We examine the change in the value of the underlying stock associated with long-term option introduction. Analysis of the abnormal returns associated with LEAPS (Long-Term Equity Anticipation Security) introductions indicates a decline in firm value even after we control for the endogenous nature of the listing decision. However, the evidence does not support previously-offered explanations for the price change associated with option introductions. In particular, we do not find the predicted relations between the cumulative abnormal returns and variables associated with loosening of short sale constraints such as beta, proxies for the dispersion in investor beliefs, and change in relative short interest.

Using a sample of 102 spinoffs in the period 1981 to 1997, we investigate the relation between corporate governance and the spinoff decision. Diversified firms conducting a spinoff have characteristics previously hypothesized to be associated with more effective corporate governance, such as greater ownership by outside board members, more heterogeneous boards, and fewer board members, in comparison to a set of peer firms. Post spinoff, relative valuation measures increase a significantly greater extent than for peer firms. These findings are consistent with the view that agency problems are a contributing factor in firms maintaining value destroying diversification strategies.

The public arrest of Adelphia executives on July 24, 2002 signaled tougher enforcement of laws against corporate crime. On that day and the two following days, foreign firms experienced a cumulative 1.7% decline in value. Relative to domestic firms, the loss was a much larger 4.5%. The expected cost to firms from tougher enforcement suggests three possible reasons. Foreign firms may be targeted more heavily, may face greater penalties, or may find it more costly to react to (deflect) enforcement. We find evidence consistent with foreign firms facing higher costs from tougher enforcement for each of these reasons.

[A simple scheme for making governmental decisions about the production and financing of public goods is presented. The "competitive" equilibria under the scheme are Pareto optimal; more importantly, they are Lindahl equilibria. Thus, it is never in any individual's interest to refuse to participate (no one will be worse off at the equilibrium than at his initial holding); moreover, the existence of equilibria is assured in the usual classical public-goods economies.]

[In a broad class of situations not covered by the Gibbard-Satterthwaite Theorem it is shown that one cannot design a strategy-proof choice mechanism which attains Pareto optimal outcomes. The results are shown to be genetic in character--i.e., any nonmanipulable mechanism will attain nonoptimal outcomes virtually everywhere--and they cover, in particular, certain problems of allocating public and private goods. The analysis is carried out in transferable utility environments, and makes extensive use of the mechanisms recently introduced by Groves.]

[Green and Laffont have characterized certain appealing dominant-strategy revelation mechanisms as precisely the mechanisms introduced by Groves, but they have established the characterization only for unstructured sets of public alternatives: if the set has some natural structure, their proof generally requires that pathological preferences be admissible. It is shown here that the same characterization holds on sets in R extasciicircumn, even when only nice preferences are admitted; this greatly extends the usefulness of the characterization.]

Thomas Muench, Mark Walker; Are Groves-Ledyard Equilibria Attainable?, The Review of Economic Studies, Volume 50, Issue 2, 1 April 1983, Pages 393–396, htt

Using a sample of 438 firms that issued seasoned equity, we investigate the ex ante reasons stated by the firm for the use of capital, the actual ex post use of funds, and the market reaction to this information. We find that, regardless of the stated use of funds, firms increase capital expenditures and research and development following an SEO. In addition, firms increase their long term debt following an SEO, even when the stated reason for the capital is to pay down debt. The market reacts more favorably to the anticipated investment increases if the firm provides specific plans for the use of the soon-to-be-raised capital. The evidence is consistent with the view that agency issues are important factors in SEOs.

Leonid Hurwicz, Mark Walker, On the Generic Nonoptimality of Dominant-Strategy Allocation Mechanisms: A General Theorem That Includes Pure Exchange Economies, Econometrica, Vol. 58, No. 3 (May, 1990), pp. 683-704