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The Myth Of The Ideal Investor, Elisabeth de Fontenay 2018 Duke Law School

The Myth Of The Ideal Investor, Elisabeth De Fontenay

Faculty Scholarship

Critiques of specific investor behavior often assume an ideal investor against which all others should be compared. This ideal investor figures prominently in the heated debates over the impact of investor time horizons on firm value. In much of the commentary, the ideal is a longterm investor that actively monitors management, but the specifics are typically left vague. That is no coincidence. The various characteristics that we might wish for in such an investor cannot peacefully coexist in practice.

If the ideal investor remains illusory, which of the real-world investor types should we champion instead? The answer, I argue, is ...


Proxy Access And Optimal Standardization In Corporate Governance: An Empirical Analysis, Reilly S. Steel 2017 U.S. Senate Committee on Banking, Housing, and Urban Affairs

Proxy Access And Optimal Standardization In Corporate Governance: An Empirical Analysis, Reilly S. Steel

Fordham Journal of Corporate & Financial Law

According to the conventional wisdom, “one size does not fit all” in corporate governance. Firms are heterogeneous with respect to their governance needs, implying that the optimal corporate governance structure must also vary from firm to firm. This one-size-does-not-fit-all axiom has featured prominently in arguments against numerous corporate law regulatory initiatives, including the SEC’s failed Rule 14a-11—an attempt to impose mandatory, uniform “proxy access” on all public companies—which the D.C. Circuit struck down for inadequate costbenefit analysis.

This Article presents an alternative theory as to the role of standardization in corporate governance—in which investors ...


2017 Q4 Private Capital Access Index Report, Craig R. Everett 2017 Pepperdine University

2017 Q4 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Graziadio School of Business and Management at Pepperdine University, and with the support of Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.


Ceo Compensation And Risk-Taking At Financial Firms: Evidence From U.S. Federal Loan Assistance, Amar Gande, Swami Kalpathy 2017 Southern Methodist University

Ceo Compensation And Risk-Taking At Financial Firms: Evidence From U.S. Federal Loan Assistance, Amar Gande, Swami Kalpathy

Amar Gande

We examine whether risk-taking among the largest financial firms in the U.S. is related to CEO equity incentives before the 2008 financial crisis. Using data on U.S. Federal Reserve emergency loans provided to these firms, we find that the amount of emergency loans and total days the loans are outstanding are increasing in pre-crisis CEO risk-taking incentives – “vega”. Our results are robust to accounting for endogeneity in CEO equity incentives and selection of financial firms into emergency loan programs. We also rule out the possibility that our results are driven by a bank’s funding base, bank complexity ...


Venture Capital Contract Design: An Empirical Analysis Of The Connection Between Bargaining Power And Venture Financing Contract Terms, Spencer Williams 2017 Stanford Law School Program on Corporate Governance and Practice

Venture Capital Contract Design: An Empirical Analysis Of The Connection Between Bargaining Power And Venture Financing Contract Terms, Spencer Williams

Fordham Journal of Corporate & Financial Law

This Article presents an empirical analysis of the connection between bargaining power and contract design using an original dataset of over 5,500 equity and debt venture financings from 2004–2015. Using the total supply of venture capital in the U.S. as a measure of relative bargaining power between entrepreneurs and investors, this Article finds that venture capital supply has a statistically significant relationship with price and non-price terms in both equity and debt financings. These results contradict one of three theoretical accounts of bargaining power and support the other two.


The Seventeenth Annual Albert A. Destefano Lecture On Corporate, Securities & Financial Law At The Fordham Corporate Law Center, Caroline M. Gentile, The Honorable Karen L. Valihura 2017 Fordham University School of Law

The Seventeenth Annual Albert A. Destefano Lecture On Corporate, Securities & Financial Law At The Fordham Corporate Law Center, Caroline M. Gentile, The Honorable Karen L. Valihura

Fordham Journal of Corporate & Financial Law

No abstract provided.


A Novel Approach To Defining "Whistleblower" In Dodd-Frank, Ian A. Engoron 2017 J.D. Candidate, Fordham University School of Law

A Novel Approach To Defining "Whistleblower" In Dodd-Frank, Ian A. Engoron

Fordham Journal of Corporate & Financial Law

Following the Financial Crisis of 2008, trust in the financial industry was at an all-time low as the American taxpayer was forced to bailout the very same institutions responsible for their suffering. In response, Congress passed Dodd-Frank in 2010 to ensure another crisis like 2008 never happen again. Section 78u-6 of the Act provides incentives and protections for whistleblowers who report violations of securities laws. In recent years there has been a divide among circuit courts over the question of whether employees who report violations internally to their bosses—and not directly to the SEC—are protected by the Act ...


