Business Commons^™

Corporate Bond Etfs, Bond Liquidity, And Etf Trading Volume, Thomas Marta

Business Faculty Publications

This study investigates the impact of corporate bond ETFs on the liquidity of their underlying securities. By alternatively utilizing panel regressions in levels, in changes, controlling for past liquidity, subsample tests—including periods of market stress and arbitrage—and a novel quasi-natural experiment, this study addresses self-selection and index effect identification issues. The findings indicate that ETFs significantly reduce transaction costs and enhance bond liquidity. Notably, the trading volume of ETFs, which is 6.67 times greater than their arbitrage, appears beneficial.

World Class Supply Chain 2023: Dynamic Challenges, Collaborative Solutions, Michael Haughton

Business Faculty Publications

The Seventh Annual World Class Supply Chain Summit was convened on May 3rd, 2023 under the theme of Dynamic challenges, collaborative solutions. Being derived from opinions that attendees expressed in the previous year’s post-summit survey, the theme signified the supply chain community’s strong interest in how organizations and individuals can collaborate with each other to address today’s most pressing challenges. The design of the summit’s deliberations on the theme comprised two keynote addresses (one each from the perspectives of industry and academia), an industry panel, a student forum presentation, and an intergenerational fireside chat by a panel comprising individuals …

World Class Supply Chain 2022: Creating A Sustainable Future, Michael Haughton

Business Faculty Publications

The Sixth Annual World Class Supply Chain Summit on May 4th, 2022 was a landmark in at least threes ways: First, it marked a return to having the annual summit in-person following the COVID-driven cancellation of the 2020 summit and the virtual delivery format of the 2021 summit. Second, the 2022 summit’s hybrid format (simultaneous in-person delivery in Milton, Ontario and online delivery to delegates who attended virtually) required the summit planning team to creatively deploy teleconferencing tools that characterise the pandemic-era. Third, for the very first time, we scheduled a Student Forum segment in which students presented material from …

Research-Based Activities To Promote Student Flourishing, Helen Hampson, Christina Hinton, Ayse Yemiscigil, Mark Beverley, Jon Beale, Ben Hill

Business Faculty Publications

No abstract provided.

Payout Policy, Managerial Perquisites, And Sticky Sg&A Costs, Deborah Smith

Business Faculty Publications

Background

Sticky SG&A costs provide a novel opportunity to investigate whether payout policy serves as a remedy for management overspending on perquisites that are embedded in SG&A expenses. Payout policy, especially under strong governance, may reduce overspending. Another possibility is that management may use sales declines opportunistically to repurchase shares when sales are expected to rebound.

Methods

Regression analysis is used to examine the effect of payout mechanisms (dividends, share repurchases, and combinations thereof) and shareholder rights (EIndex) to determine whether managerial overspending on perquisites is reduced through payout policy.

Results

The results indicate that dividends and share repurchases are …

Does Industry Timing Ability Of Hedge Funds Predict Their Future Performance, Survival, And Fund Flows?, Turan G. Bali, Stephen J. Brown, Mustafa O. Caglayan, Umut Celiker

Business Faculty Publications

This paper investigates hedge funds’ ability to time industry-specific returns and shows that funds’ timing ability in the manufacturing industry improves their future performance, probability of survival, and ability to attract more capital. The results indicate that the best industry-timing hedge funds in the manufacturing sector have the highest return exposure to earnings surprises. This, together with persistently sticky earnings surprises, transparent information environment in regards to earnings releases, and large post-earnings-announcement drift in the manufacturing industry, explain to a great extent why best-timing hedge funds can generate significantly larger future returns compared to worst-timing hedge funds.

World Class Supply Chain 2021: Vision 2030: Scm In A New Decade, Michael Haughton

Business Faculty Publications

The Fifth Annual World Class Supply Chain Summit on May 5th, 2021 was momentous in at least threes ways: First, it marked a return to having the annual summit following the cancellation of the 2021 summit because of the COVID- 19 pandemic. Second, in light of ongoing pandemic-related restrictions on in-person gathering, the 2021 summit was convened virtually –this meant leveraging needed digital technology platform and technological savvy of the summit planning team personnel. Third, in light of how the pandemic has affected supply chains, the summit theme (Vision 2030 -SCM in a New Decade) and, the industry representation of …

Jamaican Micro/Small Entrepreneurs: A Comparative Assessment Of Their Motivations And Problems, Mauvalyn M. Bowen

