Tarun Mukherjee - Academia.edu (original) (raw)

Papers by Tarun Mukherjee

Global Finance Journal, May 1, 2017

Before the introduction of the Split Share Structure Reform (SSSR) of 2005, a dual stock system c... more Before the introduction of the Split Share Structure Reform (SSSR) of 2005, a dual stock system characterized Chinese-listed firms. The states owned non-tradable shares and private owners held tradable shares. The dual system generated agency problems because state owners enjoyed all the rights reserved for tradable shares but escaped the stock market risk faced by non-state shareholders. Because executives of state-owned enterprises (SOEs) received rewards based on the book value of assets rather than the market price of shares, they had no incentive to maximize the share price. The SSSR led to the conversion of non-tradable shares to tradable shares, with two major implications: (1) the interests of government and private owners are now more closely aligned and (2) government agents of SOEs are now rewarded and punished based on a firm's market performance. Thus, the expectation is that government agents turn their attention to improving a firm's market performance rather than its book value during the post-reform era. We examine the impact of the SSSR on Chinese firms' investments in working capital. Based on 511 manufacturing firms between 2003 and 2011, we find that the SSSR is associated with significant reductions in working capital investments during the post-reform period. The reduced investment in working capital is associated with improved market performance of these firms.

Social Science Research Network, Nov 12, 2015

ABSTRACT We investigate why firms choose to issue new shares to fund their direct stock purchase ... more ABSTRACT We investigate why firms choose to issue new shares to fund their direct stock purchase plans (DSPPs). The evidence supports our hypothesis that such firms are high growth firms facing shortages of internal capital along with a high marginal cost of external capital. We also hypothesize that firms use new-issue DSPPs to raise equity in smaller installments before making full-scale seasoned equity offerings (SEOs). The majority of firms in our sample offer SEOs within five years after initiating new-issue DSPPs. The market appears to perceive new-issue DSPPs as small-scale SEOs given that the reaction to SEO announcements is significantly higher for these firms than for matching firms without DSPPs.

Social Science Research Network, Feb 22, 2005

Page 1. 7 Merger Motives and Target Valuation: A Survey of Evidence from CFOs Tarun K. Mukherjee,... more Page 1. 7 Merger Motives and Target Valuation: A Survey of Evidence from CFOs Tarun K. Mukherjee, Halil Kiymaz, and H. Kent Baker This study provides insights about the motives for mergers and acquisitions (M&As) as well ...

Journal of Economics and Finance, Sep 1, 2002

We examine several arguments-past performance, capital structure adjustment, and broadening the o... more We examine several arguments-past performance, capital structure adjustment, and broadening the ownership base-involving why firms adopt and discontinue new-issue dividend reinvestment plans (DRPs). We test hypotheses for each argument by analyzing financial characteristics for firms adopting and discontinuing new-issue DRPs compared with matching non-DRP firms. The evidence provides some support for the past performance argument but none for the capital structure adjustment argument. Limited support also exists for the broadening the shareholder base argument. Overall, the results support the notion that firms needing funds initiate new-issue DRPs, and then discontinue them when the need for external funding diminishes.

RePEc: Research Papers in Economics, Dec 7, 2005

We survey managers of Norwegian firms listed on the Oslo Stock Exchange about their views on divi... more We survey managers of Norwegian firms listed on the Oslo Stock Exchange about their views on dividend policy. The key factors that drive dividend policies are the level of current and expected future earnings, stability of earnings, current degree of financial leverage, and liquidity constraints. No significant correlation exists between the overall rankings of factors influencing dividend policy between Norwegian and U.S. managers. Norwegian managers express mixed views about whether a firm's dividend policy affects firm value. In general, management views provide support for the signaling hypothesis of payout policy but not the tax-preference explanation.

RePEc: Research Papers in Economics, Feb 2, 2006

We survey editors from 15 "core" and 35 "non-core" finance journals to learn their views about sp... more We survey editors from 15 "core" and 35 "non-core" finance journals to learn their views about specific issues involving survey research. Based on responses from 25 editors, none of their journals has an established policy involving the publication of survey research. The evidence shows that survey-based manuscripts typically go through the same review process as other manuscripts. However, editors of "core" versus "non-core" journals have mixed views about the role that survey research should play in the finance literature. The editors provide their views about the strengths and weaknesses of survey research as well as topic areas that would benefit from using this approach. A review of a finance journals shows that the publication of survey-based papers is an infrequent event for most journals.

The Journal of Entrepreneurial Finance

This paper reports survey results regarding leasing practices of small firms. Small firms that le... more This paper reports survey results regarding leasing practices of small firms. Small firms that lease are more likely to be relatively large manufacturing firms which exhibit higher debt ratios and higher sales growth. The survey responses as well as empirical analyses of pertinent data reveal that the relationship between debt and leasing is complementary. Unlike their larger counterparts, small firms seldom use textbook recommended lease-borrow decision models. Also, unlike large firms, small firms are more likely to offer "dubious" reasons, such as off-balance sheet accounting and 100 percent financing, as advantages of leasing.

