Corporate Finance Commons^™

Firm-Level Analysis Of The Tax Cuts And Jobs Act On Capital Expenditures, Mason Westphal

Accounting Undergraduate Honors Theses

This study investigates the firm-level consequences to capital expenditure levels from the passing of the Tax Cuts and Jobs Act of 2017 (TCJA). It theorized that favorable tax provisions in the TCJA would cause firms to increase their levels of capital expenditures. To test this hypothesis, the study analyzed the capital expenditure levels of public firms from 1986-2019 controlling for factors such as national gross domestic product (GDP) growth and used a dummy variable of reporting periods after 2018 to represent the effects of the TCJA. In contrast to the original hypothesis, the results demonstrate that the TCJA had a ...

Otter Tail Corporation, Heather Strese

Dissertations, Theses, and Projects

In my valuation model I gathered Otter Tail Corporation’s financial statements, historical and industry data, public information and ratio analysis from Mergent Online, Yahoo Finance and Otter Tail Corporation’s 2018 annual report. I discount the expected free cash flows at the WACC and estimate that Otter Tail Corporation’s stock is price is at USD 56.36 per share as of November 1^st, 2019, given the small difference between my estimated price per share and the current price per share in the market, and consistent with the EV/EBITDA multiple, I recommend a HOLD on the stock ...

Behavioral Factors Determining The Decisions Of Individual Investors And Their Impact On The Performance Of The Investment Portfolio "An Empirical Analysis From Palestinian Security Exchange", Jameel Alnajjar

Journal of the Arab American University مجلة الجامعة العربية الامريكية للبحوث

This study seeks to determine the relationship between organizational justice (OJ) and organizational citizenship behavior (OSB) among local administration’s employees through the five-factor model consisting of altruism, courtesy, conscientiousness, civic virtue, and sportsmanship. In order to achieve the study’s objectives, two scales have been adopted, namely organizational justice and organizationa citizenship behavior. Aformentioned scales have been adapted to suit both the nature and the environment of the study and have been carried out on 72 employee at workplace. Several results have been achieved, and the most important of these was the existence of a strong positive relational link ...

Is Carbon Risk Priced In The Cross-Section Of Corporate Bond Returns?, Tinghua Duan, Frank Weikai Li, Quan Wen

Research Collection Lee Kong Chian School Of Business

This paper examines the pricing of a firm's carbon risk, measured by its carbon emissions intensity, in the cross-section of corporate bond returns. Contrary to the "carbon risk premium" hypothesis, we find bonds of firms with higher carbon emissions intensity earn significantly lower returns. This effect cannot be explained by a comprehensive list of bond characteristics and exposure to known risk factors. Investigating sources of the low carbon premium, we find the underperformance of bonds issued by carbon-intensive firms cannot be fully explained by divestment from institutional investors. Instead, our evidence is most consistent with investor underreaction to carbon ...

Appraisal Waivers, Jill E. Fisch

Faculty Scholarship at Penn Law

A judicial determination of fair value in a private company can be a difficult and imprecise process. This difficulty coupled with variations in way mergers are negotiated and structured and the potential for conflicts of interest lend uncertainty to appraisal proceedings. As a result, corporate participants have powerful reasons to seek to limit the uncertainty associated with an appraisal proceeding ex ante. The response has been the growing use of shareholder agreements that limit appraisal rights.

Appraisal waivers also offer a potentially attractive solution to a somewhat different concern, the growth of appraisal litigation in publicly traded companies. As with ...

Cross-Country Differences In The Effect Of Political Connections On Stock Price Informativeness, Yuanto Kusnadi, Bin Srinidhi

Research Collection School Of Accountancy

Using an international sample of firms from 28 countries, we document that there exists a negative relationship between political connections and the informativeness of stock price, as measured by idiosyncratic volatility (IV). This finding is robust to alternative regression specifications, sub-samples analyses, and concerns related to endogeneity. A more detailed analysis shows that out of the different types of possible connections, the connectedness of the owners is the primary driver of this result. Further, the negative association is only significant for firms in countries characterized by low institutional quality (corrupted countries, countries with low access to external equity markets, and ...

Executive Compensation Incentives Impact On The Tone And Readability Of Financial Reports, Xiaoyan Mi

All Graduate Plan B and other Reports

Financial disclosures do not only influence the future reaction of customers, they also imply the financial strategies of the managers of corporations. Through analysis, we find a strong causal relationship between tone and readability of financial disclosures and incentive methods of managers. Controlling executives’ pay-performance sensitivity (delta) and other variables, executives with higher sensitivity of executives’ wealth to stock volatility (vega) (Coles, Daniel, Naveen, 2004) tend to announce reports with more negative tone and low readability.

