The sources of spinoff equity gains: takeover premiums or operating gains

Although the existence of spinoff equity gains is well documented, their source remains controversial. Arnong many potential causes, the literature suggests that spinoff equity gains could arise from expected tax benefits, expected takeover premia, operating performance improvement or from refocusing benefits. This paper investigates the link between spinoff announcement and post completion equity gains and post spinoff operating performance changes, takeover activity and refocusing benefits. The results indicate that spinoff announcement retums reflect anticipated takeover premiums as well as expected operating performance gains and refocusing benefits unrelated to operating performance. However, only the parent's operating performance gains are anticipated at the spinoff announcement. We find that post spinoff equity gains are driven mostly by operating performance changes for both parents and spun off subsidiaries. Takeover activity and unrelatedness of business lines between parent and subsidiary expIain littIe of post spinoff equity gains. OveralI, the data suggests that spinoffs equity gains mostly reflect anticipated real economic gains in terms of improved operating performance, and to a lesser extent takeover premium and refocusing benefit.

Relationship between franking credits and the market risk premium

In a dividend imputation tax system, equity investors have three potential sources of return: dividends, capital gains and franking (tax) credits. However, the standard procedures for estimating the market risk premium (MRP) for use in the capital asset pricing model, ignore the value of franking credits. Officer (1994) notes that if franking credits do affect the corporate cost of capital, their value must be added to the standard estimates of MRP. In the present paper, we explicitly derive the relationship between the value of franking credits (gamma) and the MRP. We show that the standard parameter estimates that have been adopted in practice (especially by Australian regulators) violate this deterministic mathematical relationship. We also show how information on dividend yields and effective tax rates bounds the values that can be reasonably used for gamma and the MRP. We make recommendations for how estimates of the MRP should be adjusted to reflect the value of franking credits in an internally consistent manner.

How accurately can convertibles be classified as debt or equity for tax purposes? Evidence from Australia

The New Business Tax System (Debt and Equity) Act established a set ofcriteria by which convertible securities could be classified as “debt-like” or “equity-like” for tax purposes. Using data on 256 convertible issues made in Australia between 2001 and 2012, we show that there is a strong relation between, on the one hand, a convertible’s ex ante classification determined at issuance using the tax criteria and, on the other hand, its ex post classification based on the conversion premium at maturity. We conclude that the criteria have been an efficient means of classifying convertibles. We also find an industry effect where debt-like convertibles are more likely to be associated with the resources, metals and mining firms, whilst equity-like are mainly issued by the finance sector. This finding is consistent with the solution to a finance-sequencing problem in the former case, and the impact of capital adequacy regulation in the latter.

A Markov switching unobserved component analysis of the CDX index term premium

Using a Markov switching unobserved component model we decompose the term premium of the North American CDX index into a permanent and a stationary component. We establish that the inversion of the CDX term premium is induced by sudden changes in the unobserved stationary component, which represents the evolution of the fundamentals underpinning the probability of default in the economy. We find evidence that the monetary policy response from the Fed during the crisis period was effective in reducing the volatility of the term premium. We also show that equity returns make a substantial contribution to the term premium over the entire sample period.

Equity management strategies in the Australian private sector

This paper outlines the methods and outcomes of a study into equity management strategies in Australian private sector organisations reporting to the Equal Opportunity for Women in the Workplace Agency. Reports from 1976 organisations indicate eleven key factors characterising equity management in Australia. The study highlights differences within previously identified social structural policies, temperamental and opportunity policies and identifies a further policy type, categorised as “support policies”. Differences have also been identified in relation to distribution structures, suggesting that gender is not the sole consideration in determining equity management strategies. The principle of distribution also figures strongly in equity management implementation.

Applying an equity lens to tobacco-control policies and their uptake in six western-european countries

We identified policies that may be effective in reducing smoking among socioeconomically disadvantaged groups, and examined trends in their level of application between 1985 and 2000 in six western-European countries (Sweden, Finland, the United Kingdom, the Netherlands, Germany, and Spain). We located studies from literature searches in major databases, and acquired policy data from international data banks and questionnaires distributed to tobacco policy organisations/researchers. Advertising bans, smoking bans in workplaces, removing barriers to smoking cessation therapies, and increasing the cost of cigarettes have the potential to reduce socioeconomic inequalities in smoking. Between 1985 and 2000, tobacco control policies in most countries have become more targeted to decrease the smoking behaviour of low-socioeconomic groups. Despite this, many national tobacco-control strategies in western-European countries still fall short of a comprehensive policy approach to addressing smoking inequalities.

