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Conferences

Session V-1 Corporate Finance 2 (18/12/2009 à 09h00)

E. Ginglinger

Stock market liquidity and the rights offer paradox

Auteurs : Edith Ginglinger (Université Paris-Dauphine, DRM); Laure Koenig (Université Paris-Dauphine, DRM); Fabrice Riva (Université Paris-Dauphine, DRM)

!!Email!! : Fabrice.Riva@dauphine.fr

Intervenants : Fabrice Riva (Université Paris-Dauphine, DRM)

Rapporteurs : Baran Siyahhan

This paper contributes to the resolution of the rights offer paradox, using a database of French SEOs. We first document higher direct flotation costs, but also improved stock market liquidity after public offerings and standby rights relative to uninsured rights. We find that blockholder renouncements to subscribe to new shares and stock market liquidity are important determinants of flotation method choice. After controlling for endogeneity in the choice of flotation method, we find that public offerings are cost effective and more liquidity improving than standby rights whereas an uninsured rights offering is the best choice for low liquidity, closely held firms. Our results provide new insights as to why firms choose public offerings despite apparently higher costs.

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CEO Manipulation of Stock-Option Grants : Evidence from Canadian Public Firms

Auteurs : Lamia Chourou (Faculty Queen’s School of Business, Quenn’s University); Samir Saadi (Queen's School of Business, Quenn's University)

!!Email!! : LChourou@business.queensu.ca

Intervenants : Lamia Chourou (Faculty Queen’s School of Business, Quenn’s University)

Rapporteurs : Christophe Pérignon

Using a sample of unscheduled stock options granted to CEOs of large Canadian firms, we find reliable evidence of option grants manipulation. Our results show that the introduction of the two-day filing requirement following the Sarbanes-Oxley Act (SOX) has eliminated backdating practice by Canadian firms cross-listed in the U.S. stock market. Further, we find that SOX has altered the way Canadian domestic firms manipulate stock option grants. Most importantly, we find that cross-listed firms are likely to set stock option grants in harmony with the day-of-the-week effect. Our study suggests that Canadian regulators should at least adopt the SEC-initiated change and should also introduce new regulations that enhance the monitoring role of board of directors.

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Information Revelation and Strategic Use of Capital Structure in Duopoly with Asymmetric Information

Auteurs : Baran Siyahhan (Vienna Graduate School of Finance)

!!Email!! : baran.siyahhan@vgsf.ac.at

Intervenants : Baran Siyahhan (Vienna Graduate School of Finance)

This paper studies strategic behavior in product markets with asymmetric information. A real options model is developed to investigate information revelation and signaling role capital structure. Information revelation is ensured through a learning mechanism that stems from the real options framework: firms learn from the strategic exercise of options. In cases where option exercise fails to yield information, firms issue securities in order to change the strategic behavior of their competitors. Such a policy, in turn, is shown to impose constraints on the ex ante capital structure decision of the firm. The outcome of competition depends on industry and firm characteristics. The model has important implications for firms operating in mature industries with low growth and/or high operating expenses.

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