Business Commons^™

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

Mauricio Melgarejo

Ipo Underpricing: The Owner’S Perspective, Steven Dolvin

Steven D. Dolvin

Most corporate finance textbooks include a chapter on raising capital, giving particular attention to initial public offerings (IPOs). For IPOs, underpricing is defined as the percentage change from the offer price to the closing price on the first trading day. Textbooks universally treat underpricing as the indirect cost of issuance; however, this fails to account for the share issuance decision. Because owners do not typically sell all (or even most) of their shares, underpricing overstates the wealth lost by preexisting owners. I provide simple, real-life examples for instructors to use in courses such as corporate finance, entrepreneurship, or alternative investments.

New Student Investment Club Launches

Bridget Lyons

Sacred Heart University has launched a new extracurricular student venture where return on investment IS the return on investment! The mission of the SHU Student Investment Club will be to engage students—under the watchful guidance of faculty and professional financial advisers—to make prudent financial investments aimed at enriching the University’s endowment while teaching valuable skills and providing practical hands-on experiences.

Wisdom From Warren Buffett, Todd A. Finkle

Todd A Finkle

Further Examination Of Equity Returns And Seasonal Depression, Steven D. Dolvin, Mark K. Pyles, Qun Wu

Steven D. Dolvin

Seasonal Affective Disorder (SAD) induces investors to shift resources away from risky investments (such as equity) and towards safer alternatives (such as fixed income) during the Fall, while stimulating the opposite action in the Winter. Existing studies, however, fail to account for the possibility that SAD could further motivate investors to shift exposure among different subsets of equity, rather than simply across broad asset categories. We explore this possibility by examining the impact of SAD on the returns of “safe” and “risky” equity sectors (i.e., industries), as well as on equity at different levels of market capitalization. We find the …

Lessons Learned From The “Oracle Of Omaha” Warren Buffett, Todd A. Finkle

Todd A Finkle

Supply Based Explanation Of The Equity Premium Puzzle, Richard H. Serlin

Richard H. Serlin

All of the explanations for the equity premium puzzle I have seen in the literature are based on the demand side; trying to find utility functions for a representative investor and ex-ante probability distributions for returns that would explain investors demanding such high average returns for stocks relative to bonds. I suggest a supply side explanation: The long run supply curve for corporate stock may simply be extremely long and flat, and consistently about 5 ½ percentage points in return higher than the premium bonds supply curve, even at stock quantities as high as the entire national savings rate. Why? …

Household Financial Ratios: A Review Of Literature, Nathan Harness, Michael Finke, Swarn Chatterjee

Swarn Chatterjee

The literature on household financial ratios provides insight into the characteristics related to meeting common investment asset, debt, and liquidity guidelines. We know much about the contemporaneous relation between ratios and household characteristics, but the literature exploring the impact of meeting ratio thresholds on subsequent financial success is in its infancy. Ratios can be useful heuristics that efficiently provide information about financial status as well as a prescriptive guideline to motivate more efficient financial behavior. While the existing literature provides some insight into which households have adequate ratios, there are opportunities for additional empirical scrutiny and application of household resource …

Trust And Investments Across Cultures, Thomas D. Berry, Omur Suer

Thomas D Berry