Executive Incentive Schemes in Initial Public Offerings: The Effects of Multiple-Agency Conflicts and Corporate Governance

Combining a behavioral agency perspective with research on multiple-agency conflicts, this article examines factors affecting the implementation of equity-based incentive schemes in initial public offerings (IPOs). With a unique sample of U.K. IPO companies between the years 1998 and 2002, it shows that conditional (performance-related) incentive schemes are negatively associated with share ownership and board power of the IPO’s founding directors. However, the retained ownership of venture capital firms is positively associated with the probability of conditional incentive schemes. Board independence weakly effects on the toughness of executive compensation. The article’s interesting findings suggest a number of avenues for a future analysis of the governance development process in threshold firms

Zero forcing sets and minimum rank of graphs

The minimum rank of a simple graph G is defined to be the smallest possible rank over all symmetric realmatrices whose ijth entry (for i /= j ) is nonzero whenever {i, j } is an edge in G and is zero otherwise. Thispaper introduces a new graph parameter, Z(G), that is the minimum size of a zero forcing set of verticesand uses it to bound the minimum rank for numerous families of graphs, often enabling computation of theminimum rank

Wealth Effects of Diversification and Financial Deal Structuring: Evidence from REIT Property Portfolio Acquisitions

This study examines the strategic characteristics and shareholder wealth effects of a popular vehicle for Real Estate Investment Trust growth in the 1990s: the acquisition of a portfolio of properties from a single seller. We examine a sample of 209 REIT portfolio acquisitions during 1995-2001. We observe a wide variety of financing strategies and find an array of different categories of sellers. Contrary to results reported in real estate transactions of this sort in the past, we find that announcement-period shareholder returns are significantly positive in the aggregate. We present evidence that excess returns to acquirers result from (1) wealth benefits received when companies reconfirm their geographical focus in the acquisition, (2) positive information conveyed by the use of project-specific private debt and (3) a positive signal sent to the market when transactions are financed by stock privately placed with financial institutions. Copyright 2003 by the American Real Estate and Urban Economics Association