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Articles 1 - 27 of 27
Full-Text Articles in Finance and Financial Management
Market Reaction Test On Banks & Brokers Based On Bitcoin Price History. A Look At National Commercial Banks And Security Broker, Exchanges, And Service Stocks Following The Most Volatile Swings In Bitcoin’S Price., Payton Earl
CMC Senior Theses
This paper examines if there is an inverse correlation between Bitcoin’s most volatile price swings and national commercial banks and security brokers, exchanges and service companies performance. Company performance in the dataset is measured by Cumulative Abnormal Returns during 2021 within a two-day period where Bitcoin has had the most significant uptick and downtick events. Using a market-adjusted model for my regression, it is concluded that Bitcoin’s largest uptick event did indeed have an inversely negative effect on traditional banks and trading securities companies, as the Cumulative Abnormal Returns were negative for my 107 observations and the event was statistically …
Unions’ Impact On Firms’ Financial Decision Making: A Look At Right-To-Work Laws And Their Impact On Firms’ Leverage Decisions, Rachana Muvvala
Unions’ Impact On Firms’ Financial Decision Making: A Look At Right-To-Work Laws And Their Impact On Firms’ Leverage Decisions, Rachana Muvvala
CMC Senior Theses
I study the impact of unions on firms’ financial decision making by exploring their capital structure, specifically leverage. I test two opposing hypotheses to understand the relationship between unions and firms’ leverage: (1) the bargaining hypothesis which suggests that firms use higher leverage as a bargaining device with unions, and (2) the crowding-out hypothesis which suggests that firms have lower leverage because unions crowd out their debt capacity due to their perceived riskiness. Focusing on the 2007 to 2022 period, I examine right-to-work (RTW) laws, since they are exogenous shocks that decrease union power in five different states. Then, I …
Listed Private Equity Returns: The Forecasting Power Of Premiums And Discounts, Daniel Krasemann
Listed Private Equity Returns: The Forecasting Power Of Premiums And Discounts, Daniel Krasemann
CMC Senior Theses
In this paper, I assess the ability of premiums and discounts to predict future listed private equity returns. I hypothesize that the premiums and discounts of the net asset value of the listed private equity funds with monthly lags hold forecasting power. I use four distinct listed private equity indices and their respective NAV P/D values for my research. To ensure my analysis is realistic in scope, I incorporate a variety of macroeconomic variables that have been proven to influence listed private equity returns. I structure my time-period analysis around the 2008-09 financial crisis. I generally find that a two-month …
Does Firm Payout Behavior Serve As A Signal For Future Profitability?, Michael Colangelo
Does Firm Payout Behavior Serve As A Signal For Future Profitability?, Michael Colangelo
CMC Senior Theses
In this paper I explore the potential signaling capability that payout behavior, in the forms of dividends and share repurchases, has on the profitability of a firm. To do so, I analyze the relationship that dividends paid, share repurchases, and total payout have with asset turnover, return on assets, and EBITDA margin across different time structures. Next, I aim to understand if there is a significant differential impact of negative payout growth compared to positive payout growth, on the growth of the same performance measures above. I found that an increase in share repurchases and total payout both lead to …
Doing Well While Doing Good? The Cost Of Responsible Investing, Elizabeth Iwicki
Doing Well While Doing Good? The Cost Of Responsible Investing, Elizabeth Iwicki
CMC Senior Theses
In this paper, I estimate the monthly alpha of highly rated ESG stocks, with the motivation to assess the effects of ESG investors on public equity markets. I hypothesize, consistent with the motivating theory of Heinkel et al. (2001), that the shift in investor preferences toward ESG-friendly investments leads to the underperformance of a broad ESG portfolio relative to a portfolio of comparable stocks. I test my hypothesis using the methodology of Hong and Kacperczyk (2009) and Wallace (2022), where I apply the methods to an ESG portfolio rather than a “sin” portfolio. Consistent with my hypothesis, I find that …
