Jean-Marie Gagnon

Stock market behaviour of merging firms: The Belgian experience

This paper shows that mergers are especially beneficial to shareholders of acquired firms. Those are generally companies experiencing abnormally low rates of return, on the Brussels Stock Exchange, before announcement of the merger. The opposite is true of acquiring companies. Statistically significant increases in volumes of transactions accompany acquisitions.

Determinants of Households Saving and Financing of Assets in Canada, a Balance Sheet Approach

This paper uses National Balance Sheet data and defines households’ savings as the change in net worth estimated at book and at market value. The study examines the evolution of households’ savings and financing of assets in Canada over the past forty years, and takes into account a set of portfolio management variables that were largely ignored in prior studies. The findings, based on a quantile regression analysis, reveal that disposable income can be a significant determinant of net worth buildup only when balance sheets are estimated at book value and only for the fourth quartile savings level, whereas portfolio variables appear as significant determinants whether balance sheets are at book or at market values. These findings have public policy implications that are laid out and discussed.

The Tax Benefits of Hedging for Small and Medium-Sized Firms

Abstract Tax laws create challenges for the role of hedging income volatility in the context of tax planning that are of interest from both theoretical and practical perspectives for the purpose of maximizing after-tax income. In this regard, the study concentrates on small and medium-sized enterprises (SME). It brings into focus the simultaneous interplay of the empirically observed range of coefficients of variation and autocorrelation of taxable incomes for SMEs, in connection with the progressive tax rates structure and the cazryover horizon of non-capital losses. It examines the relationship of potential tax savings with hedging using a Monte Carlo simulation methodology after controlling for the taxable income and payout policy of the SMEs. The reseazch is normative and should be useful to decision-makers whose firms have taxable incomes azound the kinks of the tax liability function.