Front Matter Source: Financial Management, Vol. 19, No. 1 (Spring, 1990), pp. 1-6 Published by: Wiley on behalf of the Financial Management Association International Stable URL: http://www.jstor.org/stable/3666025 . Accessed: 15/06/2014 20:28 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp . JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. . Wiley and Financial Management Association International are collaborating with JSTOR to digitize, preserve and extend access to Financial Management. http://www.jstor.org This content downloaded from 91.229.229.162 on Sun, 15 Jun 2014 20:28:49 PM All use subject to JSTOR Terms and Conditions
Transcript
Front MatterSource: Financial Management, Vol. 19, No. 1 (Spring, 1990), pp. 1-6Published by: Wiley on behalf of the Financial Management Association InternationalStable URL: http://www.jstor.org/stable/3666025 .
Accessed: 15/06/2014 20:28
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .http://www.jstor.org/page/info/about/policies/terms.jsp
.JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range ofcontent in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new formsof scholarship. For more information about JSTOR, please contact [email protected].
.
Wiley and Financial Management Association International are collaborating with JSTOR to digitize, preserveand extend access to Financial Management.
http://www.jstor.org
This content downloaded from 91.229.229.162 on Sun, 15 Jun 2014 20:28:49 PMAll use subject to JSTOR Terms and Conditions
President Robert A. Taggart Boston College 1989-1990
Richard W. McEnally University of North Carolina 1990-1991
Secretary/Treasurer Timothy W. Koch
University of South Carolina
Chariman, Board of Trustees Frank K. Reilly University of Notre Dame
Vice President, Program Ronald C. Lease Tulane University 1990
David A. Walker Georgetown University 1991
Vice President, Meeting Arrangements Edward A. Moses Rollins College 1990
Vice President, Membership Services Philip L. Cooley Trinity University 1989-1990
Roger P. Bey University of Tulsa 1990-1991
Vice President, Awards R. Charles Moyer Wake Forest University 1989-1990
Dana J. Johnson Virginia Tech 1990-1991
Vice President, Financial Education Gary L. Trennepohl Texas A&M University
Immediate Past President Charles A. D'Ambrosio University of Washington
FMA EXECUTIVE OFFICE
Executive Director Jack S. Rader
Director, Placement Service Anita Glover
Director, Student Programs Karen Wright
Financial Management (ISSN 0046-3892) is the journal of the Financial Management Association, an affiliate of the Finman Corporation. It is published quarterly. See publishing schedule and deadlines below. The Editor and the Association assume no responsibility for views expressed by the authors.
Membership dues of the Association include a one-year subscription to the journal. Subscription rates are: Regular $40; Sustaining $45. Library subscriptions are $60 per year. Members outside the U.S. add $6 per year to cover overseas postage. All fees must be in U.S. dollars drawn on a U.S. bank. Application forms are available in this issue.
Memberships, subscriptions, and address changes: Write Financial Management Association, College of Business Administration, University of South Florida, Tampa, FL 33620.
Manuscripts: Send to James S. Ang, Editor, Financial Management, R-53G, Department of Finance, College of Business Administration, Florida State University, Tallahassee, FL 32306-1042. A submission fee is required for evaluation of each manuscript considered, $40 for non-FMA members and $20 for FMA members (U.S. dollars). Style information for manuscripts is at the back of this journal.
Permission to Quote or Republish: Write Financial Management Association, College of Business Administration, University of South Florida, Tampa, FL 33620.
Advertising Rates and Requirements: Write Tammy L. Jones, Managing Editor, c/o James S. Ang, Editor, Financial Management, R-53G, Department of Finance, College of Business Administration, Florida State University, Tallahassee, FL 32306-1042.
