Reversal of fortune: dividend signaling and the disappearance of sustained earnings growth

Article Abstract:

A sample of 145 NYSE companies with declining annual earnings after nine or more years of consecutive positive performance were considered to determine the impact of dividend signaling. The signaling process tested Year 0 dividend decisions to infer managers' future earnings prospects. Favorable dividend decisions were not a reliable predictor of future earnings performance, as negative future earnings were observed even after substantial dividend forecasts were reported.

Research, Reports, Profits, Dividends, Disclosure statements (Accounting), Corporate profits

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Perceptions and the politics of finance: junk bonds and the regulatory seizure of First Capital Life

Article Abstract:

Analysis of the 1991 seizure of First Capital Life Insurance Co. by California regulators indicates that the decision reflected a regulatory prejudice against insurers that specialized in junk bond investments. Findings suggest that the company, which had massive junk bond holdings and was a client of Drexel, did not collapse due to its weak financial condition since its statutory capital was higher than other major insurance companies with California policyholders.

Case studies, Laws, regulations and rules, Insurance industry, Investments, Political aspects, Industry regulations, Government regulation of business, Trade regulation, Junk bonds, First Capital Life Insurance Co.

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The indirect economic penalties in SEC investigations of underwriters

Article Abstract:

The Securities and Exchange Commission's investigation of an insurer is found to impose indirect penalties on the insurer and its past clients due mainly to the devaluation of the insurer's reputation capital. Findings suggest that those particularly affected are the IPO clients and that prior IPO research and insurer reputation are not stagnant as other previous studies suggest.

Economic aspects, Insurance claims adjustment, Claims adjustment (Insurance), Third-party administrators (Insurance), Third party administrators (Insurance)

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