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Abstract:
This paper documents the value-relevance of nonfinancial information on the quantity and quality of inventive output for high-tech companies. We find that the number of patents and information on the quality of patents have consistently positive effects on stock prices. Interestingly, this information does not appear to diminish the value-relevance of accounting data on the firm's financial performance and R&D expenditures. Like findings reported by Amir and Lev (1996) for the wireless communications industry, these results suggest an important complementary relation between traditional financial information and nonfinancial data in the high-tech sector. The findings also lend credence to the suggestion of the AICPA Special Committee on Financial Reporting that firms disclose nonfinancial performance measures to provide insight into a company's operations. In particular, patent statistics concerning the quantity and quality of inventive output appears to sharpen the investor's perception of the ongoing value created by the firm's inventive and innovative activity.

Abstract:
Analysis of broad samples of value-weighted and equal-weighted returns of U.S. equities documents that abnormally high rates of return on small-capitalization stocks continue to be observed during the month of January. This January effect in small-cap stock returns is remarkably consistent over time and does not appear to have been affected by passage of the Tax Reform Act of 1986. This finding brings new perspective to the tax-loss selling hypothesis and suggests that behavioral explanations are relevant to the January effect. After a generation of intensive study, the January effect continues to present a serious challenge to the efficient market hypothesis.

Equity Investments, Technical Analysis, Portfolio Management, Equity Strategies, Investment Theory, Efficient Market Theory, Behavioral Finance

Abstract:
This paper uses broad samples of value-weighted and equally-weighted returns to document the fact that abnormally high rates of return on small-cap stocks continued to be observed during the month of January. The January effect in small cap stock returns is remarkably consistent over time, and does not appear to have been affected by passage of the Tax Reform Act of 1986. This finding adds new perspective to the traditional tax-loss selling hypothesis, and suggests the potential relevance of behavioral explanations. After a generation of intensive study, the January effect is alive and well, and continues to present a daunting challenge to the Efficient Market Hypothesis.

Market efficiency, January effect, calendar anomalies, behavioral finance

Abstract:
Together with the number of patents and the value of R&D expenditures, scientific measures of patent quality give investors a useful basis upon which to judge the economic merit of the firm's inventive and innovative activity. Especially in the case of small cap and relatively low P/E high tech companies, we find a favorable stock-price influence when both the number of patents, the scientific merit of those patents, and R&D spending is high. Patent quality information also appears germane in the case of large cap high-tech companies with relatively high P/E ratios. In short, patent citation information may indeed help investors judge the future profit-earning potential of a firm's scientific discoveries.

Patents, patent citations, market value, research and development

Abstract:
Significant market value effects of research and development (R&D) are generally apparent, but aggregate evidence has the potential to obscure meaningful differences according to firm size. Consistent with findings reported by Chauvin and Hirschey (1993) for the late 1980s, valuation effects of R&D remain somewhat greater for larger as opposed to smaller firms.

Abstract:
An interesting perspective on recent trends in the U.S. housing market is gained by noting how housing prices correspond to per capita income, a traditional measure of affordability. The ratio of housing prices to per capita income is high but close to historical norms in many regional markets. However, notable exceptions do exist. In California, housing prices recently reached levels relative to per capita income far above historical norms. A significant pricing correction has begun in that market. Similarly, housing prices are correcting sharply in Arizona, Florida, and Nevada. Investors need to be mindful of the potential for housing market-related losses and the potential for contagion among asset classes.

Portfolio Management: Asset Allocation, Economics: Macroeconomics, Relationship of Economic Activity to the Investment Process

Abstract:
Current accounting rules end regular amortization of goodwill and mandate annual tests for goodwill impairment and loss recognition, when appropriate. These rules make consideration of goodwill write-offs important and timely. In the study reported here, we found that the effects of goodwill write-off announcements were typically negative and material - on the order of -2.94 percent to -3.52 percent of the company's stock price. What makes goodwill write-off announcements especially noteworthy for investors is that additional effects of roughly -11.02 percent were realized by the end of a one-year post-announcement period. These results suggest that investors initially underreact to goodwill write-off announcements and that they need to be aware of the potential for further losses in the post-announcement period.

Equity Investments: fundamental analysis and valuation models; Financial Statement Analysis: financial accounting standards and proposals; Investment Theory: behavioral finance

Abstract:
The Nasdaq 100 Index is today's reincarnation of the Nifty Fifty. Many of today's institutional favorites feature extraordinary valuations, despite short operating histories, modest revenues, and sparse profits. At the market peak in 1972, Nifty Fifty stocks sold at an average P/E of 37.3 - versus a market multiple of 18.2. At the 2000 peak, the Nasdaq 100 sold at an average P/E multiple roughly six to eight times greater than the highest P/E ever accorded Nifty Fifty stocks. Following a historic stock market correction of more than 70 percent, P/Es for Nasdaq 100 companies remain two to two and a half times higher than peak P/E valuations for the Nifty Fifty.

Abstract:
This paper reports evidence in support of the hypothesis that closely-held ownership, institutional holdings and the degree of financial leverage are jointly and endogenously determined. An inverse relation between the percentage of closely-held shares and institutional holdings is apparent, as is a compatible inverse link between institutional holdings and leverage. A somewhat more complex link between closely-held ownership and leverage is suggested. High financial leverage generally reduces the percentage of closely-held shares, but already high closely-held ownership can work to increase the optimal degree of financial leverage.