Business Commons^™

Coo2 Bhanga Munda Data, Asli Ascioglu, Padma Kadiyala

Finance Department Faculty Journal Articles

No abstract provided.

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.

Corporate Social Responsibility And Likelihood Of Financial Distress, Ying Zheng, Yong Wang, Crystal Jiang

Finance Department Faculty Journal Articles

Does doing good to society make firms less likely to have financial trouble? This paper looks at the benefit of corporate social responsibility (CSR) and examines whether firms’ CSR engagement affects their chance of falling into financial distress. After analyzing a broad U.S. database spanning 25 years from 1991 to 2015, we find that CSR engagement indeed reduces the likelihood of firms falling into financial distress, and the results are statistically robust and economically significant. Further, we find the impact of CSR on the likelihood of financial distress is more pronounced in economic downturns and for firms with high levels …

Cryptocurrencies: Applications And Investment Opportunities, A. Can Inci, Rachel Lagasse

Finance Department Faculty Journal Articles

Purpose

This study investigates the role of cryptocurrencies in enhancing the performance of portfolios constructed from traditional asset classes. Using a long sample period covering not only the large value increases but also the dramatic declines during the beginning of 2018, the purpose of this paper is to provide a more complete analysis of the dynamic nature of cryptocurrencies as individual investment opportunities, and as components of optimal portfolios.

Design/methodology/approach

The mean-variance optimization technique of Merton (1990) is applied to develop the risk and return characteristics of the efficient portfolios, along with the optimal weights of the asset class components …

Collectivism And The Costs Of High Leverage, Sadok El Ghoul, Omrane Guedhami, Chuck C.Y. Kwok, Ying Zheng

Finance Department Faculty Journal Articles

Prior literature shows that high leverage is associated with losses in market share due to unfavorable actions by customers and competitors. Building on this literature, we investigate the effect of collectivism on the product market performance of highly leveraged firms. Using a sample of 46 countries over the 1989–2016 period, we find significantly lower costs of high leverage for countries with higher collectivism scores. Moreover, we find that the impact of collectivism on high leverage costs is more pronounced for firms with high product specialization and with financially healthy rivals. In additional analysis, we find that collectivism helps highly leveraged …

The Core, Periphery, And Beyond: Stock Market Comovements Among Eu And Non-Eu Countries, Michael A. Goldstein, Joseph Mccarthy, Alexei G. Orlov

Finance Department Faculty Journal Articles

We thank conference participants at the 2016 Financial Management Association and our discussant Fernando Moreira, and two anonymous referees for immensely helpful comments. We also thank Andrew Patton and James P. LeSage for sharing their MATLAB codes for computing quantile dependence. The authors of this paper are responsible for any errors or omissions. The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees. The views expressed herein are those of the authors and do not necessarily reflect the views of the Commission or the authors' colleagues on …

Ceo Compensation After Harvester Director Departure, Victor Jarosiewicz

Finance Department Faculty Journal Articles

I examine the effects of board member departures on CEO compensation using a sample of high growth IPO firms. Agency theory predicts that a reduction in board monitoring by harvester directors (VCs and private equity investors) will result in an increase in CEO pay. I find that departures of the last harvester director on a board result in an immediate and lasting increase in CEO equity compensation, while prior departures by other harvester directors are not significant. The results hold even when controlling for other governance mechanisms such as CEO wealth, CEO turnover, board composition, and external blockholder ownership.

Testing Market Response To Auditor Change Filings: A Comparison Of Machine Learning Classifiers, Richard Holowczak, David Louton, Hakan Saraoglu

Finance Department Faculty Journal Articles

The use of textual information contained in company filings with the Securities Exchange Commission (SEC), including annual reports on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K, has gained the increased attention of finance and accounting researchers. In this paper we use a set of machine learning methods to predict the market response to changes in a firm's auditor as reported in public filings. We vectorize the text of 8-K filings to test whether the resulting feature matrix can explain the sign of the market response to the filing. Specifically, using classification algorithms and a …

Cointegration And Causality In Capital Markets, A. Can Inci

Finance Department Faculty Journal Articles

Purpose

The purpose of this paper is to study the efficiency of different oil and gas markets. Most previous studies examined the issue using low frequency date sampled at monthly, weekly, or daily frequencies. In this study, 30-minute intraday data are used to explore efficiency in energy markets.

Design/methodology/approach

Sophisticated statistical analysis techniques such as Granger-causality regressions, augmented Dickey-Fuller tests, cointegration tests, vector autoregressions are used to explore the transmission of information between oil and gas energy markets.

Findings

This study provides evidence for efficiency in energy markets. The new information that arrives either to futures markets or spot markets …

Student Perceptions And Learning Outcomes: Evidence From The Education Testing Service (Ets) Major Field Test In Business, David C. Ketcham, Peter J. Nigro, Michael Roberto

Finance Department Faculty Journal Articles

We examine course evaluation data from the core finance course and analyze how these data relate to performance on the finance portion of the Educational Testing Service Major Field Test in Business (ETS). We find that gender, SAT scores, GPA and concentration all have significant impacts on student performance. We also find that student perceptions of teaching and of how much knowledge they gained do not relate to the finance ETS score. Finally, we find that students who feel challenged in their finance core course do significantly better on the finance portion of the exam. This result is robust to …