Business Faculty Publications

The purpose of the paper is to assess the motivations and challenges faced by three groups of micro and small entrepreneurs in Jamaica, as well as factors that might contribute to their success. Success was operationally defined in the study as profit. Data from a survey of 192 micro and small entrepreneurs in the urban informal sector of Jamaica were used in the study. The design tracked a descriptive survey approach with multivariate analysis. A structured questionnaire was used to collect the data with some open-ended flexible questions. The structured questionnaires with Likert-type items were used to increase the reliability …

Weathering A Crisis: A Multi-Level Analysis Of Resilience In Young Ventures, Ali Anwar, Nicole Coviello, Maria Rouziou

Business Faculty Publications

In the context of the external disruption presented by the COVID-19 pandemic, we investigate (1) how individual-level resilience and inter-functional coordination relate to organizational resilience and (2) the link between organizational resilience and firm performance. We view organizational resilience as a resource-based capability and draw on insights regarding psychological capital and relational resources to inform our hypotheses. Our hypotheses are tested with a time-lagged, multi-level study of young technology ventures. The results show that when such firms are resilient, they tend to perform significantly better in a crisis. Further, organizational resilience is positively influenced by the individual resilience of top …

Business Education: How Culture And Leadership Impact Organizational Outcomes, Joyce Lemay, Chris Kaiser

Business Faculty Publications

Leadership and organizational culture influence the outcomes of any business. Many companies look at various information to measure results but may not know how to manage the information or interpret it in a way to make ethical and effective decisions. Many organizational cultures are broken and leadership needs to better understand how culture impacts the required outcomes. This article reviews the demands of a broken culture and creative ways to impact culture to ensure effective organizational outcomes. In times of crisis, like COVID-19, organizational culture can direct, redirect, or worsen the desired outcomes. The ability to analyze, understand and positively …

A Dynamic Computational Model Of Social Stigma, Myong-Hun Hun Chang, Joseph1 Harrington Jr.

Business Faculty Publications

No abstract provided.

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 Institutional Ownership Affect Information Sharing With Independent Board Members?, Deborah D. Smith, Heidi H. Meier, Pervaiz Alam

Business Faculty Publications

Research Question This is an investigation of board independence to determine whether management shares information with the board, or withholds information to retain autonomy. A key contribution is to examine the interaction of institutional ownership with the main test variables to determine whether institutional governance influences the information environment as board independence is increased. Research Findings The results show that information asymmetry decreases internally and increases externally as board independence increases, yet institutional ownership appears to moderate or reverse this relationship. The following variables are used to explain why managers of firms are likely to have more information than outsiders: …

World Class Supply Chain 2019: Next Generation Ideas, Michael Haughton

Business Faculty Publications

Next Generation Ideas, being the theme for the Fourth Annual World Class Supply Chain Summit, reflected summit’s focus on understanding what is becoming and what will continue to be of increasingly of high priority for current and future supply chain professionals. The summit, which was held on May 8th, 2019 in Milton, Ontario, brought together invited executives, scholars, and students to present and carefully examine a range of emerging ideas that are worthy of the supply chain community’s interest. The diversity of such ideas (e.g., new technologies, geopolitical developments, and the role of supply chain analytics) necessitated a …

Incorporating Active Adjustment Into A Financing Based Model Of Capital Structure, Neal Maroney, Wei Wang, M. Kabir Hassan

Business Faculty Publications

The conventional partial adjustment model, which focuses on leverage evolution, has difficulty identifying deliberate capital structure adjustments as it confounds financing decisions with the mechanical autocorrelation of leverage. We propose and estimate a financing-based partial adjustment model that separates the effects of financing decisions on leverage evolution from mechanical evolution. The speed of adjustment (SOA) is firm specific and stochastic, and active targeting of capital structure has a multiplier effect that depends on the size of financial deficit. Overall, we find expected SOA from active rebalancing
(30%) more than doubles what is expected from mechanical mean reversion alone (13%).

Governance Structure And Performance Of Private Family Firms, Tarun Mukherjee, Vighneshwara Swami, Wei Wang

Business Faculty Publications

A debate exists on the issue of whether a governance system is value additive or even necessary for a privately-held firm. One side of the debate suggests that, since agency problems do not exist in a small private firm, it does not need a costly governance system. The other side argues that a private firm indeed faces agency costs in the form of altruism and, therefore, could extract net gains from a governance system. In this paper, we empirically investigate whether a good governance system crates or destroys value of private family firms. We first demonstrate that a multifamily firm …

Entrepreneurial Skills For The 21st Century Workplace: The Sme Sector, Mauvalyn Manzia Bowen, Karen R. Johnson

