This paper utilizes four different classification procedures (binary choice models) and compares their ability to predict corporate takeovers. Specifically, the paper develops logit, probit, discriminant, and recursive partitioning, models to predict which firms will be taken over. The original classification accuracy and the validation test results indicate that the recursive partitioning model outperforms the other models (although its accuracy drops significantly in the validation test). The results also indicate the difficulty in predicting corporate takeovers.

Examines the equity price reaction to income increasing standards on accounting for income taxes, namely the Statements on Financial Accounting Standards (SFAS) No. 96 and No. 109. Hypothesis that significant positive abnormal returns should be observed around the Exposure Draft dates; Relation of equity price reaction to income effects and economic consequences.

[This study examines the equity price reaction to two generally income increasing standards on accounting for income taxes, namely the Statements on Financial Accounting Standards (SFAS) No. 96 and No. 109. It is hypothesized that significant positive abnormal returns should be observed around the Exposure Draft dates. It is also hypothesized that the equity price reaction to these standards should be related to the magnitude of their income effects and the economic consequences of a given income effect. The results are consistent with contracting and political cost hypotheses.]

This study examines the equity price reaction to the pronouncements related to accounting for stock-based compensation and assesses the value relevance of recognition versus disclosure in financial reporting. We document that firms exhibit significant abnormal returns around the issuance of the Exposure Drafts proposing to require recognition of stock-based compensation costs, and also around the event reversing that decision to require disclosure only (while encouraging recognition). We also document that the abnormal returns are most pronounced for high-tech, high-growth, and start-up firms. Our results are consistent with the contracting theory, and show that disclosure is not a substitute for recognition.