JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org. ABSTRACTThere is gathering evidence of insider trading around corporate announcements of dividends, capital expenditures, equity issues and repurchases, and other capital structure changes. Although signaling models have been used to explain the price reaction of these announcements, a usual assumption made in these models is that insiders cannot trade to gain from such announcements. An innovative feature of this paper is to model trading by corporate insiders (subject to disclosure regulation) as one of the signals. Detailed testable predictions are described for the interaction of corporate announcements and concurrent insider trading. In particular, such interaction is shown to depend crucially on whether the firm is a growth firm, a mature firm, or a declining firm. Empirical proxies for firm technology are developed based on measures of growth and Tobin's q ratio. In the underlying "efficient" signaling equilibrium, investment announcements and net insider trading convey private information of insiders to the market at least cost. The paper also addresses issues of deriving intertemporal announcement effects from the equilibrium (cross-sectional) pricing functional. Other announcement effects relate the intensity of the market response to insider trading, variance of firm cash flows, risk aversion of the insiders, and characteristics of firm technology (growth, mature, or declining). REACTION OF SECURITY PRICES to corporate announcements of dividends, capital expenditures, equity issues and repurchases, and other changes in capital structure has been widely documented.1 Since the documented evidence suggests that these announcements convey to the market some private information possessed * Stern School of Business, New York University and Emory Business School, Atlanta, respectively. For helpful discussions the authors would like to thank other papers too numerous to site. Announcement effects of financial restructuring (including security issues or repurchases) are summarized in Jensen and Smith (1985, Tables 2 and 3) and Smith (1986, Tables 1 and 3). Some preliminary evidence on announcements of capital expenditures appears in McConnell and Muscarella (1985), Mishra (1985), and Doukas, Rahman, and Switzer (1986). 835 This content downloaded from 128.235.251.160 on Sun, 22 Mar 2015 22:23:20 UTC All use subject to JSTOR Terms and Conditions 836The Journal of Finance by corporate insiders, signaling models have been used to explain the price reaction.2 However, most signaling models have specified an objective for the corporate insiders which implicitly assumed that insiders cannot trade. The viability of the signaling equilibrium requires an assumption which precludes the in...
There is gathering evidence of insider trading around corporate announcements of dividends, capital expenditures, equity issues and repurchases, and other capital structure changes. Although signaling models have been used to explain the price reaction of these announcements, a usual assumption made in these models is that insiders cannot trade to gain from such announcements. An innovative feature of this paper is to model trading by corporate insiders (subject to disclosure regulation) as one of the signals. Detailed testable predictions are described for the interaction of corporate announcements and concurrent insider trading. In particular, such interaction is shown to depend crucially on whether the firm is a growth firm, a mature firm, or a declining firm. Empirical proxies for firm technology are developed based on measures of growth and Tobin's q ratio. In the underlying “efficient” signaling equilibrium, investment announcements and net insider trading convey private information of insiders to the market at least cost. The paper also addresses issues of deriving intertemporal announcement effects from the equilibrium (cross‐sectional) pricing functional. Other announcement effects relate the intensity of the market response to insider trading, variance of firm cash flows, risk aversion of the insiders, and characteristics of firm technology (growth, mature, or declining).
In this article we consider the following boundary value problemwhere Ω is a bounded and C 2 smooth domain in R N and F has superlinear growth in gradient and c(c) < −c 0 for some positive constant c 0 . Here, we studies the boundary behaviour of the solutions to above equation and establishes the global regularity result similar to one established in [12,16] with linear growth in gradient.
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