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Volume 44, No. 4, November 2009

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EFA Keynote Speech: "Corporate Governance and Corporate Social Responsiblitiy: What Do Investors Care About? What Should Investors Car About?"

  Laura T. Starks

 

Earnings-Based Bonus Compensation

   António Câmara

 

Excess Control, Corporate Governance and Implied Cost of Equity: International Evidence

   Omrane Guedhami and Dev Mishra

 

Director Compensation and the Reliability of Accounting Information

   Anwar Boumosieh

 

The Intertemporal Risk-Return Relation in the Stock Market

   Xiaquan Jiang and Bong Soo Lee

 

Out of Sample Predictability in International Equity Markets: A Model Selection Approach

   Xiaojing Su, Tao Wang, and Jian Yang

 

Fractional Integration in Commodity Futures Returns

   Joon Elder and Hyun J. Jin

 

The Corporate Acquisition Ploicy of Financially Distressed Firms

   Dror Parnes

 

The Forward Exchange Rate Bias Puzzle Is Persistent: Evidence from Stochastic and Nonparametric cointegration Tests

   Raj Aggarwal, Brian M. Lucey, and Sunil K. Mohanty

 

Personal Bankruptcy Law and New Business Formation

   Bill Francis, Iftekhar Hasan, and Haizhi Wang

Starks, Laura T., 2009, "EFA Keynote Speech: "Corporate Governance and Corporate Social Responsiblitiy: What Do Investors Care About? What Should Investors Car About?" The Financial Review, vol. 44., no. 4, 461-468.

This article is the keynote address from the Eastern Finance Association meeting in New Orleans in March 2007 with updated references and examples.  In this keynote address, I discuss what we can learn about institutional investors' views on corporate governance and corpoate social responsibility from research and surveys.

Câmara, António, 2009, " Earnings-Based Bonus Compensation," The Financial Review, vol. 44, no. 4, 469-488.

  

This article studies the cost of contingent earnings-based bonus compensation.  We assume that the firm has normal and abnormal earnings.  The normal earnings result from normal firm activities and are modeled as an arithmetic Brownian motion.  The abnormal earnings result from surprising activities (e.g., introduction of an unexpected new product, and unexpected strike) and are modeled as a compound Poisson process where the earnings jump sizes have a normal distribution.  We investigate, in a simple general equilibrium model, how normal and abnormal earnings affect the cost of contingent bonus compensation to the firm.

Guedhami, O. and D. Mishra, 2009, " Excess Control, Corporate Governance and Implied Cost of Equity: International Evidence," The Financial Review, vol. 44, no. 4, 489-524.

We investigate whether the separation between ownership and control rights can be costly to controlling shareholders and firms in terms of capital-raising costs.  Using estimates of the cost of equity capital implied by analyst earnings forecasts and growth rate for a sample of 1,207 firms from nine Asian and 13 Western European countries, we find strong, robust evidence that the cost of equity is increasing in excess control, while controlling for other firm-level characteristics.  This core finding persists after controlling for legal institutions variables.

 

 

 

 

 

 

 

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