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Failure of stock prices to discipline managers in a rational expectations economy

Article Abstract:

Investment managers frequently make incorrect decisions, based on faulty knowledge of investor decision rules, how these decisions are made, and the consequences for the stock market. The stock market may reinforce these decisions by generating inappropriate prices. The stock market generates these prices based on investor decisions which are evidently unknown to investment managers. Managers are then punished through secondary market mechanisms such as managerial labor markets, mergers, takeovers, the financial press, and education. The widely held belief that investment managers' investment in their own organizations induce them to maximize investment decisions does not hold true.

Investments, Accounting, Portfolio management, Investment analysis, Securities analysis

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Earnings expectations and capital restructuring: the case of equity-for-debt-swaps

Article Abstract:

Research examines whether contemporaneous changes in investors' earnings expectations are related to the security price reaction around equity-for-debt swaps. Swaps do not imply changes in investment policies, have no impact on current cash flows, and have only a negligible impact on future cash flows. Investment policies cannot be the cause of security price changes around the swap announcement date. Equity-for-debt swaps provide a setting for examining the information effects that go along with leverage decreasing transactions.

Research, Stockholders, Beliefs, opinions and attitudes, Debt equity conversion

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Estimating joint preference: a sub-sampling approach

Article Abstract:

The application of the hierarchical Bayes theorem for the analysis of group choice, based on the sampling of data imputed from a survey, is described.

United States, Data Processing, Usage, Bayesian statistical decision theory, Bayesian analysis, Electronic data processing

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