Causes and Effects of Corporate Refocusing Programs

We provide evidence that corporate refocusing are motivated, in part, by the desire to enhance shareholder value, but that it is often necessary for agency problems to be reduced before managers will begin divestiture programs. Diversified firms that refocus have significantly greater value losses from their diversification policies than multisegment firms that do not refocus. Major events of market discipline usually must occur, however, before managers attempt to undo suboptimal diversification programs, whereas the same events occur only rarely for a matched sample of nonrefocusing firms during the same time frame. Refocusing firms have a high frequency of CEO changes, and also often have new outside blockholders, unsuccessful takeover bids, and signs of financial distress in the period preceding their divestitures. Finally, we find that the cumulative abnormal returns over all of the refocusing-related announcements of a refocusing firm average 7.3%, and that these abnormal returns are significantly related to the amount of value that was being destroyed by the refocuser’s diversification policy

Causes and Effects of Corporate Refocusing Programs

We provide evidence that corporate refocusing are motivated, in part, by the desire to enhance shareholder value, but that it is often necessary for agency problems to be reduced before managers will begin divestiture programs. Diversified firms that refocus have significantly greater value losses from their diversification policies than multisegment firms that do not refocus. Major events of market discipline usually must occur, however, before managers attempt to undo suboptimal diversification programs, whereas the same events occur only rarely for a matched sample of nonrefocusing firms during the same time frame. Refocusing firms have a high frequency of CEO changes, and also often have new outside blockholders, unsuccessful takeover bids, and signs of financial distress in the period preceding their divestitures. Finally, we find that the cumulative abnormal returns over all of the refocusing-related announcements of a refocusing firm average 7.3%, and that these abnormal returns are significantly related to the amount of value that was being destroyed by the refocuser’s diversification policy

Managerial Entrenchment and Capital Structure Decisions

We study associations between managerial entrenchment and firms’ capital structures, with results generally suggesting that entrenched CEOs seek to avoid debt. In a cross-sectional analysis, we find that leverage levels are lower when CEOs do not face pressure from either ownership and compensation incentives or active monitoring. In an analysis of leverage changes, we find that leverage increases in the aftermath of entrenchment-reducing shocks to managerial security, including unsuccessful tender offers, involuntary CEO replacements, and the addition to the board of major stockholders

Managerial Entrenchment and Capital Structure Decisions

We test the prediction that leverage is inversely associated with managerial entrenchment. We examine leverage levels and year-to-year changes for several hundred firms between 1984 and 1991. We find that leverage levels are positively related to CEO stock ownership and CEO stock option holdings, and negatively related to CEO tenure and board of directors size. While generally consistent with less entrenched CEOs pursuing more leverage, these results are subject to alternative interpretations. We therefore analyze year-to-year changes in leverage around exogenous shocks to corporate governance variables. We find that leverage increases after unsuccessful tender offers and “forced” CEO replacements, and under certain conditions after the arrival of major stockholders. These relations have greater magnitude when the sample is restricted to low-leverage firms, even when 80% of firms are defined as low-leverage. The results are consistent with decreases in entrenchment leading to increases in leverage, and with the majority of firms having less debt than optimal

Managerial Entrenchment and Capital Structure Decisions

We test the prediction that leverage is inversely associated with managerial entrenchment. We examine leverage levels and year-to-year changes for several hundred firms between 1984 and 1991. We find that leverage levels are positively related to CEO stock ownership and CEO stock option holdings, and negatively related to CEO tenure and board of directors size. While generally consistent with less entrenched CEOs pursuing more leverage, these results are subject to alternative interpretations. We therefore analyze year-to-year changes in leverage around exogenous shocks to corporate governance variables. We find that leverage increases after unsuccessful tender offers and “forced” CEO replacements, and under certain conditions after the arrival of major stockholders. These relations have greater magnitude when the sample is restricted to low-leverage firms, even when 80% of firms are defined as low-leverage. The results are consistent with decreases in entrenchment leading to increases in leverage, and with the majority of firms having less debt than optimal

Ariel - Volume 4 Number 6

Editors David A. Jacoby Eugenia Miller Tom Williams Associate Editors Paul Bialas Terry Burt Michael Leo Gail Tenikat Editor Emeritus and Business Manager Richard J. Bonnano Movie Editor Robert Breckenridge Staff Richard Blutstein Mary F. Buechler J.D. Kanofsky Rocket Weber David Maye

‘Priming’ exercise and O2 uptake kinetics during treadmill running

We tested the hypothesis that priming exercise would speed kinetics during treadmill running. Eight subjects completed a square-wave protocol, involving two bouts of treadmill running at 70% of the difference between the running speeds at lactate threshold (LT) and max, separated by 6-min of walking at 4 km h−1, on two occasions. Oxygen uptake was measured breath-by-breath and subsequently modelled using non-linear regression techniques. Heart rate and blood lactate concentration were significantly elevated prior to the second exercise bout compared to the first. However, kinetics was not significantly different between the first and second exercise bouts (mean ± S.D., phase II time constant, Bout 1: 16 ± 3 s vs. Bout 2: 16 ± 4 s; slow component amplitude, Bout 1: 0.24 ± 0.10 L min−1vs. Bout 2: 0.20 ± 0.12 L min−1; mean response time, Bout 1: 34 ± 4 s vs. Bout 2: 34 ± 6 s; P > 0.05 for all comparisons). These results indicate that, contrary to previous findings with other exercise modalities, priming exercise does not alter kinetics during high-intensity treadmill running, at least in physically active young subjects. We speculate that the relatively fast kinetics and the relatively small slow component in the control (‘un-primed’) condition negated any enhancement of kinetics by priming exercise in this exercise modality

The homotopy theory of simplicial props

The category of (colored) props is an enhancement of the category of colored operads, and thus of the category of small categories. In this paper, the second in a series on "higher props," we show that the category of all small colored simplicial props admits a cofibrantly generated model category structure. With this model structure, the forgetful functor from props to operads is a right Quillen functor.Comment: Final version, to appear in Israel J. Mat

Constraints and entropy in a model of network evolution

Barab´asi-Albert’s ‘Scale Free’ model is the starting point for much of the accepted theory of the evolution of real world communication networks. Careful comparison of the theory with a wide range of real world networks, however, indicates that the model is in some cases, only a rough approximation to the dynamical evolution of real networks. In particular, the exponent γ of the power law distribution of degree is predicted by the model to be exactly 3, whereas in a number of real world networks it has values between 1.2 and 2.9. In addition, the degree distributions of real networks exhibit cut offs at high node degree, which indicates the existence of maximal node degrees for these networks. In this paper we propose a simple extension to the ‘Scale Free’ model, which offers better agreement with the experimental data. This improvement is satisfying, but the model still does not explain why the attachment probabilities should favor high degree nodes, or indeed how constraints arrive in non-physical networks. Using recent advances in the analysis of the entropy of graphs at the node level we propose a first principles derivation for the ‘Scale Free’ and ‘constraints’ model from thermodynamic principles, and demonstrate that both preferential attachment and constraints could arise as a natural consequence of the second law of thermodynamics

Group actions on Segal operads

We give a Quillen equivalence between model structures for simplicial operads, described via the theory of operads, and Segal operads, thought of as certain reduced dendroidal spaces. We then extend this result to give an Quillen equivalence between the model structures for simplicial operads equipped with a group action and the corresponding Segal operads.Comment: Revised version. Accepted to Isr J Mat