Business Faculty Publications

The foundation of graduates' employability is based on skills and by extension, workers. Due to the high levels of unemployment among young people, entrepreneurial skills for graduates and the workforce becomes an imperative to scholars and policy makers trying to tackle unemployment issues by providing students with skills, and competences that fulfill the needs of a very competitive labor market (Pereira, Vilas-Boas & Rebelo, 2016). To encourage collaboration on educational innovation, to promote entrepreneurship education, and to improve university technology and knowledge transfer to industry and society, several initiatives were developed. This chapter discusses some of those initiatives and contributes …

Faculty Development For Online Teaching, Karen R. Johnson, Gertrude I. Hewapathirana, Mauvalyn M. Bowen

Business Faculty Publications

Despite dramatic increase in online education and the benefits associated with this instructional pedagogy, many challenges exist with the design and delivery of online learning. Faculty play a critical role in the process of quality online education. Yet, development opportunities for faculty are too few, often lacking a comprehensive approach needed for faculty to function optimally in the online learning environment. The interconnection among pedagogy, technology, context, students, faculty, key decision makers, and administrators in higher education complicates the online teaching and learning processes. The purpose of this chapter is to address development issues related to faculty who teach online …

Estimation Of Multivariate Asset Models With Jumps, Angela Loregian, Laura Ballotta, Gianluca Gianluca Fusai, Marcos Fabricio Perez

Business Faculty Publications

We propose a consistent and computationally efficient two-step methodology for the estimation of multidimensional non-Gaussian asset models built using Levy processes. The proposed framework allows for dependence between assets and different tail behaviors and jump structures for each asset. Our procedure can be applied to portfolios with a large number of assets as it is immune to estimation dimensionality problems. Simulations show good finite sample properties and significant efficiency gains. This method is especially relevant for risk management purposes such as, for example, the computation of portfolio Value at Risk and intra-horizon Value at Risk, as we show in detail …

Market Share Growth And Stock Returns, Jaideep Chowdhury, Gokhan Sonaer, Umut Celiker

Business Faculty Publications

We find a negative relationship between market share growth and subsequent stock returns, three- and four-factor alphas. We report the potential explanatory role of market share growth in explaining subsequent average monthly stock returns. High (Low) market share growth firms report good (poor) operating performance and positive (negative) SUEs in the quarter in which market share growth is measured and investors overact to that good (bad) news. However, high (low) market share growth firms experience decrease (increase) in operating performance and SUEs in the subsequent quarters resulting in corrections in investors’ expectations and subsequent lower (higher) stock returns.

An Examination Of State And Local Government Pension Underfunding –Implications And Guidance For Governance And Regulation, Craig L. Foltin

Business Faculty Publications

State and local government pension underfunding has become a major focus of public policy debate due in large part to recent Governmental Accounting Standards Board (GASB) actions that have brought national attention to the issue. The extent of these plans underfunding has been debated, along with the necessity for state government intervention and the level of regulatory actions that should be enacted by state legislatures. State and local public pension plans do not fall under the enumerated powers of the federal government in the Constitution and are therefore left to each individual state to regulate. The amount of plan underfunding …

A Continuous Review Inventory System With Lost Sales And Emergency Orders, Michael Haughton, K.P. Sapna Isotupa

Business Faculty Publications

We analyze a continuous review lost sales inventory system with two types of orders—regular and emergency. The regular order has a stochastic lead time and is placed with the cheapest acceptable supplier. The emergency order has a deterministic lead time is placed with a local supplier who has a higher price. The emergency order is not always filled since the supplier may not have the ability to provide the order on an emergency basis at all times. This emergency order has a higher cost per item and has a known probability of being filled. The total costs for this system …

Escape From ‘Owlcatraz’: An Interaction Ritual Case Study Of The Stadium Naming Rights Agreement Between Florida Atlantic University And The Geo Group, Inc., Kiernan O. Gordon

Business Faculty Publications

In 2013, Florida Atlantic University and The GEO Group, Inc. entered into a naming rights agreement for the university’s football facility, which the latter rescinded 42 days later. This agreement is unique relative to similar agreements within intercollegiate athletics in the United States for two reasons: the sponsoring entity’s business model and the fact that the agreement failed. The online media coverage of the naming rights agreement was gathered and used to reconstruct key events through qualitative content analysis (Berg, 2007). Interaction ritual theory (Collins, 2004) was employed to examine these events and provide an explanation for the agreement’s outcome. …

Hedge Fund Vs. Non-Hedge Fund Institutional Demand And The Book-To-Market Effect, Mustafa Onur Caglayan, Umut Celiker, Gokhan Sonaer

