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Using a system of equations approach, this paper empirically tests the impact of credit quality, asset maturity, and other issuer and issue characteristics on the maturity of municipal bonds. We find that under conditions of lower information asymmetry that prevails in the municipal sector, higher-rated bonds have longer maturities than low-rated bonds. This result differs from that observed in the corporate sector. Overall, our results support the asset maturity hypothesis. In addition, our analysis finds that fundamentals matter. Issue features that provide additional protection or convenience to the investor tend to increase debt maturity. Copyright (c) 2010, The Eastern Finance Association.

Problem statement:There is a significant difference between the interest rates on the GO and the RV municipal bonds. We sought explanation for this difference in differences in information asymmetry between the two types of municipal bonds. GO bonds finance general municipality expenditures and repayment is from general tax revenues. RV bonds finance special projects and repayment is from cash flows of the special projects. These projects are assumed to be more asymmetric than the general municipality tax revenues. Previous studies examined this issue but did not explicitly consider the information asymmetry differences. Approach: We used issue transaction spread as a proxy for information asymmetry. Average spread for RV bonds is 1.172% while that for GO bonds is 0.892%. We controlled for external economic factors, issue and issuer features and contractual terms that might affect yield on debt. We used two-step regression analyses to explain yields on the two types of municipal bonds. Results: RV bonds cost 74 basis points more on the average than GO bonds. After controlling for external economic factors, issue and issuer features and contract terms, the difference shrank to an average of 44 basis points. Issue transaction spread, our proxy for information asymmetry and credit rating were important determinants of bond yields. Conclusion/Recommendations: Issue transaction spread, as a proxy for information asymmetry, explained differences in bond yields. Other variables that affect yield differences were credit rating, maturity, economic activities, contract terms and other issue and issuer features. Still, there remained an unexplained difference in the yields between RV and GO bonds of 44 basis points that we left for further research. This difference was inversely related to the credit rating of the bond.

This article analyses stock market reactions to election polls. Stock markets anticipate the impact of events on future cash flows. Current values depend on future cash flows and risk prospects. We posit that election polls are indications of the political platforms that are expected to win elections. Given the traditional philosophical differences between the Republican and the Democratic Parties, and the specific campaign promises of the US presidential candidates in the 2008 election, we hypothesize that stock market reacts negatively to the prospect of Barack Obama winning the election. We test this hypothesis by relating daily stock index returns to a lag value of differences in election polls that show Obama's advantage over John McCain. The results consistently show that stock market reacts negatively (positively) when Obama (McCain) has poll advantage over McCain (Obama). We conclude that there are differences in perception between Main Street and Wall Street.

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PurposeThe purpose of this paper is to export the idea of “Core Competency Based Valuation”. Wireless network operations services companies have exploded in importance and face unprecedented challenges in valuing them. This article considers how one firm's managers are enhancing their value through better performance and decision making to input long‐term value, along with the industry growth and highly favorable customer response to their quality products and services.Design/methodology/approachThis fairly extensive, yet focused paper, was based on accepted financial valuation procedures, due diligence from visit with managers and relevant market data. This paper also reflects other critical valuation quantitative information concerning their considerable business activity and excellent future prospects in the “sales deals pipeline” such as Nokia, a key customer development, that should be reflected in any detailed report regarding valuation.FindingsEffective management requires that the emphasis return to fundamentals, even if it makes analysts unhappy in the short‐term. For managers, DCF tools will continue to be important. However, history also shows that on occasion market valuations can and do deviate. They can benefit that way only if they understand the real underlying values. Managers need to keep their focus on discounted cash flow and all those factors in the company and marketplace that reflect the firm's capabilities and opportunities.Originality/valueWhat makes wireless firms, and especially new wireless firms, different? First, they usually have not been in existence for more than a year or two, leading to a very limited history. Second, their current financial statements reveal very little about the component of their assets – expected growth – that contributes the most to their value. Third, these firms often represent the first of their kind of business. In many cases, there are no competitors or a peer group against which they can be measured.

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This paper investigates the impact of ADR listing on the trading volume and volatility of the domestic market. Existing theories indicate that trading shifts to a market with lower transaction costs, and the level of volatility is directly related to the level of trading activity. The analyses provide empirical evidence showing increase in both trading volume and price volatility in the domestic market after ADR listing. The increase in volatility is attributed to noise resulting from public information as opposed to from increased trading friction. This suggests improvement in liquidity following ADR listing. Comparison across country groups indicates marginally higher gain for emerging market stocks although the difference is not statistically significant. Auction type markets gain more in terms of increase in trading volume than dealer type markets (JEL: G15, N20).