Profitability Ratios In The Early Stages Of A Startup, Erkki K. Laitinen 2017 University of Vaasa

Profitability Ratios In The Early Stages Of A Startup, Erkki K. Laitinen

The Journal of Entrepreneurial Finance

This study develops a mathematical framework to analyze the time series of profitability ratios in the early stages of a startup. It is assumed that the expenditure of the startup grows at a steady rate and generates a proportionally identical flow of revenue in each period. The profitability in terms of the internal rate of return (IRR) and the lag structure of revenue flows are assumed constant over time in describing the adjustment process towards the steady state. The startup is assumed to expense in each period a constant part of periodic expenditure and beginning-of-the-period assets. The adjustment processes of ...


Lobbying In Finance Industry: Evidence From Us Banking System, Omer Unsal, M.Kabir Hassan, William Hippler 2017 Merrimack College

Lobbying In Finance Industry: Evidence From Us Banking System, Omer Unsal, M.Kabir Hassan, William Hippler

Finance Faculty Publications

We examine the relationship between corporate lobbying, shareholder-based litigation outcomes, and firm value for financial firms. First, we show that political lobbying lowers the litigation likelihood for financial institutions. Secondly, lobbying firms experience a higher likelihood of having litigation dismissed, and the average settlement amount is significantly lower for lobbying institutions. In addition, shortly after a litigation announcement, lobbying firms experience significantly higher cumulative abnormal returns (CARs), compared to non-lobbying firms. Finally, we show that lobbying firms have higher long-run buy-and-hold abnormal stock returns (BHARs) following lobbying activities. Our results link financial institution lobbying activity with improved legal outcomes and ...


Zombie Board: Board Tenure And Firm Performance, Sterling HUANG, Gilles HILARY 2017 Singapore Management University

Zombie Board: Board Tenure And Firm Performance, Sterling Huang, Gilles Hilary

Research Collection School Of Accountancy

We show that board tenure exhibits an inverted U-shaped relation with firm value and accounting performance. The quality of corporate decisions, such as M&A, financial reporting quality, and CEO compensation, also has a quadratic relation with board tenure. Our results are consistent with the interpretation that directors’ on-the-job learning improves firm value up to a threshold, at which point entrenchment dominates and firm performance suffers. To address endogeneity concerns, we use a sample of firms in which an outside director suffered a sudden death, and find that sudden deaths that move board tenure away from (toward) the empirically observed ...


Protecting The Viability Of The Small Donor In Modern Elections, Ben Miller 2017 Fried Frank, Harris, Shriver & Jacobson LLP

Protecting The Viability Of The Small Donor In Modern Elections, Ben Miller

Arkansas Law Review

Campaign finance reform stands as one of the most important issues in today’s modern elections. From national to municipal contests, the influx of large donations places wealthy individuals—and interests—at odds with the average voter. Over the years, volumes of academic and legislative reforms have been proposed that encompass a wide range of electoral subject matter. From Citizens United to Federal Elections Commission (FEC) control mechanisms, solutions on how to change our campaign finance regulatory regime cover a large and diverse area of law and policy. However, the central theme throughout these reforms is maximizing transparency and curbing ...


Analyzing Cyber Threats Affecting The Financial Industry, Anna Skelton 2017 Embry-Riddle Aeronautical University

Analyzing Cyber Threats Affecting The Financial Industry, Anna Skelton

Student Works

As critical infrastructure, financial institutions must execute the highest level of cybersecurity as the threat of a crippling cyberattack continues to develop. Malicious actors, including disenfranchised employees, state sponsored actors, and traditional hackers, all have motivations to target the financial industry, and do so frequently. However, the threat changes slightly between resource rich large institutions and their smaller, community bank counterparts. The complex and multifaceted threat must be fully understood in order to properly address and analyze solution options to preserve the security of these institutions and the economy that they contribute to.


Inside Brokers, Frank Weikai LI, Abhiroop MUKHERJEE, Rik SEN 2017 Singapore Management University

Inside Brokers, Frank Weikai Li, Abhiroop Mukherjee, Rik Sen

Research Collection Lee Kong Chian School Of Business

We identify the broker each corporate insider trades through, and show that analystsand mutual fund managers affiliated with such “inside brokers” retain a substantialinformation advantage on the insider’s firm, even after these trades are disclosed.Affiliated analysts issue 10–20% more accurate earnings forecasts, and affiliated fundstrade the insider’s stock much more profitably than their peers, following insider tradesthrough their brokerage. Our results challenge the prevalent perception that informationasymmetry arising from insider trading is acute only before trade disclosure, andsuggest that brokers facilitating these trades are in a unique position to exploit suchan asymmetry.


Additional Evidence On The Impact Of The International Financial Reporting Standards On Earnings Quality: Evidence From Latin America, Mauricio Melgarejo 2017 Butler University

Additional Evidence On The Impact Of The International Financial Reporting Standards On Earnings Quality: Evidence From Latin America, Mauricio Melgarejo

Scholarship and Professional Work - Business

The purpose of this paper is to explore whether the adoption of the International Financial Reporting Standards (IFRS) has an impact on the quality of earnings in Latin America. Studying a sample offirms from Argentina, Brazil, Chile, Mexico, and Peru, I find that management reports a lower level of discretionary accruals after the implementation of the IFRS. In addition, this study provides evidence that earnings are more persistent and stock prices are more associated with earning numbers after the application of IFRS. This paper provides evidence that earnings quality has increased after the adoption of IFRS in Latin America.