Securing The Overnight Rates: A Study Of Alternative Reference Rates In Illiquid Overnight Tri-Party Repo Markets, Michael Murphy
Securing The Overnight Rates: A Study Of Alternative Reference Rates In Illiquid Overnight Tri-Party Repo Markets, Michael Murphy
CMC Senior Theses
Since 2011, the London Interbank Offer Rate (LIBOR) has been on the way out for practitioners and researchers alike due to its manipulation in key bank quotes during the Great Financial Crisis (GFC). This paper intends to examine key rates being introduced as LIBOR substitutes, such as SOFR, BSBY, and Ameribor. Specific to its concern, the paper will back test these rates during times of illiquidity in both their respective markets and the broader financial markets to determine which rates will be able to sustain an abnormal drop in transaction volumes. Furthermore, this paper will try to determine whether a …
An Analysis Of Impacts Of Covid-19 On Salary Cap Allocation And Performance In The National Football League, Abai Houser
An Analysis Of Impacts Of Covid-19 On Salary Cap Allocation And Performance In The National Football League, Abai Houser
CMC Senior Theses
Professional sports are one of the most successful industries in the world. The live spectacle and in-person nature make sporting events a unique and individual experience. COVID-19 shifted how athletic events were operated, financed, and viewed, thereby changing leagues as well. The National Football League was one of the last sports to start its season during 2019 and 2020, setting the stage as the only league to not isolate its players in a safe operating space. This paper studies the effects of COVID-19 on the salary cap management of teams after the pandemic. The findings suggest that financial metrics analyzed …
Media Merger Madness: An Event Study Analyzing Acquiror Returns In Media & Entertainment, Samuel Johnson
Media Merger Madness: An Event Study Analyzing Acquiror Returns In Media & Entertainment, Samuel Johnson
CMC Senior Theses
Utilizing an event study methodology, this paper studies the effect that mergers and acquisitions (M&A) announcements have on media acquirors’ stock returns. This study also examines the effect that various characteristics of the target and acquiror have on acquirors’ returns. These characteristics include: location of the acquired company, year of the acquisition, industry of the acquired company, price of the acquired company, size of the acquiror, and serial acquiror status of the acquiror. My findings are consistent with previous literature that find that, in a short-term event window surrounding the announcement of a merger or acquisition, acquirors experience returns that …
Don’T Get Screwed: What Factors Determine The Inclusion Of J. Crew Blockers?, Michael Sill
Don’T Get Screwed: What Factors Determine The Inclusion Of J. Crew Blockers?, Michael Sill
CMC Senior Theses
A “J. Crew Maneuver” is a type of collateral-stripping event that transfers the value of a nearly insolvent company from the lender to the borrower. This concept matters to lenders because it exposes them to significant downside risk through the loss of hundreds of millions of pledged collateral. While credit analysts and debt lawyers have commented on the importance of preserving creditor value ex ante through lender-protective clauses embedded within debt documents, this paper breaks ground on empirically studying the determinants of these protective clauses known as “J. Crew Blockers”. I hypothesize that private equity backing, a contractionary credit environment, …
Zoom In, Class Out: An Event Study On Publicly Traded Ed Tech Firm Valuations During Covid-19, Matiss Ozols
Zoom In, Class Out: An Event Study On Publicly Traded Ed Tech Firm Valuations During Covid-19, Matiss Ozols
CMC Senior Theses
This paper examines how publicly traded Ed Tech firms reacted to negative announcements regarding COVID-19. Using an event study method, I document how an international portfolio of Ed Tech firms react across multiple event windows. The results show that Ed Tech firms reacted positively to the announcement of the first US death and negatively to the World Health Organization’s declaration that COVID-19 was a pandemic. Additionally, differences in geographical location did not impact cumulative abnormal returns across event windows. Finally, firm-specific characteristics such as volatility and financial leverage had little or no significance on stock returns.
