Wallace N. Davidson

The Impact of Announcements of Corporate Illegalities on Shareholder Returns

The article presents information on a study which determined the reaction of the stock market to a public announcement that a corporation has been caught allegedly committing a crime. The author de...

The Effect of CEO Succession on Stockholder Wealth in Large Firms Following the Death of the Predecessor

Using event time methodology, this study explores, over the 17-year period of 1966 to 1982, the effect on the price of common stock in large publicly held corporations of Chief Executive Officer (CEO) succession following the death of each CEOs predecessor. The market was found to react positively to the announcement of internal succession, but external succession was not associated with significant abnormal returns. The findings support the importance of examining the organizational conditions surrounding succession events.

Effect of Strike Activity on Firm Value

The article examines the stock markets reaction to labor management problems and employee strikes. A discussion is presented about various categories of strike costs and cumulative abnormal return...

The impact of a captive insurance company's formation on a firm's value after the carnation case

Abstract One of the primary reasons previously cited for forming a captive insurance company is tax advantages based on premium deductibility. The IRS ruling in the Carnation Company case was the first time that investors experienced a decisive legal action signaling the possibility that premiums paid to captives might not be tax deductible to the parent company. The purpose of this paper is to determine if the investors perceived lack of tax deductibility of premiums, based upon the Carnation case, has an impact upon the parent firms value at time of captive formation. The results indicate that the market placed a high value on the ability of the parent company to deduct for tax purposes the insurance premium paid to its captive. Before the Carnation case there was a positive reaction by the market to captive formation whereas after the Carnation case, there was a negative reaction.