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  • Holmén, Martin; Wang, Peng (M.E.Sharpe, 2015)
    This paper investigates Initial Public Offerings (IPOs) of high-tech firms on the Chinese Growth Enterprise Market (GEM). Almost half of the GEM IPOs are set up in pyramid structures. The likelihood of a pyramid structure increases with the size of the IPO firm and state control. Our results do not suggest that pyramids are set up to overcome financial constraints. However, we document that pyramid IPOs are discounted before the IPO. The subscription price to book ratio is significantly lower for pyramid IPOs and this translates into higher underpricing. We conclude that IPO investors demand a higher risk-premium when investing in pyramid IPOs.
  • Brunzell, Tor; Liljeblom, Eva; Löflund, Anders; Vaihekoski, Mika (Elsevier BV * North-Holland, 2014-08)
    In this paper we analyze the results from a survey among all publicly listed Nordic firms on their dividend payout policy. The results show that 72% of the Nordic companies have a specified dividend policy. Larger andmore profitable companies aremore likely to have a defined dividend policy in place. The dividend policy is mostly influenced by capital structure considerations and the outlook of future earnings. We also find that the likelihood for a firm having an explicit dividend policy is positively related to ownership concentration as well as to the presence of large long-term private or industrial owners. Our results support the use of defined dividend policies for agency or monitoring reasons rather than signaling reasons.
  • Brunzell, Tor; Liljeblom, Eva (Emerald Group Publishing Ltd, 2014-08)
    ´Purpose – The purpose of this paper is to survey chairmen’s perceptions of female board representation in five Nordic countries, focusing on whether the chairman’s perception of board work is related to gender diversity, and on differences between high- and low-risk firms. Design/methodology/approach – The authors combine data from a questionnaire directed to the chairmen of the boards in Nordic listed companieswith data on firmcharacteristics and board composition. Findings – The authors find that the chairmen (97.5 percent male) are significantly less satisfied with female board members as compared to male ones. The authors also find that firms with nomination committees have more gender diverse boards, as well as indications of a more positively perceived contribution of female representation in high-risk firms. Research limitations/implications – The study is restricted to perceptions of chairmen for listed Nordic firms. The low response rate of 20.1 percent is a severe limitation. Practical implications – The increasing practice of using nomination committees in the Nordic countries seems advantageous from gender balance perspective. Originality/value – The authors contribute to the literature on gender diversity in boards by providing results from a board intern perspective. Keywords Diversity, Board of directors, Board effectiveness, Gender minority Paper type Research paper
  • Virk, Nader Shahzad; Butt, Hilal Anwar (Springer New York LLC, 2014-07-24)
    The evaluation for the specification errors of asset-pricing models is conducted using numerous characteristic portfolios for the Finnish stock market. The selection of the market is motivated by the atypical setting wherein few firms dominate the total market capitalization and small numbers of stocks are listed. We report diverging risk-returns trade-offs for the average tendencies of the stocks and for the actual growth in the invested stocks. We show Carhart (1997) model produces the smallest pricing errors across all the tested specifications although with different significant risk for EW and VW test portfolios. Deviations in the significant risk factors in the asset pricing tests becomes prevalent for using a simple technique of equally weighted (EW) and value weighted (VW) test assets. We suggest more cautious analyses for markets that have peculiar features instead of generalizing to standard evidence.
  • Butt, Hilal; Virk, Nader Shahzad (Wiley-Blackwell Publishing Ltd, 2014-03-02)
    This paper presents a simplified single period asset-pricing model adjusted for liquidity and tests it for the Nordic markets. The detailed empirical evidence is presented from Finnish test case. Empirical testing of small yet developed markets is motivated by the increased relevance of the illiquidity effect for illiquid assets/markets. The main evidence reports liquidity risk makes sufficiently larger part of predicted factor risk premium than the market risk, contrary to comparable US evidence. This highlights the ability of liquidity related model betas in capturing the time variation in expected returns across illiquid (Nordic) markets than market beta.
  • Ahmed, Sheraz; Hussain, Mujahid (M.E.Sharpe, 2014)
    This paper examines the impact of bilateral political and military news on the returns and volatility of the stock markets of India and Pakistan. Our results show that the volatility of both stock markets shows a significant reaction on the arrival of the news related to military aggression in a reciprocal way. Moreover, while the Indian stock market’s volatility seems to show a subdued response to bilateral political news, the Pakistani stock market appears to be sensitive to both political and military news originating from either country. The relatively stronger impact of military events can be attributed to a higher financial cost of confrontation between two countries.
  • Korkeamäki, Timo; Pöyry, Salla Fanny Helena; Suo, Maiju (Elsevier BV * North-Holland, 2014)
  • Antell, Jan; Korkeamäki, Timo (University of Vaasa, 2014)
  • Kuosmanen, Petri; Nabulsi, Nasib; Vataja, Juuso (Elsevier BV * North-Holland, 2014)
  • Holmén, Martin; Nivorozhkin, Eugene; Rana, Rakesh (Routledge (Taylor & Francis), 2014)
    In this paper we use Heckman selection models to analyse the relation between the likelihood of the firm becoming a takeover target, the takeover premium, and the use of anti-takeover devices. Ordinary least squares regressions suggest that anti-takeover devices, especially dual class shares, are associated with a higher takeover premium. However, we also document that anti-takeover devices reduce the likelihood that the firm will be taken over. When we control for the fact that takeover targets are selected, we do not find a significant relation between the takeover premium and dual class shares. Hence, our results suggest that the takeover premium is indeed influenced by private information about the likelihood of takeover.
