Business Commons^™

Time-Varying Contemporaneous Spillovers During The European Debt Crisis, Marinela Adriana Finta, Bart Frijins, Alireza Tourani-Rad

Research Collection Lee Kong Chian School Of Business

This paper considers contemporaneous spillover effects between Germany and four peripheral European countries that were most affected by the European Debt Crisis, and provides evidence of bidirectional spillovers among these equity markets. We document that there is asymmetry and time variation in contemporaneous spillovers. Particularly, contemporaneous return spillovers from Germany to the peripheral equity markets is higher than the other way around. We show that European Debt Crisis led to a decrease in the contemporaneous spillover effects.

Liquidity Effects On Travel And Tourism Stocks Following Global Financial Crises, Andros Gregoriou, Sotiroula Liasidou

Journal of Hospitality Financial Management

This paper explores liquidity effects following the global financial crises between 2007 and 2009 for 26 stocks listed on the Dow Jones Travel and Tourism Index. We find evidence of a sustained increase in the liquidity of the stocks as a result of the financial crises. The empirical findings are consistent with the information cost/liquidity hypothesis, which states that investors demand a lower premium for holding stocks with relatively more available information. Our results suggest that the travel and tourism industry is no longer considered a luxury item. On the contrary, it appears to be more of a necessity to …

Securitization Ten Years After The Financial Crisis: An Overview, Steven L. Schwarcz

Faculty Scholarship

This symposium issue examines securitization a decade after the 2008 financial crisis. Prior to the crisis, securitization was one of America’s dominant means of financing. Many observers, however, blamed securitization for causing the crisis, sparking regulation that arguably has been overly restrictive and, in some cases, even punitive. Where are we now?

Regulating Complacency: Human Limitations And Legal Efficacy, Steven L. Schwarcz

Faculty Scholarship

This Article examines how insights into limited human rationality can improve financial regulation. The Article identifies four categories of limitations—herd behavior, cognitive biases, overreliance on heuristics, and a proclivity to panic—that undermine the perfect-market regulatory assumptions that parties have full information and will act in their rational self-interest. The Article then analyzes how insights into these limitations can be used to correct resulting market failures. Requiring more robust disclosure and due diligence, for example, can help to reduce reliance on misleading information cascades that motivate herd behavior. Debiasing through law, such as requiring more specific, poignant, and concrete disclosure of …

Too Big To Fool: Moral Hazard, Bailouts, And Corporate Responsibility, Steven L. Schwarcz

Faculty Scholarship

Domestic and international regulatory efforts to prevent another financial crisis have been converging on the idea of trying to end the problem of “too big to fail”—that systemically important financial firms take excessive risks because they profit from success and are (or at least, expect to be) bailed out by government money to avoid failure. The legal solutions being advanced to control this morally hazardous behavior tend, however, to be inefficient, ineffective, or even dangerous—such as breaking up firms and limiting their size, which can reduce economies of scale and scope; or restricting central bank authority to bail out failing …

Controlling Systemic Risk Through Corporate Governance, Steven L. Schwarcz

Faculty Scholarship

Most of the regulatory measures to control excessive risk taking by systemically important firms are designed to reduce moral hazard and to align the interests of managers and investors. These measures may be flawed because they are based on questionable assumptions. Excessive corporate risk taking is, at its core, a corporate governance problem. Shareholder primacy requires managers to view the consequences of their firm’s risk taking only from the standpoint of the firm and its shareholders, ignoring harm to the public. In governing, managers of systemically important firms should also consider public harm. This proposal engages the long-standing debate whether …

Understanding The Global In Global Finance And Regulation, Lawrence G. Baxter

Faculty Scholarship

No abstract provided.

Misalignment: Corporate Risk-Taking And Public Duty, Steven L. Schwarcz

Faculty Scholarship

This article argues for a “public governance duty” to help manage excessive risk-taking by systemically important firms. Although governments worldwide, including the United States, have issued an array of regulations to attempt to curb that risk-taking by aligning managerial and investor interests, those regulations implicitly assume that investors would oppose excessively risky business ventures. That leaves a critical misalignment: because much of the harm from a systemically important firm’s failure would be externalized onto the public, including ordinary citizens impacted by an economic collapse, such a firm can engage in risk-taking ventures with positive expected value to its investors but …

Keynote Address, Regulating Corporate Governance In The Public Interest: The Case Of Systemic Risk, Steven L. Schwarcz

Faculty Scholarship

There’s long been a debate whether corporate governance law should require some duty to the public. The accepted wisdom is not to require such a duty—that corporate profit maximization provides jobs and other public benefits that exceed any harm. This is especially true, the argument goes, because imposing specific regulatory requirements and making certain actions illegal or tortious can mitigate the harm without unduly impairing corporate wealth production. Whether that is true in other contexts, this paper—delivered as the keynote address at the June 2016 National Business Law Scholars Conference at The University of Chicago Law School—questions if it’s true …

Shadow Banking And Regulation In China And Other Developing Countries, Steven L. Schwarcz

Faculty Scholarship

The rapid but largely unregulated growth in shadow banking in developing countries such as China can jeopardize financial stability. This article discusses that growth and argues that a regulatory balance is needed to help protect financial stability while preserving shadow banking as an important channel of alternative funding. The article also analyzes how that regulation could be designed.