Publishing Schedule and Deadlines: Financial Management is published on March 30 (Spring), June 30 (Summer), September 30 (Autumn), and December 30
(Winter). Deadlines for receipt of meeting announcements, calls for papers, or positions available are: January 8 (Spring), April 10 (Summer), July 10 (Autumn), and October 6 (Winter). Announcements received after these deadlines will be printed in the current issue if at all possible or will be printed in the next following issue if appropriate. (These deadlines do not apply to camera-ready copy for advertisements. Advertisers please direct queries to the Managing Editor.)
Copyright O 1990 Financial Management Association, an affiliate of the Finman Corporation. Composed and printed by Dartmouth Printing Company, Hanover, NH. Second class postage paid at Tampa, FL and additional mailing offices.
POSTMASTER: Send address changes to FMA, College of Business Administration, University of South Florida, Tampa, FL 33620.
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College of Business, R-53G Tallahassee, FL 32306-1042
MANAGING EDITOR
Tammy L. Jones (904) 644-6512
James A. Brickley University of Utah
Donald H. Chew Stern Stewart & Co/JACF
Philip L. Cooley Trinity University Thomas E. Copeland UCLA/McKinsey
Gary W. Emery University of Oklahoma
John D. Finnerty Fordham Univ./McFarland
Dewey & Co.
Robert S. Harris University of Virginia Gailen L. Hite Columbia University
SPONSORS
Florida State University University of South Florida
ASSOCIATE EDITORS
Roger G. Ibbotson Yale University Kose John New York University Andrew J. Kalotay Salomon Brothers
Richard Kolodny University of Maryland Ronald Lease Tulane University Wilbur G. Lewellen Purdue University Gershon N. Mandelker University of Pittsburgh John J. McConnell Purdue University
INSTITUTIONAL MEMBERS
Arkansas Public Service Commission
AT&T Communications Bell Atlantic Corp. Central Bank for Cooperatives Credit Research Foundation E.F. Hutton
Richard H. Pettway University of Missouri
Lemma W. Senbet University of Wisconsin, Madison Clifford W. Smith University of Rochester Meir Statman University of Santa Clara Hans R. Stoll Vanderbilt University
Anjan Thakor Indiana University David A. Walker Georgetown University
Hampton University John Hancock Mutual Life Morgan Guaranty Trust Morgan Stanley & Co. N.Y. Society of Fixed Income Analysts Republic National Bank of New York Wisconsin Bell
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12 Employee Stock Ownership Plans and Corporate Restructuring: Myron S. Scholes Myths and Realities Mark A. Wolfson
The analysis suggests that, particularly for large firms (in which area the greatest growth in ESOPs has occurred), the case for tax incentives being the primary motivation in establishing an ESOP is
very weak. The case for employee incentives being the driving force behind ESOPs is also weak. The main motivation for the growth of ESOPs is their antitakeover characteristics.
29 The Tax and Distributional Effects of Leveraged ESOPs Susan Chaplinsky Greg Niehaus
The magnitude of tax benefits from a leveraged ESOP depends on the ESOP's dividend policy. The distribution of ESOP benefits between employees and nonemployee shareholders depends on the
price employees pay for their ESOP stock. Evidence on ESOP dividend policies and on the amount of compensation that employees forego in exchange for their ESOP suggests that ESOPs are generally not structured to maximize the benefits to shareholders.
REVIEW
39 The Record of Employee Ownership Corey Rosen
Employee ownership has grown rapidly in the last decade-over 9,000 companies have made over 9,000,000 employees owners. In about a third of these cases, employees will own a majority of the firm's stock. Employees have accumulated significant capital stakes, usually without having to sacrifice wages or benefits. Companies have performed better, provided they link ownership with
employee involvement programs. However, employee ownership has not usually led to corporate democracy.
EMPIRICAL ANALYSIS
48 Employee Stock Ownership Plans and Shareholder Wealth: Saeyoung Chang An Empirical Investigation
The effect of ESOPs on shareholder wealth is documented. On average, firms adopting ESOPs for leveraged buyouts, wage concessions, or employee benefit plans experience positive abnormal returns. This is consistent with the shareholder interests hypothesis. However, firms adopting ESOPs as takeover defenses suffer from significant wealth losses, supporting the managerial entrenchment hypothesis.
