This brief primer is intended to provide the foundations for the study of more rigorous and lengthy texts. It is designed principally for the finance faculty which does not specialize in continuous time methods, PhD students in finance and finance professionals. Chapters cover: a paradigm for primary asset valuation; complications of the basic paradigm; the valuation of derivative securities; optimal decision strategies and valuation.

This paper investigates whether managers rely on dividends to obtain a higher price in a stock offering and whether the stock price reaction to dividend and offering announcements justifies such a coordination. The evidence does not support either conjecture. Issuing firms are not more likely to pay or increase dividends than nonissuing firms. Moreover, there is little evidence that firms time stock-offering announcements right after dividend declarations to benefit from the attendant information disclosure. The analysis of dividend and stock-offering announcement effects suggests few if any benefits from linking dividend and stock-offering announcements.

ABSTRACT This study shows the extent to which deviations from the absolute priority rule increase or decrease the bankruptcy emergence payoff to traded (i.e., usually junior claimants) bondholders. The data indicate that, on average, bondholders benefit, albeit slightly, from absolute priority rule (APR) violations. This paper also examines the degree to which the bond market, in the bankruptcy filing month, anticipates departures from the APR and other influences on the payoff to bondholders. In other words, we investigate the informational efficiency of the market for bankrupt bonds. Overall, despite the complex and lengthy nature of bankruptcy proceedings, the results support efficiency.

This study shows the extent to which deviations from the absolute priority rule increase or decrease the bankruptcy emergence payoff to traded (i.e., usually junior claimants) bondholders. The data indicate that, on average, bondholders benefit, albeit slightly, from absolute priority rule violations. This paper also examines the degree to which the bond market, in the bankruptcy filing month, anticipates departures from the absolute priority rule and other influences on the payoff to bondholders. In other words, the authors investigate the informational efficiency of the market for bankrupt bonds. Overall, despite the complex and lengthy nature of bankruptcy proceedings, the results support efficiency.

Examines the influence of annual earnings announcements on financial forecasts. Convergence of beliefs; Earnings surprise; Suggestion that annual earnings announcement should increase the convergence of analysts' forecasts of future earnings.

[One indication of information usefulness is its ability to increase the precision of individuals' estimates of events of interest (FASB 1980; ljiri and Jaedicke 1966). In this context, earnings reports are useful if they increase the precision of investors' forecasts of future earnings when the latter proxy for the event of interest, future cash flows. The cross-sectional variance of analysts' earnings expectations often is used as a proxy for the unobservable precision of their earnings estimates (Ajinkya and Gift 1985; Brown et al. 1987; Imhoff and Lobo 1992). We show that, when combined with the time-series properties of accounting earnings and prior research in analyst forecasts, Bayesian revisions suggest that year t earnings reports should, on average, increase the convergence of analysts' year t + 1 earnings forecasts. Operationally, we examine whether the information contained in year t earnings decreases the cross-sectional variance of analysts' year t + 1 forecasts. Morse et al. (1991) use I/B/E/S Summary data, and conclude that the information contained in year t earnings announcements increases the cross-sectional variance of analyst forecasts of year t + 1. This is a surprising result. One feature of the I/B/E/S Summary data is that they do not contain dates of the analysts' earnings forecasts. Thus, researchers who use these data do not know the set of information upon which the analyst's earnings forecast is based. In contrast to the I/B/E/S Summary data, the I/B/E/S Detail data are precise regarding the date that the individual analyst's earnings forecast entered the I/B/E/S system. We use I/B/E/S Detail data to reexamine the relation between annual earnings announcements and convergence of beliefs. Using the Detail data, we show that the information contained in year t earnings decreases the cross-sectional variance of analysts' earnings forecasts of year t + 1. Moreover, our finding is insensitive to year of study. Using the Summary data, we find that the information contained in year t earnings increases the cross-sectional variance of analysts' earnings forecasts of year t + 1, but this finding is sensitive to year of study. Morse et al. (1991) hypothesize and provide evidence that reduction in variance is less likely to occur when "standardized" surprise is large. Using the Detail data, we show that significant decreases in variance occur for the seven smallest deciles of standardized surprise, and that significant increases in variance occur only for the largest decile. Using the Summary data for the same "window" as the Detail data, we find no deciles of standardized surprise associated with significant decreases in variance, and we observe significant increases in variance for the three largest deciles of standardized surprise. In sum, our results using I/B/E/S Detail data suggest that, on average: (1) annual earnings announcements increase convergence of analysts' forecasts of firms' future earnings; (2) annual earnings announcements decrease convergence only for the largest decile of earnings surprise. In contrast, we do not obtain consistent results with I/B/E/S Summary data.]

Overview Switzerland The Federal Republic of Germany France The United Kingdom Japan Canada The United States securitization and financial innovation non-banking activities of banking organizations the international convergence of capital adequacy requirements the 1992 single European market in financial services trends and developments concluding remarks.