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This thesis examines responses to the problem of stock market short-termism ('SMST'). SMST is defined as investors preferring short-term financial returns over potentially more profitable longer-term investment opportunities. Such short-termism may result in serious real-world consequences. Company executives appear to respond to short-term pressures in ways that jeopardize the long-term sustainability of listed companies negatively impacting investors and other stakeholders including employees, customers and the community at large. This thesis provides an original contribution to the academic literature via an in-depth examination of all significant regulatory and financial industry efforts meant to reform SMST in major capital markets after the global financial crisis of 2007-2009. I hypothesize that the extensive discussion of the SMST issue has generated substantial reforms. Based on an analysis of the implemented reforms, I reveal that the anticipated surge of SMST reform has not occurred. I then explore why the widespread SMST discussion has not resulted in greater reform efforts. This examination reveals the complex nature of the SMST problem and the evidentiary issues inherent in viably identifying and measuring the harms of SMST. However, I determine that there is probable cause for concern justifying SMST reform measures. Further, I conclude that SMST issues arise because investors are biased towards short-term returns when calculating risk. This bias is evident in share pricing, meaning that share prices are not a reliable indicator of fundamental corporate value. Based on this conclusion, an original dual pathway for SMST reform is proposed. This dual pathway indicates that SMST reform measures must either: (1) reduce the actual or perceived excessive discounting of future returns by investors (i.e. make share prices better reflective of long-term value); or (2) cut-off the transmission mechanisms of SMST into the listed company (i.e. sever the link between share prices and corporate decision-making). Assessing the reforms against this dual pathway reveals that few of the reforms are conceptually effective. Of the few reforms that are conceptually effective, most are relatively 'light' touch. A 'light' touch approach may not be problematic, however, as such measures are easier to implement than 'hard' law. In the case of regulatory reforms, a 'light' touch approach provides scope for flexibility to minimize the many potential harms associated with 'hard' law measures. Consequently, this thesis concludes that SMST reform is more likely to occur if reformers pursue a 'lighter' touch approach meant to reduce excessive discounting of future returns and 'nudge' capital markets away from their harmful short-termism focus.

Corporate Governance (CG) nowadays is on the agenda of most developed and developing countries, including Jordan, and is receiving considerable attention in the business world as well as in the area of academic research, which is an indication of its importance for business development and society as a whole. The knowledge base about CG in developing countries appears to be limited, but it is growing in size and importance. This study therefore aims to investigate current CG practices and barriers to the development of good CG practices in firms. In order to accomplish the research objectives, a mixed research methodology was adopted. The findings of the study contribute to knowledge by providing empirical data to test and extend the theory of CG. The results suggest that most big and old firms are applying best practice of good CG. Regarding factors inhibiting the practice of effective CG, the results indicate that weakness of the legal environment for firms and lack of knowledge of BODs about CG principles are the most important factors. The empirical results find that constitution, compliance and conscience will affect firm’s performance positively. Separation between the position of CEO and Chairman, the existence of independent NEDs, the use of board subcommittees and a strong disclosure regime also help firms to improve performance. On the basis of the empirical results, the study recommends that the government needs to reform the relevant legislation. These suggestions may strengthen the internal governance of firms, thereby increasing performance and maximise shareholders’ wealth.

