Steven L. Jones

Corporate value and ownership structure in the post-takeover period: what role do institutional investors play

Several recent papers show that dissident institutions have more influence with management when the level of institutional ownership in the target firm is high. This paper investigates whether increased institutional ownership and institutional ownership concentration reduce agency costs and thus increase corporate value. We find that corporate value is positively related to institutional ownership but negatively related to institutional ownership concentration. This implies that the linkage between corporate value and institutional ownership is driven by momentum trading and supports the view that the bulk of institutional investors remain passive in regards to monitoring. Whether the relaxation of restrictions on institutional communication and ownership (by individual institutions) would facilitate more efficient managerial oversight remains a debatable point.

The Distribution of Stock Returns Implied in Their Options at the Turn-of-the-Year: A Test of Seasonal Volatility

The authors find that, for a sample of call options on stocks with low prior returns, the implied volatilities increase as the year-end approaches. However, there is no increase in the volatilities implied from put options on the same stocks over the same dates. This is inconsistent with a hypothesis that attributes the seasonal in stock returns to an increase in systematic risk. The results are consistent with price pressure from portfolio rebalancing at the turn-of-the-year. The implications are that the option market anticipates the return seasonal, but it survives in the stock market due to transaction costs. Copyright 1997 by University of Chicago Press.

Internet auctions as a means of issuing financial securities: the case of the OpenIPO

Purpose - The purpose of this paper is to analyze the OpenIPO process, vis-a-vis traditional bookbuilding, and evaluate the suitability of the OpenIPO for various types of companies, market conditions, and assets. Design/methodology/approach - This paper develops the pros and cons of the OpenIPO process, vis-a-vis the traditional bookbuilding method, in light of the recent academic literature on securities auctions and the results of the OpenIPOs Hambrecht has conducted, as of mid-2004. Findings - The main advantage of the OpenIPO process is that it precludes many of the abuses recently observed in investment banking; however, it is not well suited for complex businesses that are either difficult to value or far removed from the public eye. Research limitations/implications - Only nine OpenIPOs have been conducted by Hambrecht, or using the Hambrecht method, as of the completion of this paper in mid-2004. Practical implications - The paper foresees the OpenIPO process of Hambrecht as supplementing, rather than supplanting, the traditional bookbuilding method. This could come about through the emergence of the OpenIPO as a more viable alternative to bookbuilding, or possibly through some hybrid type of offering in which individual investors play a larger role in price discovery, via the internet, and shares are allocated through both the internet auction and traditional bookbuilding. Originality/value - Managers considering an initial public offering have a choice between the OpenIPO process of Hambrecht, used in the Google offering, and the traditional bookbuilding process. The choice of the OpenIPO has become more viable not only because of the Google offering, but due to the severe criticism the traditional method has received in recent years for alleged abuses related to the pricing and allocation of shares. This paper assists managers in evaluating this choice IPO offer type while rigorously evaluating the pros and cons of the OpenIPO process and its likely future role in the investment banking industry.

Immediate Reconstruction of Midfacial Defects with Osteofascial and Osteocutaneous Free Flaps following Oncological Anterior Skull Base Surgery

Background: Free tissue transfer is commonly used in head and neck reconstruction to restore both form and function following tumor excision. Although, the use of vascularized bone is widely reported in mandibular reconstruction, there is a paucity of literature on the use of osteocutaneous or osteofascial free flaps in facial reconstruction. Free tissue transfer offers both theoretical and practical advantages despite the morbidity associated with increased operative time and potential flap failure. Methods: Retrospective review of a prospectively collected head and neck reconstruction database. Subsequent case note review. Results: We describe the clinical presentation, reconstructive options, and clinical course of five patients who each underwent free flap reconstruction of an anterior skull base defect using bony tissue to replicate midfacial structures. Two patients had nasal bone reconstruction using osteofascial radial forearm free flap reconstruction. Three patients required osteofascial and osteocutaneous fibula and radial forearm free flaps to reconstruct a combination of nasal and malar defects involving the zygoma, maxilla, and mandibular ramus. There was no flap failure. Conclusions: The transfer of vascularized bony tissue in anterior skull base reconstruction is both safe and practical; “like for like” tissue reconstruction may provide superior cosmetic and functional outcomes.

Implications for Enhanced Portfolio Performance Based on the Information Content of Short Interest

In this paper, we review the mean-variance portfolio theory literature that supports short selling as an active portfolio management tool and the empirical literature that provides evidence of active short sellers having superior information about overpriced securities. What may not be clear is exactly how that information can be detected and analyzed. We, therefore, review the theoretical and empirical literature that investigates the information content of short interest. Finally, we document several methods used by portfolio managers to target short sale candidates.