Initial Public Offerings and the Firm Location

The firm geographic location matters in IPOs because investors have a strong preference for newly issued local stocks and provide abnormal demand in local offerings. Using equity holdings data for more than 53,000 households, we show the probability to participate to the stock market and the proportion of the equity wealth is abnormally increasing with the volume of the IPOs inside the investor region. Upon nearly the universe of the 167,515 going public and private domestic manufacturing firms, we provide consistent evidence that the isolated private firms have higher probability to go public, larger IPO underpricing cross-sectional average and volatility, and less pronounced long-run under-performance. Similar but opposite evidence holds for the local concentration of the investor wealth. These effects are economically relevant and robust to local delistings, IPO market timing, agglomeration economies, firm location endogeneity, self-selection bias, and information asymmetries, among others. Findings suggest IPO waves have a strong geographic component, highlight that underwriters significantly under-estimate the local demand component thus leaving unexpected money on the table, and support state-contingent but constant investor propensity for risk

A two-period model of signaling with ownership retention

This dissertation is an extension of Leland and Pyle's (1977) signaling model. It introduces the length of the retention period to which the entrepreneur commits in the prospectus as a signal of firm value, in addition to the retention level. The analysis uses concepts of game theory to examine a two-period model where an entrepreneur seeks to issue shares on the market and invest in a productive project that generates outcomes which are publicly announced at the end of the next two periods. The entrepreneur can retain some of her firm's shares and trade them later on the secondary market, after information has been released about the outcomes. The length of the retention period is found to be a signaling mechanism that complements ownership retention. Depending on the information structure of the firm, a longer retention period may reduce or increase the retention level necessary for separation. The model also shows that there are realistic situations in which entrepreneurs prefer to retain a portion of their firm's shares for longer than the minimum retention period imposed by regulations, and others in which she prefers the shortest period possible. The optimal combination of under-diversification and commitment is shown to depend on the information structure and the probability distribution of outcomes of the firm. The empirical implications of the model are tested on the set of firms that made an initial public offering in 1981. Although the results of the tests are generally consistent with the predictions of the model, they are not strong enough to reject the null hypotheses.Arts, Faculty ofVancouver School of EconomicsGraduat

The role and effect of controlling shareholders in corporate governance

This paper examines two potentially contradictory effects of the presence of controlling shareholders. Controlling shareholders have been shown to be beneficial, as they generally have a long-term interest in the firm and are willing and able to monitor the actions of senior managers closely and decrease agency costs between shareholders and management (agency costs of Type I). However, they are also in a position to expropriate the firm’s assets, especially when they are actively involved in management (agency costs of Type II). More specifically, this article reviews how regulatory and legislative bodies have tried to curb the consumption of private benefits by controlling shareholders while preserving the beneficial aspects of their long-term interest and their monitoring role, the effect controlling shareholders on the application and effectiveness of corporate governance best practices as well as on the executive and board member remuneration

Relative accuracy and predictive ability of direct valuation methods, price to aggregate earnings method and a hybrid approach

In this paper, we assess the relative performance of the direct valuation method and industry multiplier models using 41 435 firm-quarter Value Line observations over an 11 year (1990-2000) period. Results from both pricing-error and return-prediction analyses indicate that direct valuation yields lower percentage pricing errors and greater return prediction ability than the forward price to aggregated forecasted earnings multiplier model. However, a simple hybrid combination of these two methods leads to more accurate intrinsic value estimates, compared to either method used in isolation. It would appear that fundamental analysis could benefit from using one approach as a check on the other. Copyright (c) The Authors Journal compilation (c) 2006 AFAANZ.

Amorcer un traitement antipsychotique en schizophrénie : la situation au Québec de 1998 à 2006

Contexte Cet article vise à décrire les facteurs associés à la prescription d’antipsychotiques par un psychiatre plutôt qu’un omnipraticien, la prescription d’un antipsychotique de seconde plutôt que de première génération, la prescription d’une multithérapie d’antipsychotiques et le non-renouvellement de la prescription initiale.Méthodologie Il s’agit d’une étude pharmacoépidémiologique observationnelle avec analyses secondaires d’une banque de données médicoadministratives (RAMQ). Les données disponibles portaient sur un échantillon exhaustif des personnes adultes ayant reçu un diagnostic de schizophrénie et ayant obtenu un antipsychotique couvert par le régime public d’assurance médicaments de 1998 à 2006. Les résultats de régression logistique multiple sont rapportés.Résultats Parmi les 16 225 personnes éligibles, 46,2 % étaient des femmes et 70 % étaient bénéficiaires d’une aide financière. La clientèle des psychiatres était plus jeune et plus atteinte au niveau de la santé mentale. La multithérapie était associée aux hospitalisations pour psychose, au faible statut socio-économique et à un âge entre 35 et 64 ans. Les antipsychotiques de seconde génération ont pris une place importante au cours de la période à l’étude. Le non-renouvellement était associé à l’abus de substances et était moins fréquent suite à une hospitalisation pour trouble mental.Conclusions Malgré les limites liées à l’utilisation de données administratives, l’utilisation d’une banque de données exhaustive provenant autant de médecine générale que de spécialité permet à cette étude de brosser un portrait populationnel pertinent pour connaître la situation réelle du traitement incident de la schizophrénie au Québec de 1998 à 2006, une période caractérisée par l’introduction des antipsychotiques de seconde génération.Objectives To describe factors associated with the following characteristics of the first prescription of an antipsychotic drug treatment (ADT): 1) prescribing physician type (psychiatrist vs. general practitioner); 2) second-generation vs. first-generation antipsychotic drug; 3) in conjunction with at least one additional antipsychotic drug (multitherapy); 4) never renewed by the patient.Methods This is a pharmacoepidemiologic study using administrative data from the Régie de l’assurance maladie du Québec (RAMQ), the public healthcare insurer in Quebec, Canada. Available data sample was exhaustive for adults with a diagnosis of schizophrenia who received an ADT under RAMQ drug coverage from 1998 to 2006. We report multiple logistic regression results.Results Among 16,225 patients who met inclusion criteria 46.2% were women and 70% were beneficiaries of governmental financial assistance. Patients who had their ADT prescribed by psychiatrists tended to be younger and were more burdened by their mental illness. Multitherapy was associated with hospitalization with a psychotic disorder as main diagnosis, lower socioeconomic status, and age between 35 and 64. Second-generation antipsychotic use became progressively more prominent during the period under study. Antipsychotic non renewal was correlated with substance use disorders and was less likely to happen following hospitalization with a psychiatric main diagnosis. Conclusions Although this study is subject to the intrinsic limitations of secondary analysis of administrative data, the database available for study was exhaustive within the Quebec healthcare system and included data from both general practice and specialized care, which allowed us to draw a relevant picture of how ADT were initiated for schizophrenia in Quebec, Canada, from 1998 to 2006. This timeframe is especially relevant since the 1990s were marked by the introduction of second-generation antipsychotics in Canada