&D intensity and future market returns: Does expensing versus capitalization matter?
    Chan, HWH ; Faff, RW ; Gharghori, P ; Ho, YK (Springer Science and Business Media LLC, 2007-07-01)
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    On the upper bound of a call option
    Handley, JC (Springer Science and Business Media LLC, 2005-08-01)
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    Diversification, fee income, and credit union risk
    Esho, N ; Kofman, P ; Sharpe, IG (Springer Science and Business Media LLC, 2005-09-01)
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    Australian evidence on the determinants and impact of takeover resistance
    Maheswaran, K ; Pinder, S (Wiley, 2005-12-01)
    Abstract In the present paper, we examine the determinants and impact of target bid resistance on the wealth of target shareholders and the takeover process in Australia. We find that bid resistance increases target shareholder wealth in the post‐announcement period and that the probability of bid hostility increases with the target's size, decreases with the target's performance and is unrelated to the size of the premium offered by the bidder. We also find that bid hostility decreases the probability of bid success, increases the probability of bid revision and has no effect on the probability of competing bidders entering the market.
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    Narratives in managers' corporate finance decisions
    Coleman, L ; Maheswaran, K ; Pinder, S (WILEY, 2010-09)
    Abstract This article uses the extended case method to explore senior executives’ corporate finance decisions. We quantified firm’s finance practices using a mail survey, and then – to resolve puzzles in managers’ decision processes – conducted face‐to‐face interviews with chief finance officers of large listed firms. The interviews identified six themes as consistent influences on finance decisions: pressures imposed by clienteles; constraints on resources; risk management; heuristics; real options; and sustainability. We conclude that managers are logical and rational in their decisions, but employ a wider range of criteria than assumed in conventional finance theories.
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    Re-examination of the historical equity risk premium in Australia
    Brailsford, T ; Handley, JC ; Maheswaran, K (BLACKWELL PUBLISHING, 2008-03)
    Abstract In light of the ongoing debate over the value of the equity risk premium, its increasing use in the regulatory setting, and the impact of dividend imputation on the premium, this paper presents a timely new look at the historical equity risk premium in Australia, and provides an improved understanding of the historical record. We document concerns about data quality that become increasingly important the further back in time one looks. In particular, there are sufficient question marks over the quality of data prior to 1958 to warrant any estimates based thereon to be treated with caution. Accordingly, we present a new set of estimates of the historical equity risk premium corresponding to periods of increasing data quality but of decreasing sample size. Relative to bonds (bills), the equity premium has averaged 6.3 per cent (6.8 per cent) per annum over 1958–2005, which is a period of relatively good data quality. Together with other results in the paper, the findings reveal a historical estimate that is substantially less than widely cited historical studies would otherwise indicate. We reconcile prior evidence through documenting a dividend adjustment that has typically been overlooked. We also provide estimates that incorporate an adjustment for imputation credits.