Finance and Financial Management Commons^™

Lumberjack Construction: Job-Order Costing & Manufacturing Simulation, Marie Kelly, Nikki Shoemaker

Faculty Publications

This paper describes a classroom Job-Order Costing and manufacturing simulation called Lumberjack Construction. This simulation is used in introductory managerial accounting and cost accounting courses to help students understand the various parts of the manufacturing process and the application of Job-Order Costing principles. For this simulation, students are placed into manufacturing groups. Each group is responsible for manufacturing a building and calculating the cost of that building using job-order costing.

The Need For Sustainable Finance, Singapore Management University

Perspectives@SMU

Bringing about sustainable or ‘green’ finance requires a convergence of policy and profitability – and it’s not just the developed countries that are leading the way

Playing Fast And Furious In The Stock Market, Singapore Management University

Research@SMU: Connecting the Dots

Surprising insights into the role of high frequency traders and short sellers revealed by Professor Ekkehart Boehmer’s research.

See the papers:

• Short selling and the price discovery process
• Which shorts are informed?
• The competitive landscape of high-frequency trading firms
• The Good News in Short Interest

Estimating Risks And Resolving Paradoxes, Singapore Management University

Research@SMU: Connecting the Dots

Professor Lim Kian Guan uses sophisticated mathematical tools to extract information out of options data and provide more accurate risk estimates.

See his paper: Portfolio value-at-risk optimization for asymmetrically distributed asset returns

Is The Dodd-Frank Act Destroying What Is Left Of U.S. Thrifts?, Scott Deacle

Business and Economics Faculty Publications

I examine data from 1992 to 2015 to assess the Dodd-Frank Act’s impact on the performance of U.S. depository institutions, thrifts in particular. Ceteris paribus, the average FDIC-regulated institution experienced a decline in profitability as measured by pre-tax return on assets (ROA) following the Act’s passage, but the decline was concentrated among commercial banks. Small thrifts increased pre-tax profitability, after controlling for other factors including weak economic growth. Depository institution loan quality improved after Dodd-Frank, less so for small thrifts but more so for large thrifts. Efficiency ratios, which regulatory costs affect, increased, more for thrifts than banks.

From Bit Valley To Bitcoin: The Nasdaq Odyssey, Mark Lennon, Daniel Folkinshteyn

Rohrer College of Business Departmental Research

Over the past 15 years, NASDAQ, the world’s first all-electronic stock exchange, has actively engaged in efforts to serve the global digital economy by expanding its reach beyond its original domestic U.S. market. They have attempted to create a global 24/7 trading platform, to serve customers in the U.S., Japan, and Europe. These efforts have met with varying degrees of success. More recently, the renamed NASDAQ OMX Group has been experimenting with the disruptive fintech (financial technology) Bitcoin and its underlying technology blockchain to develop robust trading solutions, which drastically reduce transaction and record keeping costs. In this paper we …

Base Erosion And Profit Shifting: Options, Opportunities And Alternatives, James Mohs, Martin Goldberg, David Palacio Buitrago

Finance Faculty Publications

Base erosion and profit shifting is generally defined as tax strategies that serve to exploit gaps or inconsistencies in global tax systems that allow an enterprise to shift profits to lower tax jurisdictions. This can be accomplished by either shifting income to lower tax jurisdiction or shifting deductible expenses to higher tax jurisdictions. Historically, these shifting strategies have been handled on a country by country basis with no centralized framework. In 2015 the Organization of Economic Cooperation and Development proposed modifications through its Base Erosion and Profit Shifting project that if adopted by the member countries, would reverse the adverse …

The Macro Behind Microfinance: Cambodia's Financial Inclusion Success Story, Jonathan Chang

Social Space

Financial inclusion refers to the delivery of affordable financial services to disadvantaged and low-income segments of society. However, as it also involves striking a fine balance between managing businesses’ credit risks and improving customers’ access to credit, different countries have made varied progress in their financial inclusion efforts. To date, across both developed and developing nations, SMEs and individuals still struggle in the face of limited access to adequate financing. Yet there is one country that has made considerable strides in this area: judging from the tremendous success of its microfinance sector, Cambodia seems to have found the sweet spot …

Scaling Impact Investing Through Innovative Finance: A Focus On Women's Livelihoods, Durreen Shahnaz

Social Space

I embarked on a journey from the first steps of my career to utilise finance to do good for the world. This journey has now turned into a global movement that is taking the world by a storm, known as impact investing or social finance.

How Hedge Funds Beat The Market, Singapore Management University

Research@SMU: Connecting the Dots

From epic tales spun around investment legends Ray Dalio and George Soros, to the secretive, high-octane world of Wall Street, the hedge fund has attained a worldwide notoriety for being an opaque, unwieldy beast. Professor Melvyn Teo studies what makes them tick.