SSRN Electronic Journal, 2020

Journal of Economics and Finance, 2019

A debate exists on the issue of whether a governance system is value additive or even necessary f... more A debate exists on the issue of whether a governance system is value additive or even necessary for a privately-held firm. One side of the debate suggests that, since agency problems do not exist in a small private firm, it does not need a costly governance system. The other side argues that a private firm indeed faces agency costs in the form of altruism and, therefore, could extract net gains from a governance system. In this paper, we empirically investigate whether a good governance system crates or destroys value of private family firms. We first demonstrate that a multifamily firm encounters larger agency costs stemming from inter-family conflicts, and therefore, has larger incentive than a single-family firm to institute a superior governance system. We then show that a multifamily firm, owing to its better governance system, outperforms its single-family counterpart.

Journal of Financial Research, 1995

By employing the vector error correction model (VECM) in a system of seven equations, we find tha... more By employing the vector error correction model (VECM) in a system of seven equations, we find that the Japanese stock market is cointegrated with a group of six macroeconomic variables. The signs of the long‐term elasticity coefficients of the macroeconomic variables on stock prices generally support the hypothesized equilibrium relations. Our findings are robust to different combinations of macroeconomic variables in six‐dimension systems and two subperiods. Also, the VECM consistently outperforms the vector autoregressive model in forecasting ability.

We investigate why firms choose to issue new shares to fund their direct stock purchase plans (DS... more We investigate why firms choose to issue new shares to fund their direct stock purchase plans (DSPPs). The evidence supports our hypothesis that such firms are high growth firms facing shortages of internal capital along with a high marginal cost of external capital. We also hypothesize that firms use new-issue DSPPs to raise equity in smaller installments before making full-scale seasoned equity offerings (SEOs). The majority of firms in our sample offer SEOs within five years after initiating new-issue DSPPs. The market appears to perceive new-issue DSPPs as small-scale SEOs given that the reaction to SEO announcements is significantly higher for these firms than for matching firms without DSPPs.

Financial Analysis for Today's Investment Projects, 2013

Dividends and Dividend Policy, 2011

In this paper, we examine factors influencing the choice between tracking stocks and minority car... more In this paper, we examine factors influencing the choice between tracking stocks and minority carve-outs and their performances. We expand the research in this field by incorporating a fa ctor that was largely ignored in extant literature: managerial entrenchment. We find that the following firms have a greater tendency to choose tracking stocks over carve-outs: firms with a tendency to increase executive pays-especially those in the form of subsidiary stocks, firms that are more tightly controlled by their executives, and firms with greater financial strength prior to restructuring. The former two are consistent with our conjecture that managerial entrenchment plays a role in the choice between tracking stocks and carve-outs. The latter result is consistent with our other hypothesis that prior financial strength influences the decision. Equally important findings are that both are characterized by poor long-term performances and that tracking stocks' performances are on average inferior to those of carve-outs. Evidence suggests that these sub-par performances can be partially attributable to managerial entrenchment.

SSRN Electronic Journal, 2012

In this paper, we investigate the effects of internal corporate governance on the length it takes... more In this paper, we investigate the effects of internal corporate governance on the length it takes to remove a CEO after the initial sign of poor firm performance. We find that firms that have a better quality of internal corporate governance are quicker to remove poor-performing CEOs. This result persists after controlling for other factors that might influence the CEO removal decision.

SSRN Electronic Journal, 2011

This paper examines the level and the main determinants of liquidity created by credit unions. Th... more This paper examines the level and the main determinants of liquidity created by credit unions. The contribution of credit unions to the aggregate liquidity created by the financial system has increased over time from 206billionin2000to206 billion in 2000 to 206billionin2000to318 billion in 2008. We document a negative relationship between the level of capital and liquidity created by credit unions across all size classes. Liquidity creation is positively related to the level of deposit insurance for medium credit unions and for credit unions with no special credit and borrowing agreements and negatively related to deposit insurance for a sample of large credit unions and for credit unions with special credit and borrowing agreements. The evidence suggests that credit unions' decision to substitute insured funds with funds obtained through special credit and borrowing agreements alters the traditional role played by deposit insurance on liquidity creation.

Journal of Economics and Finance, 2002

Interfaces, 1987

Survey evidence in a four-stage framework for the capital budgeting process reveals that many cap... more Survey evidence in a four-stage framework for the capital budgeting process reveals that many capital budgeting practices differ from what the relevant theory prescribes. Much of the gap, however, can be explained by deficiencies in the theory itself, suggesting new directions for ongoing capital budgeting research.