Sagi Akron

Rating the credit rating agencies

ABSTRACT We offer herein several policy tools that can assist the new Office of Credit Ratings within the Securities and Exchange Commission in assessing the quality of past credit ratings and thus measuring the inclusive competency of credit rating agencies. We propose to weigh the degrees of accuracy, consistency and total synchronization between a tested sample of past ratings and a benchmark array of flawless ratings. We also discuss various techniques to handle major discrepancies between these two arrays of credit ratings. We further explain and demonstrate the importance of different sample sizes. In addition, we present a simple approach to estimate the probability of convergence between the two matched sets of ratings under specified governing thresholds. Lastly, we illustrate the bulk of the theory with a concise empirical investigation.

Market Reaction Implications of the Composition of SEO Packages on the Tel Aviv Stock Exchange

In this paper, the author examines the implications of the composition of the Tel Aviv Stock Exchanges different seasoned equity offering (SEO) packages on the market reaction to the SEO announcements. The 2000-2010 analysis demonstrates the significant impact of the SEO packages composition on the reaction to SEO announcements. It appears that the most negative impact of stock options in the package is alleviated by inclusion of a rights issue. The author concludes that package composition conveys an important signal to investors. Because they are perceived as a diminished threat to the existing ownerships balance of power, rights issues may alleviate asymmetric information agencies.

The effect of European and global uncertainty on stock returns of travel and leisure companies

This article aims to evaluate the impact of economic policy uncertainty (EPU) on the STOXX Europe 600 Travel & Leisure Price Index by utilizing a monthly data set for 20 years through 1997–2016. It is found that both the European and the global EPU have significant negative effects on the stock returns of travel and leisure companies. We demonstrate the significantly superior forecasting power of EPU measures on tourism and leisure stock returns, relative to a rather weak forecasting power of various macroeconomic variables.

The Life Expectancy of Fallen Angels

In this study, we develop analytic derivations for the projected mean and median times to default for high-yield bonds that have been previously downgraded from investment-grade ratings. These predictive measures are calibrated for both the respective times already spent in the group of high credit grades and the inherent dependency between the observed times in the investment and the speculative classes. We also document an inverse historical relation between the time spent in the group of investment-grade ratings and the noninvestment class. Furthermore, we calculate both the mean and the median times to default for numerous junk bonds in their diverse life cycles. Finally, we ide.tify the most influential accounting and market ratios that can explain the life expectancies of fallen angels. The framework presented hereafter aims to benefit high-yield debt investors.

Employment arrangements diversity and work group performance

Purpose The purpose of this study was to explore the relation between diversity in work group members’ employment arrangements and the actual performance of the work groups. Design/methodology/approach A field study was conducted on 31 work groups in a public plant belonging to the industrial sector that constitute a unique data set. The 441 employees are contracted under four significantly different employment arrangements and are mixed together in heterogeneous work groups, but perform similar tasks. Findings The results indicated that the influence of employment arrangement diversity on work group performance is best represented as variation, and work arrangements diversity is positively correlated with improved work group performance. Research limitations The study design prevented assessment of employees’ opinions. Rather, the authors used objective type of employment arrangements as the basis for calculating diversity as separation. Using mean Euclidean distance as suggested by Harrison and Klein (2007), the authors arbitrarily set the distance between two different employment arrangements as one. Practical implications The research results help in the stages of recruiting, structuring and development and application of necessary work team. Formal emphasis of diversity in work arrangements improves performance. Originality/value To the authors’ knowledge, this is one of the first studies using unique data set analyzing real-life team diversity and performance in the public sector. The research highly contributes to organizational decision-making processes regarding the importance of incorporating non-standard work arrangements in organizations. Management’s implementation of formal diversity seems to alleviate the negative sides of diversity and increases its positive performance effects.