Spring 2008 Volume III Issue I
1. Effects of Issue Decisions on the Stock Prices in the Korean Market Doug S. Choi
he purpose of this study is to examine stock market reactions to different types of new issue decisions, i.e., debt and equity in light of Myers’ modified pecking order theory. The results of this examination will reveal if the experiences of the U.S. firms hold true in the Korean financial community. The capital structure studies incorporating recent developments in Korean market are beneficial to U.S. as well as Korean firms since many U.S. firms have become heavily involved with many Asian firms through direct and indirect investment. The asymmetric information hypothesis, supporting Myers’ modified pecking order theory, can be tested by examining market reactions to the announcement of external financing decisions.
2. Optimal Bookmaker Pricing and the Efficiency of the Baseball Betting Market Michael W. Smyser
The optimal pricing rules for a bookmaker in a line betting market are derived and shown to imply restrictions on the relation between win probabilities and line prices which provides a means to identify the actual pricing strategies used by professional bookmakers. Overall, our empirical results are consistent with balanced book pricing indicating that Las Vegas casinos making book on major league baseball games are not actively gambling in the market. Moreover, given balanced book pricing, our results indicate that bookmaker prices and gambling action in the baseball betting market are remarkably efficient although we do uncover some evidence suggesting that bookmakers are more adept at assessing win probabilities than the gambling public.