This empirical paper investigates the relationships between the amount of human capital that flows into a firm and two activities underlying a firm’s knowledge production, variation or change and knowledge retention. We track the flow of human capital within and across organizational and geographic space for all multi‐unit banks operating in the world foreign exchange trade industry from 1973 to 1993. The findings indicate that an increased reliance on past experience reduces how much human capital a firm imports in the future. This effect is moderated by a self‐reinforcing cycle of human capital inflow. Inflows of human capital also decline when a firm has recently adopted novel changes in its operations. The paper uses evolutionary thinking to define a model for intrafirm knowledge production.

We provide evidence on the agency cost explanation for corporate diversification. We find that the level of diversification is negatively related to managerial equity ownership and to the equity ownership of outside blockholders. In addition, we report that decreases in diversification are associated with external corporate control threats, financial distress, and management turnover. These findings suggest that agency problems are responsible for firms maintaining value-reducing diversification strategies and that the recent trend toward increased corporate focus is attributable to market disciplinary forces.

ABSTRACTWe provide evidence on the agency cost explanation for corporate diversification. We find that the level of diversification is negatively related to managerial equity ownership and to the equity ownership of outside blockholders. In addition, we report that decreases in diversification are associated with external corporate control threats, financial distress, and management turnover. These findings suggest that agency problems are responsible for firms maintaining value‐reducing diversification strategies and that the recent trend toward increased corporate focus is attributable to market disciplinary forces.

The Journal of FinanceVolume 32, Issue 2 p. 565-574 Session Topic: Money and Capital Market THE COMPARATIVE OPERATING EFFICIENCY OF BLACK SAVINGS AND LOAN ASSOCIATIONS Lewis J. Spellman, Lewis J. SpellmanSearch for more papers by this authorAlfred E. Osborne Jr., Alfred E. Osborne Jr.Search for more papers by this authorWilliam D. Bradford, William D. Bradford University of Texas-Austin, University of California-Los Angeles, and Stanford University, respectively. We gratefully acknowledge the aid of Donald Kaplan, Director of the Office of Economic Research, Federal Horne Loan Bank Board, in obtaining the data used in this study. Research support at Stanford was provided by the Dean Witter Foundation.Search for more papers by this author Lewis J. Spellman, Lewis J. SpellmanSearch for more papers by this authorAlfred E. Osborne Jr., Alfred E. Osborne Jr.Search for more papers by this authorWilliam D. Bradford, William D. Bradford University of Texas-Austin, University of California-Los Angeles, and Stanford University, respectively. We gratefully acknowledge the aid of Donald Kaplan, Director of the Office of Economic Research, Federal Horne Loan Bank Board, in obtaining the data used in this study. Research support at Stanford was provided by the Dean Witter Foundation.Search for more papers by this author First published: May 1977 https://doi.org/10.1111/j.1540-6261.1977.tb03294.xCitations: 4 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinkedInRedditWechat Citing Literature Volume32, Issue2May 1977Pages 565-574 RelatedInformation

The Journal of FinanceVolume 32, Issue 2 p. 565-574 Session Topic: Money and Capital Market THE COMPARATIVE OPERATING EFFICIENCY OF BLACK SAVINGS AND LOAN ASSOCIATIONS Lewis J. Spellman, Lewis J. SpellmanSearch for more papers by this authorAlfred E. Osborne Jr., Alfred E. Osborne Jr.Search for more papers by this authorWilliam D. Bradford, William D. Bradford University of Texas-Austin, University of California-Los Angeles, and Stanford University, respectively. We gratefully acknowledge the aid of Donald Kaplan, Director of the Office of Economic Research, Federal Horne Loan Bank Board, in obtaining the data used in this study. Research support at Stanford was provided by the Dean Witter Foundation.Search for more papers by this author Lewis J. Spellman, Lewis J. SpellmanSearch for more papers by this authorAlfred E. Osborne Jr., Alfred E. Osborne Jr.Search for more papers by this authorWilliam D. Bradford, William D. Bradford University of Texas-Austin, University of California-Los Angeles, and Stanford University, respectively. We gratefully acknowledge the aid of Donald Kaplan, Director of the Office of Economic Research, Federal Horne Loan Bank Board, in obtaining the data used in this study. Research support at Stanford was provided by the Dean Witter Foundation.Search for more papers by this author First published: May 1977 https://doi.org/10.1111/j.1540-6261.1977.tb03294.xCitations: 4 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Share a linkShare onFacebookTwitterLinked InRedditWechat Citing Literature Volume32, Issue2May 1977Pages 565-574 RelatedInformation

IN A RECENT PAPER Black and Scholes [3] presented an explicit equilibrium model for valuing options. In this paper they indicated that a similar analysis could potentially be applied to all corporate securities. In other papers, both Merton [8] and Ross [11] noted the broad applicability of option pricing arguments. At the same time Black and Scholes also pointed out that actual security indentures have a variety of conditions that would bring new features and complications into the valuation process. Our objective in this paper is to make some general statements on this valuation process and then turn to an analysis of certain types of bond indenture provisions which are often found in practice. Specifically, we will look at the effects of safety covenants, subordination arrangements, and restrictions on the financing of inter

Most institutional fund managers attempt to adjust the stock‐bond composition of portfolios over time in anticipation of stock market movements. Using quarterly data in 1962–72 for the United States, this paper demonstrates that ‘profitable’ strategies for timing portfolio composition in common stocks and Treasury bills are generally not attainable after transaction costs if one uses lagged observations of corporate profit, money supply and consumer sentiment to forecast the market return, as this information is largely reflected in current stock prices. By contrast, accurate forecasts of these aggregate variables lead to substantial market‐timing profits relative to a buy‐and‐hold policy of remaining fully invested in common stocks.