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59 Leveraged ESOPs, Wealth Transfers, and "Shareholder Neutrality:" Robert F. Bruner The Case of Polaroid E. Richard Brownlee II
Using an economic framework, Polaroid's ESOP based restructuring of 1988-1989 is examined with simulation analysis, and with the estimation of cumulative market-adjusted returns for stockholders and bondholders. The analysis reveals gains to Polaroid's public shareholders, losses to bondholders, and losses to the government. The welfare of employees and public stockholders is found to be
contingent on the realization of restructuring savings and productivity gains.
PANEL DISCUSSION
75 ESOPs and Corporate Finance Implications
82 Bond Covenants and Managerial Flexibility: Gene Laber Two Cases of Special Redemption Provisions
Bond covenants are used to control conflicts between bondholders and stockholders. Sometimes, covenants that appear to protect bondholders can be used to the shareholders' advantage. Two such covenant provisions are maintenance and replacement (M&R) funds and funnel sinking funds. Both have been used to redeem bonds at special prices, sometimes during periods when bonds were protected from refunding. These redemptions allow wealth transfers away from bondholders.
90 A Weighted Cash Conversion Cycle James A. Gentry R. Vaidyanathan
Hei Wai Lee
The cash conversion cycle (CCC) focuses on the length of time funds are tied up in the cycle, but it is not adjusted for the timing nor for the amount of funds committed throughout the total conversion run. A weighted cash conversion cycle (WCCC) is developed to combine the timing of the flows and the amount of cash used in each segment of the cycle. The WCCC provides helpful insight when evaluating short-run financial management performance.
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H arcourt B race Jovanovich, Inc. .........................................................................................................................
....................... 114 M acm illan P ublishing C o
M cG raw -H ill Publishing Co. .............................................................................................................................................. ..............
South-W estern- A cquisitions...................................................................................................................................................................
PLACEMENT DIRECTORY-POSITIONS SOUGHT AND AVAILABLE Positions Available-Multiple Listings ........................................ .................107-108 Positions Available -Individual Listings
The University of Calgary, Alberta, Canada ........................................................... 108 International University of Japan, Niigata ........................................................... 109 U niversity of Tennessee, K noxville
Financial M anagem ent for D ata Processing .................................................................................................................................... 11
New Jersey Center for Research .................................................................................................47 Northern Finance Association ...................................................................................................99 Midwest Finance Association ........................................................................................58 Pacific-Basin Finance Conference...................... ............................................................ 121 Southern Finance Association......................... .................................................38
PROFESSIONAL JOURNALS FinancialAccountability & Management ........................................ ......................122 Journal of Business Finance & Accounting.............................. ....................... 123 Journal of Money, Credit, and Banking ........................................... ................... 124 The Journal of Small Business Finance .......................................... ..................... 119
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An Important Announcement from Financial Management
A Special Issue on
"International Corporate Finance"
Authors are invited to submit papers on issues related to international dimensions of corporate finance. Topics include (but are not limited to):
* Capital structure and dividend policies of transnational firms
* Corporate financing and investment strategies due to differences in international tax
regimes and differences in inflation rates
* International corporate hedging
* International mergers and acquisitions
* International financing innovations
* Agency and asymmetric information issues in international corporate finance
* International joint ventures
* Challenging case studies of international corporate financial problems
* Quality reviews of topics of continuing interest in international corporate finance
Professor Lemma W. Senbet, University of Maryland, has accepted the task of editing the Special Issue. The issue is tentatively scheduled for Summer 1991.
Submissions (6 copies) marked "Special Issue" should be sent to the Editor of Financial Manage- ment by July 31, 1990:
James S. Ang FINANCIAL MANAGEMENT/SPECIAL ISSUE
Florida State University
College of Business, R-53G
Tallahassee, FL 32306-1042
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