We examine the industry valuation effects of analyst stock revisions and identify the variables that influence these effects. Our results show that industry rivals experience significant abnormal returns in response to revision announcements. Although the mean stock price response suggests contagion effects, there is also evidence of significant competitive effects. The valuation effects are influenced by the magnitude of the rated firm's announcement return, along with analyst-specific and industry-specific characteristics. However, the sensitivity of the valuation effects to these characteristics is conditioned on whether the industry effects are contagious or competitive. 2006 The Southern Finance Association and the Southwestern Finance Association.

No abstract

We examine whether predictable outcomes of the National Basketball Association playoff games can generate increased trading of firms headquartered in the geographic area of the participating teams. We find statistically significant increased trading before games and this effect is more pronounced and persistent for games with more predictable outcomes, for predictable losses more than wins, and for more critical games. We also find that this effect is more pronounced for firms that are more vulnerable to shifts in investor sentiment and we find weak evidence that trading leads to price effects. The results are consistent with the hypothesis that predictable sentiment can drive investor behavior.

We examine how the wealth effects of equity offers are influenced by investors' expectation of the equity type (public or private) to be issued. Firms deviating to the public market may be issuing when information asymmetry or agency costs are high, and their wealth effects are more negative than for firms that are anticipated to issue equity publicly. Firms deviating to the private market, however, may signal firm undervaluation or monitoring benefits and experience more positive wealth effects than firms that are expected to issue equity privately. For the private issues, public market accessibility appears to influence the wealth effects. 2006 The Southern Finance Association and the Southwestern Finance Association.

The Sarbanes-Oxley Act of 2002 (SOX) aimed to improve financial reporting by enhancing corporate disclosure and governance. We find statistically significant increases, from before to after the passage of SOX, in total return variance, market risk and idiosyncratic risk. The risk increases are consistent with predictions that the legislation would cause firms to disclose more negative information, resulting in increased investment risk. However, in cross-sectional tests, post-SOX improvements in information certainty, board independence and monitoring are associated with smaller increases or greater decreases in risk. If SOX is responsible for these improvements, its effects are consistent with its purpose. Copyright (c) 2008, The Eastern Finance Association.