Business Commons^™

Essays On Risk Management Of Insurance Companies, Olga Kanj

Theses and Dissertations (Comprehensive)

This dissertation examines the risk management of insurance companies. It consists of three essays, which study the risk management of property and casualty (P/C) insurance companies. The first essay examines the impact of board diversity on firms’ risk-taking strategies using Canadian P/C insurance companies. The findings show that board ethnic diversity significantly decreases company risk as measured by reinsurance, asset risk, and leverage risk. Ethnic background values of the board members could be the reason behind this effect, board members with ethnic backgrounds from countries with high (low) Uncertainty Avoidance Index (UAI) decrease (increase) the risk. Results also show that …

Early Termination Of Small Loans In The Multifamily Mortgage Market, Anthony Pennington-Cross, Brent C. Smith

Finance Faculty Research and Publications

This article uses micro‐level data on small (as defined by Fannie Mae) multifamily loans in the Fannie Mae loan portfolio to examine prepayment and default performance. The results document the importance of equity, as measured by the loan‐to‐value ratio, and contemporaneous property operating income relative to debt service obligations, as measured by the debt‐to‐income ratio. Our results indicate that the expiration of prepayment penalties and yield maintenance provisions lead to large spikes in prepayment and default. The results also illustrate that multifamily loans, as they are not fully amortized, also have a substantial risk of both extension and default at …

How To Develop Successful And Ethical Investment Analysts: Marquette University's Applied Investment Management Program, Matteo P. Arena, David K. Krause

Finance Faculty Research and Publications

Purpose

The purpose of this paper is to suggest best practices for managing a successful student-managed investment program (SMIP) based on the experience of Marquette University's Applied Investment Management (AIM) program.

Design/methodology/approach

The authors provide a detailed description of the program curriculum, instructional design, fund structure, program history, fund performance and student outcomes.

Findings

Through its experiential learning innovations, focus on ethics and close relationships with a dedicated alumni group, the AIM program prepares students for a successful career in investment analysis. Students who graduate from the AIM program experience a significantly higher successful placement rate and higher compensation at …

Rethinking The Regulatory Sandbox For Financial Innovation: An Assessment Of The Uk And Singapore, Christopher Chen

Research Collection Yong Pung How School Of Law

After the UK launched the first regulatory sandbox regime in 2016, the approach was quickly transplanted to numerous other countries as a means of promoting innovation, improving competition and enhancing financial inclusion. However, it remains unclear whether the approach can effectively achieve the relevant policy goals and thus justify the differential regulatory treatment. This chapter provides a broad overview of the regulatory sandbox regime and examines its potential benefits and problems. The chapter then provides some empirical evidence by analyzing the sandboxes awarded in the UK and Singapore between 2016 and 2018 with the aim of identifying what the businesses …

Financial Vulnerability And The Reproduction Of Disadvantage In Economic Exchanges, Tianyu He, Rellie Derfler-Rozin, Marko Pitesa

Research Collection Lee Kong Chian School Of Business

Integrative value generation through negotiated business deals is a fundamental way in which organizations and economic systems attain economic benefits. It is also an important way in which individuals can improve their financial situation. We propose that individuals most in need of improving their financial standing, those in a financially vulnerable situation, are least likely to reap the benefits of integrative value generation. We theorize that financial vulnerability induces a more zero-sum construal of success, or a view that success for one person must come at another person’s success. A more zero-sum construal of success, in turn, hampers negotiators’ ability …

Tepoel Lecture: Bond Trustees And The Rising Challenge Of Activist Investors, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

Potential Pilot Problems: Treatment Spillovers In Financial Regulatory Experiments, Ekkehart Boehmer, Charles Jones, Xiaoyan Zhang

Research Collection Lee Kong Chian School Of Business

In analyzing regulatory experiments, a fundamental assumption is that the control group is unaffected. However, in many settings, this assumption may not hold. Generally, the total effect of a regulatory change consists of direct and indirect effects, but the standard difference-in-difference approach measures only direct effects. We apply our methods to the 2007 repeal of the uptick rule by the SEC. The indirect effects are substantial, because unlike the 2005 partial repeal, total repeal enables aggressive portfolio shorting. In particular, we find that short sellers become much more aggressive across the board, and shorting activity increases, even in control stocks …

Which Early Withdrawal Penalty Attracts The Most Deposits To A Commitment Savings Account?, John Beshears, James J. Choi, Christopher Harris, David Laibson, Brigitte C. Madrian, Jung Sakong

Faculty Publications

Previous research has shown that some people voluntarily use commitment contracts that restrict their own choice sets. We study how people divide money between two accounts: a liquid account that permits unrestricted withdrawals and a commitment account that is randomly assigned in a between-subject design to have either a 10% earlywithdrawal penalty, or a 20% early withdrawal penalty, or not to allowearlywithdrawals at all (i.e., an infinite penalty).When the liquid account and the commitment account pay the same interest rate, higher early-withdrawal penalties attract more commitment account deposits. This pattern is predicted by the hypothesis that some participants are partially- …