Financing Method And Abnormal Returns In Corporate Mergers And Acquisitions, Patrick Thomas
Financing Method And Abnormal Returns In Corporate Mergers And Acquisitions, Patrick Thomas
CMC Senior Theses
This study analyzes the impact of merger and acquisition financing method on buyer cumulative abnormal returns. The model builds on findings in previous literature by including deal structure variables, company variables, industry variables, time variables, and post-acquisition announcement return data from 2000 to 2018. The analysis does not find a statistically significant relationship between cash plus debt/stock financing and cumulative abnormal returns. However, significant coefficients for buyer and target industry suggest that deal structure varies and ultimately effects cumulative abnormal returns within specific industries. Additionally, significant results for buyer profitability and time variables provide insight on how the financial market …
Are Women Executives Hurting Firm Performance? An Examination Of Gender Diversity On Firm Risk, Performance, And Executive Compensation, Krystal Diane Sung
Are Women Executives Hurting Firm Performance? An Examination Of Gender Diversity On Firm Risk, Performance, And Executive Compensation, Krystal Diane Sung
CMC Senior Theses
In order to assess the continuing imbalance of top executives between genders, I examine the effects of gender diversity within top management teams on firm risk, performance, and executive compensation. Capitalizing on previous analysis, I apply three unique differentiators. First, I utilize current data from 2012 to 2017 from Compustat, CRSP, and ExecuComp. Second, I provide a unique subset view on a firm and individual performance of female CEOs to examine executive compensation. Third, my scope of analysis expands to S&P Composite 1500 companies. I use separate models to estimate the effect of gender diversity on firm risk by examining …
You Can Run But You Can’T Hide: The Advance Of Shareholder Activism, Kendall Greenberg
You Can Run But You Can’T Hide: The Advance Of Shareholder Activism, Kendall Greenberg
CMC Senior Theses
Shareholder activism has exploded in popularity since the turn of the century, due in large part to impressive relative returns generated by its major participants. The result has thus been a surge in assets invested in the category, to in excess of $170 billion today up from less than $3 billion in 2000 (Inglis 2015; Romito 2015). This influx of capital, in absolute dollars and pace of growth, has caused many to wonder whether activists truly create shareholder value and, if so, if the value generated is sustainable. Numerous studies of activist interventions prior to 2009 reveal significant stock price …
Is The Accruals Anomaly More Persistent In Firms With Weak Internal Controls?, Kanishk Kapur
Is The Accruals Anomaly More Persistent In Firms With Weak Internal Controls?, Kanishk Kapur
CMC Senior Theses
In 1996, Sloan identified the accruals anomaly, in which the negative relationship between the accruals component of current earnings and subsequent stock returns can be exploited to generate excess returns. One would expect the accruals anomaly to dissipate and ultimately disappear as investors take advantage of the now-public information. However, nearly two decades later, it persists as one of the most prominent and contentious anomalies; its magnitude of current and future excess returns still remain controversial. The main reason for its persistence is that extreme accrual firms possess characteristics that are unappealing to most investors. These characteristics, which include insufficient …
The Effect Of Mandatory Adoption Of Ifrs On Transparency For Investors, Crystal Anderson
The Effect Of Mandatory Adoption Of Ifrs On Transparency For Investors, Crystal Anderson
CMC Senior Theses
This paper examines the effect of the mandatory adoption of the International Financial Reporting Standards (IFRS) on transparency for investors by measuring the increase in earnings management during the post-adoption period of IFRS. One sign of earnings management is current year earnings being only slightly higher than the previous year’s earnings. An increase in earnings management means a decrease in accounting quality and a decrease of transparency for investors. By comparing firms that mandatorily adopted IFRS to similar benchmark firms in terms of strength of legal enforcement, book-to-market ratios, market values and net incomes, I am able to run empirical …
Stock Returns And Industrial Production: A Sectoral Analysis, Griffin Lazarus
Stock Returns And Industrial Production: A Sectoral Analysis, Griffin Lazarus
CMC Senior Theses
