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Abstract:
We examine the relation between stock liquidity and investment opportunities in a sample of firms experiencing an exogenous liquidity shock. We find a positive relation between changes in capital expenditures and changes in stock liquidity, indicating that stock liquidity influences corporate investment decisions. This relation is robust to alternative measures of growth opportunities, and is consistent with a liquidity premium in equity returns. That is, an increase in liquidity effectively expands the set of positive NPV projects because it reduces the cost of capital. The results suggest that liquidity-enhancing events benefit shareholders by increasing the pool of viable growth opportunities.

Abstract:
We examine the relation between stock liquidity and investment opportunities in a sample of firms experiencing an exogenous liquidity shock. We find a positive relation between changes in capital expenditures and changes in stock liquidity, indicating that stock liquidity influences corporate investment decisions. This relation is robust to alternative measures of growth opportunities, and is consistent with a liquidity premium in equity returns. That is, an increase in liquidity effectively expands the set of positive NPV projects because it reduces the cost of capital. The results suggest that liquidity-enhancing events benefit shareholders by increasing the pool of viable growth opportunities.

Stock liquidity, investment opportunities, capital expenditures

Abstract:
The purpose of this course is to provide students with a heightened appreciation of the role of a financial manager within a firm and to understand the tools and the nature of the decisions that financial managers must make. Paramount to the topic is an understanding of what constitutes a "good" manager. A traditional finance characterization of a good manager is one who adopts the most firm-value-maximizing projects in the interests of maximizing current shareholders' wealth (e.g. Brealey, Myers, and Allen, pp 20-28). This model is sometimes called the shareholder primacy model. An alternative model, frequently termed the stakeholder model, argues that a good manager is one who effectively maximizes the joint utility of all firm-stakeholders. A substantial literature has evolved highlighting the tensions between the two models. The goal of this course is to expose students to both of these models in the context of a traditional core-MBA finance class. The intent is for students to leave the course understanding in which situations the actions of stakeholder-focused managers and shareholder-focus managers will be the same and in which situations the actions could be different. In particular, students will appreciate that increased attention to the interests of all stakeholders is frequently essential to maximizing the long-term value of the firm and therefore current shareholder wealth.

Abstract:
Economists and legal scholars have discussed the proper role of a public corporation since at least the early part of the 20th century. The two major schools of thought that have emerged from this discourse are frequently characterized as shareholder primacy and stakeholder primacy, noting that shareholders are one of many stakeholders. Until recently, however, this debate rarely made it into the MBA classroom. If the corporate objective function was discussed at all, it was typically treated in a cursory manner in the early stages of a corporate finance course, with shareholder primacy receiving the lion's share of attention. As a result, the shareholder primacy model has become the de-facto theory underlying MBA curricula. Recent events such as the failure of corporate governance systems, dramatic shifts in technology and production trends, and increased attention on the environment, however, have renewed interest in this debate among practitioners and academics alike. Efforts to redirect the focus of curricula have emerged, though almost exclusively from disciplines other than finance, and corporate finance faculty are frequently identified as the source of inertia against change.

Abstract:
We investigate whether men and women angel investors have different levels of confidence based on participation in the angel capital market, rate of investments, and stage of investments. We find evidence consistent with women angels having lower levels of confidence compared to men, although we do not suggest that this difference is deleterious for women angel investor's wealth. However, women entrepreneurs, who disproportionately seek funding from women angels, may have more restricted access to early-stage capital than men.

Entrepreneurship

Abstract:
As a response to the deregulation of the electric power industry, many electric utilities adopted a strategy of acquiring other electric or gas utilities. We examine whether these merger and acquisition strategies create value for the utility shareholders and whether the strategies result in superior post-merger operating and stock-price performance relative to utilities that did not grow through acquisitions. We find little evidence that the mergers and acquisitions created long-term value for a fully diversified investor. Furthermore, the stock price and operating performance of the acquirers under performed the stock price and operating performance of a control portfolio of utilities that did not engage in merger activity. This under performance was even worse for those utilities that diversified along product/power or geographic lines. We conclude that if efficiencies and synergies were created as a result of deregulation, utilities did not have to grow through merger to capture them. Our findings also suggest that utility regulation did not preclude economically efficient mergers that increased shareholder wealth from taking place prior to deregulation.

Deregulation, Electric Utilities, Mergers and Acquisitions