As a former colony of the UK, Kenya inherited its current regulatory framework of directors from the UK. Since the regulatory framework was inherited, it has not been modified in any way to reflect the circumstances of the country. This thesis assesses the suitability of the current regulatory framework of directors to Kenya by examining the extent to which the regulation of directors facilitates commercial activity and enables delivery of benefits to companies. This is assessed by analysing whether: • The rules properly regulate the key relationship between directors and shareholders. • The rules are easy to understand. • Important areas of general law should be codified. • Company directors should have non-statutory guidance to their duties and responsibilities. • Directors are properly appointed; directors have regard for their duties. • Shareholders have adequate means of enforcing liability against miscreant directors. • Self-regulation by directors would be effective. • There are enough safeguards to regulate directors of parastatals.1 • The current disqualification regime in Kenya is effective. This thesis demonstrates that the Kenyan regulatory framework relating to directors is weak, outdated, and a morass of complexity which causes much uncertainty. This thesis establishes: the objectives of commercial laws still exist from colonial times and, thus, do not conform with the present day's commercial activities; the power of shareholders to control directors is minimal; the ineffectiveness of local and international regulatory framework of directors has affected the performance of companies; corruption affects the well-being of both corporate entities and the economy of the country; the application of subjective rather than objective standards to assess the liability of directors is ineffective; the corporate and collective nature of the company makes it difficult for shareholders to enforce liability against errant directors; that parastatals have performed poorly due to inadequate managerial performance of directors; the disqualification regime needs to be more stringent in order to deter miscreant directors. It is the contention of this thesis that reforms of the current regulations are required in order to achieve a framework which is modern, effective, transparent, straightforward and easy to understand. Whilst it seeks to make recommendations for a regulatory framework tailored to local circumstances, it also draws from developments in the UK and other Commonwealth countries, which would facilitate enterprise, fair dealing, accountability, balance the interests of business with those of shareholders and stakeholders, and contribute to the growth of the national economy.

This dissertation focuses on two central capital market transactions, takeovers and initial public offerings (IPOs), from both a theoretical and an empirical point of view. After an introductory chapter, the first two chapters analyse how minority shareholders are affected by a change in take-over regulation (introduction of the mandatory bid rule) in Germany in 1995. The last chapter focuses on the pricing and timing of going-public transactions. Chapter 2 focuses on the absolute wealth effect of the mandatory bid rule and formalises the trade-off minority shareholders of corporate raiders face with respect to the adoption of a mandatory tender offer after a shift in control. Under plausible assumptions about the distribution of security and control benefits, minority shareholders of acquirers profit from the adoption of the mandatory bid rule. A subsequent empirical study supports this hypothesis by measuring the stock price effects after the acceptance of the German Takeover Code. Chapter 3 uses a dataset of German dual-class shares during 1988-1997 to study how the change of corporate governance rules affects the price differential between voting and non-voting stock. First, the chapter discusses how mechanisms to separate control from cash-flow rights relate to the value of control. Second, the chapter analyses how minority voting and non-voting shareholders participate in transfers of corporate control under the alternative regulatory structures pre- and post- 1995. By providing an analysis of sequential going-public decisions. Chapter 4 outlines conditions under which the likelihood of a second IPO increases after a first firm has gone public ('hot issue markets'). Two effects can trigger the rise of hot issue markets in a setting with asymmetric and costly information about both firm quality and industry prospects: risk-induced selling pressure and informational free-riding on the industry news conveyed by a first IPO. Finally, the model offers an explanation for the empirical finding that hot issue markets exhibit a higher degree of underpricing than cold issue markets.

