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Social and Behavioral Sciences Commons™

Open Access. Powered by Scholars. Published by Universities.®

2018

Research Collection Lee Kong Chian School Of Business

Finance

Articles 1 - 8 of 8

Full-Text Articles in Social and Behavioral Sciences

Executive Overconfidence And Securities Class Actions, Suman Banerjee, Mark Humphery-Jenner, Vikram Nanda, T. Mandy Tham Dec 2018

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.

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Likely Trajectory Of Fed Policy Far From Settled, Thomas Lam, David Fernandez Dec 2018

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.

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Partisan Conflict And Stock Price, Dashan Huang, Wang Liyao Nov 2018

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 …

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Warrants And Their Underlying Stocks: Microstructure Evidence From An Emerging Market, Charlie Charoenwong, David K. Ding, Nuttawat Visaltanachoti Sep 2018

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 …

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Marking To Market And Inefficient Investment Decisions, Clemens A. Otto, Paolo F. Volpin Aug 2018

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.

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The Real Effects Of Exchange Traded Funds, Frank Weikai Li, Xuewen Liu, Chengzhu Sun Jul 2018

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 …

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Optimal Stackelberg Strategies For Financing A Supply Chain Through Online Peer-To-Peer Lending, Guang-Xin Gao, Zhi-Ping Fan, Xin Fang, Yun Fong Lim Jun 2018

Optimal Stackelberg Strategies For Financing A Supply Chain Through Online Peer-To-Peer Lending, Guang-Xin Gao, Zhi-Ping Fan, Xin Fang, Yun Fong Lim

Research Collection Lee Kong Chian School Of Business

In recent years, supply chain finance (SCF) through online peer-to-peer (P2P) lending platforms has gained its popularity. We study an SCF system with a manufacturer selling a product to a retailer that faces uncertain demand over a single period. We assume that either the retailer or the manufacturer faces a capital constraint and must borrow capital through an online P2P lending platform. The platform determines a service rate for the loan, the manufacturer sets a wholesale price for the product, and the retailer chooses its order quantity for the product. We identify optimal Stackelberg strategies of the participants in the …

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Inflation Expectations In Singapore: A Behavioural Approach, Alexander Clark, Aurobindo Ghosh, Samuel Hanes Apr 2018

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.

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