Market Misvaluation, Managerial Horizon, and Acquisitions

2009 ◽  
Author(s):  
Huasheng Gao
Keyword(s):  
Market Misvaluation ◽  
Managerial Horizon

The effect of managerial horizon on cash holdings

2019 ◽  
Vol 45 (8) ◽  
pp. 1092-1110
Author(s):  
Sanjib Guha ◽  
Niazur Rahim
Keyword(s):  
Design Methodology ◽  
Cash Holdings ◽  
Previous Literature ◽  
Cash Holding ◽  
Firm Characteristics ◽  
Current Compensation ◽  
Content Type ◽  
Ceo Age ◽  
Excess Cash ◽  
Managerial Horizon

Purpose US corporations are now sitting on an enormous stockpile of cash. Instead of investing their resources and creating jobs, the firms are holding on to excess cash. Academicians and practitioners alike have tried to fathom the reasons why companies are holding on to so much cash. Numerous studies have talked about the various motives for holding cash. Many researchers have tried to correlate excess cash holding with particular firm characteristics. The purpose of this paper is to study the correlations that exist between excess cash holding and some measurable managerial characteristics. Design/methodology/approach Four different measures of managerial horizon (MH) were constructed. The first two constructs (MH1 and MH2) are based on the CEO’s age and how long he has been the CEO of the company. The next two constructs (MH3 and MH4) are based on compensation, proportion of current compensation and proportion of future compensation. This paper tries to examine if MH has any impact on excess cash holding. Findings The results clearly show that the CEO age and the proportion of CEO’s compensation (current and future) do determine level of cash holding in the company. Younger CEOs hold more cash compared to older CEOs. Older CEOs hold less cash suggesting that as CEOs grow older they might be motivated by the idea of leaving a long lasting legacy. CEOs who receive more of their compensation in future payments also hold on to more cash, whereas CEOs who receive more of their compensation in current payments hold less cash. Originality/value There is no previous literature dealing with MH and cash holding by corporations.

The Potential of Spirituality for the Treatment of Organizational Trauma

2017 ◽  
pp. 295-317
Author(s):  
Dušan Kučera
Keyword(s):  
Human Life ◽  
Traumatic Experiences ◽  
Organizational Crisis ◽  
Appropriate Treatment ◽  
Holistic Concept ◽  
New Perspective ◽  
Religious Systems ◽  
Managerial Psychology ◽  
Organizational Trauma ◽  
Managerial Horizon

The spiritual approach in dealing with organizational trauma is still relatively uncommon in business management literature. This chapter attempts to show the complexity of the problem through getting over the traditional framework of managerial psychology as defined by modern Western thought. Inspired by the holistic concept of man, the author transcends the usual managerial horizon and introduces a new perspective, which touches on the problem of the meaning of work within the context of the purpose of human life. The description of traumatic experiences in an organization is connected with feelings of guilt, the crisis of the concept of justice, the problem of forgiveness, and finding the inner energy to overcome the trauma and huge disappointment. Organizational trauma may develop into a personal and organizational crisis. This chapter tackles the potential of spirituality (human faith and hope) that gives a new meaning to life and work. Spirituality is connected with some religious systems. It can be instrumental in finding an appropriate treatment.

On Market Concentration and Disclosure

2021 ◽  
Author(s):  
Edwige Cheynel ◽  
Amir Ziv
Keyword(s):  
Voluntary Disclosure ◽  
Production Costs ◽  
Reduced Form ◽  
Proprietary Costs ◽  
Cournot Game ◽  
Form Representation ◽  
Partial Disclosure ◽  
The Cost ◽  
Proprietary Cost ◽  
Managerial Horizon

Verrecchia (1983,1990) introduced the proprietary cost hypothesis in which exogenous disclosure costs are a reduced-form interpretation of lost competitive advantage in product markets. We develop a micro-foundation for this disclosure cost in a Cournot game and explicitly derive the cost as a function of market structure. When the market is sufficiently competitive, this model has a reduced-form representation similar to a standard voluntary disclosure game with a partial disclosure equilibrium. Proprietary costs are increasing in the number of competitors, the degree of product substitution, overall uncertainty and production costs. The analysis also offers new empirical predictions on the interaction between disclosure choice, managerial horizon and entry.

The Potential of Spirituality for the Treatment of Organizational Trauma

2020 ◽  
pp. 358-379
Author(s):  
Dušan Kučera
Keyword(s):  
Human Life ◽  
Traumatic Experiences ◽  
Organizational Crisis ◽  
Appropriate Treatment ◽  
Holistic Concept ◽  
New Perspective ◽  
Religious Systems ◽  
Managerial Psychology ◽  
Organizational Trauma ◽  
Managerial Horizon

The spiritual approach in dealing with organizational trauma is still relatively uncommon in business management literature. This chapter attempts to show the complexity of the problem through getting over the traditional framework of managerial psychology as defined by modern Western thought. Inspired by the holistic concept of man, the author transcends the usual managerial horizon and introduces a new perspective, which touches on the problem of the meaning of work within the context of the purpose of human life. The description of traumatic experiences in an organization is connected with feelings of guilt, the crisis of the concept of justice, the problem of forgiveness, and finding the inner energy to overcome the trauma and huge disappointment. Organizational trauma may develop into a personal and organizational crisis. This chapter tackles the potential of spirituality (human faith and hope) that gives a new meaning to life and work. Spirituality is connected with some religious systems. It can be instrumental in finding an appropriate treatment.

Segment Profitability, Misvaluation, and Corporate Divestment

2007 ◽  
Vol 82 (1) ◽  
pp. 1-26 ◽  
Author(s):  
Peter F. Chen ◽  
Guochang Zhang
Keyword(s):  
Information Asymmetry ◽  
Stock Returns ◽  
Financial Reporting ◽  
Operating Performance ◽  
Equity Value ◽  
Abnormal Stock Returns ◽  
Voluntary Commitment ◽  
Value Model ◽  
Market Misvaluation ◽  
Number Of Segments

This paper develops a theoretical model to explain corporate divestment in the context of accounting-based valuation and provides empirical evidence to support the model's predictions. Building on Zhang's (2000) real-options-based equity value model, we develop a model to explain why firms with multiple business segments may have incentives in financial reporting to shift earnings from one segment to another to influence market valuation. Cross-segment earnings shifting, however, causes information asymmetry about segmental performance, which leads to market misvaluation. Divestment arises as a voluntary commitment by (some) firms to not engage in segmental earnings manipulation, with the aim of restoring valuation accuracy. Our theoretical analysis yields a number of testable implications. Consistent with our model's predictions, we find empirically that (1) divestment is preceded by an increased divergence in profitability between the divested and continuing segments of the divesting firm, (2) there are positive abnormal stock returns surrounding divestment announcements that are not dependent on increased expectations about future operating performance, (3) the magnitude of market revaluation increases with the profitability divergence between the divested and continuing segments, and (4) market revaluation is greater for more complex firms (in terms of having a larger number of segments and greater uncertainty facing investors).

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