The Market for Takeover Defenses

This paper develops a market-based approach to takeover defenses. In this framework, a firm’s decision to go public without defenses is considered a decision to produce an unshielded target. The paper shows that the voluminous classical literature on takeover defenses, which argues either that takeover defenses are good for all firms or that they are bad for all firms, actually ignores both supply and demand considerations. Recent empirical findings that revealed that IPO-stage firms diverge in antitakeover practices led to the rapid development of a new branch in the literature. This branch emphasizes that firms diverge in defense-adopting costs due to the heterogeneous characteristics of the “producers,” meaning that the literature now acknowledges supply-side considerations. The literature still overlooks, however, demand-side considerations, which are highlighted in this paper. The paper argues that bidder propensity to pay is related to the number of firms that go public without defenses. As a result of takeover diversion from shielded targets to unshielded targets, the fewer the number of firms that produce unshielded targets, the higher the price that the market will pay for unshielded firms. Finally, the existing supply-side explanations merge with the novel demand-side argument to form a full picture of the market for takeover defenses, which serves to explain the findings of recent empirical studies that have been so puzzling to corporate scholarship up until now

Reverse Monitoring: On the Hidden Role of Employee Stock Ownership Plans

This paper develops a new understanding of equity-based compensation schemes, such as employee stock option plans. Current literature views such schemes as a measure aimed at motivating the recipient employees to work harder for the firm. Under such a view, this remuneration method either complements or substitutes other measures used to monitor the performance of the recipient employees. In contrast, this paper proposes that the recipient employee be viewed as the potential monitor of other employees and that stock options (or similar types of compensation) motivate her to fulfill this task. This view has many applications and can shed light on persistent puzzles, including why there is sweeping use of stock ownership plans by many new economy firms. No junior employee at Microsoft or Intel can improve the value of her heavyweight employer to such a degree that it will make it worthwhile for her to work harder once stock options are offered. Nevertheless, given the sensitivity of the knowledge industry to leakage of its intellectual property, all employees can add much to the company\u27s value by standing on guard against such leakage. If technology is both a vulnerable and critical asset for the organization, option recipients will be alert in protecting against infringement. Since not much effort needs to be exerted to monitor their peers and supervisors to prevent this significant harm, incentive compensations can easily motivate employees to perform their monitoring task. Many other applications of this new view that cannot be explained by the current literature are discussed in the paper

Comparisons among Firms: (When) Do They Justify Mandatory Disclosure?

Comparisons among firms play a major role in securities analysis. This essay asks if this fact justifies the mandatory nature of securities regulation. Once a firm approaches the public securities markets, federal securities regulations compel it to disclose financial information to the public. A seminal theory argues that firms would not otherwise commit to maintain optimal disclosure levels, since a disclosing firm bears all disclosure costs but does not gain all disclosure benefits. This paper examines the robustness of this argument in relation to disclosure benefits which arise from comparisons among firms. Financial data of peer firms allows shareholders to measure and monitor the relative performance of their own firm. The ability to makes such comparisons is a benefit that each disclosing firm provides to its peers; it may have great social value but allegedly no private value to the disclosing party which bears the full cost of such disclosure. One might, therefore, call to address this market failure with a mandatory disclosure requirement. Interestingly, while the above description might justify a mandatory disclosure requirement for private firms (a requirement which does not exist in practice), it does not automatically justify mandated disclosure by public firms. If comparison benefits accrue only after the public shareholders or securities analysts have had a chance to review the data of all the relevant firms (which is the case for all public firms), then each individual firm cannot enjoy comparison benefits without exposing its own statements. In other words, if one firm must make its financials public in order to incur comparative disclosure benefits -- which is normally the case with public firms since their public investors process financial data outside the boundaries of the firm -- then public firms would tend to disclose information regardless of the fact that such information benefits their peers. This voluntary mutual disclosure phenomenon, which helps firms capture comparative disclosure benefits, mitigates the fear that disclosure might be sub-optimally produced without the intervention of the regulator. Nevertheless, if a material piece of information confers significant comparative benefits when reviewed by corporate insiders and not by the public shareholders, then one cannot count on voluntary mutual disclosure to occur, and the mandatory federal intervention might be in order

