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Financial Reporting Quality Of Chinese Reverse Merger Firms: The Reverse Merger Effect Or The China Effect?, Kun-Chih Chen, Qiang CHENG, Ying Chou LIN, Yu-Chen LIN, Xing XIAO 2016 Singapore Management University

Financial Reporting Quality Of Chinese Reverse Merger Firms: The Reverse Merger Effect Or The China Effect?, Kun-Chih Chen, Qiang Cheng, Ying Chou Lin, Yu-Chen Lin, Xing Xiao

Research Collection School Of Accountancy

In this paper, we examine why Chinese reverse merger (RM) firms have lower financial reporting quality than U.S. IPO firms. We find that the financial reporting quality of U.S. RM firms is similar to that of matched U.S. IPO firms, but Chinese RM firms exhibit lower financial reporting quality than Chinese ADR firms. We also find that Chinese RM firms exhibit lower financial reporting quality than U.S. RM firms. These results indicate that the use of the RM process is associated with poor financial reporting quality only in firms from China, where legal enforcement and investor ...


Does Beating Cash Flow Benchmarks Reduce The Cost Of Debt?, Mauricio A. Melgarejo 2016 Butler University

Does Beating Cash Flow Benchmarks Reduce The Cost Of Debt?, Mauricio A. Melgarejo

Mauricio Melgarejo

This paper examines whether beating previous year cash flow values and analysts' cash flow forecasts impact the firms' cost of debt. Creditors are expected to be more concerned about firm solvency than firm profitability. Accordingly, if lenders have any reference point it may be related to cash flow numbers. This study finds that firms that beat analysts' cash flow forecasts have smaller initial bond yield spreads in the next period and a decrease in their initial bond yield spreads between consecutive periods. This effect is more pronounced at short maturities and for observations with less informative earnings. Firms with lower ...


Have We Solved The Idiosyncratic Volatility Puzzle?, Kewei HOU, Roger K. LOH 2016 Ohio State University

Have We Solved The Idiosyncratic Volatility Puzzle?, Kewei Hou, Roger K. Loh

Research Collection Lee Kong Chian School Of Business

We propose a simple methodology to evaluate a large number of potential explanations for the negative relation between idiosyncratic volatility and subsequent stock returns (the idiosyncratic volatility puzzle). We find that surprisingly many existing explanations explain less than 10% of the puzzle. On the other hand, explanations based on investors’ lottery preferences, short-term return reversal, and earnings shocks show greater promise in explaining the puzzle. Together they account for 60-80% of the negative idiosyncratic volatility-return relation. Our methodology can be applied to evaluate competing explanations for a broad range of topics in asset pricing and corporate finance.


On The Behavior Of Entrepreneurial Factor Supply To The Firm, Nicos Zafiris 2016 University of Westminster

On The Behavior Of Entrepreneurial Factor Supply To The Firm, Nicos Zafiris

The Journal of Entrepreneurial Finance

This paper draws on an existing, but little used, approach to the choices governing the supply of ‘entrepreneurial’, in the sense of ‘residually remunerated’, resources to an enterprise, especially post start up. It focuses in particular on the hybrid ‘own factor demand/supply curve’ to the firm of Bronfenbrenner (1960), but attempts to treat such supply in conjunction with ‘contractual’ employment of resources, thus making use of gearing and portfolio concepts. To achieve this, it is found necessary for the hybrid schedule to be reinterpreted and recast as the locus of the relevant utility maximising choices. A model is presented ...


Hedging In Energy: The Case Of Linn Energy, Llc, Riley E. Nelson 2016 University of Arkansas

Hedging In Energy: The Case Of Linn Energy, Llc, Riley E. Nelson

Finance Undergraduate Honors Theses

This paper is a case study of LINN Energy, LLC over the period of Q1 2013 to Q4 2015. Due to volatility in commodity prices, energy companies choose to hedge their future production using forwards, futures, swaps, and options strategies. I selected LINN Energy as the subject for this study due to the breadth of detailed historical hedging information available through the company’s website. LINN Energy disclosed much more than is required for independent oil and gas companies, making them the perfect case study for this thesis. LINN Energy, LLC is one of the few publicly traded LLC’s ...


Do Investors Value The Required Stress Tests Of Financial Holding Companies?, Brendan A. Colligan 2016 University of Arkansas

Do Investors Value The Required Stress Tests Of Financial Holding Companies?, Brendan A. Colligan

Finance Undergraduate Honors Theses

This paper explores the value of disclosing stress test results to investors and market participants within the US financial system. Recently the Federal Reserve (“Fed”) expanded its required internal stress testing program, often referred to as the Dodd-Frank Act Stress Test (“DFAST”), to include bank holding companies (“BHCs”) with more than $10 billion in total assets. These BHCs were required to publicly disclose their results for the first time in June of 2015. Large BHCs are subject to another level of stress testing implemented by the Comprehensive Capital Analysis Review (“CCAR”). Large BHCs are defined as having more than $50 ...


