Corporate Finance Commons^™

Financial Literacy And Ipo Underpricing, Xiaoran Jia, Kiridaran G. Kanagaretnam, Chee Yeow Lim, Gerald J. Lobo

Research Collection School Of Accountancy

Using an international sample of IPO firms and two country-level measures of financial literacy, we find strong evidence that financial literacy is negatively associated with IPO underpricing. In cross-sectional analyses, we find that the effect of financial literacy in reducing IPO underpricing is more pronounced when the information environment is less transparent. Employing path analysis, we document that information friction, firm transparency, and stock market participation are mechanisms that mediate this relationship. Our study contributes to and extends the literature by providing strong evidence that citizens' financial literacy has an important and consistent influence on IPO underpricing.

The Governance Of Director Compensation, Lily Fang, Sterling Huang

Research Collection School Of Accountancy

The average total compensation of directors in U.S.-listed companies was $342,030 in 2020, 5.06 times the median household income. Directors set their own pay, giving rise to potential self-dealing. We argue and document that in the presence of self-dealing, external mechanisms such as legal standards act as effective means of governance. Following a landmark Delaware court ruling that subjected director pay to a more stringent legal standard, Delaware-incorporated firms reduced director compensation relative to non-Delaware firms and experienced positive and non-transient stock price reactions. Our results indicate that proper governance of director compensation enhances firm value.

The Effect Of Massage Therapy On Test Anxiety Experienced By Traditional-Aged Undergraduate Business Students, Jorge A. Pazmiño

Graduate Theses, Dissertations, and Capstones

Test anxiety impacts traditional-aged undergraduate business students and influences their academic performance and overall well-being. This study explored the efficacy of massage therapy (MT) as a means of mitigating test anxiety within this demographic. Building on existing literature that addresses the consequences of anxiety and alternative coping mechanisms, this research study focused on MT as a potential strategy for test anxiety management. The study employed the Adult Manifest Anxiety Scale–College Version (AMAS-C) to gather data from participants at a private liberal arts institution in the East South-Central region of the United States. An experimental group received an MT intervention, while …

Is Asia On The Precipice Of A Currency Crisis? Exploring Regional Risks And Implications On The Global Economy, Hannah Deng

Independent Study Project (ISP) Collection

This paper examines the economic stability of Asia in the face of a potential currency crisis through drawing upon the historical context provided by the 1997 East Asian Financial Crisis. It systematically explores the characteristics and precursors of currency crises, analyzes the Asia-Pacific region’s response to past financial upheavals, and evaluates current macroeconomic vulnerabilities as well as policy frameworks. By juxtaposing the changes in Asia’s financial landscape from the late 20th century to the present, the study identifies persistent structural weaknesses and the region’s ongoing exposure to volatile global financial markets. It also considers the possibility of emerging markets establishing …

Meme Stocks, Robinhood, And Wall Street: Retail Investors And Changing Market Dynamics, Nick Murray, Spencer Brosnan

Senior Theses

This thesis explores the rise of retail investors in the wake of the COVID-19 pandemic, and how they have changed the landscape of financial markets. We outline the full timeline of the GME and AMC social media craze that exemplified the power of retail investors in the market and investigate the impact the COVID-19 pandemic had on this group. Through the use of VandaTrack, a software that tracks retail investors’ trading activity, we were able to quantify the impact that retail investors have on US equities and ETFs and compare them to the market as a whole. We utilized this …

Intrafirm Knowledge Sharing In The Investment Research Industry, Artur Hugon, An-Ping Lin, Stanimir Markov

Research Collection School Of Accountancy

We study interdepartment knowledge sharing in an investment research setting where the benefits are potentially significant for the brokerage and the capital market, but so are the frictions impeding it. Using hand-collected data on equity analyst access to in-house debt research expertise, we find significant benefits to equity analysts in the form of improved ability to forecast cash flows and to anticipate credit rating downgrades. Moreover, we find evidence that access to management and research expertise underlie in-house debt analysts' capacity to generate information beneficial to equity analysts. Finally, these benefits exist only in the presence of a collaborative brokerage …

The Effects Of Perceived Cultural Conflicts On Employee Retention After Mergers And Acquisitions, Chengpeng Luan

Dissertations and Theses Collection (Open Access)

With China’s deepening medical reform, the state has introduced a series of regulatory policies, which has set off a frenzy of mergers and acquisitions in the medical device industry. Small and medium-sized device distribution companies with small scale and weak strength have closed. Large and powerful large medical device distribution enterprises seize the opportunity to expand mergers and acquisitions rapidly.

