Jeffery A. Born

Initial public offerings : findings and theories

Preface. Writings summarized. 1. Initial public offerings: an introduction. 2. History, regulation, and process. 3. Empirical findings. 4. Theoretical models of IPOs. 5. Testing theories of underpricing. 6.Conclusion. Bibliography. Endnotes. Index.

Closed-end investment companies : issues and answers

Preface. 1. An Introduction to Investment Companies. 2. A Brief History of Closed-End Investment Companies. 3. Summary of the Hypothesized Factors for Closed-End Fund Discounts. 4. Academic Studies. 5. Explanation Summary of Discounts and Premiums. 6. Conclusion. Index.

Changes in dividend policy and subsequent earnings

56 ividend policy signaling models suggest 2 I g ?’ a positive relationship among changes in dividend policy,, risk-adjusted excess returns at the announcement of the change, and subsequent changes in the growth of quarterly earnings per share. This study focuses on changes in subsequent earnings per share performance in an examination of the postsignal performance of firms that initiate, resume, change, or eliminate a cash dividend following a long period of stability.’ Most previous signaling studies test for excess returns on announcement of a dividend policy change, presuming that the changes in policy are followed by changes in performance. Here we test the hypothesis that dividend increases (decreases) are followed by improvement (deterioration) in the growth rate 0 1 quarterly earnings. We also test the ability of the market to differentiate firms that experience improvement in earnings growth from firms that experience deterioration in earnings growth. We begin with a review of the limited empirical evidence on the relationship between dividend changes and subsequent earnings. The next section describes the sample, the test method employed, and the results. The final section summarizes the findings.

Bank-Equity returns and changes in the discount rate

The ex ante value of discount window operations is modelled as an option providing financial institutions with a right to purchase reserves at potentially below market rates of interest. The value of this option varies according to terms specified by the Federal Reserve. Changes in the value of this option are linked to the equity returns of participating banks. An empirical method is proposed to separate the signal impacts of a discountrate change from the firm-specific impacts of changes in the hypothesized option value. Evidence consistent with changes in the value of the option is reported.

Capital expenditure announcements and anti-takeover barriers

Abstract In this paper, we compare capital budget announcements by firms with anti-takeover mechanisms in place to announcements by firms without takeover barriers during the period 1980 to 1995. We find that anti-takeover provisions do not affect investors’ average reactions to investment choices. Market responses are heterogeneous; however, and differ according to size, growth opportunity, the availability of free cash flow and exposure to the capital markets. We find evidence consistent with managerial entrenchment when firms are insulated from the threat of takeover and have enough free cash flow to avoid raising external capital. We also find that for small firms, the reaction to capital investment announcements are positively related to free cash flow when managers have high growth opportunities, but negatively related when investment opportunity is small. This result is consistent with Noe (1988) , who shows that restricting managers’ investment choices to positive NPV projects is necessary to obtain the pecking order results of Myers and Majluf (1984) .

A closer look at trading strategies for U.S. equity closed-end investment companies

Abstract Earlier studies of U.S. closed-end investment companies (CEICs) examined whether the discount between CEIC price and net asset value could be exploited to gain excess returns. We advance these studies by investigating many more trading strategies and various transaction costs. We find that the role of the span between buy and sell trigger points is highly significant in determining returns, and that transaction costs impact returns and mitigate the influence of the trigger point span. Moreover, the 10 most successful strategies for each transaction cost level exhibit lower coefficients of variation than does the Standard & Poor’s 500 (S&P 500) index.

Closed-End Funds, Exchange-Traded Funds, and Hedge Funds

Characteristics of Investment Companies.- A Brief History of Investment Companies.- Closed-End Funds Issues and Studies.- Exchange-Traded Funds: Issues and Studies.- Hedge Funds: Issues and Studies.

The selling and seasoning of investment company offerings

This article investigates the initial and subsequent pricing of Closed-End Investment Company (CEIC) shares offered to the public from 1986 through 1987. Unlike other equities, these showed no abnormal price appreciation at the offering; however, the new CEICs experience significant price declines in the 20 weeks following the offering. The evaporation of the initial premium begins approximately four weeks after the offering date, a lag that coincides with the period of time during which underwriters may cease supporting share prices in the secondary market.

Initial Public Offerings: An Introduction

An Initial Public Offering (IPO) comprises a private firm’s accessing the public capital market through the sale of securities. Thereby, the firm can raise monies more readily than by the retention of profits. Other possible motivations for an IPO include the prestige of ownership of a public company or the desire of major shareholders to exit the company.

A Brief History of Investment Companies

This chapter provides an overview of the historical evolution of investment companies which date to Europe in the late 1700s. Investment trusts became popular as an investment vehicle in Great Britain during the late 1800s. Subsequently, closed-end funds blossomed in the United States during the 1920s, at which time the first open-end fund appeared. The first hedge fund and exchange-traded fund (ETF) were formed in the late 1940s and 1993, respectively.