Over the last three decades, executive compensation has attracted considerable media attention worldwide and has become a significant issue in corporate governance debates among academic and business communities. Specifically, due to corporate collapses and scandals in the early 2000s as well as the global financial crisis of 2008, managerial remuneration has been subjected to much criticism in recent years. Regulators and activist shareholders around the world have advocated that shareholders have a greater say (vote) on executive pay and greater influence in the boardroom to restrain managerial power and rent extraction. Therefore, Say-on-Pay (SoP) legislation has been enacted in several countries including the United Kingdom, the United States, France, Germany, Japan, Canada, Brazil, China, Russia, India, Belgium, Spain, Sweden, Switzerland, the Netherlands, Finland, Denmark, Norway, Italy, South Africa, Israel, and Slovenia. Australia also has introduced SoP regulation, namely the ‘two-strikes’ rule in 2011 after a decade of growing concerns with the ‘fat cat’ pay and rewards for failure. Australia’s ‘two-strikes’ rule is viewed as a unique and innovative governance tool in that it empowers minority shareholders to remove a board of directors if a listed company receives a ‘strike’ against its remuneration report in two consecutive years. However, giving shareholders more power to have a greater direct say over the executive pay have been heavily debated. Proponents of SoP laws argued that allowing shareholders votes on executive compensation would increase accountability and transparency and incentivize boards to fulfil their fiduciary duty and ensure that CEOs are paid for performance, and thereby maximise shareholder value. In contrast, opponents argued that SoP rules would empower shareholders who lack the required expertise and sophistication, and therefore are likely to abuse their voting rights and put unnecessary pressure on the board of directors to adopt compensation contracts that may potentially destroy firm value. Given that Australia has moved away from the CLERP9 advisory vote to Australia’s ‘two-strikes’ rule, an important policy question to address is whether this change has had a positive or negative effect and whether this transition achieved or failed the intended goal to align the interests of management with those of shareholders by improving the relationship between executive compensation and firm performance. Given that the ‘two-strikes’ rule has specific and predictable consequences for Australian firms, this thesis has three objectives. First, this thesis examines the pay-performance relation before and after the introduction of the ‘two-strikes’ rule on ‘non-strike’ firms. Second, this thesis investigates whether the incidence of receiving a ‘first strike’ improves the pay-performance link in the long term. Third, this thesis investigates whether auditors respond to the incidence of receiving the first ‘strike’ by increasing the audit fees, issuing modified audit opinion, or resigning from an audit engagement. Within executive remuneration, CEO pay draws the most attention from the media, politicians, and the public. CEO pay also captures the philosophy and essence of executive remuneration structure. Hence, this thesis focuses on CEO pay. Using a large sample of Australian Securities Exchange (ASX)-listed firms with 9,513 firm-year observations for the period 2004-2016, this thesis estimates both CEO pay-performance sensitivity (PPS) and pay-performance elasticity (PPE). To avoid possible sample selection bias, this thesis employs a propensity score matching (PSM) design to match ‘first strike’ firms (treatment) with ‘non-strike’ (control) firms. As part of robustness tests and to enhance the credibility of the findings, the thesis adopts an alternative control sample. It employs a Matched-Pair Design (MPD) with a three-way matching strategy: financial year, GICS-based economic-sector classification, and firm size. Multivariate panel data estimation and logistic regression techniques were used for analysing data and drawing inferences. Findings in relation to the first research question suggest that, among the ‘nonstrike’ firms, the pay-performance relation was positive and statistically significant before the enactment of the ‘two-strikes’ rule in 2011. Specifically, CEO wealth of Australian firms increased by $51 for every $1000 increase in the shareholder value. With respect to pay-performance elasticity for Australian firms, CEO remuneration increased by 8% for each 10% increase in shareholder value. However, the relationship was reversed after the introduction of the ‘two-strikes’ rule. Specifically, CEOs of the Australian firms experienced pay cuts of about $12 for each $1,000 increase in shareholder value post-2011. With respect to pay-performance elasticity, CEO pay decreased by 0.78% for each 10% increase in shareholder value during the 2012-2016 period. The results for both sensitivity and elasticity support the interference hypothesis that the implementation of the ‘two-strikes’ rule with the threat of removing the boards in a very public way may have put unnecessary pressure on Australian boards to punish their CEOs more severely than they deserved. The reversal of the pay-performance link post-2011 can be explained as the following. There is no collective definitive view of the shareholders about the remuneration report until the annual general meeting takes place. A ‘first strike’ itself can bring a firm under negative spotlight. Further, it can be viewed as a reprimand of the board’s poor corporate governance practice. A ‘first strike’ can suggest the presence of high agency costs in the firm signalling other potential problems to shareholders, lenders, and auditors. Regulators might also take interest in the firm to have a closer scrutiny of its governance practice. All things considered; most firms listed on the ASX might have taken a pre-emptive measure of avoiding a ‘first strike’ by significantly reducing CEO compensation while improving firm performance. This could create a negative relation between CEO pay and firm performance in the ASX-listed firms after the implementation of the ‘two-strikes’ rule (2012-2016). Findings regarding the second research question suggest that, unlike the ‘nonstrike’ firms, the estimated sensitivity of CEO compensation of the ‘first strike’ firms with respect to shareholder wealth following the ‘first strike’ were all negative and significant. The sum of the shareholder wealth change coefficients implies that the wealth of CEOs of the ‘first strike’ firms decreased by about $15 whenever shareholder wealth increased by $1,000 during 2012-2016. With respect to the elasticity model, the results indicate that for a 10% increase in shareholder wealth, the CEO received pay cuts of about 0.12%. By examining the significance of coefficients on the interactions between the ‘first strike’ and changes in shareholder wealth, this thesis finds evidence that receiving a ‘first strike’ is not significantly associated with pay-performance sensitivity or elasticity in the year of the ‘first strike’. Overall, the results suggest that Australian shareholders may focus more on how much executives are paid (the total of CEO remuneration) rather than how they are paid (the pay-performance link). Furthermore, the results imply that after receiving the ‘first strike’ boards may punish CEOs more severely than they deserve by reducing future remuneration even though shareholder wealth is increasing in the long run. Thus, allowing minority shareholders to remove the boards may put public pressure on Australian firms and lead to the unintended consequence of decreasing the total CEO compensation, rather than improving the alignment of executive pay and firm performance in the long run. Further, the results suggest that shareholders may not have the sophistication necessary to use their new voting power and to target firms with weaker pay-performance relation. Thus, it might be argued that the dissatisfaction of minority shareholders may not reflect specific concerns about poor remuneration design but rather other issues such as capital raising, declining share price, and poor or unexpected financial results. Findings with regard to the third research question suggest that relative to ‘nonstrike’ firms, auditors were more likely to increase audit fees, resign or be removed from the office in the year following the ‘first strike’. Furthermore, the thesis finds that firms receiving a ‘first strike’ tend to have higher incidence of modified audit opinions than control firms. This result suggests that the incidence of a ‘first strike’ may signal clients’ higher business and/or audit risk to the auditors. In sum, the findings support the notion that the public scrutiny associated with campaigns by shareholder activists heightens auditors’ concerns about reputational damage and litigation risk. The results also suggest that the external auditors should use the incidence of a ‘first strike’ as an input in their risk assessments. This thesis contributes to the CEO compensation literature in general and the pay-performance link literature in particular by investigating the pay-performance link in preand post-implementation periods of Australia’s ‘two-strikes’ rule (2005-2011 and 2012-2016, respectively). The findings of the thesis have important policy implications for other countries that are in the process of adopting some form of SoP regulation. The findings are important in informing investors, analysts, and managers that shareholder activism in the form of votes on the remuneration report can have diverse consequences. Moreover, awarding ‘excessive’ power to minority shareholders can lead to unintended consequences. The findings of this thesis would have important implications for boards in terms of taking defensive actions to avoid a ‘first strike’ against remuneration reports. Furthermore, the findings of this study are important for activist shareholders in terms of helping them to vote wisely because such a ‘strike’ could lead to negative effects on the firm in the future. The findings of this thesis would have important implications for auditors in terms of using the ‘first strike’ as an input to their audit risk assessments. Finally, the findings of this thesis provide important insights for the global debate on governance of executive compensation.