See the papers:

• The geography of hedge funds
• The liquidity risk of liquid hedge funds; The liquidity risk of liquid hedge funds
• Limited attention, marital events and hedge funds

Stock Loan Lotteries And Individual Investment Performance, Jordan Moore

Rohrer College of Business Departmental Research

Individual investors trade excessively, sell winners too soon, and overweight stocks with lottery features and low expected returns. This paper models a financial innovation to address these biases and improve individual investor performance. Individual investors pledge shares of stock to an exchange for multiple periods and face a steep penalty for redeeming shares early. The exchange lends the shares to institutions and holds a lottery with the lending fees. I extend the Barberis and Xiong (2009) discrete-time model of realization utility to include stock loan lotteries. Investors with cumulative prospect theory preferences are reluctant to forgo trading opportunities for fixed …

The Paradoxes Of Risk Management In The Banking Sector, Chu Yeong Lim, Margaret Woods, Christopher Humphrey, Jean Lin Seow

Research Collection School of Accountancy

This paper uses empirical evidence to examine the operational dynamics and paradoxical nature of risk management systems in the banking sector. It demonstrates how a core paradox of market versus regulatory demands and an accompanying variety of performance, learning and belonging paradoxes underlie evident tensions in the interaction between front and back office staff in banks. Organisational responses to such paradoxes are found to range from passive to proactive, reflecting differing organisational, departmental and individual risk culture(s), and performance management systems. Nonetheless, a common feature of regulatory initiatives designed to secure a more structurally independent risk management function is that …

Sentiment And Stock Returns: Anticipating A Major Sporting Event, Brian C. Payne, Jiri Tresl, Geoffrey C. Friesen

Department of Finance: Faculty Publications

This study documents the effect of the Super Bowl on the stock returns of firms that are geographically associated with the competing teams. We find significant upward return drift in the 9 trading days leading up to the Super Bowl, a pattern consistent with investors trading in anticipation of the game itself. The ‘‘anticipatory behavior’’ among investors leads to widespread pregame returns, which is not documented in prior studies. These pre-event abnormal returns are positive and statistically and economically significant for all firms, and the size of pre-event returns varies according to each team’s favored status. In addition, firms associated …

The Archway Investment Fund Quarterly Report, First Quarter 2017, Bryant University, Archway Investment Fund

Archway Investment Fund

No abstract provided.

A Leveraged Buyout Of Paychex, Inc., Devon Zielanzy

The University Honors Program

A leveraged buyout is the acquisition of a company funded primarily through debt, typically 60% to 70% of the price, while a financial sponsor provides the remaining amount of funding. A public company is acquired, then made private, and finally sold after a period of time for a profit. During the time that the company is held private, cash flows of the firm are used to repay the debt taken on to acquire it and actions are taken to improve the business and performance of the firm (Rosenbaum 161-162).

Banking On It: Investment Banks As The Next Step For Impact Investing, Mitchell Laferriere

Social Space

For their size, investment banks have comparatively little to do with the rising practice of impact investing: They make up only nine per cent of all the assets under management (AUM) in the impact investment industry. That totals about US$1 trillion in investments in an US$11 trillion market.

Sofi 101: Understanding Social Finance, Christian Petroske, Florian Parzhuber, Haneol Jeong, John Kinsella, Maaya Murakami, Mitchell Laferriere, Remi Cordelle

Social Space

What is social finance? Rachel Kalbfleisch of the International Development Research Centre (IDRC) defines it as a collection of approaches to managing money that create value for society or the environment, often while producing a financial return,1 while the MaRS Centre for Impact Investing calls it “an approach to managing money to solve societal challenges”.2 In other words, social finance is a movement that covers various ways of using finance—via socially responsible investments, micro-loans, community investments, and so on—to achieve a social or environmental impact. Who is involved in this process? While charities, socially driven businesses and governments all work …

Can Investors Benefit From Using Morningstar's Stewardship Grades?, Scott B. Moore, Gary E. Porter

2017 Faculty Bibliography

Interest in governance led Morningstar to develop a summary measure for mutual fund governance. In contrast to previous work in this area, we focus on whether and how individual investors can use the Stewardship Grade Overall to improve mutual fund selection. We find that regardless of fee structure, top overall governance grade funds impose lower costs on investors regardless of fund investment style. We also find some evidence that choosing funds with the highest stewardship grade may earn positive risk adjusted returns. Stewardship Grade overall may therefore help less sophisticated investors identify better-performing mutual funds.

Performance Analysis Of Equity Index Universal Life Insurance, Zhixin Wu, Lei Liang

Mathematics Faculty Publications

Equity Index Universal Life (EIUL) is a variation of whole life insurance which carries a death benefit component and a cash value component. The popularity of EIUL has been growing quickly in recent years because of its promised downside protection and upside potential. However, its long-term viability can’t be directly verified since no public data of EIUL is available to check its historical performance. This paper models the stock market return, interest rate and other market variables simultaneously to simulate the potential future returns of EIUL under different scenarios. Research in the literature often only models the stock market return …

How Costly Is A Misspecified Credit Channel Dsge Model In Monetary Policymaking?, Takeshi Yagihashi

Economics Faculty Publications

This paper examines whether misspecification in credit market friction could be costly in the context of monetary policymaking. Using two widely known dynamic stochastic general equilibrium (DSGE) models, we simulate a hypothetical financial crisis and examine how each model performs when the misspecification occurs in the credit channel. We demonstrate that monetary policy suggested by misspecified models tends to destabilize the economy during crisis, even though one of the two models does reasonably well in estimating policy-invariant model parameters. We also show that the opportunity cost of using a misspecified model is high relative to the outcome achieved under a …