This paper analyzes the relationship between stock returns and future industrial production growth rates from 1926-1940. It replicates the work of Fama (1990) and Schwert (1990) with the intent to see if the relationship continues to hold using sector data. Furthermore, this paper focuses on the 1926-1940 sample period to explore how the relationship is affected by the stock market crash of 1929. It is expected that the relation will be weak for the industry sectors experiencing strong growth prior to the crash. The results indicate that the relationship between stock returns and future industrial production growth rates persists on …
The Risk-Return Characteristics And Diversification Benefits Of Fine Wine Investment, Tania Salomon
The Risk-Return Characteristics And Diversification Benefits Of Fine Wine Investment, Tania Salomon
CMC Senior Theses
This thesis evaluates the risk-return characteristics and diversification benefits of fine wine investment. It compares the historical performance of wine to that of equity, fixed income, real estate, and commodities. I calculate the correlation, volatility, and expected returns of these assets to examine whether adding wine to a portfolio increases its risk-adjusted return. I do this through the Markowitz portfolio optimization technique. The findings suggest that wine has a low correlation with traditional assets, providing diversification benefits. My results also show that adding wine to a portfolio increases its risk-adjusted return only when there is an allocation constraint of 0 …
Is Silence The Answer?, Gator Adams
Is Silence The Answer?, Gator Adams
CMC Senior Theses
This study examines the relationship between company management guidance, and ex-ante crash risk over the duration of 2008(Jan 2006-Dec 2009) financial crisis using the implied volatility skew, which is based upon ex-ante volatility implied by the pricing model developed by Black-Scholes (1973). The study finds that over the duration of this crisis period, management guidance decreases with a rise in ex-ante crash risk. Further, the study provides evidence on the relationship of management guidance and earnings volatility, and how that is affected by a firm's industry product concentration based on the Herfindahl-Hirschman Index (HHI) score.
The Benefits Of Having A Comprehensive Financial Plan For The Average Consumer, And The Necessary Components Comprised To Make An Effective And Efficient Plan, Nicholas M. Lund
The Benefits Of Having A Comprehensive Financial Plan For The Average Consumer, And The Necessary Components Comprised To Make An Effective And Efficient Plan, Nicholas M. Lund
CMC Senior Theses
Socioeconomic changes in American society over the past few decades, as well as an overwhelming amount of uncertainty and misconceptions, have resulted in a majority of Americans to fall short of their financial goals in the short-term, the mid-term, and the long-term. Without proper preparation and financial planning, it is likely that these Americans, and many more, will be unable to reach these goals as well as retire comfortably. Many Americans are overwhelmed with the immense amount of financial information, tools and resources, and as a consequence are unable to plan their finances efficiently and effectively. Americans need a better …
Do Internal Funds Play An Important Role In Financing Decisions For Constrained Firms?, Barun Roychowdhury
Do Internal Funds Play An Important Role In Financing Decisions For Constrained Firms?, Barun Roychowdhury
CMC Senior Theses
In this paper, I discuss the importance of internal funds for corporate investment among financially constrained firms. I use the paper ‘Financing Constraints and Corporate Investments’ by Fazzari, Hubbard and Petersen.as a base for my framework. I focus on a specific paper refuting their findings and their response in order to fully understand the benefits and costs of the framework. I then apply the original framework to a recent sample that covers the Great Recession to see the results of the initial paper are still valid today and if the recent recession and elongated recovery had an even more adverse …
The Deadweight Loss Of Equity-Based Compensation, Jessica Pence
The Deadweight Loss Of Equity-Based Compensation, Jessica Pence
CMC Senior Theses
In order to maximize shareholder value, firms attempt to align the incentives of the executives with those of the shareholders by giving them equity as a portion of their compensation package. The terms associated with this equity compensation forces the executives to hold undiversified portfolios, resulting in a sizeable deadweight loss. This paper uses the formula developed by Meulbroek (2001)1 to calculate the dollar value of this deadweight loss, in order to quantify the costs associated with equity-based compensation. We find that the 56 executives in our data set have a combined deadweight loss of $70 billion, and that on …
Mergers & Abenomics: The Determinants Of M&A In Japan's New Economy, Ethan S. Hallberg
Mergers & Abenomics: The Determinants Of M&A In Japan's New Economy, Ethan S. Hallberg
CMC Senior Theses