Australian Indigenous students: addressing equity issues in assessment

This article provides the background and context to the important issue of assessment and equity in relation to Indigenous students in Australia. Questions about the validity and fairness of assessment are raised and ways forward are suggested by attending to assessment questions in relation to equity and culture-fair assessment. Patterns of under-achievement by Indigenous students are reflected in national benchmark data and international testing programmes like the Trends in International Mathematics and Science Sstudy and the Program for International Student Assessment. The argument developed views equity, in relation to assessment, as more of a sociocultural issue than a technical matter. It highlights how teachers need to distinguish the "funds of knowledge" that Indigenous students draw on and how teachers need to adopt culturally responsive pedagogy to open up the curriculum and assessment practice to allow for different ways of knowing and being.

A-REIT seasoned equity offerings : determinants and market reaction

The paper examines the decision by Australian Real Estate Trusts (A-REITs) to issue seasoned equity offerings from 2000 - 2008 and stock market reaction to the offerings using panel data and event study methodologies, respectively. The global financial crisis has resulted in freezing of the Australian bond markets, with several A-REITs left with seasoned equity issuance and asset sales as the only viable modes of raising additional capital. The findings review that leverage and operating risk are negative significant determinants of seasoned equity offerings; profitability and growth opportunities are positive significant determinants. Of the structure and type of properties held by the A-REIT, only stapled management structure and international operations are significant determinants. Type of properties held by A-REITs show inconsistent results. Similar to previous studies of seasoned equity offerings, we find a significant negative abnormal return associated with their announcement and no evidence of excessive leakage of information. Cross-sectional regressions show that the issued amount raised and leverage are significant factors affecting abnormal returns.

Equal employment opportunity and diversity management : can either live up to the promise of achieving gender equity?

This paper examines the extent to which women movement into management positions. Like many other countries, this progress in Australia is slow. The paper includes discussion of the theoretical explanations for this and the extent to which these are borne out in Australia. We are aware this group represents only a minority of Australian women workers, and there are many other groups of women workers for whom constraints to women’s access to senior management may not be the most pressing issue. We have, however, chosen to focus on women in management in this paper, as while there was considerable research and public policy attention directed towards this group in the 1980s and early 1990s, over the past decade there seems to have been a reluctance to continue to address this group, despite the numerical evidence that women continue to be disproportionately represented in senior management positions. We believe it’s timely to refocus on women in management.

Race and equity in higher education : A harder path for Indigenous academics

Our experiences as Indigenous academics within universities often reflects the experiences we have as Indigenous people in broader society, yet I am still surprised and angered when it is others working in higher education who espouse notions of justice and equity with whom we experience tension and conflict in asserting our rights, values and cultural values. At times it is a constant struggle even when universities have Reconciliation Statements as most of them do now, Indigenous recruitment or employment strategies and university wide anti-racism and anti-discrimination policies and procedures.

Applying Keller’s brand equity model in a B2B context : limitations and an empirical test

It has been recognised that brands play a role in industrial markets, but to date a comprehensive model of business-to-business (B2B) branding does not exist, nor has there been an empirical study of the applicability of a full brand equity model in a B2B context. This paper is the first to begin to address these issues. The paper introduces the Customer- Based Brand Equity (CBBE) model by Kevin Keller (1993; 2001; 2003), and empirically tests its applicability in the market of electronic tracking systems for waste management. While Keller claims that the CBBE pyramid can be applied in a B2B context, this research highlights challenges of such an application, and suggests changes to the model are required. Assessing the equity of manufacturers’ brand names is more appropriate than measuring the equity of individual product brands as suggested by Keller. Secondly, the building blocks of Keller’s model appear useful in an organisational context, although differences in the subdimensions are required. Brand feelings appear to lack relevance in the industrial market investigated, and the pinnacle of Keller’s pyramid, resonance, needs serious modifications. Finally, company representatives play a role in building brand equity, indicating a need for this human element to be recognised in a B2B model.