Research articles for the 2019-11-09
Do Corporate Insiders Use Stock Buybacks for Personal Gain?
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This paper investigates the hypothesis of whether corporate insiders sell their own personal shareholdings more frequently when they are executing stock buybacks using corporate funds. I examine transactions for nonfinancial corporations with publicly traded stock from 2005 to 2017, and find that net insider sales of over $100,000 are nearly twice as common in quarters when stock buybacks are also occurring than in non-buyback quarters. I conduct an empirical analysis of the relationship between insider sales and stock buybacks and find that a ten percent change in stock buybacks is associated with a five percent change in corporate insiders selling their personal shareholdings, holding the other factors constant. The results suggest that executives may be taking advantage of the regulatory loophole left in the regulation of stock buybacks, and that policymakers should reform the regulations governing stock buybacks and corporate insider share-selling. I offer a set of policy recommendations to reduce the ability of corporate insiders to use stock buybacks for personal gain.
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This paper investigates the hypothesis of whether corporate insiders sell their own personal shareholdings more frequently when they are executing stock buybacks using corporate funds. I examine transactions for nonfinancial corporations with publicly traded stock from 2005 to 2017, and find that net insider sales of over $100,000 are nearly twice as common in quarters when stock buybacks are also occurring than in non-buyback quarters. I conduct an empirical analysis of the relationship between insider sales and stock buybacks and find that a ten percent change in stock buybacks is associated with a five percent change in corporate insiders selling their personal shareholdings, holding the other factors constant. The results suggest that executives may be taking advantage of the regulatory loophole left in the regulation of stock buybacks, and that policymakers should reform the regulations governing stock buybacks and corporate insider share-selling. I offer a set of policy recommendations to reduce the ability of corporate insiders to use stock buybacks for personal gain.
Learning From Trees: A Mixed Approach to Building Early Warning Systems for Systemic Banking Crises
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Banking crises can be extremely costly. The early detection of vulnerabilities can help prevent or mitigate those costs. We develop an early warning model of systemic banking crises that combines regression tree technology with a statistical algorithm (CRAGGING) to improve its accuracy and overcome the drawbacks of previously used models. Our model has a large set of desirable features. It provides endogenously-determined critical thresholds for a set of useful indicators, presented in the intuitive form of a decision tree structure. Our framework takes into account the conditional relations between various indicators when setting early warning thresholds. This facilitates the production of accurate early warning signals as compared to the signals from a logit model and from a standard regression tree. Our model also suggests that high credit aggregates, both in terms of volume and as compared to a long-term trend, as well as low market risk perception, are amongst the most important indicators for predicting the build-up of vulnerabilities in the banking sector.
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Banking crises can be extremely costly. The early detection of vulnerabilities can help prevent or mitigate those costs. We develop an early warning model of systemic banking crises that combines regression tree technology with a statistical algorithm (CRAGGING) to improve its accuracy and overcome the drawbacks of previously used models. Our model has a large set of desirable features. It provides endogenously-determined critical thresholds for a set of useful indicators, presented in the intuitive form of a decision tree structure. Our framework takes into account the conditional relations between various indicators when setting early warning thresholds. This facilitates the production of accurate early warning signals as compared to the signals from a logit model and from a standard regression tree. Our model also suggests that high credit aggregates, both in terms of volume and as compared to a long-term trend, as well as low market risk perception, are amongst the most important indicators for predicting the build-up of vulnerabilities in the banking sector.
The Economic Argument for Stakeholder Corporations
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The mainstream economic theory of the corporation is written to fit within the neoliberal framework of perfectly efficient markets. The entity itself â€" the corporation â€" is hypothesized as simply a site for freely negotiated contracts between rational actors, and the privileges granted to the corporation by public power are erased. As all negotiations between rational actors lead to efficient outcomes, the theory goes, the dominance of shareholders and their exclusive authority in decision-making must be the most efficient structure for corporations. The neoliberal economic theory that underlies shareholder primacy is deeply flawed and does not reflect how corporations actually operate and distribute value between stakeholders. While many economists that the shareholder primacy model is, and always has been, a “natural law†of the market, its dominance in American corporate governance is only decades old-- and ultimately, shareholder primacy is a failed economic model. By documenting the economic arguments made to support shareholder primacy and showing why these assumptions do not hold, this article adds to the growing literature on the effects of corporate shareholder primacy. I argue that shareholder primacy should be replaced by a model of “stakeholder corporations,†in which stakeholders collectively engage in corporate governance and own corporate equity.
