Assem Safieddine

Leverage and Corporate Performance: Evidence from Unsuccessful Takeovers

This paper examines how debt affects firms following failed takeovers. Using a sample of 573 unsuccessful takeovers, we find that, on average, targets significantly increase their debt levels. Targets that increase their debt levels more than the median amount reduce their levels of capital expenditures, sell off assets, reduce employment, increase focus and increase their operating cash flows. These leverage-increasing targets also realize superior stock price performance over the five years following the failed takeover. In contrast, those firms that increase their leverage the least show insignificant changes in their level of investment and their operating cash flows and realize stock price performance that is no different than their benchmarks. Those failed targets that increase their leverage the least, and fail to get taken over in the future, realize significant negative stock returns following their initial failed takeovers. The evidence is consistent with the hypothesis that debt helps firms remain independent not because it entrenches managers, but because it commits the manager to making the improvements that would be made by potential raiders.

The Operating Performance of Seasoned Equity Issuers: Free Cash Flow and Post-Issue Performance

We examine changes in operating performance for a large sample of industrial firms conducting seasoned equity offerings (SEOs). Our sample of SEO firms has significant improvements in operating performance prior to the issue. The SEO firms experience a sharp, statistically significant decrease in profitability following the SEO in both industry-adjusted and unadjusted comparisons. We find that the decline in profitability is greater for firms that have higher free cash flow, and that SEO firms that invest in new fixed assets perform better than SEO firms that do not.

Islamic Financial Institutions and Corporate Governance: New Insights for Agency Theory

Manuscript Type: Empirical Research Question/Issue: This paper takes a theory building approach to highlighting variations of agency theory in the unique and complex context of Islamic banks, mainly stemming from the need to comply with Sharia and the separation of cash flow and control rights for a category of investors. Research Findings/Results: The paper provides insights that agency structures in the context of Islamic banking might give rise to trade-offs between Sharia compliance and mechanisms protecting investors’ rights. Alternative models of idiosyncratic governance might be effective in balancing the two cornerstones of the agency dynamic. In practice, the paper finds that most of the surveyed Islamic banks appear to recognize the value of governance and institute some basic mechanisms. Nonetheless, some governance flaws relating to audit, control, and transparency are observed, a situation further exacerbated by the fact that investment account holders are not represented on the board, and are not granted control or monitoring rights. This leads to a discussion on the tradeoff between the costs and benefits of such a practice. Theoretical Implications: This study contributes to the agency theory literature by providing theoretical propositions highlighting challenges to this theory whereby mechanisms with the purpose of mitigating agency problems might lead to a divergence from Islamic principles of Sharia. Practical Implications: The paper motivates Islamic banks to improve governance practices currently in place. It alerts policy makers to the need to tailor the regulations to safeguard the interests of all investors without violating the principles of Sharia.

Constraints facing working women in Lebanon: an insider view

– The ascendancy of women to top management positions is a perennial problem plaguing organizations worldwide. The purpose of this paper is to present some insights relating to this pervasive phenomenon from a Middle Eastern context by exploring the constraints reported by Lebanese women managers throughout their careers., – Literature review and qualitative research methodology consisting of interviews with 62 Lebanese women managers in different fields of occupation., – The findings suggest that the constraints reported by Lebanese women managers are similar to those reported worldwide. The main differences revolve around the strongly felt salience of cultural values and expectations constraining women to traditional roles and a more accentuated sense of patriarchy., – The value added of this research is to present an insider view and fresh perspective into career constraints facing women from a non‐traditional context, namely Lebanon. In view of the Western‐centric nature of academic publication on the topic, there is a real need and added value in empirical research stemming from an Arab‐Middle Eastern context.

Investment Banker Reputation and the Performance of Seasoned Equity Issues

We study the relation between investment banker reputation and announcement-period returns and between banker reputation and three-year post-issue holding-period returns for firms that conducted seasoned equity offerings (SEOs) between 1980 and 1994. We find a positive relation overall between investment banker reputation and announcement-period returns but no significant relation between investment banker reputation and long-run post-issue stock price performance. We also design an empirical model to predict the prestige of the issuer’s underwriter. We find that announcement-period returns are significantly related to banker prestige for issuers with high levels of information asymmetry that go against type to use a high-prestige investment banker.

