Journal of Financial Research
Announcement of the 2011 Outstanding Article Awards

The 2011 editors of the Journal of Financial Research, Gerald D. Gay and Jayant R. Kale of Georgia State University, are pleased to announce their selections of the winners of the 2011 Outstanding Article Awards. Articles selected for this honor each receive a cash prize of $2000.

RECIPIENTS: This year's recipients of the 2011 Outstanding Article Awards are:

Differences of Opinion, Overconfidence and the High-Volume Premium
- Zhaodan Huang - Utica College
- James B. Heian - Utica College
- Ting Zhang - University of Dayton
(Volume 34, No. 1, Spring 2011, p1-25)

Abstract - We argue that both differences of opinion and overconfidence lead to high-volume shocks. However, a high-volume shock induced mainly by differences of opinion (overconfidence) will lead to superior (inferior) stock returns. Empirically, Asian financial markets, in contrast to U.S. markets, reveal weaker and inconsistent high-volume premiums. The inconsistency may be attributable to investor's overconfidence. Additional evidence based on U.S. data supports this view, as a high-volume shock accompanied by increased institutional ownership yields substantially higher high-volume premiums than otherwise, and high-volume premiums generally are much stronger in down-market states than up-market states.

CEO Directors, Executive Incentive, and Corporate Strategic Initiatives
- Olubunmi Faleye - Northeastern University
(Volume 34, No. 2, Summer 2011, p241-277)

Abstract - I study how directors who are chief executive officers (CEOs) of other firms affect board effectiveness. I find that CEOs are paid more and their compensation is less sensitive to firm performance when other CEOs serve as directors. This is not an employment risk premium because CEO directors are not associated with higher turnover-performance sensitivity. Also, CEO directors have no effect on corporate innovation but are associated with higher acquisition returns, especially for complex deals. My results suggest that the advisory benefits of CEO directors must be balanced against the distortions in executive incentives associated with their board service.

The Choice of Trading Venue and Relative Price Impact of Institutional Trading: ADRs versus the Underlying Securities in their Local Markets
- Sugato Chakravarty - Purdue University
- Chiraphol N. Chiyachantana - Lee Kong Chian School of Business, Singapore Management University
- Christine Jiang - University of Memphis
(Volume 34, No. 4, Winter 2011, p537-567)

Abstract - We address two important themes associated with institutions' trading in foreign markets: (1) the choice of trading venues (between a company's listing in its home market and that in the United States as an American Depositary Receipt [ADR]) and (2) the comparison of trading costs across the two venues. We identify institutional trading in both venues using proprietary institutional trading data. Overall, our research underscores the intuition that the choice of institutional trading in a stock's local market or as an ADR is a complex process that embodies variables that measure the relative adverse selection and liquidity at order, stock, and country levels. Institutions route a higher percentage of trades to more liquid markets, and these trades are associated with higher cumulative abnormal returns. We also find that institutional trading costs are generally lower for trading cross-listed stocks on home exchanges even after controlling for selection bias. The JFR is a quarterly academic journal devoted to publication of scholarly research in all areas of financial economics and has been in continuous publication since 1978.

ABOUT THE JFR: The JFR is sponsored by the Southern Finance Association (SFA) and the Southwestern Finance Association (SWFA) and is distributed by Blackwell Publishing, Inc.

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Posted 2/19/12