Corporate Finance Commons^™

Common Ownership And Analyst Forecasts, Qiang Cheng, Shuqing Luo, Jinping Zhang

Research Collection School Of Accountancy

We examine the effect of the common ownership relation between brokerage houses and the firms covered by their analysts (referred to as co-owned brokerage houses, co-owned firms, and connected analysts, respectively) on analyst forecast performance. Common ownership can help the connected analysts have better access to co-owned firms, leading to higher-quality analyst research. However, common owners have incentives for higher valuation of the co-owned firms and thus can exert pressure on the connected analysts to issue optimistically biased research reports for these firms. We find that common ownership improves analyst forecast accuracy. This result is robust to a difference-in-differences design …

Protecting The Sovereign's Money Monopoly, Gary B. Gorton, Jeffery Zhang

Articles

Sovereign states have held a monopoly over the production of circulating money for well over a century. Governments, not private entities, issue circulating money. The advent of stablecoins—privately issued digital money that can circulate—raises the question of the sovereign’s money monopoly from the grave. Should private money circulate alongside sovereign money in the twenty-first century? We argue against coexistence to preserve financial stability and monetary sovereignty.

Through the lens of economic theory, we explore the coexistence question by revisiting the original debates that led to the sovereign’s money monopoly in England, the United States, Canada, and Sweden. In each case, …

Meme Corporate Governance, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee

Articles

Can retail investors revolutionize corporate governance and make public companies more responsive to social concerns? Beginning in 2021, there was a dramatic influx of retail investors into the shareholder base of “meme” stock companies such as GameStop, AMC, and Bed Bath & Beyond. Observing the unprecedented, coordinated trading among retail investors, scholars and practitioners predicted that the influx of retail investors would reduce the power of large institutional investors and democratize corporate governance. These predictions were driven by three factors: generational, with assumptions that millennial and Gen Z investors would challenge corporate management; societal, reflecting growing discontent with slow progress …

Taxation And Corporate Governance, Reuven S. Avi-Yonah, Ariel Siman

Articles

Legal and economic scholars have examined the intersection between corporate governance and taxation; however, recent legal scholarship has generally focused on the interplay between director compensation, management measures in the face of the market for corporate control, and the double taxation of inter-corporate dividends. Other aspects of the relationship between corporate governance and taxation have received limited attention. This article aims to fill this gap in the literature. First, this paper discusses the corporate agency problem and the existing justifications for the corporate tax. Second, this paper argues that the corporate tax can be justified on the ground that it …

Owning Green: Evaluating The Effects Of Actively Managed Sustainability Fund Ownership On Esg Scores, Caleb Young

CMC Senior Theses

The growing trend of acknowledging ESG performance as a material concern when conducting due diligence on investment opportunities has exacerbated the number of assets being managed by investors with sustainability-oriented goals. At the same time, as social and climate-related issues have become more intense, investors want to use their agency as shareholders to influence companies to act in ways that align with their values. Frequently, this can be most effectively achieved through proxy voting and corporate engagement, particularly if the fund is an active manager. This thesis explores the interaction between ESG-focused ETFs and mutual funds and their management style …

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 …

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 …

Corporate Law As Decolonization, Martin W. Sybblis

Faculty Articles

After centuries of colonial subordination, Black and Brown former colonies are still fighting to achieve the fruits of decolonization. The traditional theory is that former colonies will emerge from the colonial period with the legal mandate and international recognition needed to chart their own futures. But, for those Black and Brown British colonies that achieved political independence, it became clear that, without economic strength to care for their societies, legal separation could not deliver on its promise of freedom from subordination. This Article argues that investments in corporate law innovations by some jurisdictions, such as Bermuda, the British Virgin Islands, …

Essays On Corporate Finance And Real Estate, Hanh T. H. Phan

Finance and Real Estate Dissertations - Archive

My dissertation consists of two essays. In the first essay, I study the impact of local economic policy uncertainty on corporate cash holdings for U.S. firms. While national economic policy uncertainty has been examined extensively, few studies have investigated the impact of local economic policy uncertainty. I use the state-level economic policy uncertainty developed by Baker, Davis, and Levy (2022) to examine the impact of local economic policy uncertainty on firm cash holdings. Using a sample of publicly traded U.S. firms from 1985-2022, I find that firms increase their cash holdings in response to higher local economic policy uncertainty. The …

The Effects Of Esg On The Financial Performance Of Aerospace & Defense Companies, Cooper Trimble

Honors Undergraduate Theses

This study examines the relationship between Environmental, Social, and Corporate Governance (ESG) activity and financial performance in the context of firms operating in the Aerospace & Defense industry. As societal pressure increases for companies to adopt ESG and related corporate sustainability practices, it is crucial to understand the repercussions of such adoptions. As the Aerospace & Defense industry continues to grow and capitalize on post-COVID travel booms, military modernization efforts, and increased demand for advanced aerospace technology, it is essential to understand the consequences of ESG implementation. By examining data from 2012 – 2023, this study produced results regarding the …

Initial Financial Assessment Of The Fraport Greece Cluster A Concession, Dimitrios V. Siskos, Alexander Maravas, Ronald Mau

International Journal of Aviation, Aeronautics, and Aerospace

There is a worldwide trend in the privatization of transport infrastructure and airports. Likewise, the Greek government launched an extensive privatization program that granted Fraport AG the right to operate 14 airports for the next forty years. The two separate concessions for clusters of seven airports each are named "Cluster A" and "Cluster B." The financial assessment of privatization contracts is crucial so decision-makers can accurately assess the value of aviation enterprises. This paper applies the Economic Value Added (EVA) methodology and enterprise valuation on Cluster A by assessing the concession company's balance sheets and income statements. We concluded that …

