Investor Protection and the Value Effects of Bank Merger Announcements in Europe and the US

Investor protection regimes have been shown to partly explain why the same type of corporate event may attract different investor reactions across countries. We compare the value effects of large bank merger announcements in Europe and the US and find an inverse relationship between the level of investor protection prevalent in the target country and abnormal returns that bidders realize during the announcement period. Accordingly, bidding banks realize higher returns when targeting low protection economies (most European economies) than bidders targeting institutions which operate under a high investor protection regime (the US). We argue that bidding bank shareholders need to be compensated for an increased risk of expropriation by insiders which they face in a low protection environment where takeover markets are illiquid and there are high private benefits of control

The Risk Implications of Insurance Securitization: The Case of Catastrophe Bonds

Catastrophe (Cat) bonds are insurance securitization vehicles which are supposed to transfer catastrophe-related underwriting risk from issuers to capital markets. This paper addresses key, unanswered questions concerning Cat bonds and offers the following results. First, our findings show firms that issue Cat bonds exhibit less risky underwriting portfolios with less exposure to catastrophe risks and overall less need to hedge catastrophe risk. These results show that the access to the market for insurance securitization is easiest for firms with less risky portfolios. Second, firms that issue Cat bonds are found to experience a reduction in their default risk relative to non-issuing firms and our results, therefore, demonstrate that Cat bonds provide effective catastrophe hedging for issuing firms. Third, firms with less catastrophe exposure, increase their catastrophe exposure following an issue. Therefore, our paper cautions that the ability to hedge catastrophe risk causes some firms to seek additional catastrophe risk

CEO Turnover in Large Banks: Does Tail Risk Matter?

Using a unique international dataset, we show that the CEOs of large banks exhibit an increased probability of forced turnover when their organizations are more exposed to idiosyncratic tail risks. The importance of idiosyncratic tail risk in CEO dismissals is strengthened when there is more competition in the banking industry and when stakeholders have more to lose in the case of distress. Overall, we document that the exposure to idiosyncratic tail risk offers valuable signals to bank boards on the quality of the choices made by CEOs and these signals are different from those provided by accounting and market measures of bank performance and by idiosyncratic volatility. In contrast, systematic tail risk is usually filtered out from the firing decision, only becoming important for forced CEO turnovers in the presence of a major variation in the costs that the exposure to this risk generates for shareholders and the organization

Partnership, ownership and control: the impact of corporate governance on employment relations

Prevailing patterns of dispersed share ownership and rules of corporate governance for UK listed companies appear to constrain the ability of managers to make credible, long-term commitments to employees of the kind needed to foster effective labour-management partnerships. We present case study evidence which suggests that such partnerships can nevertheless emerge where product market conditions and the regulatory environment favour a stakeholder orientation. Proactive and mature partnerships may also be sustained where the board takes a strategic approach to mediating between the claims of different stakeholder groups, institutional investors are prepared to take a long-term view of their holdings, and strong and independent trade unions are in a position to facilitate organisational change

Evolution in Board Chair-CEO Relationships: A Negotiated Order Perspective

The relationship between chairs and chief executive officers (CEOs) has been largely neglected in research on nonprofit governance. Yet, a growing body of research on corporate governance in the private and public sectors suggests that this relationship is crucial both to the effective functioning of the board and the leadership of the organization. Much of the research on chair–CEO relationships has used cross-sectional research designs ignoring the fact that these relationships will evolve over time. This article responds to some of these challenges. It presents the results from longitudinal research examining the relationship between the chair and chief executive in a nonprofit organization. It shows how this relationship is “negotiated” and develops over time in response to contextual changes

A panel analysis of UK industrial company failure

We examine the failure determinants for large quoted UK industrials using a panel data set comprising 539 firms observed over the period 1988-93. The empirical design employs data from company accounts and is based on Chamberlain’s conditional binomial logit model, which allows for unobservable, firm-specific, time-invariant factors associated with failure risk. We find a noticeable degree of heterogeneity across the sample companies. Our panel results show that, after controlling for unobservables, lower liquidity measured by the quick assets ratio, slower turnover proxied by the ratio of debtors turnover, and profitability were linked to the higher risk of insolvency in the analysis period. The findings appear to support the proposition that the current cash-flow considerations, rather than the future prospects of the firm, determined company failures over the 1990s recession