Shareholders are important because they provide finance to companies by investing in the share market. Shareholder voting rights are attached to the shares. The rights are defined by a company’s constitution, shareholders agreement, the Corporations Act 2001 (Cth) and ASX Listing Rules. The exercise of the rights is significant for the growth and trustworthiness of capital markets. Previous research has focused on evaluation of the strength of shareholders rights, shareholders activism and shareholders engagement but lacked evaluation of the ways in which shareholders exercised their rights. This thesis addresses this issue. In particular, it explores shareholders economic rights, which are divided into control and decision making rights, and how shareholders exercised these rights by voting on resolutions proposed at Annual General Meetings. The aim of this study was to empirically and legally evaluate shareholders rights in practice in ASX 200 companies during 2014-2018. The research question was: To what extent do shareholders exercise their rights in Australian listed companies, and how and to what extent does shareholders engagement with a listed company impact on corporate decision makings at AGMs? The mixed-method methodology included both empirical quantitative and black-letter law research methodologies. The research included development of a data base of voting behaviour at the AGMs of 122 companies; 3382 AGMs resolutions including 3214 ordinary resolutions 168 special resolution were studied over the period of 5 years. The results showed that on average 64% shareholders exercised control and decision making rights in 2014 which increased by on average 4.0633% in 2018. Moreover, on average around 30% of shareholders have not attended AGMs and have never appointed proxies. The appointment of proxy trend consistently increased since 2014 to 2018 by on average 4.7514%. The attendance of shareholders in person was on average around 2% during 2014-2018. The top 20 shareholders hold on average 77.5865% of voting rights in 2018 which is 3.3634% higher than 2014. Further, on average 9% of top 20 shareholders have never attended AGMs and have never appointed proxies. The blockholders voting power lay between 58% and 63% during study period. The presence of top 20 shareholders and blockholders did not have any significant influence on the voting turnouts at AGMs. The financial benefits from the issue of dividends did not have any impact on shareholders engagement and AGMs voting turnout. The relationships of shareholders engagement with election and re-election of directors were statistically significant with shareholders voting against resolutions, but the results confirm that shareholders cannot hold directors accountable at AGMs through their voting powers. The current study supports the application of stewardship theory instead of agency theory at AGMs of ASX 200. The policy recommendations were developed on the basis of empirical confirmations established from this study. In Australia, shareholders are powerful in theory and powerless in practice.