Estimating The Need For Additional Bankruptcy Judges In Light Of The Covid-19 Pandemic, Benjamin Iverson, Jared A. Ellias, Mark Roe

Faculty Publications

In this Article, we present the first effort to use an empirical approach to bolster the capacity of the bankruptcy system during a national crisis—here, the COVID-19 crisis. We provide two analyses, one using data from May 2020, very early on in the crisis, and another using data from September 2020, closer to the publication of this Article. Our analysis is based on an empirical observation: Historically, an increase in the unemployment rate has been a leading indicator of a rise in bankruptcy filings. If this historical trend continues to hold, the May 2020 unemployment rate of 13.3% would have …

Three Essays On Energy Markets, Sultan Alturki

Graduate Theses, Dissertations, and Problem Reports (ETD)

This dissertation includes three essays investigating topics relevant to the energy markets. The first essay employs a new dataset to measure the impact of investor sentiment regarding oil prices on the U.S. inflation premium. The empirical analysis relies on Structural Vector Autoregression (SVAR) and out-of-sample forecasts. The results indicate that a one standard deviation positive shock to overall investor sentiment regarding oil prices results in a significant increase in the U.S. inflation premium by approximately 1.2% over the subsequent 10 weeks. Compared to individual investor sentiment, institutional investor sentiment regarding oil prices has a larger impact on the U.S. inflation …

State Ownership And Banks Information Rents: Evidence From China, Fengyan Ru, Qi Liang, Wei Wang

Business Faculty Publications

In a lending relationship, a bank with an information advantage regarding its client tends to hold up the borrower and charge higher interest rates. We conjecture that state-owned enterprises (SOEs), with worse information asymmetry, are subject to greater information
rents. State-owned banks place less emphasis on information production and hence extract lower rents compared to profit maximizing private banks. We use the decline of loan interest rates around the borrowers’ equity initial public offerings (IPOs) as the proxy of banks’ information rents. We find SOEs in China experience
larger declines in loan interest rates around their IPOs; the central government-controlled …

Does Corporate Social Responsibility Reduce The Costs Of High Leverage? Evidence From Capital Structure And Product Market Interactions, Kee-Hong Bae, Sadok El Ghoul, Omrane Guedhami, Chuck C.Y. Kwok, Ying Zheng

Finance Department Faculty Journal Articles

Research on capital structure and product market interactions shows that high leverage is associated with substantial losses in market share due to unfavorable actions by customers and competitors. We examine whether corporate social responsibility (CSR) affects firms’ interactions with customers and competitors, and whether it can reduce the costs of high leverage. We find that CSR reduces losses in market share when firms are highly leveraged. By reducing adverse behavior by customers and competitors, CSR helps highly leveraged firms keep customers and guard against rivals’ predation. Our results support the stakeholder value maximization view of CSR.

Development Of A Financial Literacy Component For A Comprehensive Secondary Transition Program For Diploma-Bound Students With Learning Differences, Rose Marie Borillo

Student Capstone Papers

Under the Individuals with Disabilities Education Act (IDEA), schools are required to provide transition planning for students with disabilities and mental illness by age 16 (Eismann et al, 2017). Occupational therapists have been underutilized in secondary transition planning, despite their expertise in targeting functional abilities, comprehension, and health using activity analysis to promote skill attainment and achieve independence (Mankey 2012; Eismann et al, 2017).

At the Winston School, there was no formal transition program aside from the individual college counseling provided by a staff member. A coordinated transition program was indicated to prepare students for life after high school to …

The Cost Of Secrecy Isn't Worth It For The Lds Church, Nathan B. Oman

Popular Media

No abstract provided.

Corporate Governance In The Banking Sector, Ishrat Husain Dr.

Faculty Research - Talks, Speeches, & Discourse

Corporate Governance for the banking sector should be viewed in the overall context of the Governance structure of a country. Therefore, to expect that ‘one shoe fits all’ model for all the South Asian Countries would be unrealistic. In countries where capital markets are edging out banking or non-banking financial institutions such as Microfinance banks are nibbling away the market share the standards and norms applicable to banks should be equally applied to other financial sector players. To stringent standards for the banks and too lax for shadow banking have brought grief in the past and would remain a recipe …

Vega, Capital Ratios, And Real Estate Lending, Muna Alsheikh

Doctor of Business Administration Dissertations

The 2007 financial crisis revealed how excessive bank risk threatens financial system stability. This paper studies two aspects of the risk-taking incentives of banks– CEO compensation and capital. The vega of a bank executive’s equity compensation measures how compensation changes relative to the banks’ stock volatility. If CEO compensation vega is high, I expect the CEO to take more risk in areas where he exercises control. Conversely, if regulators demand that banks invest their own capital to encourage conservative behavior, then I expect risk-taking to be lower. This paper confirms that higher vega and lower capital ratios are associated with …

Review: Personal Finance (Saylor Foundation), Aaron Henrichsen

Open Textbooks & Reviews

Review of the textbook Personal Finance originally posted on Open Textbook Library (https://open.umn.edu/opentextbooks/textbooks/personal-finance).