Mass Shootings And The Performance Of Tourism Stocks, Marshall Deem

All Graduate Plan B and other Reports

This study investigates the effects of mass shooting events on the performance of the tourism industry within the United States. The results of the study show that outside of the market-wide returns, the performance of tourism stocks is negatively impacted after a large-scale mass shooting event. Furthermore, when separating extreme outliers in the data such as the Las Vegas Mandalay Bay shooting, the results of the study find that tourism stocks surrounding other large-scale mass shootings are significantly negative. Overall, the results of the study demonstrate a negative response in the tourism industry to large-scale mass shootings.

The Impact Of Competition From Venture Capitalists On Corporate Venturing Investment, Marco Bade

The Journal of Entrepreneurial Finance

This study proposes a model on corporate venturing (CV) investment and examines the impact of venture capital (VC) activity in the economy on CV firms’ investment. The presence of VCs creates competition for entrepreneurs. This reduces CV firms’ expected venturing returns, and thus gives rise to a financial disincentive to CV investment. The empirical prediction of this result is that competition for talent should decrease CV investment. This prediction contradicts previous statements in the theoretical literature on CV.

Synthetic Governance, Byung Hyun Anh, Jill E. Fisch, Panos N. Patatoukas, Steven Davidoff Solomon

Faculty Scholarship at Penn Law

Scholars, practitioners and policymakers continue to debate what constitutes “good” corporate governance. Academic efforts to evaluate the effect of governance provisions such as dual class voting structures, staggered boards of directors and separating the positions of CEO and Chairman of the Board, have produced inconsistent or inconclusive results. The consequence is that the debate over corporate governance is increasingly political and discordant.

We offer a way to address this debate. The rise of index-based investing provides a market-based alternative to governance regulation. Through the creation of bespoke governance index funds, asset managers can offer investors the opportunity to choose an ...

Implicit Communication And Enforcement Of Corporate Disclosure Regulation, Ashiq Ali, Michael T. Durney, Jill E. Fisch, Hoyoun Kyung

Faculty Scholarship at Penn Law

This study examines the challenge of implicit communication -- qualitative statements, tone, and non-verbal cues -- to the effectiveness of enforcing corporate disclosure regulation. We use a Regulation Fair Disclosure (Reg FD) setting, given that the SEC adopted the regulation recognizing that managers can convey non-public information privately not just through explicit quantitative disclosures but also through implicit communication. In a high-profile enforcement action, however, the court focused on a literal examination of the manager’s language rather than his positive spin to conclude that the SEC had been “too demanding” in examining the manager’s statements and that its enforcement policy ...

Pricing Climate Change Risk In Corporate Bonds, Elsa Allman

Publications and Research

This paper examines whether corporate bondholders price climate change risk. I find that firms exposed to higher sea level rise (SLR) across U.S. branch locations pay a premium when issuing bonds. Specifically, a one standard deviation increase in a firm’s SLR exposure is associated with a 2% increase of average yield spreads equivalent to 4 basis points. This effect is more pronounced for firms in industries vulnerable to extreme weather conditions, which are less spatially diversified, and issuing bonds with maturities ranging from 5 to 10 years. In addition, I find no evidence that credit rating agencies account ...

House Banks In Out-Of-Court Reorganization: Evidence From Austria, Stefan Mayr, Christine Duller, Kerstin Stumbauer

The Journal of Entrepreneurial Finance

The main purpose of this article is to study the role of house banks in out-of-court reorganization. Banks are traditionally one of the most important financial resources for firms. Especially in financially difficult times like those we now face due to the coronavirus, it can make a difference whether a bank supports its clients and accompanies firms through a crisis or not. With the help of relationship lending theory, we review the existing literature on this topic. Next, based on empirical findings from Austrian banks, we derive implications for corporate practice. The empirical study covers a sample of 658 firm ...

Gdp Growth Incentives And Earnings Management: Evidence From China, Xia Chen, Qiang Cheng, Ying Hao, Qiang Liu

Research Collection School Of Accountancy

Using data from China, we examine whether and how the incentive to boost GDP growth at the government level affects earnings management at the firm level. We find that firms in provinces with GDP growth lower than the national level or the average of the adjacent provinces are more likely to engage in earnings management than firms in other provinces. Specifically, they are more likely to inflate revenues, overproduce, and delay asset impairment losses. The aggregate earnings management induced by GDP growth incentives accounts for about 0.5% of GDP. The results are stronger for local state-owned enterprises, in provinces ...

