1,721,084 research outputs found
Signaling safety
No full textContrary to signaling models' central predictions, changes in the level of cash flows do not empirically follow changes in dividends. We use the Campbell (1991) decomposition to construct cash-flow and discount-rate news from returns and find the following: (1) both dividend changes and repurchase announcements signal changes in cash-flow volatility (in opposite directions); (2) larger cash-flow volatility changes come with larger announcement returns; and (3) neither discount-rate news, nor the level of cash-flow news, nor total stock return volatility change following dividend changes. We conclude cash-flow news—and not discount-rate news—drive payout policy, and payout policy conveys information about future cash-flow volatility
Stock price reactions to share repurchase announcements in Germany: Evidence from a tax perspective
Full text linkIn this study we analyse stock price reactions to share buyback announcements from a tax perspective in Germany. To determine the influence of taxes on stock prices on the announcement day of share buybacks two different tax regimes - the corporate imputation system and the classical corporate tax system - are analysed. Taking the shareholder structure into account, we find evidence that the share price reaction on share repurchase announcements was significantly larger under the full imputation system than under the classical corporate tax system with shareholder relief. Furthermore, we find evidence for the substitution hypothesis and the dividend clientele effect: High dividend paying companies have smaller positive price reactions than non-or lower dividend paying companies. --
Ex-dividend Day Stock Price Behavior: The Case of the 1986 Tax Reform Act.
No full textThis paper analyzes the behavior of stock prices around ex-dividend days after the implementation of the 1986 Tax Reform Act that dramatically reduced the difference between the tax treatment of realized long-term capital gains and dividend income in 1987 and completely eliminated the differential in 1988. The author shows that this tax change had no effect on the ex-dividend stock price behavior, which is consistent with the hypothesis that long-term individual investors have no significant effect on ex-day stock prices during this time period. The results indicate that the activity of short-term traders and corporate traders dominates the price determination on the ex-day. Copyright 1991 by American Finance Association.
ESSAYS IN CORPORATE LOBBYING, DIVIDEND POLICY, AND FINANCIAL TECHNOLOGY
No full text157 pagesDo Firms Gain from Lobbying? Evidence from Congressional Committee Assignments: Estimates on firm outcomes from lobbying are difficult to obtain due to a strong selection into lobbying; the average lobbying firm has roughly ten times the assets of the average nonlobbying firm. In order to separate the effect from lobbying, I exploit the quasi-random variation in lobbying induced by Congress members’ assignment to powerful tax writing committees. I find that smaller firms are more likely to lobby if a Congress member from their state or district is assigned to one of these committees. Lobbying by these smaller firms results in significantly higher employment and sales; lobbying by larger firms results in a lower tax rate. Disappearing and Reappearing Dividends (with Roni Michaely): We decompose the decrease (1970s-2000) and subsequent recovery (2000-current) in the percent of dividend-paying firms. Changes in firm characteristics and the proclivity to pay dividends (probability of paying dividends conditional on characteristics) each drive half of the dividend disappearance. By contrast, a higher proclivity to pay dividends drives 82% of the reappearing dividends. The remaining reappearance is driven by a single characteristic: reduced earnings volatility. Newly listed and delisted firms drive these trends, rather than dividend omissions or initiations. Finally, total payout (dividends + repurchases) disappears to a substantially lesser extent than dividends, indicating some substitution between dividends and repurchases. A Classification Framework for Stablecoin Designs (with Kevin Sekniqi and Emin Gun Sirer): Although most people are aware of Bitcoin, especially after its meteoric rise in price at the end of 2017, the vast majority of people choose not to hold or use Bitcoin or similar cryptoassets. Stablecoins promise to bridge fiat currencies with this emerging world of cryptocurrencies. They provide a way for users to take advantage of the benefits of digital currencies, such as ability to transfer assets over the internet, credibly commit to minting schedules, and enable new asset classes, while also partially mitigating their volatility risks. In this paper, we systematically discuss general design, decompose existing stablecoins into various component design elements, explore their strengths and drawbacks, and identify future directions
Secure Computation in the Real World
No full textSecure multiparty computation protocols allow multiple distrustful parties to jointly compute a function of their private data while both ensuring correctness of the results and maintaining maximum privacy. Recent progress in concretely efficient implementations has shown that these once theoretical tools are becoming mature enough to secure a variety of applications from cryptocurrencies and auctions to machine learning and medical diagnosis. However, there is still a gap between the requirements of many real world scenarios and the guarantees and performance offered by generic protocols. In this dissertation, I demonstrate how tailoring secure computation protocols to the requirements of specific applications can allow for efficient solutions that can be deployed today. In particular, I focus and improve upon the scalability and practicality of the following concrete applications: 1. Hardware wallets are small special purpose devices that are used to store the secret keys that allow users to control their cryptocurrency funds. Surprisingly, hardware wallets currently on the market provide little guarantees against an adversarial (malicious) manufacturer (or equivalently a compromised supply chain). This puts user funds at risk. Current solutions either provide vague and ad hoc security guarantees or rely on generic secure computation protocols that are not practical to use. We introduce a formal security model for hardware wallets that adequately captures the capability of an arbitrary adversary and design a concretely efficient solution by constructing a special purpose threshold signature scheme that meets this definition. 