Gatekeeper Incentive Compensation

A massive wave of corporate fraud at the beginning of the twenty first century exposed the failure of corporate gatekeepers. The Sarbanes-Oxley legislation accordingly targeted gatekeepers, primarily auditors, by imposing strict regulation and enhanced independence guidelines. This legislative remedy is of disputable benefit while its costs have been huge. This paper maintains that a certain type of auditor incentive compensation could work better than regulation. Under such an alternative scheme, auditors would defer a portion of the payment they receive from the client firm, which would be used to purchase shares in the client after their tenure as auditor has ended. Instead of making them simply independent, this compensation structure would cause auditors to fend against inflated share prices. This type of auditor compensation could, therefore, serve to counterbalance recent trends in executive compensation that cause managers to overstate earnings. Modern accounting standards that augment management\u27s scope of discretion make the suggested type of auditor compensation even more beneficial. Thus, the paper advocates calls for the Securities and Exchange Commission to promulgate a safe harbor that would facilitate such compensation schemes, which current independence guidelines do not allow

SPACtivism

In this Essay, we propose a modified version of the SPAC designed to allow the public to participate in the world of corporate activism. Unlike existing SPACs, our version is designed for investments in public companies in order to change their course of action, not in private companies in order to make them go public, and overcomes many of the problems that pertain conventional SPACs. At present, direct investment in activism is reserved to affluent individuals and other professional investors of activist hedge funds. The public at large is barred from directly entering the activist arena. The current model comes at a triple price: first, critics argue that activism in its current form is slanted toward short-termed engagements, possibly neglecting potential profitable long-term engagements. Second, although loud, the current scope of activism is relatively modest. Activist engagements only reach 2.3 percent of the public companies traded on U.S. markets. Third, retail investors cannot directly share in the excess profits stemming from activism. The introduction of the Activist SPAC can change this reality. The Activist SPAC would allow interested retail investors to invest money in a corporation dedicated to Activist engagement. To ensure the success of the enterprise, the future target of the investment would not be made public at the time of the investment. Once the Activist SPAC buys a toehold position in the target and announce its plan, the investors would receive an opportunity to get their money back, should they choose to do so, or go along with the activist plan. As we show in the Essay, setting up Activist SPACs can transform the character of corporate activism by rendering it more attuned to long-term objectives, and is especially fit to pursue ESG goals. It would also give the public a voice in the future world of activism and allow it to share in its benefits directly as well as increase the scope of corporate activism. To enable these advantages, the current regulatory framework must change. We present a blueprint for the introduction of Activist SPACs, analyze the requisite key parameters and explore the legal and regulatory steps required to ensure their success. Innovation is the lifeblood of financial markets. The Activist SPAC may well mark their future path

Private Benefits of Control, Antitakeover Defenses and the Perils of Federal Intervention

This paper develops a theory that sheds light on recent evidence according to which high quality issuers are the ones that adopt defenses in the IPO, and keys this behavior to the existing literature on private benefits of control. The paper analyzes the decision of the pre IPO owners concerning takeover defenses. This decision is shown to be influenced by the quality of the venture that goes public. High quality in firms that go public often means an abundance of growth and business opportunities, rather than sizeable existing assets. In such ventures managers are unlikely to consume much harmful control benefits, but they nevertheless derive a great deal of non-monetary control benefits from their stint in the promising entity. Consequently, takeover defenses help the pre-IPO owners to preserve their non-monetary control benefits without causing too much harm to the value of the enterprise. The argument of this paper is consistent with recent empirical evidence, which indicates that takeover defenses appear in the IPO in instances where defenses are highly beneficial for managers by shielding their positions in risky environments and that better underwriters serves the issuers that adopt defenses. The paper also shows that even if the conventional assumption that takeover defenses are harmful to shareholders is taken as given, then the inimical influence of takeover defenses is hard to trace, since the issuers that adopt them are those which shareholders should prefer in the first place. Finding a matching sample for the adopting issuers may therefore be an impossible task. The discussion also considers possible extensions that result from complications of asymmetric information, and finally concludes with the perils of federal intervention

