Changing risk, changing risk premiums, and dividend yield effects

Article Abstract:

The cross-sectional relation between expected return and dividend yield was investigated to determine whether the dividend policy of a company affects the value of its stock. The investigation attempted to include numerous results of changing risk premiums and risk measures using four methods: a Seemingly Unrelated Regressions approach; an unconditional approach; a Fama-MacBeth approach; and an approach that models dividend-related changes in risk measures and premiums. Research results demonstrate that for each of the four methods, no reliable cross-sectional connection between risk adjusted-expected return and dividend yield was found.

Risk assessment, Dividends

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The hubris hypothesis of corporate takeovers

Article Abstract:

Empirical evidence in mergers and tender offers is reconsidered in light of the hubris hypothesis, which is advanced as an explanation of corporate takeovers. In the samples observed, decision-makers in acquiring firms, on average, pay too much for their targets. Hubris is necessary to explain why managers do not abandon bids that are rendered when the valuation exceeds the price, since such bids are likely to represent positive errors in valuation. Empirical evidence is found to support the hubris hypothesis as much as it supports other explanations of corporate takeovers.

Analysis, Acquisitions and mergers, Tender offers (Securities), Tender offers

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Economic forces and the stock market

Article Abstract:

The effect of economic state variables on stock market returns are examined. Economic variables such as industrial production and changes in the risk premia have an effect on stock market returns, but real per capita consumption and oil price changes do not have a significant effect. It is concluded that stock returns are priced according to how exposed they are to systematic economic news.

Economic aspects, Prices and rates, Stock-exchange, Stock exchanges, Stock prices, Stock price forecasting

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