2. I investigate how to perform large-scale machine learning training on data held by thousands of mobile phones in a privacy-preserving way. Referred to as federated learning, this scenario presents unique challenges where mobile phones coordinate through a central server and have limited bandwidth and computational resources. Crucially, the situation demands that the computation proceeds to completion even if users drop out anytime due to network or other issues. To allow training models in this distributed scenario without leaking sensitive user data, we design and implement a new efficient Secure Aggregation protocol that provides strong privacy guarantees while less than doubling the communication necessary for training. Google is currently evaluating this scheme in the context of next-word prediction in their Android keyboard app. 3. I look at the more general problem of how to securely compute arithmetic functionalities. These include many tasks such as statistics, machine learning computations, and cryptographic primitives (e.g., threshold ECDSA operations which are useful for cryptocurrencies). While a lot of progress has been made in the context of securely evaluating boolean functions, significant bottlenecks remain for arithmetic functions. We design and implement a new protocol which can evaluate any arithmetic circuit with active security (i.e. secure against parties who can deviate from the protocol arbitrarily). The protocol can be built generically (black-box) using any passive (i.e. secure against an adversary who follows the protocol but tries to extract information from it) instantiation of a simpler building block referred to as the OLE functionality. Furthermore, it requires as little as two times more OLE invocations over what is currently needed by protocols that only achieve passive security. In contrast, previous works have either focused only on passive security or relied on concrete implementations of the OLE functionality (often using not-well-known assumptions). Our experiments demonstrate that for a wide range of applications, our protocol outperforms the state of the art (TinyOLE and Overdrive) while relying on standard assumptions
Corporate Culture In Financial Markets
No full textCorporate culture within financial institutions relates to the extent to which norms and values within promote regulatory objectives to protect investor welfare and promote market integrity. Using hand-collected measures of corporate culture based on U.S. security code violations issued by the Financial Industry Regulatory Authority (FINRA), I examine how corporate culture relates to financial institutions' roles as information intermediaries in capital markets. Analysts employed by financial institutions with weaker corporate cultures produce less accurate forecasts, more strategically biased forecasts, and less informative reports. These findings offer important implications for regulators regarding the role of cultural forces in financial institutions
Ex‐Dividend Day Stock Price Behavior: The Case of the 1986 Tax Reform Act
No full textThis paper analyzes the behavior of stock prices around ex‐dividend days after the implementation of the 1986 Tax Reform Act that dramatically reduced the difference between the tax treatment of realized long‐term capital gains and dividend income in 1987 and completely eliminated the differential in 1988. We show that this tax change had no effect on the ex‐dividend stock price behavior, which is consistent with the hypothesis that long‐term individual investors have no significant effect on ex‐day stock prices during this time period. The results indicate that the activity of short‐term traders and corporate traders dominates the price determination on the ex‐day. 1991 The American Finance Associationlink_to_subscribed_fulltex
Three Essays On Financial Policy Of A Firm
Full text linkThe first chapter of the dissertation analyzes how characteristics of a firm's brand affect financial decisions by using a proprietary database of consumer brand evaluation. It demonstrates that positive consumer attitude alleviates financial frictions by providing more net debt capacity, as measured by higher leverage and lower cash holdings. Brand perception reduces the overall riskiness of a firm, as strong consumer evaluations translate into lower future cash flow volatility, higher Z-scores, and better performance during recession. Creditors favor strong brands by demanding lower yields on corporate public bonds. The results are more pronounced among small firms and non-investment grade bonds, contradicting a number of reverse causality and omitted variables explanations. The second chapter develops a framework that shows how exactly market timing and trade-off forces coexist. The idea is that market timing benefits dominate trade-off costs when firms are close to their target leverage, but become offset by the rebalancing considerations when firms are farther away. Two sets of empirical results support the validity of the framework. First, the sensitivity of equity issuances to past stock performance is the highest among firms close to the target leverage. Second, the long-run performance of equity issuers is also a function of their deviation from target leverage. The lower the leverage of issuing firms is relative to the target, the worse their after-issuance returns are, consistent with higher market timing incentives compared to other issuers. The third chapter studies whether investors value dividend smoothing stocks differently by exploring the implications of dividend smoothing for firms' expected returns and their investor clientele. First, it demonstrates that dividend smoothing is associated with lower average stock returns in both univariate and multivariate settings. Some of this return differential can be attributed to lower risk, captured by return comovement among high (low) smoothing firms. Second, the chapter shows that institutional investors, and specifically, mutual funds, are more likely to hold dividend smoothing stocks. Last, firms that smooth their dividends issue equity more frequently. Together, these results are consistent with the role of dividend smoothing in mitigating the impact of agency conflicts on the cost of capital
Going Beyond Counting First Authors in Author Co-citation Analysis
Full text linkThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
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