Corporate Finance Commons^™

Esg Investing: From Fad To Force, Erin Cullen

Senior Theses

ESG Investing is the application of environmental, social, and governance factors to identify material investment risks and growth opportunities. Though traditionally viewed as non-financial factors, this paper asserts that ESG factors are indeed financially material. This work first surveys the current state of ESG Investing, its shortcomings, and its success despite these inherent issues. Section II adds a new perspective to ESG research by examining the applications of ESG scores in portfolio management. The study conducts t-tests to answer whether the typical holdings of an ESG mutual fund are more sustainable than those of traditional funds. The paper then focuses …

Liability For Non-Disclosure In Equity Financing, Albert H. Choi, Kathryn E. Spier

Law & Economics Working Papers

The paper analyzes the effects of holding firms liable for non-disclosure of material information when raising capital. We develop a model in which a privately-informed entrepreneur can choose to withhold information from prospective investors when issuing and selling stock and the investors can bring suit against the firm ex post for (alleged) non-disclosure. The damage payment received by the investors is partially offset by the reduced value of their equity stake. The analysis shows that the equilibrium depends on, among others, (1) the amount of personal capital the entrepreneur has to commit, (2) the frequency with which the entrepreneur is …

Fintech And Anti-Money Laundering Regulation: Implementing An International Regulatory Hierarchy Premised On Financial Innovation, Nicholas A Roide

Texas A&M Law Review

Innovations in financial technology (“fintech”) have rippling effects across global markets. Fintech firms utilizing virtual assets and disintermediating blockchain technology continue to rapidly grow in strength and number. As systemic risk mounts due to the inter-jurisdictional nature of fintech, antimony laundering (“AML”) regulators must search for an international answer to maintain global financial stability and protect consumers against illicit activities. A variety of solutions have appeared within local AML regulatory frameworks. These frameworks tend to function as a hierarchy with three ordered objectives: market integrity, rule clarity, and innovation. However, frameworks often place too much emphasis on market integrity and …

Green, Blue Or Black, But Washing–What Company Characteristics Determine Greenwashing?, Silvia Ruiz-Blanco, Silvia Romero, Belen Fernandez-Feijoo

Department of Accounting and Finance Faculty Scholarship and Creative Works

The purpose of this paper is to study what are the characteristics that make firms less or more prone to greenwashing. We collect data from sustainability disclosures of the S&P top 100 companies, to investigate the determinants of greenwashing. We use content analysis to measure the level of reporting of the companies. We define the “greenwashing” variable as the difference between what the company says it does in terms of commitment to sustainability, and what the company actually does as evaluated by external parties (Bloomberg ESG scores). Our results show that companies in environmentally sensitive industries greenwash less than their …

Major Government Customers And Loan Contract Terms, Daniel A. Cohen, Bin Li, Ningzhong Li, Yun Lou

Research Collection School Of Accountancy

We examine the relation between the presence of U.S. government as a major customer and a supplier firm’s loan contract terms, using major corporate customers as a benchmark. We find that firms with major government customers are associated with fewer covenants and a lower likelihood of having performance pricing provisions in their loan contracts. In contrast, we do not find such associations for firms with major corporate customers. Further, we find no evidence that the existence of major government customers is related to the supplier firm’s loan spread, security, or maturity. We conjecture that lenders benefit from the stricter monitoring …

Initial Public Offering And Optimal Corporate Governance, Albert H. Choi

Law & Economics Working Papers

This paper examines the long-standing debate over whether firms have a market-based incentive to adopt optimal governance provisions at their initial public offering (IPO). Various scholars and practitioners have argued that firms that offer stock to the public with suboptimal governance structure will be penalized by the market through a lower IPO price. At the same time, others have documented empirical evidence that many IPO firms have putatively suboptimal governance provisions, such as anti-takeover provisions and dual class structure, and many, especially those with dual-class structure, enjoy a market premium at their IPO. This paper attempts to bridge this gap. …

Misreading Menetti: The Case Does Not Help You Avoid Liability For Your Own Fraud, Val D. Ricks

St. Mary's Law Journal

Several decades ago, an incorrect legal idea surfaced in Texas jurisprudence: that business entity actors are immune from liability for fraud that they themselves commit, as if the entity is solely responsible. Though the Supreme Court of Texas has rejected that result several times, it keeps coming back. The most recent manifestation is as a construction of Texas’s unique veil-piercing statute. Many lawyers have suggested that this view of the veil-piercing statute originated in Menetti v. Chavers, a San Antonio Court of Appeals case decided in 1998. Menetti has in fact played a prominent role in the movement to …

