Master limited partnerships (MLPs) are publicly traded partnerships in the United States and are contractually obligated to distribute free cash flow to investors quarterly. Contrasting with the use of stock options in executive compensation by corporations, the general partner receives its compensation from distributed cash just like limited partners do. After controlling for the endogeneity problem and selection bias, we document that the MLPs have a similar Tobin’s q, a higher return on asset, similar cash flow ratio, and lower systematic and lower idiosyncratic risk than the corporations. However, there is evidence that the tunneling problem still exists in MLPs. As cash flow is more transparent and thus more difficult for manipulation than accounting earnings are, a reasonably well-designed mandatory cash payout policy may be a useful tool to protect minority shareholder by reducing the agency problems in corporations and curbing the abuses in executive compensation.

This article examines whether investors can execute profitable momentum strategies using Shari’ah-compliant stocks to enhance returns. We find no significant profits from either the traditional return-based momentum strategy or the turnover-based momentum strategy for Shari’ah-compliant stocks from 1996 to 2009. Such nonexistence of momentum profits for Islamic equities can be attributed to their low level of debt, higher level of transparency, and the endorsement effect from the Shari’ah independent supervisory board. Our results are consistent with the credit-rating hypothesis in Avramov et al. [2007] that low-credit firms drive momentum profits.

A model shows that the price-dependent Chinese margin system differs from the fixed-amount American margin system by altering the risk of underlying positions, resulting in a more elastic demand by long-term buyers but a more inelastic demand by long-term sellers, whereas demand by day traders is not affected. The simulation results show a reduction in price volatility when trading is switched to the Chinese floating system. Empirical evidence shows that futures price volatility in China is lower in general and on market-down days than that in the United States, both of which are consistent with the predictions of the model.