Corporate Finance Commons^™

Digital Liability Risk: A Note On Estimating Exposure, Costs, And Implications, Robyn L. Raschke, Michael T. Lee, Kimberly F. Charron, Paulette R. Tandy

Department of Accounting Faculty Research

Digital liabilities are the unknown future costs that occur after an event related to digital assets threatens organizational value. These events emerge from: (1) an IT data breach or cybersecurity failure; (2) IT infrastructure limitations that limit future opportunities; and (3) changes in business models that are limited due to IT infrastructure. Potential digital liabilities are not fully understood and can be difficult to quantify. Derived from prior research, this research note proposes four methods, modified from existing research literature, for estimating the cost of digital liabilities prior to a digital asset compromise. We conclude the research note by discussing …

Managerial Attributes, Incentives, And Performance, Zhichuan Li, Jeffrey L. Coles

Business Publications

We examine the relative importance of observed and unobserved firm- and manager-specific heterogeneities in determining executive compensation incentives and firm policy, risk, and performance. First, we decompose executive incentives into time-variant and time-invariant firm and manager components. Manager fixed effects supply 73% (60%) of explained variation in delta (vega). Second, controlling for manager fixed effects alters parameter estimates and corresponding inference on observed firm and manager characteristics. Third, larger CEO delta (vega) fixed effects predict better firm performance (riskier corporate policies and higher firm risk). These results suggest that the delta (vega) fixed effect captures managerial ability (risk aversion).

Hot Or Not – Which Features Make Fintechs Attractive For Investors?, Johannes Klein, Leonard Stuckenborg, Jens Leker

The Journal of Entrepreneurial Finance

Attracting investors and generating funding is a key issue for all start-ups. The information asymmetries between investor and start-up need to be reduced. Despite the overwhelming literature on venture capital financing and different signals reflecting venture quality, pinpointing the signals which impact funding decisions remains an open issue. This study presents an empirical examination of the effectiveness of different signals to convince investors and generate funding. We examine the impact of signals concerning venture quality (classic ones such as human capital, intellectual capital and social alliance/network capital as well as the strategic orientation in terms of business model patterns. Based …

Analysis Of Jamie Dimon: Impact Of Leadership And Culture At J.P. Morgan Chase & Co., Abigail Elisabeth Chapman

Honors Theses and Capstones

Jamie Dimon is one of Wall Street’s most effective and intelligent leaders who has transformed J.P. Morgan Chase into one of the largest and most well-respected banks in the world. To understand why this is, it’s important to analyze Dimon’s leadership style and how this has impacted the performance of J.P. Morgan. This paper investigates the performance of J.P. Morgan Chase under Dimon, how his character embodies both a Transformative and Transactional leadership style, and how his leadership has transformed the culture and performance of J.P. Morgan today.

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 …

Accounting-Based Compensation And Debt Contracts, Zhi Li, Lingling Wang, Karen Wruck

Business Faculty Articles and Research

We examine how accounting‐based compensation plans influence a firm's contracts with its creditors. After granting long‐term accounting‐based compensation plans (LTAPs) to CEOs, firms pay lower spreads and have fewer restrictive covenants in new bank loans. Mechanisms leading to lower borrowing cost include improvements in debt repayment ability, reduced shareholder‐debtholder conflicts, and reduced risk‐taking incentives. Creditors view LTAPs as a substitute for monitoring, adjust covenant design based on LTAP features, and value plans with concave performance‐payout functions and reasonable performance targets. A firm's credit rating improves and CDS spread declines after LTAP grants, suggesting that LTAPs help reduce firms' credit risk.

Crowdfunding Challenges For New Charity Organizations, Katherine M. Lowe

Marriott Student Review

A look into the complicated and competitive world of nonprofit fundraising in the modern world. With a special emphasis on the struggles new nonprofits face in differentiating their services and attracting donors through online crowdfunding.

The Relationship Between Investment And Internal Cash Flows In Vc-Backed Smes: Does Firm Size Matter?, Zélia Silva Serrasqueiro, Filipe Sardo, Elisabete Félix

The Journal of Entrepreneurial Finance

Using panel data models and two research sub-samples composed of smaller and larger VC-backed, this study seeks to analyze the relationship between investment and internal cash flows. The results indicate that the investment sensitivity to internal cash flows is greater in larger than in the smaller VC-backed SMEs.