Developing Financial Literacy Skills For A Secondary Transition Program For Students With Learning Differences, Rose Marie Borillo, Becki Cohill, Susan Macdermott

San Marcos, Fall 2019

Under the Individuals with Disabilities Education Act (IDEA), schools are required to provide transition planning for students with disabilities and mental illness by age 16 (Eismann et al, 2017). Occupational therapists have been underutilized in secondary transition planning, despite their expertise in targeting functional abilities, comprehension, and health using activity analysis to promote skill attainment and achieve independence (Mankey 2012; Eismann et al, 2017).

At the Winston School, there was no formal transition program aside from the individual college counseling provided by a staff member. A coordinated transition program was indicated to prepare students for life after high school to …

Predicting Market Trends: Effects Of Gdp And Pmi On Changes In Stock Closing Prices, Charley Renna

Student Scholar Symposium Abstracts and Posters

In an effort to learn more about the impact of certain economic variables on the stock market, I chose to analyze the impact that the Purchasing Managers’ Index and U.S. Gross Domestic Product have on three major stock indices: S&P 500, Dow Jones Industrial Average, and Nasdaq 100. The PMI is an index of the direction of economic trends in the manufacturing and services sector. Released on the first business day of every month, it consists of a diffusion index that summarizes whether market conditions are expanding, staying the same, or contracting. An index level greater than 50 percent suggests …

Understanding Employee Engagement: A Mixed-Methods Study, Joren M. Scharn

Theses & Dissertations

For over 4 decades businesses around the world have been conducting employee satisfaction surveys at regular intervals and this surfaced a strong positive relationship between employee satisfaction, customer satisfaction, and overall company performance. In recent years however, academics and researchers have reopened the debate on whether employee or job satisfaction metrics are in fact reliable indicators of productivity, suggesting that employee engagement has a far stronger correlation to productivity. This study addresses two interrelated problems that are associated with a practice that is common in working environments all over the world. According to literature, it is generally accepted that (a) …

How Social Media Communications Can Mitigate Negative Impacts Of Corporate Social Irresponsibility On Corporate Financial Performance?, Saad A. Alhoqail, Hyun Young Cho, Kristopher Floyd

Business Faculty Articles and Research

Previous research on corporate social responsibility (CSR) has focused on corporate reputation (CR) and corporate financial performance (CFP), showing a high correlation between both. While most researchers primarily focus on CSR, our research examines the other side of the coin; corporate social irresponsibility (CSI) and provides findings that counter previous thought. We contribute to the existing literature by showing that CSI has a non-significant impact on corporate financial performance, as measured by market value, while concurrently being negatively correlated to corporate reputation. Further, we show social media, as measured by the Social Media Sustainability Index (SMSI), a measure studied infrequently …

A Learning Curve Of The Market: Chasing Alpha Of Socially Responsible Firms, Zhichuan Li, Jun Wang, Dylan Minor, Chongyu Dang

Business Publications

This paper explores stock market reactions to corporate social performance. We find that a value-weighted portfolio based on the list of “100 Best CSR companies in the world”, published by Reputation Institute, yields statistically significant annual abnormal returns of 1.63% and 1.26%, by controlling for Carhart four factors and Fama-French five factors, respectively (2.39% and 1.84% respectively for an equal-weighted portfolio). Moreover, such abnormal returns decrease as time goes, especially after the inaugural publication of the CSR lists in 2013. The paper also indicates that companies with better social performance are more likely to have positive earnings surprises, and that …

What Determines Venture Capital Investment Decisions? Evidence From The Emerging Vc Market In Egypt, Elsayeda A. Ismail, Mona I. Medhat

The Journal of Entrepreneurial Finance

The decision of a venture capitalist to commit capital in a new risky business is a complex decision. Investors need to consider a number of important criteria simultaneously. Based on the postulates of signaling theory and the investment criteria outlined in the extant literature, we propose a theoretical framework to describe the relationship between a new venture’s characteristics and the funding decision. The proposed framework is tested using actual data of a unique sample of 200 new Egyptian technological startups. The startups were tracked from establishment until applying to a venture capitalist and a decision was made either to accept …

