Paul Kedrosky's Infectious Greed

Internet Bubbling
Brazilian Bikini Wax Watch
Annual Meeting? Let’s Announce Something or Another
No-one Reads Any More

Internet Bubbling

Posted: 15 May 2011 10:57 AM PDT

via economist.com

Brazilian Bikini Wax Watch

Posted: 15 May 2011 10:38 AM PDT

One day bikini waxes in Brazil will be the only economic indicator anyone tracks:

"We have one of the highest demands for waxing in the world because of our climate," Siqueira said in a telephone interview. "We have summer all year, we're always wearing bikinis and miniskirts."

One community listings website in Sao Paulo, Sampa Online, shows more than 90 waxing establishments.

At the Imaculada Hair and Makeup beauty shop in Brasilia, owner Alessandra Rita de Arruda Lopes says she's raised the price [of bikini waxing] to 35 reais ($21.63) from 30 reais because "all my costs are going up." The average price of the depilation procedure rose 12.4 percent in the year through April, the national statistics agency said last week.

More here.

Annual Meeting? Let’s Announce Something or Another

Posted: 15 May 2011 10:33 AM PDT

New paper on companies behavior around annual meetings. Good fun.

We show that managers respond to the shareholder pressure by reporting positive corporate news before the annual shareholder meetings. Specifically, we find significantly positive average cumulative abnormal returns during the 40 days before the annual meeting date. The pre-meeting returns are significantly higher when shareholder discontent with managerial performance is likely to be stronger. The decile of companies with the worst past stock price performance exhibits average cumulative abnormal returns of 3.4% and buy-and-hold returns of 7.0% during the 40-day pre-meeting period. Companies with poor past performance exhibit even higher pre-meeting returns when shareholder pressure on management is greater, such as when institutional ownership is high, when CEO compensation is high, and when shareholders submit proxy proposals on corporate governance. We complement the evidence based on CARs by showing how managers of poorly performing firms manage the timing and content of earnings announcements and management forecast announcements before the annual shareholder meetings. Overall, the results suggest that managers attempt to influence shareholders before annual shareholder meetings through positive news.

More here.

No-one Reads Any More

Posted: 15 May 2011 10:31 AM PDT

The abstract a new paper on textual mining of 10-Ks:

We present a new approach in financial content analysis to determine the strength of various words in conveying positive or negative tone. We apply our approach to quantify the tone of 10-K filings and find a significant relation between document tone and market reaction for both negative and positive words. Previous research has not been successful using positive words to quantify tone. We find that our measure of positive and negative tone is significantly related to filing period returns after controlling for factors such as earning announcement date return and accruals, while the earlier approaches in the literature are not. In addition, we find that the appropriate choice of term weighting in content analysis at least as important, and perhaps more important, than a complete and accurate compilation of the word list. We find that the market underreacts to the tone of 10-K's, and this underreaction is corrected over the next two weeks.

More here.