Analysts' Site Visits And Corporate Innovation, Qiang Cheng, Yutao Wang, Holly I. Yang, Zheyuan Zhang

Research Collection School Of Accountancy

While prior studies examine whether analyst coverage affects corporate innovation, there is little research on the mechanism through which financial analysts affect corporate innovation. In this paper, we examine whether and how analysts’ questions about innovation affect corporate innovation activities and outcomes. Using a sample of corporate site visits in China, we find that when analysts ask questions about innovation during site visits, the firms invest more in research and development and file more patent applications in the future. This association is stronger when analysts have a greater information and monitoring role. In addition, consistent with knowledge diffusion between firms, …

The Influence Of Corporate Income Taxes On Investment Location: Evidence From Corporate Headquarters Relocations, Travis Chow, Sterling Huang, Kenneth J. Klassen, Jeffrey Ng

Research Collection School Of Accountancy

This study examines the effects of jurisdictions’ corporate taxes and other policies on firms’ headquarters (HQ) location decisions. Using changes in state corporate income tax rates across time and states as the setting, we find that a one-percentage-point increase in the HQ state corporate income tax rate increases the likelihood of firms relocating their HQ out of the state by 16.8%, and an equivalent decrease in the HQ state rate decreases the likelihood of HQ relocations by 9.1%. Exploiting the unique tax policy features within the state apportionment system lends strong support to the interpretation that taxation drives this effect. …

Securing Repo: Counterparty Risk And Collateral Supply Effects In The Tri-Party Repo Market, Stephen H. Frank

Doctoral Dissertations (DBA)

I examine the co-variance between tri-party repurchase agreement (repo) spreads and proxies for collateral values and counterparty risk. Since the Global Financial Crisis of 2008 (GFC), the Federal Reserve (Fed) has taken measures to mitigate repo market instability. These measures have collectively placed the Fed astride repo markets as ongoing borrower, lender and purchaser of US Treasury and Agency securities. By analyzing the relationships between repo spreads, the US 10-year yield and the TED spread, I assess the effectiveness of Fed measures to mitigate repo market instability. Using multiple breakpoint Bai-Perron regression and Markov Switching tests, I find that these …

Climate Change And Corporate Behaviors, Lei Lei

Dissertations, Theses, and Capstone Projects

This dissertation consists of several chapters that span corporate disclosures on climate change-related impacts, environmental performance, common institutional ownership, and financial analyst coverage.

Chapter 1 This chapter briefly introduces this dissertation, including the motivation and structure.

Chapter 2 In this chapter, I exploit the oral and communicative nature of earnings conference calls to explore whether the discussions on climate change influence corporate environmental performance. I find strong and robust evidence that communications make firms engage more actively in environmentally beneficial investments, and thus, have better environmental profiles. Further evidence shows that mandatory disclosure may unexpectedly crowd out communications, and this …

Uncertainty And Banks’ Security Holdings, Van Dan Dang, Hoang Chung Nguyen

The Indonesian Capital Market Review

The paper enriches the existing literature on financial intermediaries’ operations in the face of uncertainty by empirically examining the impact of banking uncertainty on banks’ security holdings. Using bank-level data in Vietnam during 2007–2019 to compute a micro uncertainty proxy based on the dispersion of bank shocks, we document that banking uncertainty tends to enhance total security holdings at banks. Decomposing aggregate securities into disaggregate components, we find that safer investments (including government bonds and financial institution bonds) dominate the overall impact of banking uncertainty on security holdings, which completely offset a drop in the volume of riskier investments (including …

The Impact Of Geopolitical Risk On Corporate Investment: Evidence From Turkish Firms, Omer Faruk Tan, Hakan Cavlak, Yasin Cebeci, Necati Güneş

The Indonesian Capital Market Review

This study analyzes the effects of geopolitical risk on the corporate investment of 164 Turkish manufacturing firms listed in Borsa Istanbul (BIST). The time covers the period from 2005 to 2019, applying the system Generalized Methods of Moments (GMM) estimator. The results indicate that geopolitical risk hurts corporate investment in Turkey. Under uncertainty induced by geographical risk, firms prefer to decline their investment. Additionally, financially constrained (non-dividend, small, young) firms are more negatively affected than financially unconstrained firms. Our findings are robust under alternative measures of geopolitical risk. Overall, this study reveals that geopolitical risk is a significant uncertainty affecting …