This dissertation consists of three essays. The first essay focuses on idiosyncratic volatility as a primary arbitrage cost for short sellers. Previous studies document (i) negative abnormal returns for high relative short interest (RSI) stocks, and (ii) positive abnormal returns for low RSI stocks. We examine whether these market inefficiencies can be explained by arbitrage limitations, especially firms' idiosyncratic risk. Consistent with limits to arbitrage hypothesis, we document an abnormal return of -1.74% per month for high RSI stocks (>=95th percentile) with high idiosyncratic volatility. However, for similar level of high RSI, abnormal returns are economically and statistically insignificant for stocks with low idiosyncratic volatility. For stocks with low RSI, the returns are positively related to idiosyncratic volatility. These results imply that idiosyncratic risk is a potential reason for the inability of arbitrageurs to extract returns from high and low RSI portfolios. The second essay investigates market efficiency in the absence of limits to arbitrage on short selling. Theoretical predictions and empirical results are ambiguous about the effect of short sale constraints on security prices. Since these constraints cannot be eliminated in equity markets, we use trades from futures markets where there is no distinction between short and long positions. With no external constraints on short positions, we document a weekend effect in futures markets which is a result of asymmetric risk between long and short positions around weekends. The premium is higher in periods of high volatility when short sellers are unwilling to accept higher levels of risk. On the other hand, riskiness of long positions does not seem to have a similar impact on prices. The third essay studies investor behaviors that generate mispricing by examining relationship between stock price and future returns. Based on traditional finance theory, valuation should not depend on nominal stock prices. However, recent literature documents that preference of retail investors for low price stocks results in their overvaluation. Motivated by this preference, we re-examine the relationship between stock price and expected return for the entire U.S. stock market. We find that stock price and expected returns are positively related if price is not confounded with size. Results in this paper show that, controlled for size, high price stocks significantly outperform low price stocks by an abnormal 0.40% per month. This return premium is attributed to individual investors' preference for low price stocks. Consistent with costly arbitrage, the return differential between high and low price stocks is highest for the stocks which are difficulty to arbitrage. The results are robust to price cut-off of $5, and in different sub-periods.

Integrity means to act with truth, being honourable, loyal, faithful and trustworthy ad to exhibit “moral excellence and honesty”. The purpose of this research was to provide models of best practice in corporate integrity for public listed companies in Malaysia. This study arose from perceptions that what was reported in corporate governance statements was not always consistent with what was actually happening in the companies. The research is the first of its kind to design an integrity assessment instrument and to assess Corporate Integrity Systems in Malaysian Companies. Specifically, it identified the scope of Corporate Integrity Systems implemented in publicly listed companies, identified appropriate indicators, and verified the reliability of the instrument.

