Firms are undertaking growing numbers of e-commerce initiatives and increasingly making significant investments required to participate in the growing online market. However, empirical support for the benefits to firms from e-commerce is weaker than glowing accounts in the popular press, based on anecdotal evidence, would lead us to believe. In this paper, we explore the following questions: What are the returns to shareholders in firms engaging in e-commerce? How do the returns to conventional, brick and mortar firms from e-commerce initiatives compare with returns to the new breed of net firms? How do returns from businessto-business e-commerce compare with returns from business-to-consumer e-commerce? How do the returns to e-commerce initiatives involving digital goods compare to initiatives involving tangible goods? We examine these issues using event study methodology and assess the cumulative abnormal returns to shareholders (CARs) for 251 e-commerce initiatives announced by firms between October and December 1998. The results suggest that e-commerce initiatives do indeed lead to significant positive CARs for firms ’ shareholders. While the CARs for conventional firms are not significantly different from those for net firms, the CARs for businessto-consumer (B2C) announcements are higher than those for business-to-business (B2B) announcements.

In this paper, we analyse the short-term wealth effects of large (intra)European takeover bids. We find large announcement effects of 9 % for target firms and a cumulative abnormal return that includes the price run-up over the two-month period prior to the announcement date of 23%. However, the share price of the bidding firms reacts positively with a statistically significant announcement effect of only 0.7%. We also show that the status of a takeover bid has a large impact on the short-term wealth effects of target’s and bidder’s shareholders, with hostile acquisitions triggering substantially larger price reactions than friendly mergers and acquisitions. When a UK target or bidder is involved, the abnormal returns are almost twice as high as bids involving both a Continental European target and bidder. We also find strong evidence that cash offers trigger much larger share price reactions than all-equity offers or combined bids consisting of cash, equity and loan notes. A high market-to-book ratio of the target leads to a higher bid premium, but triggers a negative price reaction for the bidding firm. Also, our results suggest that bidding firms should not diversify by acquiring target firms that do not match their core

AI has long been applied to the problem of predicting financial markets.

This paper documents a dramatic difference in the abnormal announcement period returns of the first bidder to announce an acquisition attempt in a particular industry. Typical of the literature, the set of all bidders in our sample earn abnormal returns indistinguishable from zero. However, bidders announcing an acquisition after a ‘dormant period ’ of at least a year without such activity in their industry, earn significantly positive abnormal returns of 0.8%. This contrasts with the insignificantly negative returns earned by bidders with shorter industry dormant periods. We also document that the prices of subsequent bidders adjust proportionately to returns of the initial bidder at the time of that initial announcement. In addition, bidder abnormal returns are significantly positively related to the length of the dormant period. These results provide strong evidence in support of the anticipation hypothesis. Our results hold after controlling for variables typically associated with bidding firm returns. 2 Anticipation Acquisitions and the Bidder Return Puzzle

Abstract not found

AI has long been applied to the problem of predicting financial markets. Recently, developments in both AI and financial economics have opened up the possibility for close collaboration between the two fields. First, a line of economics research has emerged that uses AI market forecasting as a form of applied econometrics. Just as importantly, an entirely new source of financially relevant data has become available and amenable to computational analysis: text. Access to text data -- and the associated AI techniques for analyzing it -- not only hold out the hope of improved prediction on the AI side, but also enable financial economics to ask new kinds of questions about how markets react to events. I propose a line of research that develops a set of AI tools, specifically adapted to financial markets, to exploit this convergence for both economics and AI. This research has three main elements. The first thread takes representations from technical analysis -- a semi-rigorou...

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 limits thrift goodwill that can be counted as regulatory capital. This paper examines if and why the goodwill clause adversely affected the market value of thrifts. Main findings are that good will had a large negative effect on stock returns of low-capital thrifts in 1989 and that the negative effect persisted in the following two years. These findings suggest that a reduced put option value accounted for a large portion of the stock-price decline. The role of asymmetric information appears to have been small. Key Words: Put option value; Asymmetric Information; FIRREA; goodwill JEL Classification Codes: G21 and G32 Address: Sangkyun Park Capital Markets Function Federal Reserve Bank of New York 33 Liberty St. New York, NY 10045 Telephone: (212) 720 - 6317 Fax: (212) 720 - 1773 E-mail: Sangkyun.Park@ny.frb.org The views expressed are those of my own and do not necessarily reflect those of the Federal * Reserve ...

The event study is an important methodology in management research that enables the assessment of value attributable to firm initiatives based on the responses of capital markets to news about firm actions. While capital markets are efficient in processing information about firms, their ability to rapidly determine future benefit streams linked to initiatives involving novel information technologies such as ecommerce technologies may be limited by several factors. There is considerable ambiguity related to benefits from novel technologies and their effects on industries, markets and firms in the short term. At the time of the announcement, relevant information is also not available on complementary initiatives influencing value such as such as changes to business processes, willingness of supply chain partners to make complementary changes etc. Adjustments of stock prices over longer windows are thus likely to reflect more informed assessment of the ability of firms to generate benefits and to appropriate value created by novel information technologies than those within a few days of the event. We examine the returns to e-commerce events in the period from 1999 to 2000 employing a set of short time windows (1-day, 5-days, 10-days bracketing the event) as well as a set of long event windows (6-month, 9month and 1-year from the event). The results reflect little consistency between abnormal returns in short 1day, 5-day and 10-day event windows. In contrast, the abnormal returns observed in 6, 9 and 12-month windows, though slightly different are reasonably consistent. Further, the variation of short-run abnormal returns across the two year period appear to be suspiciously similar to the fluctuations of market sentiments related to the Internet, indicating that extraneous,...

The world banking industry is undergoing a large-scale transformation. Banking systems and financial markets, both domestic and international, have been undergoing a series of profound changes. One of the main driving forces of these worldwide changes is the introduction of innovations in new information technologies. Against these trends, industrial structure in the banking industry and banking regulation have sometimes encouraged these trends and sometimes adapted to them. The aim of this paper is to present research findings and the main arguments in the literature on technological change and industrial organisation in the banking industry. The last section of the paper focuses on the role of information technologies in the banking industry. We present research findings of functional studies on IT investment in the banking industry. These studies have analysed the relationship between IT and corporate performance by examining specific IT applications in the context of corporate strategies.

1 st draft We examine the magnitude and determinants of acquiring shareholder returns using a sample of domestic and foreign acquisitions of UK firms during the period 1990-1998. We also assess the magnitude of combined wealth gains and their division using a paired sample of 219 targets and their acquirers. Targets of foreign bids have a lower PE ratio, have experienced lower sales growth and lower profitability growth but have greater cash reserves and higher R&D intensity vis a vis targets of domestic bids. Foreign acquirers are larger and have a higher level of intangible assets and R&D expenditure vis-à-vis UK bidders. Both targets of foreign bids and their acquirers differ to their domestic counterparts in that they are from more high tech industries. UK acquirers gain albeit insignificantly upon the takeover announcement being made in contrast to the small losses experienced by their foreign counterparts with US acquirers deem to fare worst. Combined wealth gains whilst on average are small, are larger when acquirers are from Continental Europe and when acquirers do not have a previous presence in the UK market. The determinants of acquirers value changes are found to include a mix of both target firms financial characteristics as well as bid features. Finally, a great volume of merger activity is witnessed in the 1995-1998 era compared to the 1990-94 period and we control for this in our analyses. Principal author: