Finance and Financial Management Commons^™

Likely Trajectory Of Fed Policy Far From Settled, Thomas Lam, David Fernandez

Research Collection Lee Kong Chian School Of Business

Markets seem to be assuming an almost pre-set path of Fed policy normalization in 2019, including hiking rates and shrinking the balance sheet. In contrast, we see many uncertainties ahead.

Executive Overconfidence And Securities Class Actions, Suman Banerjee, Mark Humphery-Jenner, Vikram Nanda, T. Mandy Tham

Research Collection Lee Kong Chian School Of Business

Overconfident CEOs/senior executives tend to have excessively positive views of their own skills and their company’s future performance. We hypothesize that overconfident managers are more likely to engage in reckless or intentional actions/disclosures that give rise to securities class actions (SCAs). Empirical evidence is supportive: Overconfident CEOs/senior executives increase SCA likelihood, though litigation risk is ameliorated through improved governance, such as following the Sarbanes–Oxley Act of 2002. Post-SCA, companies are less likely to hire an overconfident CEO. Following an SCA, overconfident CEOs appear to moderate behavior and to reduce their litigation risk.

Partisan Conflict And Stock Price, Dashan Huang, Wang Liyao

Research Collection Lee Kong Chian School Of Business

Partisan conflict has been one dominant theme in U.S. politics in recent years. By using the textual index of Azzimonti (2018), this paper shows that partisan conflict positively predicts market returns, controlling for economic predictors and proxies for uncertainty, disagreement, geopolitical risk, and political sentiment. A one standard-deviation increase in partisan conflict is associated with a 0.58% increase in next month market return. The forecasting power concentrates in periods when the president is from the Republican Party or the majority of House is Republicans. Partisan conflict is positively related to downside risk, and makes investors more conservative when its value …

Gender Performativity And Hegemonic Masculinity In Investment Management, Corina Sheerin, Prof. Margaret Linehan

Dept of Applied Social Science

Purpose

Through an examination of the everyday organisational and social practices, this paper aims to consider gender performativity and hegemonic masculinity within front office investment management. At the core of this research is the need to understand the interactions between gender, power and patriarchy.

Design/methodology/approach

An interpretivist philosophical stance underpins the study. A theory-building approach using 19 semi-structured interviews with investment management employees based in Ireland was undertaken.

Findings

The findings highlight a sector in which gender is performed in line with sectoral expectations, which place men in positions of dominance with hegemonic masculinity inherent. The organisational structures and daily …

Could An Alternative Policy Design Have Produced A Stronger Mortgage Modification Outcome For Hamp?, Sean Macdonald

Publications and Research

This paper conducts a study of the relative effectiveness of the Home Affordable Modification Program (HAMP) - the primary federal mortgage loan modification program - from early 2009 through 2016. It evaluates U.S. Treasury Department and other data sources, and reviews the recent literature on the relative success of the program. The analysis suggests that HAMP’s success rate in modifying mortgage loans was likely constrained by its voluntary design, a structure that enabled lenders and servicers to prioritize the interests of investors in assessing the risks of modification. It then considers the economic issues surrounding the foreclosure issue and presents …

Warrants And Their Underlying Stocks: Microstructure Evidence From An Emerging Market, Charlie Charoenwong, David K. Ding, Nuttawat Visaltanachoti

Research Collection Lee Kong Chian School Of Business

The Stock Exchange of Thailand provides an ideal platform for comparing the trading characteristics of warrants and their underlying stocks since both of them trade in the same market under identical trading rules. If their patterns diverge significantly, it may be possible for an astute trader to devise profitable arbitrage strategies during the life of the warrants. We find that both their patterns are downward-sloping for spreads, U-shaped for flow toxicity, volatility, depth concentration, and trading volume; and upward-sloping for depth and market order flow ratio. This implies that trading under identical market structures leads to similar trading characteristics. We …

The Salience Theory Of Consumer Financial Regulation, Natasha Sarin

All Faculty Scholarship

Prior to the financial crisis, banks’ fee income was their fastest-growing source of revenue. This revenue was often generated through nefarious bank practices (e.g., ordering overdraft transactions for maximal fees). The crisis focused popular attention on the extent to which current regulatory tools failed consumers in these markets, and policymakers responded: A new Consumer Financial Protection Bureau was tasked with monitoring consumer finance products, and some of the earliest post-crisis financial reforms sought to lower consumer costs. This Article is the first to empirically evaluate the success of the consumer finance reform agenda by considering three recent price regulations: a …

