Business Commons^™

Stock Liquidity And Default Risk Around The World, Sivathaasan Nadarajah, Huu Nhan Duong, Searat Ali, Benjamin Liu, Allen Huang

Faculty of Business - Papers (Archive)

We document the negative effect of stock liquidity on default risk for a sample of 46 countries. We further find that default risk declines following the introduction of the Directive on Markets in Financial Instruments (MiFID)—an exogenous shock that increases liquidity. The effect of liquidity on default risk is more pronounced in countries with poorer investor protection and information environments. Further, this effect is attenuated (strengthened) for firms with greater information efficiency (governance monitoring). Overall, our findings highlight the important role of regulatory settings in shaping the impact of stock liquidity on default risk in international markets.

Effect Of Corporate Tax Avoidance Activities On Firm Bankruptcy Risk, Anirudh Dhawan, Liangbo Ma, Maria H. Kim

Faculty of Business - Papers (Archive)

Corporate tax avoidance has been shown to raise the cost of bank debt and lower credit and bond ratings. However, it is unclear whether tax avoidance actually increases a firm’s bankruptcy risk or whether it is just viewed negatively by banks and rating agencies. We find that firms engaging in tax avoidance and firms that are thinly capitalized face higher bankruptcy risk. To account for endogeneity and functional form misspecification, we verify our results using instrumental variable and propensity score matching methods. Our findings are consistent with the view that tax avoidance is a risk-enhancing activity.

Corporate Governance And The Insolvency Risk Of Financial Institutions, Searat Ali, Jamshed Iqbal

Faculty of Business - Papers (Archive)

We investigate whether corporate governance is related to insolvency risk of financial institutions. Using a large sample of U.S. financial institutions over the 2005-2010 period, we find that corporate governance is positively related with insolvency risk of financial institutions as proxied by Merton's distance to default measure and credit default swap spread. We also find that "better" corporate governance increased insolvency risk relatively more for larger financial institutions and during the period of the global financial crisis. Our findings suggest that too-big-to fail and deposit insurance policies encourage excessive risk taking by financial institutions.

Social Risk In Female Entrepreneurship, Roshni Narendran

Faculty of Business - Papers (Archive)

The aim of this chapter is to introduce an alternate means of conceptualising risk, as well as, intercede the concept to the situation of Indian female entrepreneurs. In most contexts, risk tends to be associated with finance (Buttner & Rosen 1988; Jianonkoplos & Bernasek 1998; Verheul & Thurik 2001); however, other intricacies hindering the growth of female entrepreneurship need to be considered. This aspect is trivial when studies are conducted in a culturally rich country like India. When analysing the situation of women in India, researchers refer to the Manusmriti to highlight the social stigma against women in India. Manusmiriti …

Social Risk And Female Entrepreneurs In Kerala, India: A Preliminary Assessment, Roshni Narendran

Faculty of Business - Papers (Archive)

The aim of this paper is to highlight the concept of social risk in the literature of female entrepreneurship. In most studies, entrepreneurial risk is considered to be related to monetary concerns, but sociological risks are overlooked. The risks associated with social challenges will be discussed in this paper. First, a conceptual model is developed with the help of the literature review. This conceptual model is further explained with the help of a qualitative analysis that was carried out in the state of Kerala. This South Indian state is renowned for the high social status enjoyed by women; therefore, it …

Risk Within The Foundation Of Australian Supply : A Cross-Sectoral, Cross-Regional Perspective, Lee Styger Sydney Business School

Sydney Business School - Papers

Supplier capability and customer engagement trends have changed considerably in recent times. Once robust supply networks have been eroded and capacity reduced, OEM engagement patterns have changed that now often preclude existing suppliers in favour of new, alternative suppliers. In 2010 and 2011 a series of supply focus groups and key interviews with customers indicated that OME’s have typically focused attention on Tier 1 and Tier 2 supplier and lost visibility of lower level suppliers, by outsourcing the management and responsibility of the lower level suppliers to their Tier 1 and Tier 2 suppliers. The outsourcing of management and responsibility …

Determination Of Consumer Context In An Online Transaction Process For A High Risk Purchase, Robert G. Grant, Rodney J. Clarke, Elias Kyriazis

Faculty of Commerce - Papers (Archive)

This paper showcases/discusses a method of analyzing consumer website behavior that enables real-time purchase context identification. Such analysis will enable online vendors to serve content that is relevant to the consumer’s needs, addressing the apparent utility deficit that websites have for complex product transactions. The use of communication theory is a key component of a value co-creation process that leverages the data derived from website interactivity by analyzing the meaning of consumer activity on a website. Such an approach offers insights into the effect of information accessed by consumers in real time, enabling a responsive system for serving information in …

Does Ownership Affect A Firm's Performance And Default Risk In Jordan?, Rami Zeitun, Gary Gang Tian

Faculty of Commerce - Papers (Archive)

Purpose – This paper seeks to examine the impact of ownership structure on firm performance and the default risk of a sample of publicly listed firms.

Design/methodology/approach – This paper examines the impact of ownership structure on firm performance and the default risk of a sample of 59 publicly listed firms in Jordan from 1989 to 2002.

Findings – The main findings were: ownership structure has significant effects on the accounting measure of performance return on assets (ROE); government shares are significantly negatively related to the firm's performance ROE; defaulted firms have a high concentration ownership compared with non-defaulted firms …

A World Of Flux Requires Information Literacies In The Community And Workplace, Lynda S. Kriflik, George K. Kriflik

Faculty of Commerce - Papers (Archive)

This paper outlines two studies that explored alternative methodologies that assisted individuals to identify and critically reflect on their preferred way of being. Central to both studies is the importance of critical reflection as the pathway to fully informed decisions. In one study the researcher explored how managers considered information issues that influenced their leadership style, including the risks that stem from individual attitudes and actions. The other explored consumer reactions to food system risk and the information desired to reduce such risk. Both studies highlight the need to facilitate the enhancement of information literacies in the workplace and in …

Macroeconomic Risk Factors In Australian Commercial Real Estate, Listed Property Trust And Property Sector Stock Returns, Tracey West, Andrew C. Worthington

Faculty of Commerce - Papers (Archive)

This paper employs a Generalised Autoregressive Conditional Heteroskedasticity in Mean (GARCH-M) model to consider the effect of macroeconomic factors on Australian property returns over the period 1985 to 2002. Three direct (office, retail and industrial property) and two indirect (listed property trust and property stock) returns are included in the analysis, along with market returns, short, medium and long-term interest rates, expected and unexpected inflation, construction activity and industrial employment and production. In general, the macroeconomic factors examined are found to be significant risk factors in Australian commercial property returns. However, the results also indicate that forecast accuracy in these …

Analysis Of Information Cost Incurred In Foreign Exchange Risk Management By Smes, Shyam S. Bhati

Faculty of Commerce - Papers (Archive)

In this study, the theory of Information Cost developed by Casson (1995) is used to explain the various intormatlOn cost associated with foreign exchange risk management by SMEs. From the application of Casson's theory, 1t 1S concluded that the SMEs incur maximum cost in collecting, communicating and synthesising information while managing foreign exchange risk. Also, the SMEs do not seem to have the potential to reduce these information costs because of ,their limited bargaining capacity in relation to service provIders. As such, SMEs would fit the description of "optimal" organisation as defined by Casson (1995) due to the trade-offmade by …