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The mainstream economic theory of the corporation is written to fit within the neoliberal framework of perfectly efficient markets. The entity itself â€" the corporation â€" is hypothesized as simply a site for freely negotiated contracts between rational actors, and the privileges granted to the corporation by public power are erased. As all negotiations between rational actors lead to efficient outcomes, the theory goes, the dominance of shareholders and their exclusive authority in decision-making must be the most efficient structure for corporations. The neoliberal economic theory that underlies shareholder primacy is deeply flawed and does not reflect how corporations actually operate and distribute value between stakeholders. While many economists that the shareholder primacy model is, and always has been, a “natural law†of the market, its dominance in American corporate governance is only decades old-- and ultimately, shareholder primacy is a failed economic model. By documenting the economic arguments made to support shareholder primacy and showing why these assumptions do not hold, this article adds to the growing literature on the effects of corporate shareholder primacy. I argue that shareholder primacy should be replaced by a model of “stakeholder corporations,†in which stakeholders collectively engage in corporate governance and own corporate equity.
ОТЧЕТÐЫЙ ПЕРИОÐ" Ð' Ð'УХÐ"ÐЛТЕРСКОМ (ФИÐÐÐСОÐ'ОМ) УЧЕТЕ И ОПРЕÐ"ЕЛЕÐИЕ ПОСЛЕÐ"ÐЕЙ ОТЧЕТÐОЙ Ð"ÐТЫ (Reporting Period in Accounting (Financial) Accounting and Determination of the Last Reporting Date)
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Russian Abstract: Ð"Ð»Ñ Ñ€Ñда корпоративных процедур необходимо определить баланÑовую ÑтоимоÑÑ‚ÑŒ активов на поÑледнюю отчетную дату, предшеÑтвующую Ñтой корпоративной процедуре.English Abstract: For a number of corporate procedures, it is necessary to determine the carrying amount of assets at the last reporting date preceding this corporate procedure.
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Russian Abstract: Ð"Ð»Ñ Ñ€Ñда корпоративных процедур необходимо определить баланÑовую ÑтоимоÑÑ‚ÑŒ активов на поÑледнюю отчетную дату, предшеÑтвующую Ñтой корпоративной процедуре.English Abstract: For a number of corporate procedures, it is necessary to determine the carrying amount of assets at the last reporting date preceding this corporate procedure.
ПРОТИÐ'ОÐ"ЕЙСТÐ'ИЕ ПРИÐЯТИЮ РЕШЕÐИЯ ОÐ' ОÐ'ЪЯÐ'ЛЕÐИИ Ð"ИÐ'ИÐ"ЕÐÐ"ОÐ' КÐК СРЕÐ"СТÐ'О Ð'ОРЬÐ'Ы ЗРКОРПОРÐТИÐ'ÐЫЙ КОÐТРОЛЬ (Countering the Decision on the Declaration of Dividends as a Means of Fight for Corporate Control)
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Russian Abstract: анализируетÑÑ Ð¿Ñ€Ð°ÐºÑ‚Ð¸ÐºÐ° противодейÑÑ‚Ð²Ð¸Ñ Ð¿Ñ€Ð¸Ð½Ñтию Ñ€ÐµÑˆÐµÐ½Ð¸Ñ Ð¾Ð± объÑвлении дивидендов Ñ Ñ†ÐµÐ»ÑŒÑŽ ÑÐ¾Ñ…Ñ€Ð°Ð½ÐµÐ½Ð¸Ñ Ð¿Ñ€Ð°Ð²Ð° голоÑа по привилегированным акциÑм, что позволÑет уÑтановить корпоративный контроль над общеÑтвом.analiziruyetsya praktika protivodeystviya prinyatiyu resheniya ob ob"yavlenii dividendov s tsel'yu sokhraneniya prava golosa po privilegirovannym aktsiyam, chto pozvolyayet ustanovit' korporativnyy kontrol' nad obshchestvom.205/5000English Abstract: It analyzes the practice of counteracting the decision to declare dividends in order to maintain voting rights on preferred shares, which allows establishing corporate control over the company.
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Russian Abstract: анализируетÑÑ Ð¿Ñ€Ð°ÐºÑ‚Ð¸ÐºÐ° противодейÑÑ‚Ð²Ð¸Ñ Ð¿Ñ€Ð¸Ð½Ñтию Ñ€ÐµÑˆÐµÐ½Ð¸Ñ Ð¾Ð± объÑвлении дивидендов Ñ Ñ†ÐµÐ»ÑŒÑŽ ÑÐ¾Ñ…Ñ€Ð°Ð½ÐµÐ½Ð¸Ñ Ð¿Ñ€Ð°Ð²Ð° голоÑа по привилегированным акциÑм, что позволÑет уÑтановить корпоративный контроль над общеÑтвом.analiziruyetsya praktika protivodeystviya prinyatiyu resheniya ob ob"yavlenii dividendov s tsel'yu sokhraneniya prava golosa po privilegirovannym aktsiyam, chto pozvolyayet ustanovit' korporativnyy kontrol' nad obshchestvom.205/5000English Abstract: It analyzes the practice of counteracting the decision to declare dividends in order to maintain voting rights on preferred shares, which allows establishing corporate control over the company.