Marking To Market And Inefficient Investment Decisions, Clemens A. Otto, Paolo F. Volpin

Research Collection Lee Kong Chian School Of Business

We examine how mark-to-market accounting affects the investment decisions of managers with reputation concerns. Reporting the current market value of a firm’s assets can help mitigate agency problems because it provides outsiders (e.g., shareholders) with new information against which the management’s decisions can be evaluated. However, the fact that the assets’ market value is informative can also have a negative side effect: managers may shy away from investments that indicate conflicting private information and would damage their reputation. This effect can lead to inefficient investment decisions and make marking to market less desirable when market prices are more informative.

The Real Effects Of Exchange Traded Funds, Frank Weikai Li, Xuewen Liu, Chengzhu Sun

Research Collection Lee Kong Chian School Of Business

This paper investigates the effects of exchange-traded funds (ETFs) on the real efficiency of the underlying securities. We document strong evidence that being held by ETFs increases the sensitivity of a firm's investment to its own stock price. This is consistent with the model prediction on the managerial learning channel. Higher ownership by ETFs increases the firm's stock price informativeness about systematic shocks but may decrease the informativeness about firm-specific shocks; however, the firm manager cares most and wants to learn from the stock price mainly about systematic shocks in making investment decisions as he already has precise private information …

The Relationship Between Financial Literacy, Financial Status, And Academic Success In College Students, Brian Douglas Brausch

Dissertations

As the cost of college continues to rise, an increasing number of students are relying on loans and credit cards to fund their postsecondary education. In an effort to curb student debt and increase retention and graduation rates, many universities have begun to offer financial literacy initiatives to stimulate financial knowledge and promote positive money management behaviors.

This study examines the relationship between a for-credit personal financial literacy course and student academic success and economic status. Students who took a personal finance course during their first or second year of college are compared to a random sampling of students who …

The Path To Mainstream Finance: Exploring Complementary Currencies And Interest-Free Lending, Ema Di Fruscia

Independent Study Project (ISP) Collection

This paper explores elements of alternative finance including complementary currencies, credit clearing systems, and Islamic Banking practices. I begin first by outlining the issues created by the mainstream western banking model, including wealth inequality, socioeconomic discrimination, environmental degradation, and the collapse of small businesses and local economies. I go on to introduce and define the concepts of complementary currencies, Local Exchange Trading Systems, and credit clearing systems; I argue that these systems challenge the popularly held perceptions that currencies and mainstream banking practices in general are immutable, given, or ideal. To support this assertion, I transition into my research findings …

Inflation Expectations In Singapore: A Behavioural Approach, Alexander Clark, Aurobindo Ghosh, Samuel Hanes

Research Collection Lee Kong Chian School Of Business

The expectations of economic agents have significant impact on their decisions and are key determinants of macroeconomic outcomes such as inflation, economic growth and unemployment. For example, if a worker believes that consumer prices will rise sharply next year, she would demand a wage increase. Similarly, a homeowner with a fixed interest mortgage might make an early repayment if she expects price levels to fall, knowing that the real value of her mortgage debt will increase. In these cases, expectations about inflation could lead to changes in behaviour and in the aggregate, influence prices and become self-fulfilling.

Microfinance And The Decision To Invest In Children’S Education, P.V. Viswanath

Faculty Working Papers

Although one of the primary objectives of microfinance has been the reduction of poverty through the provision of credit for income-generating purposes, evidence of its impact on poverty has been mixed. Even if there is no direct impact of microfinance, there may be an indirect positive impact through the effect of microcredit availability on families’ decisions to invest in their children’s education. In this paper, I describe a study undertaken to gauge the impact of microcredit availability on education expenditures for children of clients of a South Indian microfinance institution. I first look at some determinants of the demand for …

Thinking Finance - The Comic Book, Dimitrios V. Siskos

Publications

Thinking financially results in the best possible outcome and establishes a secure foundation for the future as an independent man. In contrast, thinking emotionally leads to short-sighted financial decisions and usually, deep regrets. However, thinking financially is not pleasant for the people around us. This comic book presents a guy, whose dream is to become an accountant. When he finally succeeds in this, he realizes that thinking financially may be effective for his boss but it is irritating for everyone else, even for his family.