The glass ceiling: some positive trends from the Lebanese banking sector

Purpose – The purpose of this study is to explore the salience of glass ceiling type barriers in the Lebanese banking sector, based on the perceptions of a sample of Lebanese top and middle level women managers.Design/methodology/approach – Literature review and survey type questionnaire molded after the women workplace culture questionnaire developed by Bergman and Hallberg. The questionnaire was administered to a sample of 61 top and middle level women managers, drawn from the context of 12 different banks in the Lebanese context.Findings – The findings suggest that the common precepts of the glass ceiling theory are not supported in the context of Lebanese banks with overall positive inferences and perceptions reported by Lebanese women managers in relation to their work environment and daily work experiences. These findings are explained by the progressive evolution of the Lebanese banking sector over the past few decades.Originality/value – The value added of this research is to revisit the salience ...

Corporate governance and women: An empirical study of top and middle women managers in the Lebanese banking sector

Purpose – The purpose of this paper is to look at how recent corporate scandals have translated into heightened interest in understanding various facets of corporate governance, notably the effectiveness of boards of directors and the composition of boards with particular attention to the gender dimension. In this context, the current study gauges the perceptions of Lebanese women managers regarding corporate governance issues pertaining to board effectiveness, roles and responsibilities and the benefits of female representation on boards.Design/methodology/approach – The approach takes the form of a literature review and survey type questionnaire deriving from the literature. The questionnaire was administered to a sample of 61 top and middle level women managers, drawn from the context of 12 different banks in the Lebanese context.Findings – The findings suggest that Lebanese women managers consider current board performance as not being satisfactory, that women are important board member candidates and...

Corporate governance and intellectual capital: evidence from an academic institution

Purpose – The purpose of this paper is to examine the relationship between intellectual capital (IC) and corporate governance (CG) in a university setting. In particular, the aim is to argue that the lack of good CG can lead to an inability to attract and retain IC.Design/methodology/approach – The article tests the CG/IC relationship at the American University of Beirut (AUB) by surveying the perceptions of full‐time faculty members. The survey addresses, in particular, the factors that attract IC to AUB and their perception of several aspects of CG at the institution.Findings – The results suggest that CG and IC are indeed related and that faculty members view CG as a major factor for IC attraction. Respondents also consider that existing IC enhances the institutions ability to attract more IC. However, the mixed perceptions of the governance structure in place at AUB, as revealed by faculty responses, weaken the support for a strong relation between CG and IC at the university. The results also unveil...

Does Smart Money Move Markets

The authors split equity investors into two groups, one of “smart money” institutional investors and the other of individual investors. Using quarterly data, they examine how aggregate ownership flows between the two groups are related to stock returns. Except in one case, increases in institutional ownership are associated with positive returns, and reductions in institutional ownership with negative returns, and the positive relationship between institutional ownership flows and returns is not explained by within-quarter momentum trading. These findings are consistent with the belief that institutional investors play a price-setting leadership role in the equity markets. The exception to the positive association between institutional ownership flows and returns is for small-capitalization stocks; increases in institutional ownership of small-capitalization stocks that were prior losers are associated with negative returns (concentrated in the fourth quarter). This different return pattern for small-capitalization stocks is interpreted as consistent with institutions buying stocks at price discounts from individuals who are systematically selling to establish tax-deductible capital losses.

Corporate governance and the external monitoring of banks in Lebanon

Purpose – Prior research suggests that corporations in countries with a weak and illiquid stock market rely either on internal resources or on loans from the banking system, while family businesses, in their desire to maintain control, prefer debt to equity. Owing to the weak external monitoring role played by the financial markets in Lebanon, this paper aims to goes beyond the financial role played by Lebanese banks by investigating their role in monitoring corporate clients.Design/methodology/approach – A survey was conducted which included 12 questions and focused on the role of banks in Lebanon in fostering proper practices of governance amongst their corporate clients. The completed surveys represent 24 banks, with more than 85 percent of the total deposits, 89 percent of the total loan portfolio, and spanning all bank groupings.Findings – The paper finds that, in addition to their financing role, Lebanese banks are both active monitors of and resource providers to their corporate clients, which is c...