AGENCY COSTS AND THE SIZE DISCOUNT: EVIDENCE FROM ACQUISITIONS

Many scholars have found a negative relationship between a firm’s size and its value, as measured by Tobin’s q. This result is called the size discount. There are hypotheses about why the size discount exists, but none have been rigorously empirically tested. This paper argues that the size discount is created by the inability of shareholders to minimize agency costs in larger companies. Statistical tests suggest that the size discount only appears in large firms with managers that impose excessive agency costs upon their shareholders. Empiricists who use Tobin’s q to proxy for growth opportunities may need a different proxy.Agency costs; size discount; acquisitions; corporate governance.

An Experimental Examination of Competitor-Based Price Matching Guarantees

We use experimental methods to demonstrate the anti-competitive potential of price matching guarantees in both symmetric and asymmetric cost duopolies. Our findings establish that when costs are symmetric, price-matching guarantees significantly increase market prices. In markets with cost asymmetries, guaranteed prices remain high relative to prices without the use of guarantees, but the overall ability of price guarantees to act as a collusion facilitating device becomes contingent on the relative cost difference. Lesser use of guarantees, combined with lower average prices and slower convergence to the collusive level, suggest that the mere presence of cost asymmetries may curtail collusive behavior.Price Matching; Price Guarantees; Laboratory; Collusion

Closing the Teacher Quality Gap in Philadelphia: New Hope and Old Hurdles

This study of teacher staffing issues in the School District of Philadelphia, the third in a series, outlines the degree to which the district has succeeded in upgrading teachers' professional credentials, recruiting and retaining them, and equitably distributing experienced and credentialed teachers across all types of schools. Since the passage of NCLB and the state's takeover of the district in 2001, the district has succeeded in improving the certification rates of its teachers, especially new teachers, and in drastically cutting the number of emergency-certified teachers and classroom vacancies. It has also improved new teacher retention and has modernized and decentralized its hiring process. At the same time, it has not been able to change the pattern of having the least qualified teachers in schools serving the highest percentages of poor and minority students nor its poor long-term rate of teacher retention. The district is also challenged to speed up and simplify its hiring and school placement process and to hire more minority teachers

Agency costs and the size discount: evidence from acquisitions

Many scholars have found a negative relationship between a firm’s size and its value, as measured by Tobin’s q. This result is called the size discount. There are hypotheses about why the size discount exists, but none have been rigorously empirically tested. This paper argues that the size discount is created by the inability of shareholders to minimize agency costs in larger companies. Statistical tests suggest that the size discount only appears in large firms with managers that impose excessive agency costs upon their shareholders. Empiricists who use Tobin’s q to proxy for growth opportunities may need a different proxy.Muchos académicos han encontrado una relación negativa entre el tamaño de la firma y su valor, calculada según el q de Tobin. El resultado se llama el descuento por tamaño. Existen múltiples hipótesis que tratan de explicar por qué el descuen-to por tamaño se produce, pero ninguna ha sido empíricamente examinada con rigurosidad. Este estudio argumenta que el descuento por tamaño se crea debido a la inhabilidad de los accionistas para minimizar los costos de agencia en las grandes empresas. Las pruebas estadísticas sugieren que el descuento por tamaño solo aparece en las empresas grandes con gerentes que imponen costos de agencia excesivos a los accionistas. Los empíricos que usan el q de Tobin para representar factores de oportunidades de crecimiento necesitarán un factor diferente

Sword and Buckler in Masorah Figurata: Traces of Early Illuminated Fight Books in the Micrography of Bible, BnF, MS héb. 9

Two manuscripts produced in early fourteenth-century German lands reflect similar iconography of the fighting with Sword and Buckler; one is the well-known fencing manual, Leeds, Royal Armouries, MS I. 33, produced ca. 1320, and the other is a Hebrew manuscript of the Bible, Paris, Bibliothèque nationale de France héb. 9, made in 1304, that will be the focus of this article. This preliminary research intends to demonstrate how Hebrew illuminated manuscripts can shed more light on the study of fight books iconography

Markets: Gift Cards

The Mobil Oil Company introduced the first retail gift card that recorded value on a magnetic strip in 1995. In under a decade, such gift cards replaced apparel as the number one item sold during the Christmas season. This study will discuss the reasons for the strong surge in the gift card market. It will then consider the value of gift cards as an intermediate option between two alternatives: purchasing a physical gift, which could possibly be returned or exchanged, versus giving cash. Empirical data on the resale price of gift cards from an Internet auction website provide information on the value that recipients place on gift cards suggesting that the difference between the cost of a gift card to the giver and its value to the recipient is substantial, although perhaps not quite as large as the parallel gap involved in physical gifts

Translational cooling and storage of protonated proteins in an ion trap at subkelvin temperatures

Gas-phase multiply charged proteins have been sympathetically cooled to translational temperatures below 1 K by Coulomb interaction with laser-cooled barium ions in a linear ion trap. In one case, an ensemble of 53 cytochrome c molecules (mass ~ 12390 amu, charge +17 e) was cooled by ~ 160 laser-cooled barium ions to less than 0.75 K. Storage times of more than 20 minutes have been observed and could easily be extended to more than an hour. The technique is applicable to a wide variety of complex molecules.Comment: same version as published in Phys. Rev.

The drivers of merger waves

A reduced form hazard rate model of merger timing, estimated using a uniquely constructed 1990–2004 UK panel data set, shows clear correlations between the observed wave-like pattern of merger activity and both exogenous and endogenous drivers with firm characteristics acting as intermediaries

Evaluation of cosmic ray rejection algorithms on single-shot exposures

To maximise data output from single-shot astronomical images, the rejection of cosmic rays is important. We present the results of a benchmark trial comparing various cosmic ray rejection algorithms. The procedures assess relative performances and characteristics of the processes in cosmic ray detection, rates of false detections of true objects and the quality of image cleaning and reconstruction. The cosmic ray rejection algorithms developed by Rhoads (2000), van Dokkum (2001), Pych (2004) and the IRAF task xzap by Dickinson are tested using both simulated and real data. It is found that detection efficiency is independent of the density of cosmic rays in an image, being more strongly affected by the density of real objects in the field. As expected, spurious detections and alterations to real data in the cleaning process are also significantly increased by high object densities. We find the Rhoads' linear filtering method to produce the best performance in detection of cosmic ray events, however, the popular van Dokkum algorithm exhibits the highest overall performance in terms of detection and cleaning.Comment: 12 pages, 4 figures, accepted for publication in PAS

How do Acquirers Choose between Mergers and Tender Offers?

Tender offers provide the advantage of substantially faster completion times than mergers. However, a tender offer signals to the target higher demand for its shares and raises its reservation price. In equilibrium, bidders tradeoff speed and cost. Consistent with this theory, we show that deals in more competitive environments and deals with fewer external impediments on execution are more likely to be structured as tender offers. Tender offers also require higher premiums than mergers. Finally, the rivals of the bidding firm realize significantly lower announcement returns and subsequent operating performance in tender offers than in mergers