Michael C. Walker

Founding family controlled firms: Efficiency and value

Abstract We examine the efficiency and value of founding family controlled firms (FFCFs), firms whose CEOs are either the founder or a descendant of the founder. We find that FFCFs are more efficient and valuable than non-FFCFs that are similar with respect to industry, size, and managerial ownership. We also observe that descendant-controlled firms are more efficient than founder-controlled firms. Finally, we show that younger founder-controlled firms are more efficient than older ones. These results are robust after controlling for the age of the firm and a variety of investment opportunity measures. Our results are consistent with the notions that managerial ownership is endogenous to the firm and that family relationships improve monitoring while providing incentives that are associated with better firm performance.

Measurements of acute cerebral infarction: lesion size by computed tomography.

As part of a prospective therapy study of 65 patients with acute, nonhemorrhagic, cerebral infarction, computed tomographic scans of the head were obtained at admission, 7-10 days, and 3 months. The scans were analyzed for the presence, site, size, and volume measurement of the infarction. At 7-10 days, the mean infarction volume as measured by computed tomography was 55 cm3 or about 4 x 4 x 3.5 cm (range = 0-507 cm3). At 3 months, the mean infarction volume decreased by 25% to 41 cm3. For the 26 scans showing infarction at the time of admission, the mean lesion volume was 33 cm3 at admission, 51 cm3 at 7-10 days, and 49 cm3 at 3 months. With lesion size at 7-10 days expressed as percentage of total brain volume, the mean infarction size was only 5%. Of the 49 patients with lesions revealed by computed tomography at 7-10 days, 20 had an infarction of 1% or less of total brain volume, while only six had an infarction of 20% or more of total brain volume. The lesion volumes as measured by the 7-10-day computed tomography correlated with the neurologic examination scores on admission (Spearmans rank-order correlation = 0.78) and with the scores at 1 week (Spearmans rank-order correlation = 0.79).

Effectiveness and Safety of Transcranial Laser Therapy for Acute Ischemic Stroke

Background and Purpose— We hypothesized that transcranial laser therapy (TLT) can use near-infrared laser technology to treat acute ischemic stroke. The NeuroThera Effectiveness and Safety Trial–2 (NEST-2) tested the safety and efficacy of TLT in acute ischemic stroke. Methods— This double-blind, randomized study compared TLT treatment to sham control. Patients receiving tissue plasminogen activator and patients with evidence of hemorrhagic infarct were excluded. The primary efficacy end point was a favorable 90-day score of 0 to 2 assessed by the modified Rankin Scale. Other 90-day end points included the overall shift in modified Rankin Scale and assessments of change in the National Institutes of Health Stroke Scale score. Results— We randomized 660 patients: 331 received TLT and 327 received sham; 120 (36.3%) in the TLT group achieved favorable outcome versus 101 (30.9%), in the sham group (P=0.094), odds ratio 1.38 (95% CI, 0.95 to 2.00). Comparable results were seen for the other outcome measures. Although no prespecified test achieved significance, a post hoc analysis of patients with a baseline National Institutes of Health Stroke Scale score of <16 showed a favorable outcome at 90 days on the primary end point (P<0.044). Mortality rates and serious adverse events did not differ between groups with 17.5% and 17.4% mortality, 37.8% and 41.8% serious adverse events for TLT and sham, respectively. Conclusions— TLT within 24 hours from stroke onset demonstrated safety but did not meet formal statistical significance for efficacy. However, all predefined analyses showed a favorable trend, consistent with the previous clinical trial (NEST-1). Both studies indicate that mortality and adverse event rates were not adversely affected by TLT. A definitive trial with refined baseline National Institutes of Health Stroke Scale exclusion criteria is planned.

The Continuing Increase in the Use of Sophisticated Capital Budgeting Techniques

This article reports on several surveys which examine the changes in industry capital budgeting techniques which have occurred between 1960 and 1980. It reveals that the increased use of sophisticated capital budgeting techniques has been accompanied by a substantial increase in respondent satisfaction with their capital budgeting procedures.

The Effect of Stock Splits on the Ownership Structure of Firms

Although several researchers have speculated that stock splits may affect the ownership structure of firms, there is very little empirical evidence available in this regard. We investigate a broad sample of stock splits by firms without confounding events, controlling for industry and size effects. Our results show that stock splits increase the numbers of both individual and institutional shareholders, and they do not affect the proportion of equity held by institutions. Further, changes in the numbers of individual and institutional shareholders are positively related to the split factor. Abnormal announcement returns are positively correlated with changes in the total number of shareholders. These findings support the signaling hypothesis.

Share price reaction to plant-closing announcements

A plant closing can be good news: a positive-NPV abandonment decision. We split a plant-closing sample according to the reasons given. Closings pursuant to a strategic objective are called aggressive. Those due to managements failure to achieve an objective are defensive. Aggressive closings were associated with significant positive price reactions. Defensive closings had no lasting share price effect. Market reaction was negative for closings following other closings. Plant-closing firms have below average profitability, but three years after the closing our sample firms had above-average ROEs.