We present a dynamic model of an IPO market in which firms go public to raise capital for investment. The original shareholders have inside information with respect to the quality of their firm’s investment opportunities, and they decide whether to go public, how much capital to raise and invest, and how to price the IPO. Outside investors are of one of two types: some investors know and unders...

Institutional investors, primarily pension funds, drive global financial markets. The result is investors vulnerable to the risks companies face in global consumer and capital markets. Though some market risks are inevitable, others, such as reputation risk, can be mitigated through increased corporate social and environmental standards and the increased transparency that such higher standards ...

The development of mobile applications has mushroomed in local and foreign industries. This provides a tremendous opportunity for developers. For technopreneur developer, the capital to run the business is one of the biggest problems despite the fact that they may have great competence in the field. The fact that the business has big potential market in Indonesia has invited investors from loca...

We present a multiperiod agency model of stock-based executive compensation in a speculative stock market, where investors have heterogeneous beliefs and stock prices may deviate from underlying fundamentals and include a speculative option component. This component arises from the option to sell the stock in the future to potentially overoptimistic investors. We show that optimal compensation ...

We examine analysts’ motives to issue long-term earning growth (LTG) forecasts. We find that analysts are more likely to issue LTG forecasts when their incentive to please managers is strong. In addition, analysts are more likely to choose firms that they are more optimistic about for LTG coverage. We find mixed evidence regarding whether analysts issue LTG forecasts to signal their ability or ...

On December 15, 2010, after 11 months of legal standoff, the Swiss corporation Novartis finally closed a deal to acquire the remaining shares of eye-care company Alcon from minority shareholders. Why did it take almost a year? The acquisition had become a relatedparty transaction after Novartis purchased a 25% stake from then majority shareholder Nestlé and nominated some of its own directors t...

Business sustainability in all dimensions of economic, governance, social, ethical, and environmental (EGSEE) performance is gaining acceptance as many global stock exchanges either encourage or require their listed companies to issue sustainability reports and investors worldwide demand sustainability performance information. More than 8, 000 companies worldwide are disclosing various EGSEE di...

When consumption betas of stocks are computed using year-over-year consumption growth based upon the fourth quarter, the consumption-based asset pricing model (CCAPM) explains the cross-section of stock returns as well as the Fama and French (1993) three-factor model. The CCAPM's performance deteriorates substantially when consumption growth is measured based upon other quarters. For the CCAPM ...

The optimal bond-stock mix is examined in light of an apparent inconsistency between the Tobin Separation Theorem and the advice of popular investment advisors which has been pointed out by Canner et al (1997). It is shown that the apparent inconsistency is largely explicable in terms of the hedging demands of optimising long-term investors in an environment in which the investment opportunity ...

This paper uses evidence from a dataset of 27 European IPOs to analyse how investors bid and the factors that influence their allocations. We also make use of a unique ranking of investor quality, associated with the likelihood of flipping the IPO. We find that investors perceived to be long-term holders of the stock are consistently favored in allocation and in out-turn profits. In contrast to...