Based on the researcher's work experience and data availability, this paper takes an MNC company, M, acquisition of a high-quality local company, K, as the research object. Based on the actual operation of the medical device industry, combined with the …

Jump Diffusion Outperforms Geometric Brownian Motion When Forecasting Bric’S Daily Foreign Exchange Carry Trading Strategy Returns, Marc Kwait

Doctoral Dissertations (DBA)

This research will examine how the Jump Diffusion Model 1 (JDM) accurately outperforms Geometric Brownian Motion2 (GBM) when forecasting the Japanese Yen carry trade daily returns for the BRICs' and three bellwether currency pairs GBP/JPY, EUR/JPY, and PLN/JPY from January 2, 2012, to September 30, 2023. An added innovation within this research is the inclusion of the interest rate return in arriving at the daily cumulative carry trade returns. This is a distinctive and unique feature that offers a different perspective, since many journal articles do not discuss or address the interest earned (long position) component of the FX Carry …

"Just Beat It" Do Firms Reclassify Costs To Avoid The Base Erosion And Anti-Abuse Tax (Beat) Of The Tcja?, Stacie O. Laplante, Christina M. Lewellen, Daniel P. Pynch, David M. P. Samuel

Research Collection School Of Accountancy

This study examines whether multinational corporations (MNCs) reclassify related-party payments to avoid the new base erosion and anti-abuse tax (BEAT). The Tax Cuts & Jobs Act of 2017 included the BEAT to combat income shifting from the U.S. to foreign entities. An exclusion in the tax law provides MNCs an incentive to reclassify related-party payments as cost of goods sold. We use a triple-difference design that leverages the BEAT filing threshold of $500 million in revenue and the parent company’s location to document increases in the unconsolidated sales of foreign subsidiaries of MNCs subject to BEAT relative foreign subsidiaries of …

Efficiency And Sustainability Of Bond Market: Evidence From Aftermarket Trading Of Us Corporate Bond Offerings, Lisa (Zongfei) Yang, Choo Yong, Jeremy Goh

Research Collection Lee Kong Chian School Of Business

We find that for bond offerings that are non-self-marketed, there is a significantly larger proportion of institutional-sized sell trades than buy. In stark contrast, for self-marketed offerings by underwriters, immediate post-offer trading is characterized by a larger proportion of institutional-sized buy trades than sell. We also find evidence suggesting that retail investors, who are initially shut out of the offering deals, buy bonds in the secondary market at a higher price. Our evidence suggests that certain institutional investors receiving allocations of non-self-marketed offerings flip them for a quick profit. The systematic disparity in aftermarket trading immediately following self-marketed versus non-self-marketed …

Capital Expenditure Dynamics In Asean: Unveiling Determinants And The Impact Of The Covid-19 Pandemic On Non-Financial Corporations, Solikin M. Juhro, Dhaha Praviandi Kuantan, Charvin Lim

Bulletin of Monetary Economics and Banking

This study investigates the intricate determinants influencing the capital expenditure behavior of Non-Financial Corporations (NFCs) in major ASEAN countries over the past decade. Employing a fixed effect panel analysis encompassing 1,488 NFCs in Indonesia, Malaysia, Thailand, and the Philippines, our study unveils a robust and statistically significant relationship between corporate financial performance and capital expenditure. Notably, indicators such as profitability, market value, and cash flow rate demonstrate a positive association with heightened capital expenditure. Furthermore, macroeconomic conditions and policy-related variables emerge as influential factors affecting capital expenditure decisions. Stringent financial conditions tend to hamper firm investment decisions, whilst interest rate …

[Discussions] Vol. 19 Iss. 1

Discussions

This issue of Discussions was published for the Spring 2023 cycle.

U.S. Public Equity Esg Fund Composite And Parnassus Core Equity Fund: Performance And Factor Attribution, Karthik Nemani, Barrett Buhler

Discussions

This is the first paper to examine all U.S. public equity Environmental, Social, and Governance (ESG) funds offered by the Forum for Sustainable and Responsible Investment’s (SIF) institutional member firms from 2005 to 2020. For ease of communication, this will be called the ESG Composite. With a Net Asset Value (NAV) over $150 billion, these funds comprise nearly half of the U.S. public equity ESG investment landscape. The article finds that the ESG Composite maintains performance with the Standard and Poor’s (S&P) 500 total return index on an overall returns basis with lower volatility, indicating greater risk-adjusted returns. Factor analysis …

The Impact Of Celebrity News On Entertainment Industry Stock Prices, Alexandra Widuri Ariani, Zaäfri Ananto Husodo

