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Examines the bidding associated with mergers, highlighting evidence from the United Kingdom. Reference to studies conducted by R. Roll in 1986; In-depth look at the merger bidding process; Detailed information on the game-theoretic approach; Hypothesis that the generosity of the merger terms increases the probability of acceptance; Problems associated with the `analogy' of an auction and a merger bid.

This article reviews a study on the uses of financial ratios. Financial ratios are used to assess the ability of a firm to pay its debts, determine managerial effectiveness, and evaluate a firm's performance. The article identified two types of positive uses of financial ratios: (1) by accountants and analysts to forecast future financial variables and (2) by researchers in statistical models for mainly predictive purposes. The article presents considerable advances in using the financial ratios in their statistical nature.

Comments on an article concerning statistical validity of the ratio method versus regression analysis for financial analysis. Sources of heteroscedasticity; Provision of an evidence of the existence of heteroscedasticity in cross-sectional data; Empirical results and inferences.

This article presents a study on the stock market efficiency and low volume of trading at the Kuala Lumpur Stock Market. Thirty companies and six sector indices for the six years ended 30th June 1980 were examined. Only companies that were traded both during the last two days of the first month and during the last two days of the last month of the data period were selected. The serial correlation coefficient measures the relationship between the value of a random variable at time and its value in the previous period. After two efficient tests, a third and more complicated test is also conducted. The application of spectral analysis not only serves to confirm or reject the results of the earlier two tests; it also shows any isolated deviations from the random walk model in both the high and low frequency regions of the spectrum.

The article focuses on building society mergers in Great Britain. The Chief Registrar of Friendly Societies has actively encouraged mergers between the smaller societies throughout the 1970s. Many building society chiefs have embraced his views and have used them as reasons for their societies actively searching out takeover victims. In fact commentators frequently talk nowadays of a dozen or so building societies as the eventual state. Such views have been rarely challenged and the merger movement has been largely ignored as a public issue. However the empirical evidence concerning industrial mergers more generally and related theories of merger activity, suggest that there is often no economic case for such merger mania and that such activity may be explained in terms of simple managerial motives of self-interest. The empirical evidence shows that while acquiring firms on average are more profitable, and acquired firms less so, it is not correct to infer that the combined unit will retain above average profitability. Subsequent to the merger, acquiring firms in Great Britain have tended to reductions in profitability.

It has often been argued that the monopolistic position of building societies and the lack of constraints on policies of their managers has brought inefficiencies and managerial utility maximising results. This may be seen in society growth policies and their expense preference behaviour. When there is increased competition affecting margins some building societies may earn insufficient profits so as to threaten their financial stability. The present study uses multiple discriminant analysis to study the period 1978-1980 and verifies the hypothesis that both growth and expense preferences caused profit insufficiency which could lead to financial distress. [ABSTRACT FROM AUTHOR]

Discusses some of the issues concerning the evolving structure of the building society industry in Great Britain during the 1970s. Discussion of the economics and the constitution of the movement; Development of a behavioral hypotheses; Variations in building societies' operations.

Empirical studies have shown distributions of financial ratios are skewed. An explanation for this is given and it is argued that in such circumstances comparison of a financial ratio with some norm (e.g. industry average) is likely to misinform. It is also shown that where financial ratios are used as inputs to statistical models normality is irrelevant but a method of transformation into a normal distribution is provided whereby original interrelationships are preserved. Finally, because of the inadequacies of financial ratios, it is shown how regression analysis may be used in financial statement analysis. [ABSTRACT FROM AUTHOR]

This reply extends the contention that financial ratios cannot be used comparatively with any safety. It is shown that the obstacles posed by Horrigan for residual analysis may easily be overcome. [ABSTRACT FROM AUTHOR]