Open Access. Powered by Scholars. Published by Universities.®
- Discipline
- Institution
- Publication
- File Type
Articles 1 - 6 of 6
Full-Text Articles in Business
International Portfolio Prospects And Concerns, Dimitrios V. Siskos
International Portfolio Prospects And Concerns, Dimitrios V. Siskos
Publications
The recent financial crisis amplifies the need for an updated and more universal investment strategy for both individuals and corporate investors. Diversification satisfies that condition, as it provides access to different economies operating in different countries while, simultaneously, it spreads the risk across different asset allocation[1]. However, to benefit the advantages of a diversified portfolio, a sophisticated decision making process and appeal to re-planning are required. Otherwise, international investors have to face the consequences of political-country risk and currency risk. The goal of this research is to correlate the benefits of diversification with risk undertaking for either individual …
Being Watched In An Investment Game Setting: Behavioral Changes When Making Risky Decisions, Z. Tingting Jia, Matthew J. Mcmahon
Being Watched In An Investment Game Setting: Behavioral Changes When Making Risky Decisions, Z. Tingting Jia, Matthew J. Mcmahon
Economics & Finance Faculty Publications
We design a laboratory experiment to test for behavioral differences due to observation within a novel arena: investment games. We find that fund managers are more risk-averse when investors can observe their investment allocations. This effect is more pronounced when investors, in addition to observing the allocations, can also observe the investment outcomes. Interestingly, allowing investors to observe how their investment is allocated does not impact how much they invest. Last, when the outcome of the risky investment is public knowledge, disclosing managers’ allocations leads them to return more tokens to investors and to expropriate fewer tokens for themselves at …
Cash For Gold: An Economic Analysis Of The Olympic Games, Connor De Faber-Schumacher
Cash For Gold: An Economic Analysis Of The Olympic Games, Connor De Faber-Schumacher
Business and Economics Presentations
No abstract provided.
The Paradox Of Insurance, Gideon Parchomovsky, Peter Siegelman
The Paradox Of Insurance, Gideon Parchomovsky, Peter Siegelman
All Faculty Scholarship
In this Article, we uncover a paradoxical phenomenon that has hitherto largely escaped the attention of legal scholars and economists, yet it has far-reaching implications for insurance law: loss-creation by uninsured parties caused by the presence of insurance. Contrary to the conventional wisdom, we show that insurance can create significant negative externalities by inducing third parties to engage in antisocial, illegal and unethical activities in order to extract money from insureds or insurers. Moreover, as the amount and scope of insurance grows, so does its distortionary effect on third parties. We term this phenomenon the paradox of insurance. The risk …
Effect Of Corporate Tax Avoidance Activities On Firm Bankruptcy Risk, Anirudh Dhawan, Liangbo Ma, Maria H. Kim
Effect Of Corporate Tax Avoidance Activities On Firm Bankruptcy Risk, Anirudh Dhawan, Liangbo Ma, Maria H. Kim
Faculty of Business - Papers (Archive)
Corporate tax avoidance has been shown to raise the cost of bank debt and lower credit and bond ratings. However, it is unclear whether tax avoidance actually increases a firm’s bankruptcy risk or whether it is just viewed negatively by banks and rating agencies. We find that firms engaging in tax avoidance and firms that are thinly capitalized face higher bankruptcy risk. To account for endogeneity and functional form misspecification, we verify our results using instrumental variable and propensity score matching methods. Our findings are consistent with the view that tax avoidance is a risk-enhancing activity.
Stock Liquidity And Default Risk Around The World, Sivathaasan Nadarajah, Huu Nhan Duong, Searat Ali, Benjamin Liu, Allen Huang
Stock Liquidity And Default Risk Around The World, Sivathaasan Nadarajah, Huu Nhan Duong, Searat Ali, Benjamin Liu, Allen Huang
Faculty of Business - Papers (Archive)
We document the negative effect of stock liquidity on default risk for a sample of 46 countries. We further find that default risk declines following the introduction of the Directive on Markets in Financial Instruments (MiFID)—an exogenous shock that increases liquidity. The effect of liquidity on default risk is more pronounced in countries with poorer investor protection and information environments. Further, this effect is attenuated (strengthened) for firms with greater information efficiency (governance monitoring). Overall, our findings highlight the important role of regulatory settings in shaping the impact of stock liquidity on default risk in international markets.