In few areas have legal scholars focused more closely on the sources of law than in the study of corporate governance. Questions of institutional design thus pervade the literature of corporate law. Most prominent among these questions have been ones surrounding the allocation of law-making authority as between federal and state authorities: What is the dynamic by which corporate law will be generated at the state level, absent federal intervention? What is the normative quality of the resulting rules? When might a federal role be advisable, if not essential, in the regulation of public corporations? What form ought any such intervention take, and what distortions might it be expected to introduce into our traditionally state-based regime of corporate law? There has been much debate over these questions, to which the literature of law and economics has contributed mightily. To a striking degree, however, scholars have come to embrace – at least in broad terms – a common view on these questions. In this standard account, sub-national rules of corporate governance are to be preferred. State law – and the dynamic of state competition that arises from it – generates (at least some) efficiency gains, helping to reduce agency costs, as between shareholders and managers. For these and other reasons, the law and economics literature admonishes, the scope of federal law in an optimal regime of corporate governance should be limited. Federal rules may have a role in imposing mandatory disclosure obligations, regulating aspects of the issuance and trading of corporate securities, and in selected other circumstances, but not more generally. In this chapter, I suggest that this account of corporate law, widely accepted as it has become in the law and economics literature, deserves a closer look. As to what might be thought of as its horizontal and vertical axes – the perception of (horizontal) state competition as beneficial for shareholder-managerial relations, and the notion of (vertical) federal preemption as properly limited – the meaning and implications of the conventional account turn out to be more ambiguous. A careful analysis thus highlights critical limitations of each of these claims, and offers a more complex picture of the optimal sources of corporate law. Ultimately, a closer analysis of the horizontal dimension of state-to-state interaction and the vertical dimension of potential federal intervention points us to the same result in institutional design: a more mixed architecture of corporate law-making.

En el mundo de la empresa el beneficio constituye un concepto con muy diversas acepciones y con grandes dificultades, o mejor dicho, con enorme imposibilidad para determinarlo en función de las múltiples premisas que le afectan. Aquí no nos vamos a ocupar de su determinación empresarial, de sus problemas y valoraciones. Vamos más bien a entrar en el papel que juega el beneficio tanto en el ordenamiento económico-social como en las perspectivas económicas y empresariales, así como en sus consideraciones éticas y societarias en los actuales momentos de cambio y de transformación.-----In the business world, it's hard to define profit. It's a very complex concept with different meanings and various conditioning factors. Here we will not take care of business its determination, its problems and values. Because of this complexity in this work we will not approach the definition of the concept. Instead we will focus on the role of the profit in the socioeconomic system (business and economy) and the aftermath of ethics and society at the present time of change and transformation.

primary objectives ofthis thesis are: (i) to review the ongoing practices of corporate governance in six developed and emerging markets that represent a broad and diverse sample that varies in terms of historical, légal, économie and cultural Systems; (ii) to assess comprehensively the effectiveness of corporate governance in a unique developing country, Saudi Arabia; and (iii) to identify whether there are significant différences in the perceptions among the involved four samples (board of directors' members, chief executive officers 'CEOs', audit committee members and shareholders) towards the four mechanisms of corporate governance investigated in this study, namely: shareholders' rights; board of directors; audit committees and internai audit; and disclosure and transparency.

In this thesis it is recognised that marketing has a dual role to satisfy both customer and shareholder objectives. The issue of shareholder value creation of marketing is an important and immediate agenda for marketing executives, management and academics. To date, marketers have not been able to adequately quantify and measure shareholder value creation through marketing assets and marketing expenditure. This has led to a dilution of marketing power and influence in the boardroom with management tending to treat marketing as discretionary expenditure and not as an asset. Academics have responded with conceptual models that relate marketing assets back to shareholder value, generally through cash flow or sales models. The creation of shareholder value through marketing assets and expenditure is then conceptualised and tested empirically. The conceptual model builds on the theory of agency and incomplete markets setting to illustrate the flow effects through marketing assets to shareholder value. The conceptual model also demonstrates that marketing expenditure can have stock and/or flow impacts on shareholder value. Flow effects are indirect effects that are mediated through sales, cash flows, and earnings and can be either temporary or longer term. It is concluded that in listed markets stock prices are the general surrogate for shareholder value, and risk adjusted earnings are the appropriate surrogate in non-listed markets. The thesis then empirically illustrates and tests the relationships between marketing communications expenditure on two data sets representing firms in listed and non-listed settings. The empirical results reveal that marketing expenditure does play an important role in the creation of shareholder value and that stock and flow effects are both present. Knowledge of the various empirical impacts from marketing across firm size, industry and listed and non-listed market settings observed in this thesis should prove highly valuable for marketers and managers. Finally, a conceptual understanding by marketers of the financial metrics that are required to be influenced in order to increase shareholder equity will provide greater clout in negotiations with management and boards of directors.