Vernacular museum: communal bonding and ritual memory transfer among displaced communities

Eclectically curated and largely ignored by the mainstream museum sector, vernacular museums sit at the interstices between the nostalgic and the future-oriented, the private and the public, the personal and the communal. Eluding the danger of becoming trivialised or commercialised, they serve as powerful conduits of memory, which strengthen communal bonds in the face of the ‘flattening’ effects of globalisation. The museum this paper deals with, a vernacular museum in Vanjärvi in southern Finland, differs from the dominant type of the house museum, which celebrates masculinity and social elites. Rather, it aligns itself with the small amateur museums of everyday life called by Angela Jannelli Wild Museums (2012), by analogy with Lévi-Strauss’ concept of ‘pensée sauvage’. The paper argues that, despite the present-day flurry of technologies of remembering and lavishly funded memory institutions, there is no doubt that the seemingly ‘ephemeral’ institutions such as the vernacular museum, dependent so much on performance, oral storytelling, living bodies and intimate interaction, nevertheless play an important role in maintaining and invigorating memory communities

Optimasi Portofolio Resiko Menggunakan Model Markowitz MVO Dikaitkan dengan Keterbatasan Manusia dalam Memprediksi Masa Depan dalam Perspektif Al-Qur`an

Risk portfolio on modern finance has become increasingly technical, requiring the use of sophisticated mathematical tools in both research and practice. Since companies cannot insure themselves completely against risk, as human incompetence in predicting the future precisely that written in Al-Quran surah Luqman verse 34, they have to manage it to yield an optimal portfolio. The objective here is to minimize the variance among all portfolios, or alternatively, to maximize expected return among all portfolios that has at least a certain expected return. Furthermore, this study focuses on optimizing risk portfolio so called Markowitz MVO (Mean-Variance Optimization). Some theoretical frameworks for analysis are arithmetic mean, geometric mean, variance, covariance, linear programming, and quadratic programming. Moreover, finding a minimum variance portfolio produces a convex quadratic programming, that is minimizing the objective function ðð¥with constraintsð ð 𥠥 ðandð´ð¥ = ð. The outcome of this research is the solution of optimal risk portofolio in some investments that could be finished smoothly using MATLAB R2007b software together with its graphic analysis

Differential cross section measurements for the production of a W boson in association with jets in proton–proton collisions at √s = 7 TeV

Measurements are reported of differential cross sections for the production of a W boson, which decays into a muon and a neutrino, in association with jets, as a function of several variables, including the transverse momenta (pT) and pseudorapidities of the four leading jets, the scalar sum of jet transverse momenta (HT), and the difference in azimuthal angle between the directions of each jet and the muon. The data sample of pp collisions at a centre-of-mass energy of 7 TeV was collected with the CMS detector at the LHC and corresponds to an integrated luminosity of 5.0 fb[superscript −1]. The measured cross sections are compared to predictions from Monte Carlo generators, MadGraph + pythia and sherpa, and to next-to-leading-order calculations from BlackHat + sherpa. The differential cross sections are found to be in agreement with the predictions, apart from the pT distributions of the leading jets at high pT values, the distributions of the HT at high-HT and low jet multiplicity, and the distribution of the difference in azimuthal angle between the leading jet and the muon at low values.United States. Dept. of EnergyNational Science Foundation (U.S.)Alfred P. Sloan Foundatio

Penilaian Kinerja Keuangan Koperasi di Kabupaten Pelalawan

This paper describe development and financial performance of cooperative in District Pelalawan among 2007 - 2008. Studies on primary and secondary cooperative in 12 sub-districts. Method in this stady use performance measuring of productivity, efficiency, growth, liquidity, and solvability of cooperative. Productivity of cooperative in Pelalawan was highly but efficiency still low. Profit and income were highly, even liquidity of cooperative very high, and solvability was good