Designing effective compensation contracts has become increasingly complex due to the globalization of the executive work force and the multitude of incentive schemes. We examine the relationships between managerial pay and firm performance among domestic and global firms using economic value added (EVA) and market value added (MVA) to assess wealth creation. Our work suggests that top managers in domestic- and globally focused firms are not only incented to increase EVA, but also rewarded for past additions to MVA. The results of our research suggest that managers of highly globalized firms tend to be paid at higher levels, reflecting the increased complexity of managing global firms.

AbstractWe examine changes in trading activity around stock splits and their effect on volatility and the adverse‐information component of the bid‐ask spread. Even after controlling for microstructure biases, we find a significant increase in volatility after the split. Changes in total volatility and in its permanent component are positively related to changes in the number of trades. This suggests that both informed and noise traders contribute to changes in trading activity. Further, while the adverse‐information component of the spread increases unconditionally after the split, the change is negatively related to the change in trading activity. The results suggest that a crucial determinant of liquidity changes after a stock split is the success of the split in attracting new trades in the security.

In this paper, we analyze the information content of stock splits by examining the market's reaction to the joint announcement of both stock splits and cash dividends. Several authors have suggested that splits are merely vehicles to convey information about either dividends or future earnings. If this were the case, one might expect the simultaneous announcement of the dividend to eliminate the marginal informativeness of the split. To the contrary, we find that even after controlling for the information contained in the dividend announcement, splits convey significant information to the market. We also examine whether both dividends and splits are conveying information about the same underlying attribute of firm value, or whether they are jointly providing information about more than one attribute. To study this issue, we employ latent variable/structural equation models. The analysis suggests that there are, in fact, at least two latent variable that are being signalled by the firm. While the information in dividend announcements leads to a statistically significant market revaluation, there is independent information contained in the split signal, and this information is significant in explaining the market's revaluation as well.

We reexamine the impact of stock splits on the volatility and liquidity of the stock. We develop a model of trading where the number of informed traders and changes in the volatility and liquidity are endogenously determined by changes in the number of noise traders. Our empirical evidence suggests that the increase in volatility after stock splits cannot be totally attributed to microstructure biases due to the bid-ask bounce and price discreetness. A significant fraction of the increase in volatility is due to an increase in the number of both noise and informed trades. Also consistent with our model's predictions, we find that the stock's liquidity worsens when the number of noise trades either declines or increases by a small amount. On the other hand, liquidity improves for large increases in noise trades, which is consistent with the managerial motive for stock splits. A crucial determinant of the increase in noise trades is the release of positive information to the market soon after the announcement of the split.

Journal of Financial ResearchVolume 3, Issue 3 p. 309-319 Article EFFICIENT PORTFOLIOS VERSUS EFFICIENT MARKET James S. Ang, James S. Ang Florida State UniversitySearch for more papers by this authorJess H. Chua, Jess H. Chua The University of CalgarySearch for more papers by this authorAnand S. Desai, Anand S. Desai The University of MichiganSearch for more papers by this author James S. Ang, James S. Ang Florida State UniversitySearch for more papers by this authorJess H. Chua, Jess H. Chua The University of CalgarySearch for more papers by this authorAnand S. Desai, Anand S. Desai The University of MichiganSearch for more papers by this author First published: Fall 1980 https://doi.org/10.1111/j.1475-6803.1980.tb00282.xRead the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Volume3, Issue3Fall 1980Pages 309-319 RelatedInformation

Journal of Financial ResearchVolume 2, Issue 2 p. 97-109 Article EVIDENCE THAT THE COMMON STOCK MARKET ADJUSTS FULLY FOR EXPECTED INFLATION James S. Ang, James S. Ang Visiting Professor of Management Purdue UniversitySearch for more papers by this authorJess H. Chua, Jess H. Chua Associate Professor of Finance Calgary (University of Calgary)Search for more papers by this authorAnand S. Desai, Anand S. Desai Ph.D. candidate University of Michigan.Search for more papers by this author James S. Ang, James S. Ang Visiting Professor of Management Purdue UniversitySearch for more papers by this authorJess H. Chua, Jess H. Chua Associate Professor of Finance Calgary (University of Calgary)Search for more papers by this authorAnand S. Desai, Anand S. Desai Ph.D. candidate University of Michigan.Search for more papers by this author First published: Fall 1979 https://doi.org/10.1111/j.1475-6803.1979.tb00022.xCitations: 5Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume2, Issue2Fall 1979Pages 97-109 RelatedInformation