Stavros Thomadakis

Systematic Risk and the Theory of the Firm

The mean-variance capital-asset-pricing model forms the basis for much of the theoretical and empirical work in modern financial economics. While this model defines the relevant measure of the risk of a security β in a general equilibrium context, the relationship between this measure and the microeconomic variables of a firm has not been studied in the literature. This paper develops a model of the firm under uncertainty and derives the relationship between systematic risk and such firm variables as monopoly power, demand elasticity, and the labor-capital ratio. The general conclusions are surprisingly robust and point to several interesting empirically testable hypotheses.

The Share of Small and Medium-Sized Enterprise in Greek Manufacturing

This paper examines the determinants of small establishment shares in Greek manufacturing and compares the results to previous findings for U.S. small firms. Two groups of explanatory variables are used: Industry variables and small-firm performance variables. Both types of variables are found to have an impact on the determination of small firms shares, with performance variables being at least as strong as industry variables. Measures of entry barriers give mixed results. Capital intensity exercizes an expected negative impact. Advertising intensity shows a trace of positive impact for medium-sized establishments in consumer goods sectors. Operating efficiency of small firms also appears as a strong influence on their shares whereas investment intensity does not appear significant. These results are in partial agreement to earlier findings for U.S. small firms. Their generality is tempered both by the fact that they come from a small country of middle level of development and by the recognition that the year of observation (1983) was at the start of Greeces industrial adjustment to entry in the EEC. Both these concerns constitute areas of future research.

Valuation Response to New Information: A Test of Resource Mobility and Market Structure

This article hypothesizes that resources employed in concentrated industries are more specialized and durable and therefore less mobile than resources employed in atomistic industries. The hypothesis is tested by estimating the relationship between changes in the market value of a firms securities and changes in its earnings levels and comparing this relation under different market structures. The response of market values to earnings changes is found to be greater for concentrated industries than for atomistic industries. This difference is interpreted as evidence that abnormal earnings persist longer in concentrated industries because of the lower degree of resource mobility.

Foreign Project Financing in Segmented Capital Markets: Equity Versus Debt

Starting with the premise of capital structure irrelevance in each national market, the study arrives at an optimal international capital structure comprised of country A equity and country B debt in segmented international capital markets. It is also shown in such a market that risky foreign debt can enhance shareholder wealth beyond that of default-free debt. Empirical predictions are made about types of firms that are prone to issue foreign debt/equity.

Price Regulation Under Uncertainty in an Asymmetric Decision Environment

A regulated firm that can make decisions both before and after uncertainty is resolved with respect to input use cannot be led to competitive solutions by regulatory price ceilings. Whether those ceilings are imposed before or after the resolution of uncertainty, they present incentives for undercapitalized production, contrary to usual AJ assertions. Under these conditions the Fair Return objective is neither a sufficient nor an unambiguous regulatory target.

Rate of return, firm size and development subsidies : The case of Greece

Abstract To actualize the process of industrialization, developing countries often subsidize the formation of the large, capital intensive firm. We pose the question: To what extent does subsidization of the large firm lead to inefficient choices? We attempt to answer the question with an analysis of rates of return of a sample of large manufacturing firms in Greece. It is found that, on average, the large firm has benefited from government subsidies which decrease the cost of capital or which provide exclusive incentives to foreign investment. Aside from subsidies, as Greek-owned firms increase in size their rates of return decline; in contract rates of return and size are uncorrelated among firms invested with foreign capital. The subsidized inefficiency of large Greek firms is a failure of a policy which is designed to promote efficiency through size.

International Market Segmentation and Eurodebt Issues

Implications of capital market segmentation for international capital structure (ICS)—capital structure consisting of equity issued in one country and debt issued in another—are examined. Necessary conditions for the emergence of ICS are analyzed under two options for debt issues (foreign debt and Eurodebt) and comparisons are made. It is shown that in cases where the project cannot support an ICS including foreign debt Eurobonds can be issued and would be profitable.

Innovation and Upheaval: Early Growth in the Greek Capital Market: Listings and IPOs from 1880 to WWII in ASE

The establishment and growth of the Greek stock market were coincident with development episodes, financial upheavals, and geographic expansions of the countrys economy over the period 1880–1940. This article explores the growth of the Athens Stock Exchange through new listings and initial public offerings (IPOs) in the late nineteenth and early twentieth centuries. We examine changes in exchange governance and listing requirements. On a theme not addressed before, we find that simple listings were far more numerous than actual IPOs. IPOs in Greece remained unregulated throughout the period. Their under-pricing became pronounced in the later parts of the period, especially the 1920s. The study presents data on ‘quasi-IPOs’ (that is, capital increases shortly after listing) and shows that they offer a more accurate assessment of the demand for the financing of listing firms in an emerging market. Robust evidence is presented to show that as the Exchange developed it also underwent a change in character, becoming more oriented to the domestic market and catering to smaller firms in domestic manufacturing in the post-First World War era that marked the end of early globalization.

Innovation and upheaval: early growth in Greek capital market listings and IPOs from 1880 to the Second World War in the Athens Stock Exchange†

The establishment and growth of the Greek stock market were coincident with development episodes, financial upheavals, and geographic expansions of the countrys economy over the period 1880–1940. This article explores the growth of the Athens Stock Exchange through new listings and initial public offerings (IPOs) in the late nineteenth and early twentieth centuries. We examine changes in exchange governance and listing requirements. On a theme not addressed before, we find that simple listings were far more numerous than actual IPOs. IPOs in Greece remained unregulated throughout the period. Their under-pricing became pronounced in the later parts of the period, especially the 1920s. The study presents data on ‘quasi-IPOs’ (that is, capital increases shortly after listing) and shows that they offer a more accurate assessment of the demand for the financing of listing firms in an emerging market. Robust evidence is presented to show that as the Exchange developed it also underwent a change in character, becoming more oriented to the domestic market and catering to smaller firms in domestic manufacturing in the post-First World War era that marked the end of early globalization.