  • Dijk, Oege; Holmén, Martin; Kirchler, Michael (Elsevier BV * North-Holland, 2014)
    Tournament incentives schemes have been criticized for inducing excessive risktaking among financial market participants. In this paper we investigate how relative performance-based incentive schemes and status concerns for higher rank influence portfolio choice in laboratory experiments. We find that both underperformers and over-performers adapt their portfolios to their current relative performance, preferring either positively or negatively skewed assets, respectively. Most importantly, these results hold both when relative performance is instrumental for higher payoffs in a tournament and when it is only intrinsically motivating and not payout-relevant. We find no effects when no relative performance information is given.
  • Korkeamäki, Timo; Michael, Timothy (Wiley-Blackwell Publishing, Inc, 2013-07)
  • Korkeamäki, Timo; Rainio, Elina; Takalo, Tuomas (Wiley-Blackwell Publishing, 2013-07)
  • Brunzell, Tor; Liljeblom, Eva; Vaihekoski, Mika (Wiley-Blackwell Publishing Asia, 2013-03-18)
    We study the determinants for the choice of capital budgeting methods and the setting of hurdle rates (WACCs) in five Nordic countries. Combining survey data with a rich set of determinants, including ownership data, CFO characteristics, and financial data, we find that the use of the Net Present Value method and the sophistication of the capital budgeting are related to firm characteristics, vari- ables proxying for real option features in investments and CFO characteristics (age and education). We also find support for significantly higher hurdle rates than motivated by economic theory. The premium is weakly positively related to managerial short-term pressure and strongly negatively related to the sophistica- tion level of the firm’s capital budgeting.
  • Korkeamäki, Timo; Takalo, Tuomas (John Wiley & Sons Ltd, 2013)
  • Holmén, Martin; Nivorozhkin, Eugene (John Wiley & Sons, 2012)
    In this paper, we test whether the determinants of block trade and non-partial tender offer probabilities differ and whether the relative magnitude of security and private benefits can explain the choice of transfer mode. We investigate the Swedish market for corporate control. The results emphasize the importance of investigating block trades and tender offers as two competing events. The proxies for private benefits of control, small controlling voting blocks, and separation of voting rights from cash flow rights are positively related to the likelihood of a block trade but negatively related to the likelihood of a non-partial tender offer. Our results suggest that separation of voting rights from cash flow rights might limit the efficiency of the market for corporate control. The prevalence of block trades in the presence of greater private benefits of control highlights the disadvantages of this control transfer mode in terms of incentive alignment between the buyer and the remaining dispersed shareholders.
  • Korkeamaki, Timo; Liljeblom, Eva; Pasternack, Daniel (Elsevier, 2011-01-03)
    Changes in taxation of corporate dividends offer excellent opportunities to study dividend clientele effects. We explore payout policies and ownership structures around a major tax reform that took place in Finland in 2004. Consistent with dividend clienteles affecting firms’ dividend policy decisions, we find that Finnish firms altered their dividend policies based on the changed tax incentives of their largest shareholders. While firms adjust their payout policies, our results also indicate that ownership structures of Finnish firms also changed around the 2004 reform, consistent with shareholder clienteles adjusting to the new tax system.
  • Maury, Benjamin; Liljeblom, Eva (Wiley-Blackwell, 2010-12-31)
    This paper examines the impact of a regime shift on the valuation of politically powerful oligarch firms. Focusing on the Yeltsin-Putin regime shift in Russia, we find that the valuations of outside shareholders claims are significantly higher under the Putin regime than under the Yeltsin regime after controlling for industry and time effects. The findings suggest that the increasing cost of extracting private benefits outweigh the reduction in the value of political connections following the political regime change. The results are also consistent with changes in the risk of state expropriation. Our results show that effects driven by the political regime change complement the traditional view stating that increased ownership concentration improved the performance of Russian oligarch firms.
  • Liljeblom, Eva; Vaihekoski, Mika (Elsevier, 2010-12-31)
    Increased media exposure to layoffs and corporate quarterly financial reporting have created arguable a common perception – especially favored by the media itself – that the companies have been forced to improve their financial performance from quarter to quarter. Academically the relevant question is whether companies themselves feel that they are exposed to short-term pressure to perform even if it means that they have to compromise company’s long-term future. This paper studies this issue using results from a survey conducted among the 500 largest companies in Finland. The results show that companies in general feel moderate short-term pressure, with reasonable dispersion across firms. There seems to be a link between the degree of pressure felt, and the firm’s ownership structure, i.e. we find support for the existence of short-term versus long-term owners. We also find significant ownership related differences, in line with expectations, in how such short-term pressure is reflected in actual decision variables such as the investment criteria used.