Proteomic Basis of the Antibody Response to Monkeypox Virus Infection Examined in Cynomolgus Macaques and a Comparison to Human Smallpox Vaccination

Monkeypox is a zoonotic viral disease that occurs primarily in Central and West Africa. A recent outbreak in the United States heightened public health concerns for susceptible human populations. Vaccinating with vaccinia virus to prevent smallpox is also effective for monkeypox due to a high degree of sequence conservation. Yet, the identity of antigens within the monkeypox virus proteome contributing to immune responses has not been described in detail. We compared antibody responses to monkeypox virus infection and human smallpox vaccination by using a protein microarray covering 92–95% (166–192 proteins) of representative proteomes from monkeypox viral clades of Central and West Africa, including 92% coverage (250 proteins) of the vaccinia virus proteome as a reference orthopox vaccine. All viral gene clones were verified by sequencing and purified recombinant proteins were used to construct the microarray. Serum IgG of cynomolgus macaques that recovered from monkeypox recognized at least 23 separate proteins within the orthopox proteome, while only 14 of these proteins were recognized by IgG from vaccinated humans. There were 12 of 14 antigens detected by sera of human vaccinees that were also recognized by IgG from convalescent macaques. The greatest level of IgG binding for macaques occurred with the structural proteins F13L and A33R, and the membrane scaffold protein D13L. Significant IgM responses directed towards A44R, F13L and A33R of monkeypox virus were detected before onset of clinical symptoms in macaques. Thus, antibodies from vaccination recognized a small number of proteins shared with pathogenic virus strains, while recovery from infection also involved humoral responses to antigens uniquely recognized within the monkeypox virus proteome

Stranded research? Leading finance journals are silent on climate change

Finance research has shaped the modern financial system, influencing investors and market participants directly through research findings and indirectly through teaching and training programmes. Climate change presents major risks to the global financial system as well as new opportunities for investors. Is climate finance an important topic in finance research? We systematically analyse the content of 20,725 articles published in the leading 21 finance journals between January 1998 and June 2015. We find that only 12 articles (0.06%) are related in some way to climate finance. The three elite finance journals (Journal of Finance, Journal of Financial Economics and Review of Financial Studies) did not publish a single article related to climate finance over the 17.5-year period. We repeat our analysis across a sample of 29 elite business journals spanning accounting, economics, management, marketing and operations research, as well as finance. We find a similar dearth of published climate finance research. We consider four possible explanations for this failure of top finance and business journals to engage with climate finance as a research topic. These include methodological constraints and editorial policies. We conclude by arguing why it is critical for climate-related research to be given greater attention and prominence in finance journals

Binary choice models for external auditors decisions in Asian banks

Summarization: The present study investigates the efficiency of four classification techniques, namely discriminant analysis, logit analysis, UTADIS multicriteria decision aid, and nearest neighbours, in the development of classification models that could assist auditors during the examination of Asian commercial banks. To develop the auditing models and examine their classification ability, the dataset is split into two distinct samples. The training sample consists of 1,701 unqualified financial statements and 146 ones that received a qualified opinion over the period 1996–2001. The models are tested in a holdout sample of 527 unqualified financial statements and 52 ones that received a qualified opinion over the period 2002–2004. The results show that the developed auditing models can discriminate between financial statements that should receive qualified opinions from the ones that should receive unqualified opinions with an out-of-sample accuracy around 60%. The highest classification accuracy is achieved by UTADIS, followed by logit analysis, nearest neighbours and discriminant analysis. Both financial variables and the environment in which banks operate appear to be important factors.Presented on: Operational Research, An International Journa

The governance of co-operatives and mutual associations: a paradox perspective

This paper presents a new theoretical framework for understanding the governance of co-operative and mutual organisations. The theoretical literature on the governance of co-operatives is relatively undeveloped in comparison with that on corporate governance. The paper briefly reviews some of the main theoretical perspectives on corporate governance and discusses how they can be usefully extended to throw light on the governance of co-operatives and mutuals. However, taken individually these different theories are rather one dimensional, only illuminating a particular aspect of the board's role. This has lead to calls for a new conceptual framework that can help integrate the insights of these different theories. The paper argues that a paradox perspective offers a promising way forward. Contrasting the different theoretical perspectives highlights some of the important paradoxes, ambiguities and tensions that boards face