Debt is more important for smaller than for larger VC-backed SME investment. The moderation effect of VC ownership reduces the magnitudes of the positive impact of cash flows and debt as well as the negative effect of growth opportunities on investment in both smaller and larger VC-backed SMEs.

Cost Stickiness And Supply Chain Bargaining Power, Binghao (Jimmy) Zhao

Dissertations, Theses, and Capstone Projects

Given the essential role of supply chains in the economy, furthering our understanding of the interactions between trade partners is important. In this paper, I study the relation between cost stickiness and bargaining power over supply chain partners. I document evidence consistent with the argument that firms wield supply chain bargaining power to avoid cost stickiness by shifting high adjustment costs onto their trade partners. In particular, I show that the level of SG&A and COGS stickiness is negatively associated with firms’ bargaining power over their suppliers and customers. My results are robust to using industry competition as an alternative …

Jpmorgan Chase London Whale F: Required Securities Disclosures, Arwin G. Zeissler, Giulio Girardi, Andrew Metrick

Journal of Financial Crises

On April 13, 2012, JPMorgan Chase (JPM) Chief Financial Officer Douglas Braunstein took part in a conference call to discuss the bank’s first quarter 2012 earnings. Coming just a week after media reports first questioned the risks taken by JPM derivatives trader Bruno Iksil, Braunstein made a series of assertions about the trades. On May 10, JPM finalized its first quarter financial results, which included some disclosures regarding Iksil’s trading that were substantially different from Braunstein’s statements of April 13. At issue is whether the regulatory filings on April 13 and May 10, as well as verbal comments by Braunstein …

Jpmorgan Chase London Whale E: Supervisory Oversight, Arwin G. Zeissler, Andrew Metrick

Journal of Financial Crises

As a diversified financial service provider and the largest United States bank holding company, JPMorgan Chase (JPM) is supervised by multiple regulatory agencies. JPM’s commercial bank subsidiaries hold a national charter and therefore are regulated by the Office of the Comptroller of the Currency (OCC). Since the bank’s Chief Investment Office (CIO) invested the surplus deposits of JPM’s commercial bank units, the OCC was also CIO’s primary regulator. During the critical period from late January through March 2012, when CIO traders undertook the failed derivatives strategy that ultimately cost the bank $6 billion, JPM did not provide the OCC with …

Jpmorgan Chase London Whale D: Risk-Management Practices, Arwin G. Zeissler, Andrew Metrick

Journal of Financial Crises

JPMorgan Chase (JPM) prided itself on having the best risk-management practices in the financial industry, having survived the 2007-09 financial crisis in better shape than many competitors. Chief Executive Officer Jamie Dimon often spoke of the bank’s “fortress balance sheet.” A keen focus on risk management is vital to JPM’s longevity, as is the case with all highly leveraged financial institutions. However, the JPM Task Force that investigated the $6 billion 2012 London Whale trading loss concluded that risk-management practices at the bank’s Chief Investment Office (CIO), the unit in which the loss occurred, were given less scrutiny by senior …

Jpmorgan Chase London Whale C: Risk Limits, Metrics, And Models, Arwin G. Zeissler, Andrew Metrick

Journal of Financial Crises

Value at Risk (VaR) is one of the most commonly used ways to measure and monitor market risk. At JPMorgan Chase (JPM), very large derivative positions established by Bruno Iksil in the Synthetic Credit Portfolio (SCP) caused the bank’s Chief Investment Office (CIO) to exceed its VaR limit for four days in a row in January 2012. In response, the CIO changed to a new VaR model on January 30, which appeared to immediately reduce VaR by half. However, JPM soon discovered that this new VaR model had not been properly implemented and the bank went back to using the …

The Effect Of Corporate Visibility On Corporate Social Responsibility, Zhichuan Li, Taylor Morris, Brian Young

Business Publications

Outside of direct ownership, the general public may feel it is an implicit stakeholder of a firm. As the public becomes more vested in a firm’s actions, the firm may be more likely to engage in Corporate Social Responsibility (CSR) activities. We proxy for the public’s stake in a firm with public visibility. Based on 3,400 unique newspaper publications from 1994 to 2008, we measure visibility for the U.S. S&P 500 firms with the frequency of print articles per year concerning the firm. We find that visibility has a signficant, positive relationship with the CSR rating. Evidence also suggests this …

College Of Business Dean's Report: 2018-2019, Ryan Butt

College of Business Dean’s Reports

No abstract provided.