Event-Based Biotechnology Stock Price Movement: Valuing Success And Failure In Biotechnology Product Development, Faris Sumadi 2016 University of Massachusetts Boston

Event-Based Biotechnology Stock Price Movement: Valuing Success And Failure In Biotechnology Product Development, Faris Sumadi

Honors College Theses

Biotechnology investment, in the second quarter of 2015, hauled in a record $2.3 billion worth of venture capital. The 126 deals struck marked the biggest quarterly investment (up 32% from the prior quarter) since reporting started in 1995. With $3.8 billion invested in these pre-IPO ventures by mid-2015, the biotech industry soared past the $6 billion of venture capital cash invested in 2014. These numbers illustrate how early-stage research, with unproven science, has been revived after a decade of VCs shying away. Out of the $2.3 billion raised in Q2, $1.5 billion went to early-stage companies ...


Role Of Inside Directors In Mitigating Negative Effects Of Outside Directors’ Busyness, Syed Mainuddin Kamal 2016 University of Tennessee - Knoxville

Role Of Inside Directors In Mitigating Negative Effects Of Outside Directors’ Busyness, Syed Mainuddin Kamal

Doctoral Dissertations

In this study, I investigate the effect of outside directors’ busyness on firm performance, and how the presence of a certified inside director (CID) on the board alters the busyness effect. Busy outside directors are over-stretched to provide adequate monitoring. Certified inside directors (CIDs), inside directors holding a directorship at an unaffiliated firm, have director labor market incentives to focus on their own firm’s performance and share firm-specific information to outside directors for effective monitoring. I find that the negative effect of outside directors’ busyness on firm performance is mitigated when a firm’s board includes a certified inside ...


Shareholder Advocacy In Corporate Elections: Case Studies In Proxy Voting Websites For Retail Investors, Robin Miller 2016 Clark University

Shareholder Advocacy In Corporate Elections: Case Studies In Proxy Voting Websites For Retail Investors, Robin Miller

International Development, Community and Environment (IDCE)

One of the key rights shareholders retain is the right to vote on issues affecting the companies in which they invest. This voting right is seen as one of the primary means of exercising diligent corporate governance (Cole 2003, Fairfax 2009). Only 28 percent of individual investors vote in corporate elections compared with 91 percent of institutional investors. Informed voting decisions at corporate elections can be very information intensive, and theories of rational apathy and the free rider problem may explain a lack of participation from individual investors.

Many shareholders cannot attend annual corporate meetings, so they can use the ...


Can Information Be Locked-Up? Informed Trading Ahead Of Macro-News Announcements, Gennaro BERNILE, Jianfeng HU, Yuehua TANG 2016 Singapore Management University

Can Information Be Locked-Up? Informed Trading Ahead Of Macro-News Announcements, Gennaro Bernile, Jianfeng Hu, Yuehua Tang

Research Collection Lee Kong Chian School Of Business

Government agencies routinely allow pre-release access to information to accredited news agencies under embargo agreements. Using high-frequency data, we find evidence consistent with informed trading during embargoes of Federal Open Market Committee (FOMC) scheduled announcements. The E-mini Standard & Poor’s 500 futures’ abnormal order imbalances are in the direction of subsequent policy surprises and contain information that predicts the market reaction to the policy announcements. The estimated informed trades’ profits are arguably large. Notably, we find no evidence of informed trading prior to the start of FOMC news embargoes or during lockups ahead of nonfarm payroll, US Producer Price Index ...


Disproportional Ownership Structure And Pay-Performance Relationship In China, Xiaping Jerry CAO, Xiaofei Pan, Gary Tian 2016 Singapore Management University

Disproportional Ownership Structure And Pay-Performance Relationship In China, Xiaping Jerry Cao, Xiaofei Pan, Gary Tian

Gary Tian

This paper examines the impact of ownership structure on executive compensation in China's listed firms. We find that the cash flow rights of ultimate controlling shareholders have a positive effect on the pay-performance relationship, while a divergence between control rights and cash flow rights has a significantly negative effect on the pay-performance relationship. We divide our sample based on ultimate controlling shareholders' type into state owned enterprises (SOE), state assets management bureaus (SAMB), and privately controlled firms. We find that in SOE controlled firms cash flow rights have a significant impact on accounting based pay-performance relationship. In privately controlled ...


Disproportional Ownership Structure And Pay-Performance Relationship In China, Xiaping Jerry CAO, Xiaofei Pan, Gary Tian 2016 Singapore Management University

Disproportional Ownership Structure And Pay-Performance Relationship In China, Xiaping Jerry Cao, Xiaofei Pan, Gary Tian

Gary Tian

This paper examines the impact of ownership structure on executive compensation in China's listed firms. We find that the cash flow rights of ultimate controlling shareholders have a positive effect on the pay-performance relationship, while a divergence between control rights and cash flow rights has a significantly negative effect on the pay-performance relationship. We divide our sample based on ultimate controlling shareholders' type into state owned enterprises (SOE), state assets management bureaus (SAMB), and privately controlled firms. We find that in SOE controlled firms cash flow rights have a significant impact on accounting based pay-performance relationship. In privately controlled ...


