Issues of social justice underlie the clamour for greater gender balance in top-management. The present study reveals that pursuit of such social justice is also value-enhancing in relation to the longer-run performance of initial public offerings stocks, especially where female board members are unencumbered by family-connection with other directors. This study examines the economic benefits of board gender diversity for state- and privately controlled firms in the Hong Kong IPO market. Gender board diversity is much less common in state-run IPO (...) firms. Within the subset of privately controlled IPO firms, distinction exists between entities that accommodate family-connected board officers and those that do not. Specifically, this study focuses on family-ties between board members. This issue allows for finer-grained assessment of family influence on firm performance. Stronger post-listing stock, return-on-assets and sales-on-assets performance arise in privately controlled firms without family-connected board members and in state-run entities. Gender diversity thus serves as a positive, but only when female director presence is untrammelled by family associations between directors. However, there is little evidence of a link between female board representation and IPO underpricing. Relative to state-backed issuers, privately controlled firm boards accommodate more women, younger officers and a broader mix of nationalities, but appear more-inclined to unify CEO and chair positions. Board duality, the fraction of independent directors and directors’ age and nationality exhibit little relation with initial and aftermarket stock returns. In prescriptive terms, minority investors gain from the inclusion of female directors, especially when IPO firm directors are unencumbered by family-affiliation with other board members. Results therefore add to the clarion of calls for greater female board presence. (shrink)

Managers conduct open market repurchases for many different reasons, including to distribute excess cash. However, the most widely discussed explanation for OMRs is the “signaling theory:” that managers announce OMRs to signal that the stock is underpriced. The first purpose of this paper is to show that the signaling theory is theoretically problematic—in part because it assumes managers deliberately sacrifice their own wealth to increase that of shareholders—as well as inconsistent with much of the empirical evidence. The second purpose of (...) the paper is to put forward an alternative explanation for managers’ use of OMRs: the managerial-opportunism theory. This theory, which assumes that managers seek to maximize their own wealth, predicts that managers announce OMRs both when the stock is underpriced and when it is not. When the stock is underpriced, managers may announce and conduct an OMR to transfer value to themselves and other remaining shareholders. When managers wish to sell a large portion of their shares, they announce an OMR to boost the stock price before selling their shares. The paper shows that managerial opportunism is not only a more plausible motive for OMRs than is signaling, it is also more consistent with the empirical data. The paper concludes by describing some testable predictions of the theory. (shrink)

We examine initial public offering (IPO) holdings in the mutual funds of four large investment banks and five large non-investment banks during the period 1997 through 2002. Investment banks hold IPOs with different characteristics than IPOs held by noninvestment banks, and they also tend to hold IPOs in different types of funds than non-investment banks. We classify holdings as to whether the IPO lies outside or inside the fund's objective. Investment banks hold IPOs outside the fund objective in 27% of (...) the fund/IPO pairs while non-investment banks hold outside their objective in just 5.4% of fund/IPO pairs. We see significant differences in IPO underpricing for both groups as well. For example, when non-investment banks hold IPOs outside a large capitalization fund objective, they select IPOs with 52% higher underpricing as measured by first-day returns. (shrink)

This paper uses an innovative way to screen stocks and analyzes the relationship between corporate environmental responsibility and long-run stock returns. By our definition, an environmentally responsible (green) company gives no environmental concern and shows environmental strength(s). Using 20 years’ data of 1992–2011, we find evidence that environmentally responsible company outperforms, in the 4th to 7th year after the screening year. An equal-weighted environmentally responsible portfolio earned an annual four-factor alpha of 4.06 % in the 4th year, 3.00 % above (...) industry benchmarks, and 3.87 % above characteristic benchmarks. The results are robust to alternative portfolio weighting methodologies, controlling for firm characteristics, and the removal of outliers. Testing using industry-adjusted Tobin’s Q, we find consistent evidence that environmental strength creates firm value. We argue that environmental responsibility is an intangible asset, likely to be undervalued by the market, especially in the long horizon, thereby causing environmentally responsible companies to exhibit long-horizon excess returns. (shrink)

Publication date: 28 April 2021 Source: International Letters of Social and Humanistic Sciences Vol. 90 Author: Sarah Kinya Mburugu Listing of a company in the securities exchange has been observed to be followed by underpricing in the first day and long term period of underperformance in terms of pricing in the subsequent days. Consequently, there has been a considerable curiosity from stakeholders, investors and academics to comprehend the assessments of why companies go public and the issues surrounding the short (...) and long-run performance of newly issued equities. Underpricing is necessary to induce uninformed investors to participate in IPO offering when faced with adverse selection from informed investors. This often leads to first day price not reflecting a fair value of the IPO. The objective of the study was to determine the long-run performance IPOs and effects in the Kenyan stock market for the period 2007-2014. A descriptive survey research design was employed in the study. The population of the study encompassed all the 64 listed companies at the NSE as at 2016. The study employed a non-probability purposive sampling technique. Data collected for this study was secondary data obtained from NSE website, NSE price lists and the Central Bank of Kenya website for the period 2007 to 2014. The data obtained was analyzed using Statistical Package for Social Science. Mean Average Buy and Hold Returns, Abnormal Returns and Cumulative Abnormal Returns were used to calculate the performance of the stocks. T-statistic for CAR was computed to the test for its significance. T-test was conducted at 95% confidence level to find if MABHR and CAR were statistically significant after IPOs announcement. (shrink)

With cach successive generation of management, managers have been faced with different goals dictated by that current society''s needs and mores. For example, in the early 1900''s, industrial growth was essential to society''s needs; at the same time, such growth would not be hampered by social costs that were perceived as unimportant. Those social costs viewed as unimportant have not been properly factored into the cost of goods produced. Therefore, the products sold were underpriced, failing to reflect their true social (...) costs. Additionally, this miscalculation or misappropriation of such costs caused a misallocation of resources, such as the manufacturing of asbestos without regard to future health costs. Finally, the payment for the miscalculation of these social costs is due: present day management is now forced to provide a viable solution for payment of debts incurred by previous management. The most notable examples of such misappropriation are provided in the Manville, A. H. Robins and Continental cases. Unfortunately, the choice is often limited to a Chapter 11 bankruptcy.This article views the solution of Chapter 11 bankruptcy from three perspectives: legal, managerial, and moral. The legal review consists of the law and the current jurisprudence. Particularly emphasized are cases dealing with the discharge of executory contracts, tort claims and debts both secured and unsecured. Additionally, an examination of implementing a Chapter 11 bankruptcy plan from the viewpoint of current management is made. Closely associated with both the legal and managerial aspects of this issue is the moral facet of using bankruptcy as a management tool. The broad question is: how prevalent and how reasonable is it for management to declare Chapter 11 bankruptcy to manipulate the corporation''s creditors, employees, and stockholders to achieve management''s desired end. (shrink)