Senior Vice President, Investment Management Division. Lehman Brothers Kuhn Loeb. Inc. and Adjunct Associate Professor, New York University. Research for this paper was completed while an Assistant Professor at the Graduate School of Business Administration, University of California, Berkeley and was supported by grants from the Dean Witter Foundation and Institute of Business and Economic Research. The author would like to thank Irwin Friend. James Walter. Randolph Westerfield, James Pickands, Charles Frankland Moore and Barr Rosenberg for their suggestions and help. Assistance in collecting the data was kindly provided by Hambros Bank, London Business School, and the International Institute of Management. West Berlin.