Journal of Applied Finance

Journal of Applied Finance is a trade journal focusing on Applied Finance

Articles from Vol. 21, No. 1, 2011

Capital Budgeting Procedures, Policy, and Practices
Southwest Gas Corporation is a regional leader in natural gas distribution (regulated utility) serving Arizona, Nevada, and parts of California. The Hershey Company is the largest producer of quality chocolate in North America and a global leader in...
Corporate Governance: Lessons from the Crisis
Panel Session Highlights from the 2010 FMA Annual MeetingPanelists: Jeffrey Coles, Charles Elson, Lemma Senbet, and David YermackThe panel addressed questions relating to the role of corporate governance in the crisis, the social responsibility of corporations,...
Did the 2008 Short-Sale Ban Prevent a Market Crash?
This paper empirically examines the efficacy of the 2008 short-sale ban. We find that the firms covered by the ban experience positive abnormal returns at the ban initiation. When the ban expires, small banks, medium/large banks, and brokerage firms...
Foreign Exchange Exposure and Cost of Equity for US Companies: Local versus Global CAPM
For US firms with extreme foreign exchange (FX) exposure levels, we ask whether the single-factor global capital asset pricing model (CAPM) yields significantly different cost of equity estimates from the local CAPM. For a sample of US firms from 2000...
Incorporating the New Domestic Political Paradigm into Financial Research
Panel Session Highlights from the 2010 FMA Annual MeetingCo-Organizers: Charles F. Beauchamp and Edwin H. DuettPanelists: Robert W. KoIb, Robert P. Hartwig, and Joseph R. MasonSession Background & PurposeDuring the third and fourth quarters of 2008,...
Letter from the Editors
In This IssueWe begin our issue with Part 2 of our "Pioneers in Finance" interview of Professor Michael C. Jensen, Jesse Isidor Straus Professor of Business Administration, Emeritus, of the Harvard Business School. This is a continuation of the interview...
Management Views on Real Options in Capital Budgeting
We survey a large sample of Canadian firms to first learn whether they use real options, the types of real options used, and why firms do not use them. Only 36 of the 214 respondents (16.8%) report using real options, which ranks last among nine capital...
Managerial Motives for Stock Splits: Survey Based Evidence from India
The present field study investigates Indian managers' opinion about stock splits and their motives for issuing them. The empirical findings of the survey reveal that management views stock splits as a tool that enhances trading liquidity. It brings the...
MBS: Trends and New Developments
The session reviewed trends and new developments in the Mortgage-Backed Securities (MBS) market, including the evolution and current status of the market and what has been learned to help structured security issuance in the future from the recent disruptions...
Nudge: Improving Decisions about Health, Wealth, and Happiness
Nudge: Improving Decisions About Health, Wealth, and Happiness By Richard H. Thaler with Cass R. Sunstein, Yale University Press: 2008, 304 pages*Behavioral trends are gaining ground in the empirical finance literature. Richard Thaler and Cass Sunstein...
Pioneers in Finance
An Interview with Michael C. Jensen, Jesse Isidor Straus Professor of Business Administration, Emeritus, Harvard Business SchoolThis interview is Part 2 of a two-part series in which Professor Ralph Walkling, the Stratakis Chair in Corporate Governance...
Shadow Financial Regulatory Committee
Panel Session Highlights from the 2010 FMA Annual MeetingPanelists: George Kaufman and Charles CalomirisGeorge Kaufman:*The US Shadow Financial Regulatory Committee is now in its 25th year of operation, having been established in 1986. It meets quarterly...
Slapped by the Invisible Hand
SLAPPED BY THE INVISIBLE HAND By Gary Gorton, Oxford University Press: 2010, 215 pagesThere is no shortage of books on the financial crisis. Most incorrectly blame subprime mortgages as the cause of the meltdown. Gorton distilled a series of conference...
The Federal Home Loan Bank System: A Government Sponsored Enterprise That Avoided Conservatorship
In September 2008, the US government placed Fannie Mae and Freddie Mac into conservatorship and entered into preferred stock purchase agreements with each. Since that time, these two government-sponsored enterprises (GSEs) have received $148 billion...
The Future of Fannie Mae and Freddie Mac
Panel Session Highlights from the 2010 FMA Annual MeetingPanelists: Jay Brinkmann, Andrew Davidson, and Wayne PassmoreAt the recent Financial Management Association meetings in New York, New York the panelists in a session that was chaired by Diana Hancock...
The Role (If Any) of Rating Agencies after the Crisis
PDDARI is the FMA Practitioner Demand Driven Academic Research Initiative. The mission of PDDARI is to facilitate the development of cutting edge research useful to practitioners, their firms, and the profession. Through this initiative we hope to encourage...
The Role of Money Market Mutual Funds in Mutual Fund Families
This study examines cross-sectional differences among money market mutual funds (MMMFs) in the context of sponsoring fund families. The study finds that flows to family non-MMMFs are negatively related to family MMMF flows, and family non-MMMF cashflow...
The September Swoon
Anomalous evidence of seasonality in stock market returns presents a serious challenge to the Efficient Market Hypothesis. Previous studies often explain anomalous monthly returns as being caused by various institutional considerations, like taxloss...
Total Risk Evaluation for Capital Budgeting
Journal of Applied Finance Roundtable Discussion 2010 Financial Management Association International European MeetingHamburg, GermanyPanelists: Stephen Brod, Sven Salchow, Martin Glaum, and Ameeta Jaiswal-Dale* Betty Simkins: Good afternoon and welcome...
What Role Do Retail Structured Products Have in Investors' Portfolios?
Panel Session Highlights from the 2010 FMA Annual MeetingPanelists: Robert Benson, Phelim Boyle, Stewart Mayhew, Craig McCann, and Keith Styrcula*Robert Benson discussed the range of structured products and underlying assets, and their uses by investors....