The Performance Of Military Defense Contracted Companies After September 11th, 2001: The Case Of Politically Connected Companies, Derek J. Larsen

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

This paper examines the effect that the terrorist attacks on September 11^th, 2001 had on the stock prices of companies within the military defense industry. In addition, this paper studies the effect of the defense firms’ political engagement (through lobbying activities) and how this affected the stock price response to the terrorist attacks. Our study finds that the cumulative abnormal returns of these companies are positively significant and that companies who lobbied experienced higher returns relative to those who did not lobby.

New Perspectives About Financial Intermediation: Disruption By Senior Managers And Financial Technologies, Yu Shan

Dissertations, Theses, and Capstone Projects

This dissertation consists of three chapters that span managerial styles, financial technologies, and social interactions.

Chapter 1 Banks increase credit risk-taking in syndicated bank loans when their systemic risk increases; however, the interrelationship across risks depends on bank managerial styles. Using a connectedness sampling method to differentiate patterns of business policy styles and systemic risk-taking among managers, I find that credit risk-taking is more sensitive to the bank's systemic risk if the manager exhibits a preference for systemic risk. Asset-innovating managers (exhibiting a preference for non-traditional forms of income and assets) take higher credit risk in their loan portfolios, but …

“Because I Care I Risk”: How Ceo Free Market Orientation Affects The Extent And Type Of Income Smoothing, Mirzokhidjon S. Abdurakhmonov

Graduate Theses and Dissertations

The executive political ideology literature suffers from a lack of conceptual clarity because social and economic issues are conflated. This has created an inconsistency in empirical findings with the theoretical predictions of the political ideology construct. In this dissertation, I identify a distinct economic component, free market orientation, based on support for economic individualism, competition, and property rights to reconcile these inconsistencies. Specifically, I argue that these indicators of free market orientation will have a unique impact on the way executives run their organizations. I develop a novel scale that measures CEO economic values that I term free market orientation …

The Futurist, Ryan Stenquist

Marriott Student Review

Ubiquitous self-driving cars, robot workers, and massive political shifts may seem far away and irrelevant to our day to day lifestyles. However, Mr. Schenker proves that these changes are fast-approaching and come as timely responses to the problems and opportunities of today.

The Velocity Of Risk, Sridhar Ramamoorti, James H. Wanserski, Richard Stover

Accounting Faculty Publications

Only a few decades ago, the onset of problematic risk events often was slow, and organizations handled the corresponding aftermath over a manageable time frame. Organizations armed with extensive public relations resources responded to most postevent crises after planning and analyzing thoughtful responses. Additionally, organizations carefully calculated their transparency with stakeholders regarding the event to manage its impact on the organization. Fast forward to today, and the pace of information is almost instantaneous. For example, when a popular U.S. fast food restaurant chain experienced an outbreak of E. coli-infected lettuce, its stock price decreased 44 percent within 90 days amid …

Venezuela Undermines Gold Miner Crystallex's Attempts To Recover On Its Icsid Award, Sam Wesson

Loyola of Los Angeles International and Comparative Law Review

No abstract provided.

List Voting’S Travels: The Importance Of Being Independent In The Boardroom, Maria Lucia Passador

Fordham Journal of Corporate & Financial Law

The life of the law, especially with regard to corporations, is strongly influenced by experience and practice. The board, a living element of corporate law, is therefore one of the most noteworthy aspects to be studied, given its relevant implications and role as the lifeblood of scholarly debates.

This Article offers a novel contribution to the assessment of list voting, a fairly unique Italian system that has been increasingly appreciated by institutional investors. A hand-picked dataset that stretches from 2005 to 2015 shows a positive correlation between minority-appointed directors in the boardroom and dividend payouts. Furthermore, the findings shed light …

Security For Expense Statutes: Easing Shareholder Hopelessness?, Miriam R. Albert

Fordham Journal of Corporate & Financial Law

The quintessential derivative suit is a suit by a shareholder to force the corporation to sue a manager for fraud, which is admittedly an awkward and likely unpleasant endeavor and, according to the Supreme Court, a “remedy born of stockholder helplessness.” Where ownership and control of an enterprise are vested in the same population, the need for a corrective mechanism like a derivative suit is greatly lessened because the owner/managers’ self-interests will arguably guide managerial conduct. But where ownership and control are in separate hands, the incentives change, and managerial conduct may not conform to the owners’ views of the …

