Assessing the Importance of Brand Equity in Health Services Marketing Through the Impact of Acquired Goodwill on Stockholder Returns

The growing importance of brand equity is widely recognized by researchers and business strategists alike. As such, creative new ways to capture the value of this intangible asset must be devised and tested. The current study uses acquired goodwill as a surrogate indicator of brand equity and looks at the importance of brand equity for firms in the health services industry by measuring the impact of acquired goodwill on stockholder returns. The findings indicate that acquired goodwill and stockholder returns appear to be significantly and positively related to each other. In addition, firms that have higher than average amounts of goodwill relative to total assets differ significantly in terms of stockholder returns than those that have relatively little investment in goodwill. Finally, the study indicates that the impact of goodwill on investor returns is highest for firms operating in one specific industry sub-sector, the market for home health services.

Influence of Capital Gains Tax Policy on Credibility of Unverified Disclosures

ABSTRACT: In this study, we consider the effects of the asymmetry in capital gains tax policy on the communication of private information to investors. Assuming quite plausibly that firm managers tend to favor current stockholder returns relative to future stockholder returns, though not exclusively, we identify conditions under which limitations on the deductibility of capital losses lend efficacy to unverified public disclosures that allow managers of higher value firms to separate from lower value firms in equilibrium. Although the tax asymmetry by itself may not be enough to enable separation, we show how it would nevertheless contribute to the efficiency of separation through explicitly dissipative signals. It further follows that if separation would occur by means of a dissipative signal in any event, then the tax asymmetry is welfare-enhancing. Our findings demonstrate that tax asymmetry can help resolve information asymmetry.

Acquisition of Failing Firms and Stockholder Returns

The effects of stock-exchanged acquisitions of failing firms on shareholder returns of acquiring firms are examined. This study finds that stocks of acquiring firms, on average, do not experience any significant positive abnormal returns during the announcement period. A further analysis, however, shows that there is a striking difference in the announcement effects between nonbank and bank acquisitions of failing target firms. Although nonbank acquisitions are associated with significant positive abnormal returns, bank acquisitions are associated with negative, although insignificant, abnormal returns during the announcement period. These findings are robust to the choice of a particular event-study technique. The overall results of this study suggest that investors do not perceive the acquisition of failing firms, particularly that of failing target banks, as favorable, and that the market for failing firms is overall competitive and efficient.