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This Essay considers the stakeholder debate in the context of the German and Japanese legal systems. Although, nominally, corporations in those countries must operate in the interests of shareholders, in fact nonshareholder constituencies have considerable influence on corporate decision makers. Of equal importance, weak securities markets and ineffective or nonexistent legal protections for shareholders are also important factors in strengthening the position of nonshareholder constituencies and freeing directors to consider their interests. Thus, the stakeholder debate is more of an issue in the United States and Britain, where more shareholder-centic models flourish.

Mergers and acquisitions net only affect the value of merging firms but also generate a positive or negative wealth effect for shareholders of firms involved. The Hubris theory hypothesises that mergers and acquisitions affect the value of the firms as well as shareholder wealth. This theory predicts that as a result of mergers and acquisitions, the value of target firms rises, whilst the value of bidding firms diminishes. Censequently, shareholders of target firms gain a positive wealth effect while shareholders of bidding firms experience a negative wealth effect. Most empirical evidence suggests that shareholders of bidding firms suffer a small loss or sometimes earn a marginal gain while the target shareholders obtain a large gain. However, no previous studies on shareholder wealth effect have investigated whether the differences in abnormal returns are influenced by differences in controlling interest in the target firms. The purpose of the present study is to investigate whether an acquisition of more than 50% and an acquisition of less than 50% generate the same wealth effects for the shareholders of bidding and target firms.

This thesis examines ex-dividend day share price behaviour to determine empirically the estimated value of imputation tax credits in the New Zealand sharemarket. The use of ex-dividend day share price behaviour is due to the underlying premise of the tax-effect hypothesis that share price behaviour on ex-dividend day reflects marginal investors' after-tax value of receiving dividends as opposed to capital gains. Hence a dividend drop-off ratio model is used to determine whether investors have recognised and are receiving the value of imputation tax credits. Some results are inconsistent with the tax-effect hypothesis. However, it is estimated that shareholders do, on average, value tax credits at approximately 60 percent of face value. The value of tax credits should be taken into account when firms are making decisions on investment, capital structure and dividend policy. Establishing the market value of imputation tax credits enables this value to be incorporated into a firm's decision-making process.

"This is the second of two parts of this article. For the first part, see Waggoner, Eliminating the Capital Gains Preference. Part I: The Problems of Inflation, Bunching, and Lock-In, 48 U. Colo. L. Rev. 313 (1977)."

Early last year, Mesa Petroleum Company made a tender offer for shares of Unocal Corporation in an effort to take over Unocal. Unocal responded by using the "lollipop" defense, which is a discriminatory issuer self-tender offer. Unocal's use of this defense resulted in huge economic losses to many of Unocal's small shareholders who were not knowledgeable about the ramifications of their participation or non-participation in the tender offer. The Delaware Supreme Court upheld Unocal's use of this defense as an appropriate exercise of business judgment. A federal district court in California refused to strike down the lollipop under federal law because it was exclusively a state law question. In this Article, Professor Fiflis argues that broad federal legislation is needed to limit possible abuses of the lollipop and similar tender offer defenses.

This study investigates the managerial organization and incentive structures resulting from corporate acquisitions. A multiple-agent model with a linear compensation rule is used to show that the optimal incentive structure is determined by the degree of relatedness of the two firms (e.g., cash flows correlation). In particular, the model implies a horizontal (or lateral) structure for related (expansion) acquisitions and a vertical structure for unrelated (diversification) combinations. Empirical evidence is presented that is consistent with this implication. The linear compensation rule makes it possible to analytically solve for an optimal compensation schedule and obtain the net payoff to shareholders for each organization. The vertical structure is assumed to enable one manager to perfectly monitor another manager which benefits the shareholders, while two agents are assumed to play a Nash game in choosing their optimal effort in the horizontal organization. Optimal contracts are derived from the perspective of the stockholders of the acquiring firm. Generally, a vertical structure is used due to the benefit of perfect monitoring. However, in horizontal combinations, stockholders benefit from competition between the managements of the two firms, and this is possible through a relative performance contract in a horizontal organization structure. We also show that a synergy effect, in the sense of a positive production externality, makes the relative performance contract less effective and the vertical organization a more dominant organizational structure.

