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Papers by Janet Payne

We examine 189 option introductions on newly listed options for ADRs over the period of 1982 to 2... more We examine 189 option introductions on newly listed options for ADRs over the period of 1982 to 2006. We test the short sales constraint in an environment potentially less susceptible to short sales constraints for many of the firms. We find that there is a negative abnormal stock return associated with the options introduction. The return is related to firm-specific information such as volatility, volume and short interest. Our findings are not consistent with the contention that options substitute for short sales, though we do find that options are more prevalent among ADRs of firms that are located in countries where short selling is illegal or put options don't exist. We also find that the trading volume increases for the optioned group relative to a peer group. Factors driving option listing on the options exchanges are similar, but not identical, to those in US domestic securities with the addition of the change in relative short interest. JEL Classification: G14, G18

Studies in Economics and Finance, 1994

Atlantic Economic Journal, 2001

Without Abstract

This paper proposes that business schools should include a financial technology course in the und... more This paper proposes that business schools should include a financial technology course in the undergraduate finance curriculum. In the past decade, increases in the availability and affordability of financial data and technology have transformed the way business is done. As a result, graduates with a higher competency in technology applications will have a significant advantage in career placement and future success. Business schools, however, have been slow to adapt to this transformation. Though many finance courses incorporate spreadsheet analysis in content courses, we find that fewer than 1% of AACSB-accredited business schools offer a dedicated course in financial technology applications. We survey the methods used by these courses, describe the content of one such course, and offer an example of an assignment used in our financial technology course.

Journal of Financial Research, 1999

SSRN Electronic Journal, 2000

In this article, we report results on the determinants of: (i) the decision to initiate dividends... more In this article, we report results on the determinants of: (i) the decision to initiate dividends, (ii) the level of dividends at initiation, and (iii) the timing of the dividend-initiation decision. In order to compare dividend-initiating firms with non-dividend-initiating firms, we track the dividend payment behavior of a sample of 5,875 firms that went public during the period 1979-1998. We consider determinants suggested by the major theories of dividends, namely, residual, tax, transactions costs, clientele, agency, signaling, and catering. Our analysis indicates that most of these theories, in different degrees, explain various aspects of the dividend initiation decision. Notably, we find support for the assumptions and predictions of the John and Williams (1985) and Allen, Bernardo, and Welch (2000) dividend signaling models.

Review of Quantitative Finance and …, 2003

... JANN C. HOWELL Iowa State University Abstract. ... The sources for the IPO data are (i) the S... more ... JANN C. HOWELL Iowa State University Abstract. ... The sources for the IPO data are (i) the Securities Exchange Commission's Registered Offering Statistics (ROS) tape, (ii) the database of IPOs from 1975–1984 compiled by Professor Jay Ritter (henceforth referred to as the Ritter ...

The Financial Review, 2004

Journal of Financial and Quantitative Analysis, 2012

We track the dividend initiation decisions of a sample of 6,588 firms that went public during the... more We track the dividend initiation decisions of a sample of 6,588 firms that went public during the period 1979-2006 and find that 873 of them initiated dividends. Our objective is to determine whether information signaling can explain the dividend initiation (DI) decision. We find that variables suggested by extant dividend-signaling models are significant determinants of the: (i) decision to initiate dividends, (ii) level of dividends, (iii) stock price effect of DI announcements, and (iv) timing of DI. Specifically, we find that when a firm has a greater need to raise new equity, it is more likely to initiate dividends, the level of dividends at initiation is higher, the announcement effect of DI is lower, and the firm initiates dividends sooner. Furthermore, when the level of institutional ownership in the firm is lower than what it should be, the firm has a higher probability of initiating dividends, the level of dividends at initiation is higher, the announcement effect of DI is higher, and the firm initiates dividends earlier. Our findings related to the need to issue equity are consistent with the dividend-signaling framework in John and Williams (1985), while our findings on the projected deficit in institutional ownership are consistent with the dividend-signaling framework in Allen, Bernardo, and Welch . Finally, consistent with John and Williams (1985) and Kale and Noe (1990), we document evidence which indicates that dividends can also signal lower risk. In our analysis, we control for residual, agency, tax, clientele, transactions costs, catering, and life cycle explanations of dividend policy as well as for potential endogeneity issues. JEL classification: G35; G32

International Journal of Managerial Finance, 2013

ABSTRACT In this paper, we test the assertion that options act as a substitute for short sales by... more ABSTRACT In this paper, we test the assertion that options act as a substitute for short sales by allowing investors an alternative way to act on bearish sentiment. An empirical test of this assertion requires a researcher to observe both types of firm - those that weren’t short sale constrained, as well as those that were. We examine the ability of options to alleviate the short sales constraint directly - in an environment where the constraint is likely to differ across firms in a systematic fashion, namely the market for American Depository Receipts (ADRs). We examine 190 option introductions on ADRs over the period of 1982 to 2006. The question of how ADRs are chosen for options listing, and whether those criteria differ from those found using purely domestic options is addressed using logistic regressions. We use the event study methods of Brown and Warner (1985) to examine the price effect of the listing. We use OLS regression to identify determinants of the cumulative abnormal return upon option listing. Independent variables are those indicated by existing literature that examines option listing on domestic securities. In an environment where the effective short sale constraint varies across firms, we find support for the contention that U.S. option listings reduce the effect of the short sales constraint, providing relief for investors who have negative sentiment about the stock and are subject to a short sale constraint. However, it does not appear that option listing entities seek out companies for which short sale constraints are stronger. Our hypotheses are similar to those of Mayhew and Mihov (2004) and Danielson and Sorescu (2001), but we assert that the ADR market is a more robust environment in which to test the hypotheses. This is due to the potentially large variation in the effective short sale constraints that results from the differences in their underlying home market legal and regulatory environments. In addition to relative short interest and the change in relative short interest, this environment allows us to use indicator variables to directly test the ability of options to substitute for short sales.

Financial Review, 2010

Despite the increase in institutional ownership, decreased trading costs, and increased real pers... more Despite the increase in institutional ownership, decreased trading costs, and increased real personal savings, we find that the average stock price is lower today than it was in the 1920s. In the aggregate, the propensity to split is a function of recent market performance, personal savings, and the desirability of appearing to be a small firm. Our results indicate that, after decades of inflation and the average stock price falling, splitting stocks to return to an "affordable" trading range must be rejected as an explanation. This suggests that other economic forces are behind splits, whether traditional or behavioral in nature.