Using options to measure the full value-effect of an event: Application to Obamacare

Borochin, Paul; Golec, Joseph H.

doi:10.1016/j.jfineco.2016.01.009

Cited by 33 publications

(23 citation statements)

References 25 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…To the best of our knowledge, there have only been three such applications. They have been used to predict the likelihood of takeovers (Subramanian, 2004;Barraclough, Robinson, Smith, and Whaley, 2013;Borochin, 2014), to measure the impact of regulatory legislation (Borochin and Golec, 2016), and to measure uncertainty about the firm around earnings announcements (Dubinsky and Johannes, 2006). We add to this literature by using options to derive market-based measures of risk and apply these measures to the challenge of explaining, as well as predicting, within-firm capital structure changes.…”

Section: Introductionmentioning

confidence: 99%

Options, equity risks, and the value of capital structure adjustments

Borochin

Yang

2017

Journal of Corporate Finance

Self Cite

View full text Add to dashboard Cite

We use exchange-traded options to identify risks relevant to capital structure adjustments in firms. These forward-looking market-based risk measures provide significant explanatory power in predicting net leverage changes in excess of accounting data. They matter most during contractionary periods and for growth firms. We form market-based indices that capture firms' magnitudes of, and propensity for, net leverage increases. Firms with larger predicted leverage increases outperform firms with lower predicted increases by 3.1% to 3.9% per year in buy-andhold abnormal returns. Finally, consistent with the quality, leverage, and distress risk puzzles, firms with lower predicted leverage increases are riskier but earn lower abnormal returns.

show abstract

Section: Introductionmentioning

confidence: 99%

Options, equity risks, and the value of capital structure adjustments

Borochin

Yang

2017

Journal of Corporate Finance

Self Cite

View full text Add to dashboard Cite

show abstract

“…Although the impact of the Patient Protection and Affordable Care Act in America on the different sub-industry is not the same, but according to the research findings, it is to be positive on the hospital industry. (Hartley, 2012, andBorochin, &Golec, 2016) Hartley (2012) found that average cumulative abnormal returns for hospitals sub-industry was 1.9% (1.6 billion dollars) on (T 0 , T 1 ). On Chinese market, the value were 2.4% in 2009 and 1.53% in 2010 during the same period of (T 0 , T 1 ).…”

Section: Discussionmentioning

confidence: 99%

Analysis on the Effect of Chinese Medical Reform Policy on Medical Listed Companies -- Empirical Analysis on Listed Companies’ Stocks Returns

Fu¹

2018

JMS

View full text Add to dashboard Cite

This paper studies the stock market reaction of medical reform policies to examine policies' effect on the listed companies which invested in hospital. This paper applies the method of Event Study, finding out that the announcement of the new round of medical and health systemic reform in 2009, the key work for medical and health systemic reform and its detailed rules of implementation in 2010, and the setting of several specific goals to develop the private hospitals run by civilians in 2012, have taken increases of listed companies' stocks returns (rate of return) by 2.95%, 4.64% and 4.92% separately. That means the whole market value rose by almost 55 billion, 128 billion, and 131 billion of RMB respectively. The empirical analysis results show that share price's return rate of the listed companies which invested in hospital are significantly associated with industrial planning and supporting policies launched by the government. That is to say, Chinese government's policy which began to encourage and guide civilian capital to develop the medical industry stimulated the medical and health industry effectively and significantly.

show abstract

“…None of the other sectors have significant CARs. Borochin and Golec (2016) use both the stock and option markets to investigate the House of Representatives passage of the ACA and the subsequent Supreme Court ruling on the ACA's constitutionality. They find that the passage of the ACA and the Supreme Court ruling have significant and positive net effects on the hospital and health insurance industries, but not the pharmaceutical industry.…”

Section: Literature Reviewmentioning

confidence: 99%