Prior studies on the impact of the termination of overfunded defined benefit pension plans on shareholders' wealth have produced conflicting findings. The first study on the stock market reaction to pension plan termination was conducted by Alderson and Chen (1986); this study claimed that shareholders realize significant positive abnormal returns around the termination announcement date. A more recent study, by Moore and Pruitt (1990), disclaimed the findings of Alderson and Chen. Reexamination of these two studies with additional evidence and the use of the appropriate announcement date suggests that termination of pension plans is associated with significant wealth gain to shareholders. This study also analyzes samples from periods prior to and after the imposition in 1986 of a 10 percent excise tax on recaptured excess pension assets. The empirical results suggest that shareholders experience significant positive wealth effects for the pre-tax (1980-85) period and no wealth effects for the post-tax (1986-88) period. The primary purpose of this study is to determine the impact of stock market reaction upon shareholders' wealth under the partial anticipation hypothesis. The pre-tax sample is analyzed by isolating the expected terminators using the multiple discriminant analysis model. This study finds significant positive abnormal returns only for firms that are not anticipated by the investors as potential terminators. The results of this study do not lend support to either the "separation" or the "integration" hypothesis as proposed by Alderson and Chen (1986). Instead, the results are consistent with the information hypothesis that the market reacts to unanticipated events that provide new information. Cross-sectional regression analysis of unexpected terminators suggests that the abnormal performance of stocks of pension terminating firms is explained by the firms' debt ratio and the amount of surplus pension assets. It can be inferred that firms may resort to recapturing excess pension assets as a way of financing investments internally when faced with unfavorable credit markets.

Corporate governance issues have become increasingly important to financial managers and shareholders. Firms that are plagued by poor performance, incompetent managers, or excess agency costs have become the subject of a dramatic increase in shareholder activism. Dissident shareholders, who are unable to launch costly takeover bids or proxy contests, have initiated a process of governance reform through the use of shareholder sponsored proposals. Shareholder proposals are a direct attempt to reverse operating or voting policies, such as a proposal to repeal a classified board. Managers announce shareholder proposals in a proxy statement and typically include a vote recommendation against the proposal. In the first essay, I find an unfavorable stock price reaction to the announcement of a shareholder proposal. In some cases, however, management supports the proposal and negotiates an agreement with the proposing shareholder. Stock prices react favorably to a settlement announcement. If managers are willing to negotiate with shareholders, they are perceived to be acting in the best interest of shareholders. If managers are unwilling, shareholders believe a severe agency problem exists. In the second essay, the effect that ownership structure has on voting outcomes of shareholder proposals is examined. I find a direct relationship between the percentage of votes cast in favor of the proposal and levels of institutional ownership. There is an inverse relationship between the percentage of votes and managerial ownership and firm size. Large firms with powerful owner-managers present the greatest obstacle to the success of shareholder proposals. The repeal of shareholder rights plans is one of the most frequently used shareholder proposals. By adopting the rights plan, managers increase the probability of defeating a takeover, but increase their power in negotiating with a potential acquiring firm. In the third essay, I find that firms who combine a rights plan with high debt levels construct a powerful defense against a hostile takeover. Shareholders target these high debt firms and design proposals to repeal the rights plan.

In this thesis the extent private shareholders read and use information contained within company annual reports is examined. More specifically the thesis will be concerned with gathering information to establish the following: 1. the extent to which shareholders read the various sections contained in the annual report; 2. the reason why shareholders fail to read sections contained in the annual report; 3. the sections in the annual report investors have difficulty understanding; 4. the extent to which annual reports are found useful by shareholders for investment decision making; 5. the respondents personal characteristics; 6. whether any significant relationship exists between the shareholder's personal characteristics and the extent to which they read and use certain sections of the annual report.

The traditional rules governing the removal of corporate directors have evolved so as to insulate the board of directors from the shareholders who elect them. Professor Travers in his article examines initially the interests being advanced by protecting the board members from removal by their electorate. He then critically analyzes the law as it relates to these interests in order to suggest a more rational approach.