Microfinance Institutions’ Criteria On Small Business Financing In Cameroon, Serge Messomo Elle

The Journal of Entrepreneurial Finance

This study uses MFIs as a unit of analysis to examine the factors of human, financial and social capital that increase the financing of microenterprises’ identification of opportunities and exploitation in Cameroon .To attain this objective, a questionnaire was used to collect data from 207 MFIs and analyzed using descriptive and multiple linear regression models. The results revealed that when it concerns the financing of opportunity identification, only human capital variables of Prior knowledge and Business training increase the financing of microenterprises by MFIs in Cameroon. Regarding the opportunity exploitation on the contrary, accumulated business knowledge, business skills and customer …

Deep Reinforcement Learning Pairs Trading, Andrew Brim

All Graduate Plan B and other Reports, Spring 1920 to Spring 2023

This research applies a deep reinforcement learning technique, Deep Q-network, to a stock market pairs trading strategy for profit. Artificial intelligent methods have long since been applied to optimize trading strategies. This work trains and tests a DQN to trade co-integrated stock market prices, in a pairs trading strategy. The results demonstrate the DQN is able to consistently produce positive returns when executing a pairs trading strategy.

Quantum Consensus, Jorden Seet, Paul Griffin

Research Collection School Of Computing and Information Systems

In this paper, we propose a novel consensus mechanism utilizing the quantum properties of qubits. This move from classical computing to quantum computing is shown to theoretically enhance the scalability and speed of distributed consensus as well as improve security and be a potential solution for the problem of blockchain interoperability. Using this method may circumvent the common problem known as the Blockchain Trilemma, enhancing scalability and speed without sacrificing de-centralization or byzantine fault tolerance. Consensus speed and scalability is shown by removing the need for multicast responses and exploiting quantum properties to ensure that only a single multicast is …

Optimal Design And Ownership Structures Of Innovative Retail Payment Systems, Zhiling Guo, Dan Ma

Research Collection School Of Computing and Information Systems

In response to the Fintech trend, an ongoing debate in the banking industry is how to design the new-generation interbank retail payment and settlement system. We propose a two-stage analytical model that takes into account the value-risk tradeoff in the new payment system design, as well as banks’ participation incentives and adoption timing decisions. We find that, as the system base value increases, banks tend to synchronize their investment and adoption decisions. When the system base value is low and banks are heterogeneous, bank association ownership maximizes social welfare. When both the system base value and bank heterogeneity are moderate, …

An Analysis Of The Local Control Funding Formula (Lcff) As An Instrument Of Recognition And Distribution Justice, Maeve Mulholland

Doctoral Dissertations

The 2013 Local Control Funding Formula (LCFF) is the first substantive finance reform measure in California specifically designed to provide additional funding to targeted student groups. The present study adopts Nancy Fraser’s (1995) theory of distribution and recognition justice to examine the allocation of resources under the new formula. Critical quantitative methodology is employed to investigate if students identified as being in poverty, English Learners (ELs), and African-American students, benefit under the LCFF. Pre- and post-LCFF comparisons of district level per pupil dollar allocations from LCFF, Other State, Federal, and Local resources are conducted. The findings show that post-2013, funding …

Chief Financial Officer Demographic Characteristics And Fraudulent Financial Reporting In China, Jinghui Sun, Pamela Kent, Baolei Qi, Jiwei Wang

Research Collection School Of Accountancy

We investigate whether management's cognitions, values and perceptions are associated with fraud for 18 863 firm-years for Chinese listed firms from 2000 to 2014. Demographic characteristics of the chief financial officer (CFO) are used as proxies for management's cognitions, values and perceptions. We find that fraudulent financial reporting is higher when CFOs are younger, male, and have lower education backgrounds. An analysis of inflated earnings, fictitious assets, material omissions and other material misstatements provide similar results, with the exception that CFOs with higher education levels are associated with more inflated earnings. Accounting and Finance

An Ai Approach To Measuring Financial Risk, Lining Yu, Wolfgang Karl Hardle, Lukas Borke, Thijs Benschop

Sim Kee Boon Institute for Financial Economics

AI artificial intelligence brings about new quantitative techniques to assess the state of an economy. Here, we describe a new measure for systemic risk: the Financial Risk Meter (FRM). This measure is based on the penalization parameter (λ" role="presentation" style="box-sizing: border-box; display: inline; font-style: normal; font-weight: normal; line-height: normal; font-size: 18px; text-indent: 0px; text-align: left; text-transform: none; letter-spacing: normal; word-spacing: normal; overflow-wrap: normal; white-space: nowrap; float: none; direction: ltr; max-width: none; max-height: none; min-width: 0px; min-height: 0px; border: 0px; padding: 0px; margin: 0px; position: relative;">λλ) of a linear quantile lasso regression. The FRM is calculated by taking the average …