Four types of bankruptcy prediction models based on financial statement ratios, cash flows, stock returns, and return standard deviations are compared. Based on a sample of bankruptcies from 1980 to 1991, results indicate that no existing model of bankruptcy adequately captures the data. During the last fiscal year preceding bankruptcy, none of the individual models may be excluded without a loss in explanatory power. If considered in isolation, the cash flow model discriminates most consistently two to three years before bankruptcy. By comparison, the ratio model is the best single model during the year immediately preceding bankruptcy. Quasi-jack-knifing procedures suggest that none of the models can reliably predict bankruptcy more than two years in advance.Other research which compares alternative prediction models on the same data includes Collins (1980) and Hamer (1983).

This paper examines the firm's opting out decision and the impact of the 1990 Pennsylvania Antitakeover Law on the stock prices of 123 firms. The results indicate that on average Pennsylvania stock returns decreased by 9 percent from introduction to passage. A comparison indicates that firms that opted out had CARs 18 percentage points higher than firms that chose not to opt out. The event study methodology may not be appropriate because investors may anticipate the passage of legislation and because there may be multiple events. Intervention analysis, an econometric technique not previously used in this area, is applied and the results support the agency cost hypothesis. A logit model is implemented to find the sources of the losses and gains and to study why firms choose to opt out. In this model, firms are controlled for antitakeover amendments, takeover activity, insider holdings, large noninsider holdings, size, and industry. Firms with a proxy for lower agency costs were found to be more likely to opt out of the legislation.

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This paper studies secrecy in voting and the role of information on coalition building in corporate governance. It finds evidence that supports the coalition building hypothesis and, in part, rejects the agency cost hypothesis. The conditions for insiders and large outsiders to form coalitions are examined. The results are consistent with insiders and large outsiders cooperating and voting as a block to maintain power, this imposes costs on other shareholders. Consistent with the agency theory and the coalition building theory, management initiated amendments have a more negative impact than shareholder initiated amendments. The Vote Your Conscience theory is rejected.

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