Does Media Exposure Affect Financial Reporting Quality Through Auditors?, Steven F. Cahan, Chen Chen, Rencheng Wang

Research Collection School Of Accountancy

We examine whether the media has an indirect corporate governance effect on financial reporting quality (FRQ) that operates through auditors. This occurs because greater media coverage can magnify an auditor's business risk by exposing the auditor to more potential litigation and reputation damage if an audit failure occurs. We use a path analysis to examine the direct and indirect channels of media corporate governance. We find a positive association between media coverage and FRQ that is mediated by audit fees, and the results are stronger for firms with greater incentives to engage in earnings manipulation. In contrast, we find ...

Project Foresight Annual Report, 2018-2019, Paul J. Speaker

Faculty & Staff Scholarship

Project FORESIGHT is a business-guided self-evaluation of forensic science laboratories across the globe. The participating laboratories represent metro, regional, state, and national agencies. Economics, accounting, finance, and forensic faculty provide assistance, guidance, and analysis. Laboratories participating in Project FORESIGHT have developed standardized definitions for metrics to evaluate work processes, linking financial information to work tasks, and functions. Laboratory managers can then assess resource allocations, efficiencies, and value of services—the mission of Project FORESIGHT is to measure, preserve what works, and change what does not.

The benchmark data for the 2018-2019 performance period includes laboratory submissions for a variety of ...

Information Flows And Topic Modeling In Corporate Governance, Jeffrey D. Kushkowski, Charles B. Shrader, Marc H. Anderson, Robert E. White

Management Publications

Purpose – Multiple disciplines such as finance, management and economics have contributed to governance research over time. However, the full intellectual structure of the governance “field” including the exchange of knowledge across disciplines and the large variety of governance topics remains to be uncovered. To appreciate the breadth of corporate governance research, it is necessary to understand the disciplinary sources from which the research stems. This manuscript focuses on the interdisciplinary underpinnings of corporate governance research.

Design/methodology/approach – This paper employs bibliometric analysis to trace the evolution of corporate governance using articles included in the ISI Web of Science database ...

Short Sellers And Long‐Run Management Forecasts, Xia Chen, Qiang Cheng, Ting Luo, Heng Yue

Research Collection School Of Accountancy

We examine how short sellers affect long‐run management forecasts using a natural experiment (Regulation SHO) that relaxes short‐selling constraints on a group of randomly selected firms (referred to as pilot firms). We find that compared to other firms, the pilot firms issue more long‐run good news forecasts but do not change the frequency of long‐run bad news forecasts. The increase in good news forecasts is greater when the pilot firms have higher quality forecasts, greater uncertainty about firm value, or higher manager equity incentives. Overall, these results and the results of additional analyses indicate that the ...

Are Corporate Spin-Offs Prone To Insider Trading?, Patrick Augustin, Menachem Brenner, Jianfeng Hu, Marti Subrahmanyam

Research Collection Lee Kong Chian School Of Business

Despite abundant empirical evidence of informed trading ahead of major corporate events, no such evidence has been reported in the case of corporate spinoff (SP) announcements. This is surprising, as SP announcements are unexpected, and are also associated with a positive price jump in the parent company’s stock. Using a sample of 280 US announcement events from 1996 to 2013, we document significant pre-announcement informed trading activity in options for about 9 to 16% of events in our sample. In contrast, we find statistically insignificant evidence of informed trading in stocks, suggesting that informed traders employ leverage through options ...

The Substantial Growth Of Shadow Banking, Financial Technology And Digital Currency And Their Respective Roles In Shaping The Next Financial Crisis, Vardhan S. Chulani Mr.

Undergraduate Economic Review

Based on Goldman Sachs’ model and the state of current affairs, an underlying possibility of a financial crisis occurring in the foreseeable future does exist. This could be due to ongoing trade war and negotiations with different countries, the new policies introduced by political parties and their respective impacts, high amounts of corporate and student debts along with auto loans in the economy, thus indicating signs of excessive leverage and resulting in depressing consumer confidence. International issues such as Brexit, the existing currency and debt crisis with Turkey, and China’s debt bubble could also contribute to the global growth ...