Nejadmalayeri, Ali; Nishikawa, Takeshi; Rao, Ramesh P.
Journal of Banking & Finance. Aug. 2013, Vol. 37 Issue 8, pp. 2991-3006.
- SOX has led to a significant 27bps structural decline in spreads.
- Riskier firms benefited more from passage of SOX.
- Firms’ aspects related to SOX provisions (e.g., corporate governance) matter.
Stephen P. Ferris, Kenneth A. Kim, Takeshi Nishikawa and Emre Unlu
International Review of Economics Vol. 58, Issue 4, Pages: 337-358
For a sample of over 700 celebrity appointments to corporate boards of directors over the period 1985–2006, we find positive excess market returns at the time of their announcement. The 1-, 2-, and 3-year long-run performance of the appointing firms provide corroborating evidence of the value of these appointments. We conclude that the appointment of celebrities as directors increase a firm’s visibility in a fashion consistent with Merton’s (J Finance 42:483–510, 1987) investor recognition hypothesis.
Takeshi Nishikawa, Andrew K. Prevost, and Ramesh P. Rao
Journal of Financial Research Vol. 34, Issue 3, pages 503–522
We reexamine the bondholder wealth impact of stock repurchases with a focus on the wealth transfer effect. We do not detect any transfer of wealth from bondholders to shareholders surrounding open market stock repurchases. For the overall sample (1994–2002), using daily data we document a significant decrease in bond yields surrounding repurchase announcements. Subsamples classified by attributes that capture wealth transfer propensity also do not reveal evidence consistent with a wealth transfer effect. Correlation analysis between bond and stockholder wealth effects similarly is not supportive of a wealth transfer effect. Contrary to the wealth transfer hypothesis, we document a greater proportion of bond rating upgrades than downgrades in the three months following a repurchase announcement. Our results are robust to alternate bond price data and event return methodology.
Jun-Koo Kanga, Kenneth A. Kim, P. Kitsabunnarat-Chatjuthamard, and Takeshi Nishikawa
Journal of Financial Intermediation, Vol. 20, Issue 1, Pages 94–116
This paper examines the effects that bank relations have on stock repurchases in Japan. Similar to US evidence, we find that stock repurchase announcements in Japan have positive announcement period returns. Announcement returns are positively related to equity ownership by main banks, but are negatively related to nonbank debt ratios. In contrast, bank debt ratios do not have such a negative relation. Announcement returns are also negatively related to future growth opportunities, suggesting that repurchase announcements are greeted more positively by investors when repurchasing firms have lower growth opportunities. We also find that firms with high leverage are less likely to repurchase stocks, whereas firms with high equity ownership by main banks are more likely to do so. Overall, these results are consistent with the views that banks, particularly main banks, are effective monitors of agency costs and financial distress risk, and that their presence as dual stakeholders are value-enhancing.