FMAs October 2013

A quick look at some of the papers and talks that interested me from the FMA (Financial Management Association) meeting in Chicago IL.

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    FMAs--My favorite conference

    I always look forward to the FMAs, even though not always to the travel (which always seems to come at a busy time).  This year's conference is in Chicago. 

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    What influences director votes?

    Cool paper. Looks at Chinese firms. Data set has individual director votes. Findings: 1. If a director had high reputation in advance, (s)he was more likely to dissent--vote against management. 2. If a director is young, (s)he was more likely to dissent. 3. If the director is in his/her first term (they have term limits at 2 terms), less likely to dissent. 4. If the director dissents, (s)he is more likely to leave the board. ->Reputation protection (authors' views) may be the reason, BUT could also be only one with a strong reputation can fight management.

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    Sell in May and go away---still works

    Cool paper finds both longevity (still going even though it has been written about for 80 years) and breadth (the authors look at 37 countries! Strategy of making two trades a year (buying S&P futures--200% of portfolio) in November, and selling out to put in Risk Free Assets on May 1 ranked in top quartile of funds. Possibly more important (and definitely so in the opinion of the paper's discussant) was the finding that this anomaly holds true across many asset classes and not just equities.

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    What to expect in the next 4-8 weeks?

    If past history is any indication, the authors find that winners reverse over the next 4-8 weeks while losers continue their downward course.

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