E-Commerce’S Impact On Big-Box Retailers, Brian Bates 2016 University of Dayton

E-Commerce’S Impact On Big-Box Retailers, Brian Bates

Honors Theses

The history of retail has been an evolutionary process of new innovations and transformations. Previous changes include: the development of catalogue based retail, and the recent innovation of super stores, known as big-box retailers. It is possible that we are dawning upon a new revolution of the retail environment as electronic commerce (e-commerce) continues to grow. This paper will analyze the impact of e-commerce on retail markets, specifically big-box stores (warehouse style retailers with over 750 million in sales). Using financial and real estate data from BloombergTM, and e-commerce data from eMarketerTM and the US Census Bureau two models ...


Do Individuals Or Firms Matter More? The Case Of Patent Generation, Tong Liu, Yifei Mao Ph.D., Xuan Tian 2016 Peking University

Do Individuals Or Firms Matter More? The Case Of Patent Generation, Tong Liu, Yifei Mao Ph.D., Xuan Tian

Working Papers

This paper studies the relative importance of individual inventors’ human capital and firms’ organizational capital in promoting a firm’s innovation output. We decompose the variation in innovation output into inventor- and firm-specific components. Inventors’ human capital is about 13 times as important as firms’ organizational capital in explaining a firm’s innovation performance in terms of patent counts and citations, while inventors’ human capital is only about the same as important when explaining the firm’s innovation styles in terms of patent exploratory and exploitive scores. In the cross section, inventors contribute more to innovation output when they are ...


Motivations And Implications Of Corporate Tax Inversion, Brendan R. Dowling 2016 Trinity College

Motivations And Implications Of Corporate Tax Inversion, Brendan R. Dowling

Senior Theses and Projects

The phenomenon of tax inversion has returned to the public eye as American companies in every sector explore expatriation as a means to avoid the highest corporate tax rate in the developed world. In response to billions of dollars in tax revenue flowing overseas, legislators have proposed dozens of laws over the past four decades aimed at curbing this technique, but to no avail. In 2015 alone, tens of billions of dollars' worth of tax inversion transactions were announced. This thesis analyzes the motivations behind corporate emigration using both legal and economic framework, and models this behavior using Probit analysis ...


Change Of Direction: Haolu "Lulu" Wang Traded Finance For The Lens Of Filmmaking, Claire Sykes 2016 Colby College

Change Of Direction: Haolu "Lulu" Wang Traded Finance For The Lens Of Filmmaking, Claire Sykes

Colby Magazine

After only two years with an investment bank in Hong Kong, her first job straight out of Colby with a degree in government and economics, the Chinese-born-and-raised Wang left and took off for Florence, Italy, to become a filmmaker. Before the eight-week, hands-on introductory course there had ended, she realized “this was something I could do for the rest of my life,” she said in an interview via Skype.


Nol Poison Pills: Using Corporate Law For Tax Purposes, Sarah J. Webber, Karie Davis-Nozemack 2016 University of Dayton

Nol Poison Pills: Using Corporate Law For Tax Purposes, Sarah J. Webber, Karie Davis-Nozemack

Sarah J Webber

Hundreds of thousands of corporations report net operating loss (NOL) carryovers every year.1 Corporations, with the benefit of NOL rules, may turn disappointing losses into favorable tax results. During economic recovery, corporations are in better position to fully utilize the benefits of NOLs generated in prior years. NOL usage is not without peril, however. Corporations should carefully monitor corporate ownership changes to ensure that NOLs are not lost to the NOL trafficking rules. Under the NOL trafficking rules, excessive shareholder turnover triggers substantial NOL limitations. Unfortunately, corporations are not in control of their shareholder turnover, and therefore not in ...


Sustainability And Business Performance, Cedric L. Char 2016 Loyola Marymount University

Sustainability And Business Performance, Cedric L. Char

Honors Thesis

With climate change becoming more and more of an ominous reality, the concept of sustainability is gaining more and more traction, throughout both consumers and businesses. Companies that have implemented “green” initiatives have found that there are various potential benefits that can be derived from these sustainable practices. This study aims to quantify those benefits and examine how sustainable businesses perform in comparison to their non-sustainable counterparts. Using Newsweek’s Green Rankings, and several statistical tests, it was found that there are no statistically significant differences between sustainable firms and non-sustainable firms, showing that while sustainability may not yield any ...


2016 Private Capital Markets Report, Craig R. Everett 2016 Pepperdine University

2016 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital ...


Federal Home Loan Bank Advances And Small Business Lending, Travis R. Davidson, W. Gary Simpson 2016 Ohio University - Main Campus

Federal Home Loan Bank Advances And Small Business Lending, Travis R. Davidson, W. Gary Simpson

The Journal of Entrepreneurial Finance

Adequate credit availability for small businesses is an important public policy issue because small businesses are essential for employment and economic growth for the economy. The Gramm-Leach-Bliley Act of 1999 includes a provision that could potentially support financial institutions in the provision of credit to small businesses through the use of advances from the Federal Home Loan Bank (FHLB) system that are secured with small business loans. We explore the relation between FHLB advances to financial institutions and the provision of loans to small businesses. We find a positive link between the change in FHLB advances and the change in ...


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