Making Financial Disclosure More Readable, Clarence GOH, Poh Sun SEOW, Gary PAN 2017 Singapore Management University

Making Financial Disclosure More Readable, Clarence Goh, Poh Sun Seow, Gary Pan

Research Collection School Of Accountancy

There are many benefits tohaving disclosures written in plain English. Investors would be more likely tounderstand the disclosures and to make informed judgments. Investment analystswould also be able to make more timely and accurate recommendations to theirclients if they can understand such disclosures more quickly and easily


Stock Markets, Credit Markets, And Technology-Led Growth, James R. Brown, Gustav Martinsson, Bruce C. Petersen 2017 Iowa State University

Stock Markets, Credit Markets, And Technology-Led Growth, James R. Brown, Gustav Martinsson, Bruce C. Petersen

Finance Publication

The high-tech sector accounts for the majority of corporate innovation in modern economies. In a sample of 38 countries, we document a strong positive relation between the initial size of the country's high-tech sector and subsequent rates of GDP and total factor productivity growth. We also find a strong positive connection between a country's equity (but not credit) market development and the size of its high-tech sector. Our main difference-in-differences estimates show that better developed stock markets support faster growth of innovative-intensive, high-tech industries. The main channels for this effect are higher rates of productivity and faster growth ...


Additional Evidence On The Impact Of The International Financial Reporting Standards On Earnings Quality: Evidence From Latin America, Mauricio A. Melgarejo 2017 Butler University

Additional Evidence On The Impact Of The International Financial Reporting Standards On Earnings Quality: Evidence From Latin America, Mauricio A. Melgarejo

Mauricio Melgarejo

The purpose of this paper is to explore whether the adoption of the International Financial Reporting Standards (IFRS) has an impact on the quality of earnings in Latin America. Studying a sample offirms from Argentina, Brazil, Chile, Mexico, and Peru, I find that management reports a lower level of discretionary accruals after the implementation of the IFRS. In addition, this study provides evidence that earnings are more persistent and stock prices are more associated with earning numbers after the application of IFRS. This paper provides evidence that earnings quality has increased after the adoption of IFRS in Latin America.


Gender And Connections Among Wall Street Analysts, Lily Hua FANG, Sterling HUANG 2017 INSEAD

Gender And Connections Among Wall Street Analysts, Lily Hua Fang, Sterling Huang

Research Collection School Of Accountancy

We examine how alumni ties with corporate boards differentially affect male and female analysts’ job performance and career outcomes. Connection improves men’s job performance — forecasting accuracy and recommendation impact — significantly more than women’s. Controlling for performance, connection further contributes to men’s, but not women’s, likelihood of being voted by institutional investors as “star” analysts, a marker of career success. These asymmetric effects are stronger in more opaque firms and among younger analysts, but is absent from a placebo test. Our evidence indicates that men reap higher benefits from social networks than women in both job performance ...


Not Clawing The Hand That Feeds You: The Case Of Co-Opted Boards And Clawbacks, Sterling HUANG, Chee Yeow LIM, Jeffrey NG 2017 Singapore Management University

Not Clawing The Hand That Feeds You: The Case Of Co-Opted Boards And Clawbacks, Sterling Huang, Chee Yeow Lim, Jeffrey Ng

Research Collection School Of Accountancy

We examine how board co-option, defined as the fraction of the board comprising directors appointed after the CEO assumed office, is related to clawback adoption. We find that co-opted boards have a lower probability of adopting clawback provisions. Further, the negative association between board co-option and clawback adoption is more pronounced when at least one co-opted member is on the compensation committee and when there is a higher likelihood that a clawback provision will be triggered. Finally, we find that board co-option is an important mechanism through which longer-tenured CEOs reduce the likelihood of clawback adoption.


The Effects Of Risk Management On Management Forecast Behavior, John L. Campbell, Sean Cao, Hye Sun CHANG, Raluca Chiorean 2017 Singapore Management University

The Effects Of Risk Management On Management Forecast Behavior, John L. Campbell, Sean Cao, Hye Sun Chang, Raluca Chiorean

Research Collection School Of Accountancy

Prior research examines several reasons why managers voluntarily disclose information, but provides relatively little evidence as to whether day-to-day operational decisions influence a manager’s disclosure choice. In this study, we examine whether a particular operational activity – risk management through the use of derivatives – affects whether a manager decides to issue earnings forecasts. Using a large hand-collected sample of derivatives users and non-users, we find that derivatives users are more likely to issue earnings forecasts relative to non-users. We then find that this result is stronger when the use of derivatives makes it less costly for managers to issue forecasts ...


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