The Indonesian Capital Market Review

South Korea's entertainment industry has garnered global popularity. However, the competition between entertainment companies is fierce, necessitating strategies to ensure their survival, such as imposing restrictions on their artists to maintain their public image and trust. This study examined the impacts of celebrity news and activities on the stock returns of six major entertainment companies listed on the Korea Exchange (KRX) from 2018-2021. Employing the Fama-French 3 Factors Model regression, the study investigated the presence of abnormal returns. The findings indicate that comebacks and debuts elicit positive reactions and generate significant abnormal returns. Award acceptances and military service also elicit …

Diversification Strategies And Corporate Financial Distress: The Impact Of Monetary Tightening And Ipo Timing, Yingcen Zhang

Dissertations and Theses Collection (Open Access)

Diversification as a strategic objective has become increasingly pursued by many enterprises. However, whether diversification truly brings robust business operations and risk dispersion effects remains a focal point of attention in both academic and practical realms. This study, grounded in Chinese practice, empirically examines the relationship between corporate diversification and financial distress and further discusses the interactive impact of monetary policy tightening and diversification on corporate financial distress.

Empirical analysis results indicate a positive correlation between corporate diversification and financial distress in China. This finding suggests that diversification may not always confer the advantage of risk dispersion to enterprises; it …

Trade Agreements And Financial Market Integration In Latin America And The Us, Obed Fernando Izaguirre, Seungho Shin, Duygu Zirek

Department of Accounting and Finance Faculty Scholarship and Creative Works

The primary objective of this study is to examine the extent of financial integration between Latin American and US financial markets, particularly in light of recent efforts to foster integration through trade agreements. Spanning from 1 January 1990 to 31 December 2019, the sample focuses on major market indices and key sectors. Financial integration is quantified using a DCC multivariate GARCH model, incorporating a smooth transition model, structural breaks, and regression-based approaches. Results indicate increased comovement with the US for main market indices in Argentina, Chile, Colombia, Mexico, and Peru, while Brazil shows a decrease. Similar trends are observed in …

Institutions And Corporate Tax Evasion: A Review Of The Literature And A Methodological Exploration, Kiridaran Kanagaretnam, Jimmy Lee, Chee Yeow Lim, Gerald J. Lobo

Research Collection School Of Accountancy

We first review the recent research published in JIAR on the influence of international institutions on accounting practices and follow it with a discussion of the literature studying the influence of institutions on tax avoidance and tax evasion. We then explore a new methodological approach that draws on the theory of institutional hierarchy proposed by Williamson (2000) and examine the relative importance of three broad types of institutions (informal, formal and media) in curtailing perceived tax evasion activities. We contribute to the international accounting literature by summarizing the recent research that addresses tax avoidance and tax evasion and providing preliminary …

Segment Disaggregation And Equity-Based Pay Contracts, Young Jun Cho, Hojun Seo

Research Collection School Of Accountancy

We study the role of segment disaggregation in equity-based pay contracts in diversified firms. Disaggregated segment disclosures can improve the observability of managerial actions in internal capital markets and thus increase implicit incentives for managers to allocate resources as desired by shareholders, substituting for explicit incentives provided to CEOs. We use the adoption of Statement of Financial Accounting Standards No. 131 as an identification strategy and find that firms affected by this segment reporting mandate significantly decreased the provision of equity-based incentives in the post-adoption period, especially for firms with higher operating volatilities. This effect is also more pronounced for …

Valuing Circularity: Sustainable Finance With Real Options Methodology, Mostafa Alloub

Theses and Dissertations

This thesis presents an enhanced framework for valuing circular investments based on the Value Hill model using real options analysis. We propose a new flexible numerical methodology for valuing circularity using the Least Squares Monte Carlo simulation (LSMC) method of Longstaff and Schwartz (2001). The Value Hill model of circularity represents the course followed by the value of an asset, specifically after primary use. To validate the efficiency of our model, we conduct an empirical study on the smartphone business using the case of Apple. Results of our empirical analysis show that investing in circularity enhances financial value. Our model …

Audit Evidence, Technology, And Judgement: A Review Of The Literature In Response To Ed‐500, Dereck Barr‐Pulliam, Christopher G. Calvin, Marc Eulerich, Arpine Maghakyan

Accounting Faculty Publications

In October 2022, the International Auditing and Assurance Standards Board (IAASB) issued Exposure Draft 500 (ED-500). This is focused on revising and integrating the standard auditors use when evaluating audit evidence during an external audit. This study contributes to the ongoing discourse as the IAASB evaluates feedback to ED-500 and executes its standard-setting agenda. We review academic literature published in the past 10 years to synthesize extant knowledge specifically on the use of technology and the application of professional skepticism during audit evidence evaluation. Our review offers factors the IAASB should consider when seeking to modernize and future-proof its standards, …