Corporate Risk-Taking And Public Duty, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

Regulating Systemic Risk In Insurance, Daniel Schwarcz, Steven L. Schwarcz

Faculty Scholarship

As exemplified by the dramatic failure of AIG, insurance companies and their affiliates played a central role in the 2008 global financial crisis. It is therefore not surprising that the Dodd-Frank Act—the United States’ primary legislative re-sponse to the crisis—contained an entire title dedicated to insurance regulation, which has traditionally been the responsibility of individual states. The most important insurance-focused reforms in Dodd-Frank empower the Federal Reserve Bank to impose an additional layer of regulatory scrutiny on top of state insurance regulation for a small number of “systemically important” nonbank financial companies, such as AIG. This Article argues, however, that …

Demand For Credit, International Financial Legitimacy, And Vulnerability To Crises: Regulatory Change And The Social Origins Of Iceland’S Collapse, Erik Larson

Erik Larson

No abstract provided.

Outward U.S. Foreign Direct Investment Performance During Recent Financial Crises, Lucyna Kornecki

Accounting, Economics, Finance, and Information Sciences - Daytona Beach

Foreign direct investment (FDI) plays an extraordinary and growing role in the global markets and represents an integral part of the U.S. economy. This research has descriptive character and focuses on the latest trends in outward United States foreign direct investment (US FDI) illustrating the impact of the recent financial crises on FDI performance.

The study analyzes the outward US FDI stock contribution to the global FDI stock and its performance during the last decade including geographical and sectorial distribution. The next paragraph focuses on outward US FDI corporate players ranking MNC’s by revenue and foreign assets. The essential part …

The Impact Of Ceo Duality On Firm Financial And Market Performance During The Period Of 2008 Through 2010 : A Period Of Financial Crisis, Samuel Eugene Ferrara

Legacy Theses & Dissertations (2009 - 2024)

ABSTRACT

The Fiscal Forensics Of The Las Vegas Strip Lessons From The Financial Crisis, Dean M. Macomber

Occasional Papers

Hitting with the force of a 100-year storm, the first two years of the financial crisis caused a $5.2 billion swing from profitability to loss for the top 22 performing Las Vegas Strip properties between peak fiscal year 2007 and 2009. By fiscal year 2011 visitor count had almost climbed back to peak levels but the aggregate loss is still stubbornly high at $ -1.6 billion. Other signs of recovery trickle in but are sporadic and volatile. This article is an attempt to disaggregate the variance and look at where Las Vegas has been, where it is now and how …

Ignorance Is Not Bliss: Financial Illiteracy, The Mortgage Market Collapse, And The Global Economic Crisis, Jeffrey T. Dinwoodie

University of Miami Business Law Review

No abstract provided.

A Participatory Teaching Strategy Developing A Timeline Of The Global Financial Crisis, Margaret J. Giles

Research outputs 2011

The rapid pace of change of ideas and events in economics places pressure on teachers of university economics to stay abreast of developments in their field and to reflect these developments appropriately in their classes. The Global Financial Crisis (GFC) was an excellent example of this phenomenon with a great deal of material written on this subject over a relatively short space of time. Under certain circumstances, one way of coping with such developments may be for teachers and students to acquire emerging knowledge and information jointly rather than sequentially. This paper describes a teaching strategy where students constructed a …

Global Financial Crisis: Cause, Emerging Trends And Strategy, Badar Alam Iqbal

Business Review

Global financial crisis is the biggest threat to the survival of the world in years to come. It has far reaching consequences for both developed and developing economies of the world. There is only a difference of the degree of impact. This crisis is resulting into recession which is also a most dangerous thing for the global economy. Hence, these days, global attention has now shifting from concern in regard to dimensions of the financial crisis to assessing how deep the real economy recession it has triggered will be and how long the crisis would last. No one can say …

The Coexistence Of Multiple Distribution Systems For Financial Services: The Case Of Property-Liability Insurance, Allen N. Berger, J. David Cummins, Mary A. Weiss

Faculty Publications

Property-liability insurance is distributed through a direct-writer system, where agents represent one insurer, and an independent- agency system, where agents represent several insurers. Independent-agency insurers have higher costs than direct writers. The market- imperfections hypothesis attributes the coexistence of the two types of insurers to impediments to competition, while the product-quality hypothesis holds that independent-agency insurers provide higher-quality services. We measure cost efficiency and profit efficiency for property-liability insurers and find strong support for the product-quality hypothesis, implying that independent-agency insurers produce higher-quality outputs and are compensated by higher revenues.