Cash Flow And Accrual Anomalies: Evidence From Borsa Istanbul, Emine Kaya

The Indonesian Capital Market Review

This study aims to determine the persistence of earning and its components and whether investors accurately evaluate the information related to the earning and its components. The study covers the firms operating in Borsa Istanbul between 2005-2017 time period. We sort the accruals and cash flows into five portfolios. Then, we employ linear regression and Mishkin test estimations. Moreover, we compare the asset pricing models with nine metrics in explaining the cash flow and accrual anomalies. Linear regression and Mishkin test estimations show that the persistence of earning is high. The other finding is that cash flow and accrual do …

Effect Of Covid 19 Pandemic On Pharmaceutical Industry In Terms Of Inventory And Logistics Management, Shubhabrata Basu, Rimu Chaudhuri

Himalayan Research Papers Archive

The World Health Organization (WHO) declared COVID-19 a pandemic on 11^th March 2020, after the outbreak that was first reported in Wuhan, China in December 2019. The COVID-19 pandemic affected world economy including the pharmaceutical sector. The health crisis unleashed in the world because of this pandemic and the attempts of various countries and organizations in the world to contain it have also fuelled the greatest economic crisis in modern history. This significant fall in world trade in goods and services have been triggered by the interruption and break down of local and global supply chains, generating high levels …

Redefining Banking Through Defi: A New Proposal For Free Banking Based On Blockchain Technology And Defi 2.0 Model, Francesco Spinoglio

Journal of New Finance

This article aims to offer a new free banking proposal with a 100% cash ratio that uses the DeFi 2.0 model. The current monetary system, based on Central Banking with fractional reserve, has created a huge debt spiral and has distorted the entire production system, which produces deep recurring socioeconomic crises that increasingly impoverish citizens. This paper presents an innovative proposal that aims to take advantage of blockchain technology using the Defi 2.0 model. It would be a first attempt to merge centralized finance with the DeFi world, laying the foundation for a fairer and more decentralized monetary society.

Reform Of The Lebanese Public Accounting System Within The Framework Of International Accounting Standards In The Public Sector, Hassan Diab

Al Jinan الجنان

Reform of the Lebanese Public Accounting System in the Context of the International Public Sector Accounting Standards (IPSASs) This study addresses the increasing challenges that the Lebanese public accounting system is facing, in light of globalization, in shifting from a cash basis to an accrual basis system, as per the International Public Sector Accounting Standards (IPSASs). Through addressing the peculiarities of the Lebanese public accounting system, the study concludes that the conversion from cash basis to accrual basis system will help boost transparency and accountability. Yet, some essential conditions are required to successfully achieve this, including: shifting from the traditional …

Takaful Insurance And Its Similarities And Differences With Traditional Insurance, Najlaa Al Hajj

Al Jinan الجنان

Commercial insurance or cooperative insurance (Co-Op Insurance) typically aims to reduce common risks that can happen to any type of business and to provide all kinds of protection against unforeseen circumstances. Takaful insurance has been created as an alternative choice that the public was looking for, mainly in the Arab countries for the reason that the services of the traditional insurance do not suit people’s needs especially with regard to non-compliance with sharia laws. Therefore, Takaful insurance seeks to solve this problem. It provides insurance services and programs Commercial insurance or cooperative insurance (Co-Op Insurance) typically aims to reduce common …

Chief Loophole Officer Or Chief Legal Officer: Inside Lehman Brothers—A Film Case Study About Corporate And Legal Ethics, Garrick Apollon

St. Mary's Journal on Legal Malpractice & Ethics

This Article discusses the continuing legal education (CLE) visual advocacy documentary-style program, which Garrick Apollon (author of this Article) researched and developed. The case study for this CLE documentary-style program is the film Inside Lehman Brothers—a documentary film by Jennifer Deschamps which chronicles the story of the Lehman whistleblowers. The film presents Mathew Lee, former senior vice president overseeing Lehman’s global balance sheet; Oliver Budde, former in-house counsel (associate general counsel) of the Lehman Brothers; and the racialized female mid-tier manager whistleblowers, who all paid a steep price in the 2008 American subprime mortgage crisis, while many of the …

The Effects Of Environmental Corporate Social Responsibility On Financial Returns, Kevin Acevedo

Theses and Dissertations

A major issue concerning companies is global warming and the impact that firms have on the environment. Companies are taking steps towards sustainability, but it is unclear if sustainable business practices are beneficial to companies’ financial performance. This paper examines the effect of environmental corporate social responsibility (CSR) of Fortune 250 companies on financial performance. The analysis reveals significant effects on financial performance, but they are inconsistent and hard to interpret.