This paper investigates the influence of various macroeconomic variables on Japan’s merger and acquisition (M&A) activity, both in terms of total deal value and total number of deals. Looking at monthly data from June 1997 to December 2013, I use econometric time-series analysis to find that: First, total deal value per month is not well explained by our macroeconomic variables, but about half of the variation in number of deals per month can be explained by our dataset. Second, the most important determinant in the total number of deals per month during our period is the level of national debt, …
The Impact Of Prior Performance On Leadership Appointment In A Merger Of Equals, David A. Hirsch
The Impact Of Prior Performance On Leadership Appointment In A Merger Of Equals, David A. Hirsch
CMC Senior Theses
Leadership appointment during mergers has a logical and established precedent when there is a clear target and acquirer. However, in the extraordinary case of Merger Of Equals (MOEs) – where this is relative equal ownership, board representation, earnings contribution etc - this process is much less defined and can often have serious consequences on the merger, both in closing negotiations as well as post-merger performance. Intuition assumes the better performing CEO should and will be appointed. In practice, however, that is often not the case. It is arguable that performance can be defined through objective means (financially & operationally), yet …
Effects Of Early Round Venture Capital Syndication On Ipo Exits In Europe And The United States, Rosabella M. Magat
Effects Of Early Round Venture Capital Syndication On Ipo Exits In Europe And The United States, Rosabella M. Magat
CMC Senior Theses
While the importance of venture capital (VC) can be highlighted by policy goals outlined in the 'Lisbon agenda', the European VC industry remains nascent in comparison to the more sophisticated VC market in the US. Researchers have identified key determinants that foster VC success on a broad level, and have often identified syndication as an important factor of success. This paper seeks to understand the role of syndication on the VC-backed company's success. I take a novel departure from past research in this area in three ways 1) I measure performance from the perspective of the portfolio company, rather than …
Finding Profitability Of Technical Trading Rules In Emerging Market Exchange Traded Funds, Austin P. Hallett
Finding Profitability Of Technical Trading Rules In Emerging Market Exchange Traded Funds, Austin P. Hallett
CMC Senior Theses
This thesis further investigates the effectiveness of 15 variable moving average strategies that mimic the trading rules used in the study by Brock, Lakonishok, and LeBaron (1992). Instead of applying these strategies to developed markets, unique characteristics of emerging markets offer opportunity to investors that warrant further research. Before transaction costs, all 15 variable moving average strategies outperform the naïve benchmark strategy of buying and holding different emerging market ETF's over the volatile period of 858 trading days. However, the variable moving averages perform poorly in the "bubble" market cycle. In fact, sell signals become more unprofitable than buy signals …
Analyzing The Effects Of Credit Rating Changes, The Recent Financial Crisis And Other Variables On Firms' Debt Levels, Sean M. Wasserman
Analyzing The Effects Of Credit Rating Changes, The Recent Financial Crisis And Other Variables On Firms' Debt Levels, Sean M. Wasserman
CMC Senior Theses
This paper utilizes a sample of firms over the years 2000–2009 to test the effects of credit rating changes, the financial crisis, interest rates, and other variables on short-term, long-term, and total debt levels on the balance sheet. Each independent variable was created using a one year lag in order to run the regressions. The values of these variables from the previous year are being analyzed to see if they can predict debt levels for the following year. The results of this paper suggest that levels of long-term and total debt are somewhat reliant on and are positively correlated with …
Determinants Of Corporate Cash Holdings, Yun Lai (William) Li
Determinants Of Corporate Cash Holdings, Yun Lai (William) Li
CMC Senior Theses
The paper explores the driving forces behind corporate cash holdings by analyzing past literature and extending this research to the behavior of firms after the 2008 recession. I look at the cash to assets and net debt to assets ratios from October 1980 to October 2011 to obtain an understanding of the past and current state of cash holdings. A comprehensive literature review is done on agency costs and transactional motives to give the reader an overview of the costs and benefits of holding cash. This provides the foundation for the precautionary motives for companies today to keep cash as …