Business Commons^™

Can The Financialised Atmosphere Be Effectively Regulated And Accounted For?, Patty Mcnicholas, Carolyn Windsor

Carolyn Windsor

Purpose – This paper aims to carry out a critical analysis of the proposed Australian emissions trading scheme (ETS) as a complex market solution to reduce greenhouse gases (GHGs). Specifically it seeks to examine the financial regulatory infrastructure that will more than likely oversee the Australian ETS, the same regulatory infrastructure which failed to prevent the global financial crisis.Design/methodology/approach – A critical examination of the financialisation of the atmosphere that follows the growth of the financialisation of capitalism when economic activity shifted from production and service sectors to finance. Financialisation of capitalism is supported by capitalist regulation influenced by neo-liberal …

Loyalty Cards And The Problem Of Captcha.Pdf, David M. Cook

Dr. David M Cook

Fragmentation And Consolidation Of Dark Order Books, Julia Henker, Thomas Henker, Jay Majtyka

Thomas Henker

No abstract provided.

The Aggregate Impacts Of Tournament Incentives In Experimental Asset Markets, Debapriya J. Paul, Julia Henker, Sian Owen

Julia Henker

Existing studies of the aggregate impacts of tournament incentives find that asset price bubbles in experimental markets are larger and do not dissipate with experience when participants trade under tournament incentives. However, these results potentially overstate the real-world impacts of tournament incentives for two reasons. First, they examine tournaments in a restrictive single-asset market setting, which constrains the risk-taking options available to traders. Second, by purely conferring additional rewards for good relative performance, the tournament contracts used ignore the risk-moderating role played by penalties that are also written into or implicit in real-world counterparts. We address these gaps by examining …

The Ghana National Economic Forum In May 2014, Another Implementation Curse?, George E. Ekeha

George E Ekeha

More than one year after the above consensus was developed and read to the whole world, which was subsequently followed by the full report, many are of the view that little efforts have been done to implement the consensus. In this article, I decided to choose just about five of the Senchi Consensus that in my opinion can change the country very much and place her on the international radar for reckoning when implemented with the seriousness that they deserve. It is my strongest belief that many Ghanaians and other development partners are aware of many issues raised in this …

Employee's Participation: A Critical Success Factor For Justice Perception, Wai Kwan (Elaine) Lau

Wai Kwan (Elaine) Lau

The present study proposed and tested a model that examines the relationship between leadership style, employee’s participation, and justice perceptions. The paper extended the literature of the justice by connecting three major research areas (leadership style, employee’s participation, and organizational justice), and examined the influences of leadership style and employee’s participation in shaping employee’s perception of justice. Results indicated that transactional, transformational, and dynamic leadership have positive impact on distributive, procedural, and interactional justice. Moreover, the effect of leadership style on organizational justice was indirect through employee’s participation. This study synthesized previous leadership studies and argued that leadership style can …

Is It Time To Reconsider The Semivariance Again? A Note, Ladd Kochman

Ladd Kochman

Building on the assumption that stock returns are less-than-symmetric, the semivariances (SV) are computed for 14 domestic and foreign stock indices as well as their respective arithmetic means (AM) and standard deviations (SD) and hypotheses that the correlation between SVs and AMs will be both positive and greater than the correlation between SDs and AMs.

Falling Knives: Extreme Value Investing, Ladd Kochman, James Tompkins

Ladd Kochman

We identified 979 stocks with year-ending losses of 60 percent or more during the 1993-2002 period. Post-fall returns extended our analysis through 2005. Unlike previous research, we screened our "falling knives" for financial strength to promote a greater likelihood of recovery and minimize any survivorship bias. When we added the constraint of Altman Z-Scores > 3.0, our data set shrank to 790 stocks and produced two-year and three-year average annual returns that tripled their market counterparts.

Time Diversification: Tool, Fallacy Or Both?, Ladd Kochman, Randy Goodwin

Ladd Kochman

It seems fair to conclude that time diversification is more nearly a fallacy than a tool. Total periodic returns based on random annual outcomes expose the practice of diversifying with time not only as unproductive but as extremely risky as well. Yet, as the contrived distribution of alternating returns of 30% and -10% demonstrated, it is impossible to completely reject the idea that risk can actually decrease over time.