The Consumer Financial Protection Bureau: A Novel Agency Design With Familiar Issues, Thomas Arning

Fordham Journal of Corporate & Financial Law

This Note examines the structure of the Consumer Financial Protection Bureau, with a specific focus on its single-director structure. The balance of authority between agencies and the three branches of government has been a point of contention for generations, especially since the early twentieth century. This area of the law became even more contested following the financial crisis in 2008. As part of the response to the perceived abuses that led to the global recession, Congress created the Consumer Financial Protection Bureau, ultimately opting to give it a single director as opposed to a board structure. Proponents of this regime …

The Eighteenth Annual Albert A. Destefano Lecture On Corporate, Securities, & Financial Law At The Fordham Corporate Law Center: Corwin V. Kkr Financial Holdings Llc— An “After-Action Report”, The Honorable Joseph R. Slights Iii, Matthew Diller

Fordham Journal of Corporate & Financial Law

No abstract provided.

Cooking A Corporation Tax Controversy: Apple, Ireland And The Eu., Ciara Graham, Brendan O'Rourke

Articles

Given the centrality of corporations in distribution of income and wealth studies, discursive constructions of corporate taxation are essential to understanding the production of inequality. The focus of this study is an interview with Apple’s Chief Executive Tim Cook on the Irish state broadcaster, Raidió Teilifís Éireann’s (RTÉ) flagship news programme, Morning Ireland, following the ruling by the European Commission (EC) on the corporation tax arrangements between Apple Inc. and Ireland. Drawing on a Critical Discourse Analysis (CDA) approach, a frame analysis is provided. The significance and extent of the EC’s ruling has potential implications for corporation taxation policy, within …

An Analysis Of Millennial Attitudes Towards Car Servicing, Colwell S. Shupe, Jill M. Synek, Erin M. Chips, Eric A. Van Meter

Williams Honors College, Honors Research Projects

When our team originally began our project, we initially held the assumption that millennials do not care about car ownership or driving. As our secondary research progressed, we found that millennials do indeed care about automobiles, but limited research existed as to any underlying issues regarding car maintenance and service. We addressed this issue in our primary research and found that millennials experience anxiety as they do not know much about car maintenance. Our recommendations were targeted towards easing both the surface anxiety and addressing the underlying issues as well as helping prepare Goodyear for future trends that may arise.

Are Women Executives Hurting Firm Performance? An Examination Of Gender Diversity On Firm Risk, Performance, And Executive Compensation, Krystal Diane Sung

CMC Senior Theses

In order to assess the continuing imbalance of top executives between genders, I examine the effects of gender diversity within top management teams on firm risk, performance, and executive compensation. Capitalizing on previous analysis, I apply three unique differentiators. First, I utilize current data from 2012 to 2017 from Compustat, CRSP, and ExecuComp. Second, I provide a unique subset view on a firm and individual performance of female CEOs to examine executive compensation. Third, my scope of analysis expands to S&P Composite 1500 companies. I use separate models to estimate the effect of gender diversity on firm risk by examining …

When Fund Management Skill Is More Valuable?, Feng Dong, John A. Doukas

Finance Faculty Publications

Does fund management skill allow managers to identify mispriced securities more accurately and thereby make better portfolio choices resulting in superior fund performance when noise trading- a natural setting to detect skill - is more prevalent? We find skilled-fund managers with superior past performance to generate persistent excess risk-adjusted returns and experience significant capital inflows, especially in high sentiment times, high stock dispersion and economic expansion states when price signals are noisier. This pattern persists after we control for lucky bias, using the "false discovery rate" approach, which permits to disentangle manager "skill" from "luck".

Corporate Income Tax And Manufacturing Sector Performance In Nigeria: A Panel Data Analysis, Ogudu George Nwoge, Kingsley Imandojemu, Akinlosotu Nathaniel Toyosi

Bullion

The study examined the impact of corporate income tax on the performance of the manufacturing sector in Nigeria from 2013 – 2017. The ex-post facto research design was adopted for this study. The population of this study covered all the 23 registered manufacturing firms dealing with consumable foods in Nigeria. The sample of five manufacturing firms, dealing with consumable foods in Nigeria which represent 35% of the quoted manufacturing firms on the Nigerian Stock Exchange (NSE) market was selected for the study. This study made use of the fixed and random effect regression technique. The result showed that company income …