Business Faculty Publications

Recent studies have documented that institutional investors trade contrary to the predictions of the book-to market anomaly. We examine whether a prominent sub-group of institutional investors, namely hedge funds, differ from other institutions in terms of their trading behavior with respect to the book-to-market effect. We find that hedge funds significantly alter their trading preferences with respect to growth and value stocks, after book-to-market values become public information. More importantly, we show that hedge funds are better able to identify overpriced growth stocks compared to other institutions. Our results contribute to the literature on institutional investors’ trading with respect to …

The Impact Of Client Information Technology Capability On Audit Pricing, Benjamin Hoffman, R. Drew Sellers, Justyna Skomra

Business Faculty Publications

This paper explores the question: “How does a client's information technology (IT) capability influence audit pricing?” Company data for the years 2004 through 2012 are employed. Firms appearing on the InformationWeek 500 (IW500) annual list of U.S. organizations with superior IT functions serve as a proxy for companies with superior IT capability. Our findings suggest that companies with superior IT capabilities incur higher levels of audit fees. In addition, as client size increases, the audit fees of firms with advanced IT capabilities increase at a greater rate than firms without such capabilities. These findings contrast with prior research …

Innovation In A Complex, Uncertain World: Clarifying The Questions, Seeking The Answers, Michael Haughton

Business Faculty Publications

Innovation has at least 40 definitions, many of which can lay claim to being reliable and valid guidelines for organizations to make improvements by doing something new and different. Towards the goal of providing insights to facilitate fruitful pursuit of supply chain, the Third Annual World Class Supply Chain Summit focused on the theme of Innovation in a Complex, Uncertain World. At this invitation-only summit on May 9th, 2018 in Milton, Ontario, executives, scholars, and students discussed a range of innovation topics. The core of those discussions sought clarity on the following:

1. The complexities, uncertainties, and challenges that …

Market Imperfections, Macroeconomic Conditions, And Capital Structure Dynamics: A Cross-Country Study, Moonsoo Kang, Wei Wang, Ying Xiao

Business Faculty Publications

This paper investigates how “systematic” adjustment costs proxied by market imperfections and macroeconomic conditions affect capital structure dynamics in a cross-country setting. We document substantial variations in firms’ capital structure adjustments across countries and, particularly, over time. Consistent with adjustment costs impeding firms from rebalancing their capital structures, worse market imperfections are associated with slower speeds of adjustment (SOA) and larger leverage deviations. Intertemporally, capital structure adjustment is procyclical, with SOA increasing by 0.9 percentage point for a one-percentage-point increase in GDP growth rate. The procyclicality is attributable to good macroeconomic conditions mitigating market imperfections through channels of 1) facilitating …

Managerial Conservatism, Board Independence And Corporate Innovation, Jun Lu, Wei Wang

Business Faculty Publications

Using panel data on U.S. public firms, we document a positive effect of board independence on corporate innovation. This effect is concentrated in firms that are larger in size, in the non-technical industries, facing less product market competition, and using more debt, where managers are more likely to be excessively risk averse. We establish causality of board independence on innovation using a difference-in-difference approach that exploits an exogenous shock to board composition, namely, the mandate of a majority of outside directors on company boards by NYSE and NASDAQ in response to the passage of Sarbanes-Oxley Act in 2002. We further …

Task-Representation Fit’S Impact On Cognitive Effort In The Context Of Decision Timeliness And Accuracy: A Cognitive Fit Perspective, Dinko Bacic, Raymond M. Henry

Business Faculty Publications

Cognitive fit theory (CFT) has emerged as a dominant theoretical lens to explain decision performance when using data representations to solve decision making tasks. Despite the apparent consensus regarding cognitive effort's theoretical criticality in CFT-based research, researchers have made limited attempts to evaluate and empirically measure cognitive effort and its impact. Unlike prior CFT-based literature that has theorized only the role of cognitive effort, in our empirical study, we presented information and tasks to 68 participants and directly measured cognitive effort to understand how cognitive fit impacts it and how it impacts decision performance. We found that 1) cognitive fit …

Avoiding China's Capital Market: Evidence From Hong Kong-Listed P-Chips And Red-Chips, Weishi Jia, Grace Powell, Jingram Zhao

Business Faculty Publications

The purpose of this paper is to explore the puzzle of why so many Chinese firms eschew listings in China. Hundreds of firms founded in China have reorganized themselves as overseas corporations and listed on the Hong Kong Stock Exchange. These firms are called Red-chips if they are state-owned enterprises (SOEs) and Pchips if they are not state-owned (non-SOEs). To examine the rationale behind the listing decisions of P-chips and Red-chips, we compare the characteristics of Red-chips (P-chips) with SOEs (non-SOEs) listed on China stock exchanges. We find that SOEs are more likely to list in China. Moreover, while we …