Portfolio Evaluation, Downside Risk And An Anomaly, Ladd Kochman

Ladd Kochman

Owing to the developments in portfolio theory in the 1960s, the evaluation of portfolio performance has evolved from a return-only mentality to a process that makes risk no less important than return. Earliest efforts to combine the two dimensions into a single (or composite) measure belong to Treynor (1965) and Sharpe (1966), who suggested dividing a portfolio's return in excess of the risk-free rate by the portfolio's bets and standard deviation, respectively. When Fama (1972) recommended that portfolios pay premiums that capture both market and diversification risk, he was implicitly asking whether Jensen's (1968) use of beta sufficiently measures the …

Securities Market Efficiency And The Reigning Super Bowl Champions, Ladd Kochman

Ladd Kochman

The vulnerability of stock prices has long intrigued investors and researchers. Beating the market has an inescapable appeal. The overwhelming evidence that regular above average returns are denied to all but those with inside information has not slowed efforts to find market errors or tap into profitable trends. One reason for hope is that past studies have never truly resolved how long securities must be held before a particular trading strategy can be measured. Pankoff has proposed that the market for bets on National Football League games can serve as a proxy for the securities market. Examining recent studies using …

The Why And How Of Mutual Fund Standard Deviations, Ladd Kochman, Randy Goodwin

Ladd Kochman

To the interested observer, mutual fund standard deviations raise two tantalizing questions: Are standard deviations relevant when funds, by definition, eliminate the unsystematic component of total risk? and How can two respected giants in the investments field like Fidelity and Morningstar use the same returns, intervals and measurement period for the same fund and end up with glaringly different standard deviations? To answer the question of relevance, we recall Evans and Archer's (1968) argument that as much as 90 percent of a portfolio's unsystematic risk can be diversified away with 12 to 18 stocks. Since that diversifiable risk is a …

Technology, Cost, Structure And Failure Of Banking Regulation, Shyam Sunder

Shyam Sunder

No abstract provided.

Parity And Non-Parity Determinants Of Exchange Rates In Latin American Economies, Catherine S.F. Ho, Mohamed Ariff

Mohamed Ariff

This paper reports how non-parity fundamental factors together with parity factors are correlated with exchange rate movements. Seven Latin American countries were included in this study using a selection criterion that for a pair of countries to be included, the pair must have more than 50 per cent of trade with the group chosen. The econometric methods applied are appropriate to this topic and include pooled time series regression and seemingly unrelated regression. The findings show that there is support for short and long-run effects on exchange rates from inflation and interest rates. We entered non-parity factors suggested in recent …

Investment Horizons And Inedeterminancy In Financial Markets, Shyam Sunder

Shyam Sunder

No abstract provided.

Experiments With Minimally Intelligent Agents And Minimal Institutions: Structure And Behavior, Shyam Sunder

Shyam Sunder

No abstract provided.

Laboratory Experiments In Economics: Coming Of Age, Shyam Sunder

Shyam Sunder

No abstract provided.

Trade-Off Of Short-Term Trading: Liquidity Vs. Efficiency, Shyam Sunder

Shyam Sunder

No abstract provided.

Investment Horizons And Indeterminancy In Financial Markets, Shyam Sunder

Shyam Sunder

No abstract provided.

Risky Curves: On The Empirical Failure Of Expected Utility, Shyam Sunder

Shyam Sunder

No abstract provided.

Financial Intermediaries In The United States: Development And Impact On Firms And Employment Relations, Eileen Appelbaum, Rosemary Batt, Jae Eun Lee

Rosemary Batt

[Excerpt] Private equity (PE), hedge funds (HFs), sovereign wealth funds (SWFs), and other private pools of capital form part of the growing shadow banking system in the United States, where these new financial intermediaries provide an alternative investment mechanism to the traditional banking system. PE and HFs have their origins in the USA, while the first SWF was created by the Kuwaiti Government in 1953. While they have separate roots and distinct business models, these alternative investment vehicles have increasingly merged into overarching asset management funds which encompass all three alternative investments. These funds have wielded increasing power in financial …

How To Treat High-Achieving Managers, Timothy Hinkin

Timothy R. Hinkin

[Excerpt] Many financial institutions today experience major conflicts between their subordinates’ needs for performance feedback and managers’ willingness and ability to satisfy those needs. A considerable body of research suggests that most subordinates desire feedback regarding their performance. In contrast, the results of many years of study have found that managers are often hesitant to provide feedback, as illustrated by the following findings.

