The impact of the 1995 TSE corporate governance guidelines on the performance of Canadian companies : a simultaneous equation approach

This study is aimed at testing the impact of the 1995 Corporate Governance Guidelines adopted by the TSE on the performance of Canadian firms. This is accomplished by modeling the joint determination of three alternative internal agency control mechanisms: board composition, ownership structure and debt, together with firm performance in a simultaneous equation framework employing three-stage least-squares methodology. We find that the balance of forces has shifted in the post guidelines period to an increasing monitoring role attributed to boards of directors as both their composition and size become significant determinants of firm performance (as measured by Tobin's Q). Furthermore, the test performed on a 5-year pooled sample, three years from the pre-guidelines period and two years from the post-guidelines period, shows that the proposals in the Corporate Governance Guidelines adopted by the TSE in 1995 had a positive impact on the performance of these firms. Incorporating a dummy variable in the board composition equation that takes on a value of one after the adoption of the guidelines and zero before, the results from a 3SLS system confirm that the adoption in 1995 of the Corporate Governance Guidelines is associated with an increase in outside representation on the boards. An interaction variable between the above mentioned dummy and the percentage of outsiders in the firm performance equation confirms that TSE regulation prompted a rise in outsiders on boards, which consequently led to a significant improvement in their role as corporate monitors

Clawback Provisions in Real Estate Investment Trusts

Using a sample of 195 unique real estate investment trusts (REITs), we examine factors related to the adoption of clawback provisions within managerial compensation contracts. In general, we find strong and consistent empirical evidence that clawback provision are directly related to firm size, complexity, leverage, growth options, monitoring incentives, and CEO performance incentives. We also find that clawbacks are associated with enhanced market and accounting performance, with stronger performance relations observed for adoption decisions tied directly to regulatory mandates. In sum, we conclude compensation clawback provisions represent a value-relevant, strategic governance mechanism for REITs

The human side of mergers and acquisitions: a look at the evidence

22 p.This paper surveys the strategy literature on human resources’ role in the process of mergers and acquisitions. Although many studies acknowledge the important role of the “human” side in these major events in the life of a firm, we do not have up to now a comprehensive and encompassing survey of this literature. At the micro level we find consistent results across studies, mainly supporting the idea that M&A are disruptive events in the lives of the employees involved, they lead to increased stress and uncertainty which leads to dysfunctional outcomes. However the evidence is not so clear on whether these observed psychological and behavioral reactions have an impact on performance (at the individual or firm level). From a macro level perspective the hypothesis of a fit between the merging firms seems to have some empirical support, as it is found to have a positive impact on performance across the studies surveyed. The dynamic effects of this fit hypothesis, though, are not well understood yet. The impact and importance of social and formal controls and cultural fit are issues still begging for an explanation

How many days equal a year? A note on the mean-variance model

In portfolio management, the means and variances of stock returns are usually estimated on a daily basis and then converted to longer periods of time. This paper examines the issue of how to convert 1-day means for longer periods and investigates the impacts of this conversion on capital allocation decisions and portfolio performance evaluations

Clawback Provisions In Real Estate Investment Trusts

Using a sample of 195 unique real estate investment trusts (REITs), we examine factors related to the adoption of clawback provisions within managerial compensation contracts. In general, we find strong and consistent empirical evidence that clawback provision are directly related to firm size, complexity, leverage, growth options, monitoring incentives, and CEO performance incentives. We also find that clawbacks are associated with enhanced market and accounting performance, with stronger performance relations observed for adoption decisions tied directly to regulatory mandates. In sum, we conclude compensation clawback provisions represent a value-relevant, strategic governance mechanism for REITs

Further Evidence on the Capital Structure of REITs Forthcoming in Real Estate Economics 2011 Further Evidence on the Capital Structure of REITs Further Evidence on the Capital Structure of REITs

Abstract This study examines the determinants of REIT capital structure decisions from 1990-2008. Using a broad sample of 2,409 firm-year observations, we find that asset tangibility is positively related to leverage, while profitability and market-to-book ratios are negatively related. Additional evidence suggests firm debt capacity varies systematically with the unique operating and financing mechanisms employed by REITs. Finally, our results provide further insight into competing capital structure theories, generally supporting empirical predictions derived from the market timing and trade-off theories, while failing to support pecking order theory predictions