The Epitome of Style and Grace

Unknown Wife tells me, "UP, there's a small wasp nest by the garage door. Could you get it?"

So, I get the wasp spray and give it a shot. A few wasps come flying out, I take two quick steps back, and trip backwards over my own two feet.

End result: I land on my butt and wrench my back. And all Unknown Daughter (age 5) registers is that "Daddy said a bad word."

That's why they make those words (and ibuprofen).

Mark Cuban's Sharesleuth.com Is Up And Running

Back in June, Dallas Mavericks owner Mark Cuban announced that he was planning a venture that will combine investigative journalism and investing. According to this Businessweek Online story:

Searchsleuth.com will focus on investigative journalism, seeking to find unsavory companies and share the tales behind their malfeasance, Carey says. The stories will take an "anti-fraud, pro-investor” point of view and will likely steer away from the '“he-said, she-said'” approach of much contemporary journalism."

Apparently, Cuban will attempt to profit from the information he uncovers by shorting the stocks prior to unveiling the stories. At the time of Cuban's announcement, there were a lot of questions as to whether this approach was legal or amounted to insider trading (for a law professor's analysis of the issue, see Larry Ribstein's TCS story here).

To make a long story short (no pun intended), Cuban's new site is up and running and has it's first post. No investigative journalism yet (it's more of a generic piece that doesn't mention any specific companies), but I'll keep an eye on the site.

From an academic standpoint, it's an interesting idea, and could raise some interesting issues. First off, I'm curious to see what the site will add over and above the information already in Footnoted.org. Second, I wonder if Cuban will disclose his positions AND the dates he took them (highly unlikely, but I can hope, can't I?). This would make for a good case study on the actual payoff to information gathering, and would add a lot of credibility to the site. Finally, I wonder what effect the publishing of the stories will have on the trading volume (and bid-ask spreads) in the stocks covered.

Stay tuned.

Updated 8/8: Welcome to all the folks who came over from the the Yahoo! Finance Message Boards. Feel free to look around - the blog ranges over a pretty broad variety of topics. You can get back to the main page by clicking on the logo at the top, and archives (and buttons to add the blog's RSS feed to your feed reader) are listed on the right sidebar.

Interesting Paper on Votes in Director Elections

It's been a while since I highlighted an academic paper, but this one is very interesting. Boards of directors are probably the primary focus of current corporate governance research. There are numerous papers that focus on board composition, board size, the effect of poor corporate performance on board composition, and the effect of board composition on subsequent corporate performance. However, there's been relatively little work done on the director election process. Now there is.

Jay Cai, Jacqueline Garner, and Ralph Walkling (all at Drexel University) just posted a piece to SSRN titled "Electing Directors". Here's the abstract:

The election of directors is arguably the most fundamental aspect of corporate governance, yet little empirical analysis of this issue exists. The objective of this research is to examine the determinants and efficacy of director elections using a large sample of post-SOX elections. Our tests provide strong support for the firm performance, director performance and shareholder rights hypotheses and limited support for the efficacy hypothesis. Specifically, we document that shareholders express their dissatisfaction with governance and with the poor performance of their firms and directors through their votes. However, shareholder votes result in only minor changes to performance and governance of firms and are not associated with reputational effects to directors. These results provide important benchmarks for the current debate about reform of the election and voting process

Read the whole thing here.

They do a very nice job, and have some interesting results. They find that shareholders do change their voting patterns in response to poorer firm performance or perceptions that the directors are not acting in their (shareholders') best interests:

• Directors at poorer-performing firms receive fewer votes;
• Directors with poorer attendance records get fewer votes;
• "Busy" directors (those holding more seats on other boards) receive fewer votes;
• Independent outside directors receive higher votes, as do those recommended by ISS.

However, it's all relative. The typical director receives in the mid-90% range of the votes, and even in the lowest vote category, directors receive over 92% of the votes.

So, in summary they find that most directors that get put up for election do get the overwhelming majority of the votes, and that while there are variations, they're not that significant in magnitude. However, they do provide some very important benchmarks for future research. Well done.

Ken Lay Dies of Heart Attack

According to the Houston Chronicle, Ken Lay has died from a heart attack in Colorado.

List of Companies Under Scrutiny For Options Backdating

The Wall Street Journal just updated their list of companies that are being looked at by either the SEC or the Justice Department for "options timing" issues.

The table list about 60 companies at present, with a short summary of the issues or recent news stories for each company. It's worth a quick look, as there are quite a few big names on there.

Most companies on the list are being looked at by both the DOJ and the SEC, and I'm sure there are many more to come.

Dilbert Illustrates Contracting Difficulties Under Asymmetric Information

We have a similar problem each semester when we have students fill out evaluations of their professors (but the bargaining's not as explicit).

HT: Alex Tabarrok at Marginal Revolution

This Week's Carnival Of The Capitalists

The Independence Day COTC is up at My Money Forest. Because of the holiday, there are fewer submissions than usual, but there were a few that caught my eye. Here they are:

With all the media attention lately, it wouldn't be a COTC without a post on options backdating, so Sox First gives us Options Scams: Timing is Everything

Searchlight Crusade goes into the ins and outs of buying distressed propoerties in Foreclosures: A Good Investment?

Gongol gives us Traffic Rankings for Major Business and Economics Websites. It's a nice way of putting website traffic in perspective.

Finally, Ask Uncle Bill discusses pensions in Pensions - The Not So Good Old Days

As usual, look around. There's always lots of interesting stuff at a Carnival.

Statistical Rapping

If you're one of those rare few who both likes rap music AND has your statistical geek on, you might get a kick out of this - statz rappers. Looks like some grad students had WAAAY too much time on their hands.

That line sticks in your head: "Got your difference on the top, and your error on the bottom."

If I could only do this for my finance classes.

HT: Mungowits End

Great Site on the Declaration of Independence

For those of you who want a bit more information about the Declaration of Independence, USHistory.org has a great collection of resources including:

• A copy of the Declaration itself (and copies of rough drafts, too)
  
• Short biographies of all 56 signers
• Background information to give you some context about the Declaration
  
• A timeline

All in all, it's well worth a read. Now a neighbor and I have to go out and buy more fireworks for our celebration. Once we move we'll be in a state where it's much harder to get pyrotechnics, and this is the last Independence Day with our good friends in our current neighborhood. So we're going out with a bang (yeah, it's a weak pun, so sue me).

Bush Sings U2

I meet with a group of about 8-10 guys from my church at 6:30 every Saturday morning (it's the only time we can meet without taking time from our families). It's an interesting bunch -- they're mostly successful ( but not all), mature Guys (with a Big "G") with a great deal of openness and very, very strange senses of humor. My Saturday mornings with the PallBearer's Club will be one of the biggest things I'll miss after the move.

For some reason, the band U2 comes up in conversation on a regular basis. So, this video clip's for them:

Sunday Bloody Sunday.

HT: Sgtstryker.com