Stealing from thy Neighbour: Leveraged Recapitalizations and Wealth Redistribution

Leverage-increasing transactions such as recapitalizations and leveraged buy-outs are known to create shareholder wealth. It has been argued that the only sources of this value are efficiency improvements and tax benefits brought about by the higher debt load. This paper shows empirically that contrary to popular belief a portion of this wealth comes at the expense of current bondholders. It is estimated that between 20 per cent and SO per cent of the value created during a leveraged recapitalization can be attributed to wealth transfers from bondholders to shareholders.     

The Information Content of Common Stock Repurchases: An Empirical Study1

Share repurchase announcements are known to be associated with significant positive abnormal stock returns. Past studies have argued that the main explanation of this value creation is that share repurchases signal new (and favourable) information about the repurchasing firms' future cash flows. This paper examines this hypothesis and provides evidence on the nature of the information revealed by share repurchases. Using a sample of 41 repurchase announcements from the USA, we show that the new information signalled to the stock market through share repurchasing is not only about changes in the level of future cash flows but also about changes in the riskiness of these cash flows.     

Religious Involvement and Physical Functioning among Older Mexican Americans

BACKGROUND AND PURPOSE: Examine the association between attendance at religious services and incidence of ADL disability over a period of seven years among older Mexican Americans 65 years and older. METHODS: Using data from the Hispanic Established Population for the Epidemiological Study of the Elderly (H-EPESE), logistic generalized estimation equation (GEE) models were used to analyze the contribution of attendance at religious services to the differences in incidence of ADL disability over seven years, controlling for demographics, medical conditions, and physical mobility. RESULTS: Frequent attendees at religious services had 30% lower odds of developing ADL disability over seven years compared to the non-regular attendance group. The odds were reduced to 23%, but remained significant when physical and mental health were controlled. CONCLUSIONS: In this older Mexican American population, regular attendees at religious services were less likely to develop ADL disability over a period of seven years compared to those who attended services less often.     

The Economic Characteristics of De-diversifying Firms

During the 1980s, many diversified firms reduced their diversification by refocusing on their core businesses. This research note tries to identify the characteristics that distinguished the companies that refocused from those that did not. It is found that relative to their industry counterparts, the refocusing firms were characterized by high diversification and poor performance. In addition, a firm was more likely to refocus if its core industry was ‘attractive’.