Essays On Corporate Debt Structure, Kyuyoung Oh

Theses and Dissertations--Finance and Quantitative Methods

The dissertation consists of three chapters exploring three different facets of corporate debt structure choice. In the first chapter, “Risk Management and the Choice between Secured and Unsecured Debt: Evidence from Natural Experiment,” I study whether and how corporate hedging affects firms’ choice between secured and unsecured debt. Exploiting the introduction of steel futures as a natural experiment, I provide causal evidence that risk management enables firms to switch from secured to unsecured debt without sacrificing debt capacity. Cross-sectional evidence supports the interpretation that risk management drives the results. The effects are stronger for firms that are more likely to …

Three Essays On Corporate Debt Contracting And Innovation, Olaleye Morohunfolu

Theses and Dissertations (Comprehensive)

This dissertation comprises three essays investigating topics in Corporate Debt Contracting and Innovation. The first essay examines the relation between Passive Institutional Ownership (IO) and debt covenants. Using Russell 1000/2000 annual index reconstitution as a source of exogenous variation in passive IO, I find that passive IO leads to reduced covenants in the bond market. Specifically, I find that passive IO leads to reduced (a) Investment, (b) Dividend restriction, and (c) Subsequent financing restriction. However, I observe weaker results for loan covenants, implying that loans, usually collateralized, are less sensitive to changes in passive ownership. The overall effect of passive …

Entire Volume Journal Of Banking And Financial Economics 2024, 1(21)

Journal of Banking and Financial Economics

Entire Volume Journal of Banking and Financial Economics 2024, 1(21)

Product Elimination Decision And Its Impact On Consumers: The Special Case Of A Local Speedway, Mark Mitchell, Jacob Voegel, Michael Smith

Atlantic Marketing Journal

After 60+ years of operation, Myrtle Beach Speedway was closed and the property sold. The new owners will redevelop the property for commercial and residential purposes. Businesses routinely eliminate products for a variety of reasons, including under-performance and/or a desire to redeploy those resources elsewhere. What is often overlooked is the impact on consumers. In addition to reducing fan access to racing, a closed race track removes a racing opportunity for aspiring race car drivers and crew members. It can also mean shuttering tracks that once had historical significance. The history of raceway closures in the Myrtle Beach, SC area …

The Impact Of Expansionary Monetary And Fiscal Policy On Firm Performance: A Comparative Analysis Of Pre, During, And Post-Covid Periods, Kofi O. Adansi Pipim

Doctoral Dissertations (DBA)

In this research, we use panel data regression analysis to investigate the impact of expansionary monetary and fiscal policies on firm performance in pre (2017 to 2019), during (2020 to 2021), and post COVID-19 (2022 to 2023) periods. We combine quarterly data sourced from the Wharton Research Data Services (WRDS)-Compustat and the St Louis Federal Reserve Economic Data (FRED) databases. After combining all data, our final sample consists of 3,226 publicly listed firms in the United States. We test the hypothesis that the economic and fiscal policy interventions instituted by the Federal Reserve (Fed) significantly affected firm performance during and …

Relative Impact Of Economic Policy Uncertainty And Mortgage Rates On The Supply Of New Homes For Sale In The United States, Jaclyn M. Devylder-Gaidish

Doctoral Dissertations (DBA)

This paper analyzes the changeable impact of economic policy uncertainty and mortgage rates on the supply of new homes for sale in the United States. The homes supply is proxied by the ratio of new homes for sale to new houses sold. The analysis utilizes monthly data from January 1985 to November 2023. The relationship is assessed using least square regression with second order autoregressive correction as well as Bai-Perron multiple breakpoint regression for structural breaks and Markov switching tests for state-dependency. The results demonstrate a significant direct correlation between economic policy uncertainty and housing supply, but only during the …

Economic Policy Uncertainty And Its Impact On Unemployment Rates Among U.S. Ethnic Groups, Melody Shirley Nimoh

Doctoral Dissertations (DBA)

The study aims to investigate the transmission of Economic Policy Uncertainty (EPU) shocks on unemployment rates across different ethnic groups in the United States. The research employs econometric analysis such as regression modeling to determine the relationship between EPU and unemployment rates among African American, Hispanic or Latino American, and White American communities. The study estimates coefficient estimates for the lagged change in EPU and its impact on respective unemployment rates for each ethnic group. This shows that there are statistically significant positive relationships between EPU shocks and unemployment rates across all ethnic groups. An increase in EPU leads to …

Investor Reaction To Spacs' Voluntary Disclosures, Vincent Castellani, Karl A. Muller, K.J. Park

Research Collection School Of Accountancy

SPACs are formed to combine with and provide a private firm public trading status and a capital infusion. Firms that enter the public market through a SPAC combination are believed to possess greater voluntary disclosure discretion than traditional IPOs as they obtain their public trading status through a merger. Consistent with regulators’ concerns, recent research finds that SPACs use this discretion opportunistically by issuing optimistic guidance. This study examines how investors respond to these disclosures. We find that optimistic projections increase retail purchasing, which is higher than that of institutional purchasing. Additionally, we find that investors partially see through the …

Financial Literacy In The Era Of Artificial Intelligence. Towards Financial Inclusion. Opening Remarks, Łukasz Kurowski, Anna Szelągowska

Journal of Banking and Financial Economics

Financial Literacy in the Era of Artificial Intelligence. Towards Financial Inclusion. Opening Remarks