Valuation, Pricing, And Performance Of Initial Public Offerings On The Ghana Stock Exchange, Mohammed Sani Abdulai

Mohammed Sani Abdulai

In recent years, the initial public offerings (IPOs) on the Ghana Stock Exchange (GSE) witnessed some level of undersubscriptions. The purpose of this research was to investigate the extent to which valuation, pricing, and performance of prior IPOs listed on the GSE contributed to this state of undersubscriptions. The research was informed by the valuation and pricing framework of Roosenboom. The research questions addressed whether IPOs on the GSE were under/overpriced and whether the projected and pre-issue financials were free from forecasting errors and earnings management. A cross-sectional, explanatory research design was employed to examine a dataset of 30 sampled …

The Compensation Committee Process, Dana Hermanson, James Tompkins, Rajaram Veliyath, Zhongxia Ye

James Tompkins

The article investigates the process used in executive compensation committees to meet their responsibilities, particularly noting the lack of research into the committee process itself. It discusses committee's areas of responsibility, approaches to meeting their responsibilities, and committee operational issues through the use of interviews with compensation committee members. It addresses themes of the interviews including achieving fair compensation, promoting the legitimacy of the committee's decisions, and monitoring the committee for appropriate behaviors. It comments on the tension between executive committees, shareholders, organizational management, and stakeholders.

Winners And Losers As Financial Service Providers Converge: Evidence From The Financial Modernization Act Of 1999, Robert Hendershott, Darrell Lee, James Tompkins

James Tompkins

The Financial Modernization Act of 1999 dramatically increased insurers’ and investment banks’ authority to provide an array of financial services and allowed commercial banks to offer investment banking and insurance services. In this paper we examine the market response to this legislation. We find a strong positive response among insurance companies and investment banks, and no significant response among commercial banks. Larger institutions in all three financial sectors earn higher abnormal returns. Additionally, better performing banks earn higher abnormal returns. Our results suggest that allowing financial convergence can add value through synergies and that large players are needed to exploit …

Herding Behavior In Student Managed Investment Funds, Craig Caldwell, Steven Dolvin

Craig B. Caldwell

Student Managed Investment Funds (SMIFs) have grown in number; unfortunately, there has been little research on the efficacy of these funds. We fill this gap by exploring the potential consequences of student investment management. We find that investment decisions are often impacted by herding behavior, which results in underperformance. We further examine characteristics that influence the likelihood of herding, finding that pre-existing knowledge of the company under consideration, as well as amplified time constraints, increase the probability that herding occurs. In contrast, we find that increased education, both general and targeted behavioral education, reduces the likelihood (and impact) of herding.

New Ventures: Control Of Risks Through Strategies, Simone Kelly, Raymond Mcnamara

Ray McNamara

This paper uses case studies and interview data to explore the relationship between control and new venture success/survival. A model of the new venture control process is distilled and explored in six new venture cases. The control processes were traced through an examination of the everyday language of venture principals to determine a grounded lower order model. Integrating these models into contingency theory locates strategic risk reduction choices as the crucial link between contingent variables and organizational control packages. In this sense the process of organizing is seen as a tiered process of risk reduction: successful firms analyze and control …

New Ventures: Control Of Risks Through Strategies, Simone Kelly, Raymond Mcnamara

Simone Kelly

This paper uses case studies and interview data to explore the relationship between control and new venture success/survival. A model of the new venture control process is distilled and explored in six new venture cases. The control processes were traced through an examination of the everyday language of venture principals to determine a grounded lower order model. Integrating these models into contingency theory locates strategic risk reduction choices as the crucial link between contingent variables and organizational control packages. In this sense the process of organizing is seen as a tiered process of risk reduction: successful firms analyze and control …

Retail Investor Preferences And The Idiosyncratic Volatility Puzzle, Julia Henker, Thomas Henker, Deborah Tan

Thomas Henker

We explain the negative relation between idiosyncratic volatility and future stock returns observed by previous researchers. We argue that, based on the observation described in prospect theory, retail investors prefer stocks with a high level of idiosyncratic volatility and are consequently willing to overpay for those stocks. In support of our argument, we find that the negative idiosyncratic-volatility return relation is present in the Australian market, and that this relation is affected by the magnitude of retail trading. The relation is particularly strong when returns and realized volatility are measured at a daily frequency.

Mortgage Default And Prepayment Risks Among Moderate- And Low-Income Households, Roberto Quercia, Anthony Pennington-Cross, Chao Tian

Anthony Pennington-Cross

Using a unique sample of community reinvestment loans, we study the propensity of very low-income households to terminate a mortgage and compare it to the outcomes for low-income and moderate-income households. The results indicate that, even within moderate- and low-income segments, lower or very low income is associated with higher default and lower prepayment probabilities. In addition, depending on how low the borrower's income is, classic determinants of loan termination such as credit scores, the amount of equity in the home and local labor market conditions can have different impacts on default and prepayment probabilities.