To create value and reduce agency costs, firms adopt available organizational structures that match their attributes. This paper studies the characteristics of firms that choose to become master limited partnerships (MLPs). The MLP sample is dominated by firms in low-growth industries that have highly focused operations and superior profitability compared to their industry peers. After becoming an MLP, sample firms reduce capital expenditures and increase cash distributions, taking advantage of their focus, profitability, and status as non-taxable entities. A subsample of MLPs subsequently change back to corporate form. After becoming corporations, these firms reverse course by cutting cash distributions and increasing capital spending. This cycle demonstrates how firms restructure to adopt organizational forms that best fit their needs.

The trading structure differences between the NYSE and the Nasdaq market could produce different levels of trading liquidity. Several studies have attempted to measure these differences by comparing bid-ask spreads. This paper uses an alternative approach to compare liquidity. We analyze three issues: (1) the frequencies of the sizes and types of block trades found in the two markets, (2) the immediate price effects of the block transactions, and (3) the temporary and permanent price effects of the blocks. We find evidence that the NYSE system provides more liquidity for block transactions.

We analyze a sample of 119 master limited partnership agreements to examine the linkages between the contractual design and performance of organizations. Consistent with either efficient self-selection or focus arguments, partnerships that contractually limit their scope of operations tend to have superior industry-adjusted operating performance. We also find that contracting can substitute for equity ownership as a control mechanism. Partnerships with agreements unfavorable to investors tend to have higher proportions of insider equity ownership, compared to those with agreements more protective of investors.

Stock splits should have no effect on firm value in perfect capital markets, yet stock prices increase on split announcements. The two traditional explanations are information signaling and improved liquidity for shares that trade at lower prices. We investigate these explanations by studying splits of American Depositary Receipts (ADRs) that are not associated with splits in their home-country stock, and which represent unique illustrations of the effect of liquidity. We interpret our findings as supportive of the liquidity explanation of stock split announcement effects.

This paper tests Baron's (1982) model of initial public offering (IPO) underpricing. That model relies on information asymmetries between issuers and underwriters and predicts that offer prices will be lower than would prevail in the absence of asymmetric information. We examine the initial public offerings of 38 investment banks that went public in the period 1970–1987 and participated in the distribution of their own securities. We find that contrary to the implication of Baron's model such self-marketed offerings are characterized by statistically significant underpricing comparable to that of other IPOs.

Partial table of contents: AN INTRODUCTION TO CORPORATE FINANCE The Objective Function in Corporate Finance Present Value Understanding Financial Statements Risk and Return in Practice: Estimation of Discount Rates INVESTMENT ANALYSIS Capital Budgeting Decision Rules Estimating Cash Flows Issues in Capital Budgeting Uncertainty and Risk in Capital Budgeting: Part I. The Leasing Decision THE FINANCING DECISION Market Efficiency Lessons for Corporate Finance Capital Structure: Models and Applications Capital Structure The Financing Details THE DIVIDEND DECISION A Framework for Analyzing Dividend Policy VALUATION Basics of Valuation Acquisitions and Takeovers OTHER TOOLS AND TECHNIQUES International Finance Option Pricing Theory Applications of Option Pricing Theory in Corporate Finance Risk Management Corporate Finance for Privately Held Firms.

This paper is a report on seventy-two firms that went public since 1983, but previously underwent a full or divisional levereged buy-out. Accounting measures of performance reveal significant improvements in profitability, which resulted mainly from these firms' ability to reduce costs. Firms experience dramatic increases in leverage at the levereged buyout, but the leverage ratios are gradually reduced. The evidence is consistent with the hypothesis that the change in the governance structure of these firms towards more concentrated residual claims created a new organizational structure that is more efficient than its predecessor.

This paper is a report on 72 firms which went public since 1983 but previously underwent a full or divisional LBO. Accounting measures of performance reveal significant improvements in profitability which resulted mainly from these firms' ability to reduce costs. Firms experience dramatic increases in leverage at the LBO, but the leverage ratios are gradually reduced. The evidence is consistent with the hypothesis that the change in the governance structure of these firms towards more concentrated residual claims created a new organizational structure which is more efficient than its predecessor.