This study examines whether annual financial statements filed with the Securities and Exchange Commission are timely sources of information for investors. We examine a summary measure, the probability of bankruptcy, through which the release of financial statements might communicate information to investors. The results indicate that a significant association exists between revisions in the probability of bankruptcy due to nonearnings data and security returns over the fiscal year, but that investors have largely revised their estimates of the probability of bankruptcy prior to the release of the full financial statements.

[I report a bound on the variance of price-dividend ratios and a decomposition of their variance into terms that reflect changes in dividend growth and discount rates. The specification is not restrictive. The test statistics do not require construction of ex post present values; instead, they are restrictions on means, variances, and covariances of price-dividend ratios, dividend growth, and discount rates. I consider implications for the mean price-dividend ratio, and I evaluate whether a low mean discount rate can rationalize the mean and variance of price-dividend ratios. The results do not indicate any striking rejections of present-value models. However, the bulk of the variance of price-dividend ratios must be accounted for by changing forecasts of discount rates, and discount rates must possess some unusual characteristics.]

Capital structure, Tax incentives, Dividends, Dividend reinvestment plan

We examine the design of compensation contracts and determination of investment policies when a manager has private information regarding the effect of investment on both the firm's cash flows and the private benefits she is able to extract from employment. We show that, in general, the optimal mechanism is characterized by a menu of salary and option contracts. When the manager's private information relates only to the firm's cash flows, the firm overinvests relative to the Pareto optimal level. On the other hand, if the private information relates only to private benefits, the firm will underinvest.

This paper posits that stock market response to two accounting performance measures - sales growth and capital investment - is a function of firm life cycle stage. Firms are grouped into various life cycle portfolios using dividend payout, sales growth, and age. As predicted, the empirical results indicate a monotonic decline in the response coefficients of unexpected sales growth and unexpected capital investment from the growth to the stagnant stages. Additional analysis suggests that this relation is not driven by a firm size effect, risk differences, or measurement error in the proxies for performance measures.

Journal Article Sequential Vertical Integration Get access Herman C. Quirmbach Herman C. Quirmbach Iowa State University Search for other works by this author on: Oxford Academic Google Scholar The Quarterly Journal of Economics, Volume 107, Issue 3, August 1992, Pages 1101–1111, https://doi.org/10.2307/2118377 Published: 01 August 1992

This paper documents that, for the period from 1975 to 1989, the aggregate net number of open market purchases and sales by corporate insiders in their own firms predicts up to 60 percent of the variation in one-year-ahead aggregate stock returns. This study also examines whether the ability of aggregate insider trading to predict future stock returns can be attributed to changes in business conditions or movements away from fundamentals. Evidence suggests that both explanations contribute to the predictive ability of aggregate insider trading.

This paper examines existing methods of estimating the translog production function and provides a general framework that allows for variable returns to scale. The model is based on the inverse input demand function and embeds a nonhomothetic production technology. Previous estimation methods are valid only for homogeneous technologies with fixed scale effects. Estimation results for U.S. manufacturing show that neither homotheticity and homogeneity nor constant returns to scale is a proper characterization of the underlying structure of production, thereby vindicating the empirical relevance of the inverse demand framework that entails a nonhomothetic technology.