Corporate Finance Commons^™

Multinational Firms And Cash Holdings: Evidence From China, Weijun Wu, Yang Yang, Sili Zhou

Research Collection Lee Kong Chian School Of Business

To adapt to globalization, Chinese multinational firms have more exploitation of cash. This paper shows that Chinese multinational corporations (MNCs) do not hold significantly more cash relative to domestic firms unless these multinationals heavily relay on the foreign sales. In addition, the multinationals of non-State-Owned Enterprises (Non-SOEs) exhibit the insignificant difference in cash holdings for non-multinationals. We also find that Chinese MNCs invest more but are less profitable, especially in non-SOE subsample. Overall, we conclude that the need of cash liquidity of multinational corporations in China is different from those in U.S.

Gender Matters: Perceptions Of Corporate Leadership, Kylie A. Braegelmann

Electronic Theses and Dissertations

Women remain conspicuously underrepresented at the highest levels of corporate management; thus, it seems, gender matters. Gender bias in financial markets would imply an inefficient market, which necessarily constrains economic performance and social welfare more generally. To measure gender bias, I examine the cumulative abnormal returns around CEO announcements from 1992 through 2016 using a modified event study methodology. Existing event studies in this field are inconclusive as to whether or not such a bias exists. Therefore, this research contributes to the literature by extending the data, using a larger event window, and studying bias over time and firm size. …

Ownership And Identities Of The Largest Shareholders And Dividend Policy: Evidence From Vietnam, Trien Vinh Le, Trang Huyen Le

Research Collection School Of Accountancy

This study investigates the relationship between the level of shareholdings and identities of the largest shareholders, and cash dividend policy. The study is conducted with a sample of 180 firms listed on Vietnam stock exchange markets from 2009 to 2013. The fixed effect model is employed to analyze the balanced panel data. The results show that the higher the level of holdings by the largest shareholders, the lower the dividend payout. Moreover, companies with the State and Foreign investors as the largest shareholders have higher dividend payout ratio than companies with local investors and managers as the largest shareholders. The …

Is Silence The Answer?, Gator Adams

CMC Senior Theses

This study examines the relationship between company management guidance, and ex-ante crash risk over the duration of 2008(Jan 2006-Dec 2009) financial crisis using the implied volatility skew, which is based upon ex-ante volatility implied by the pricing model developed by Black-Scholes (1973). The study finds that over the duration of this crisis period, management guidance decreases with a rise in ex-ante crash risk. Further, the study provides evidence on the relationship of management guidance and earnings volatility, and how that is affected by a firm's industry product concentration based on the Herfindahl-Hirschman Index (HHI) score.

Australian Real Estate Stock Reactions To Firb Regulation Changes, Henry Wei

CMC Senior Theses

This study analyzes the share price reactions to real estate development and building/construction materials corporations in relation to FIRB rule changes. It appears companies as a whole were indifferent to the rule changes; however individual securities returns were wildly different. These findings suggest that the FIRB rule changes had a mixed effect on different corporations possibly based on their exposure to the Australian real estate market.

Audit Committees And Financial Reporting Quality In Singapore, Yuanto Kusnadi, Kwong Sin Leong, Themin Suwardy, Jiwei Wang

Research Collection School Of Accountancy

We examine three characteristics (independence, expertise, and overlapping membership) of audit committees and their impact on the financial reporting quality for Singapore-listed companies. The main finding is that financial reporting quality will be higher if audit committees have mixed expertise in accounting, finance, and/or supervisory. In addition, we do not find evidence that incremental independence of audit committees enhances financial reporting quality because audit committees already consist of a majority of independent directors. Finally, we fail to find any impact of overlapping membership on audit and remuneration committees on financial reporting quality. Overall, the results have policy implications on improving …

Political Turnovers, Ownership, And Corporate Investment In China, Jerry X. Cao, Julio Brandon, Tiecheng Leng, Sili Zhou

Research Collection Lee Kong Chian School Of Business

We examine the impact of political influence and ownership on corporate investment by exploiting the unique way provincial leaders are promoted in China. The tournament-style promotion system creates incentives for new governors to exert influence over investment in the early years of their term. We find a divergence in investment rates between state owned enterprises (SOEs) and private firms following political turnover. SOEs increase investment by 6.0% following the turnover while investment rates for private firms decline, suggesting that the political influence exerted over SOEs may crowd out private investment.

Financial Reporting Quality Of Chinese Reverse Merger Firms: The Reverse Merger Effect Or The China Effect?, Kun-Chih Chen, Qiang Cheng, Ying Chou Lin, Yu-Chen Lin, Xing Xiao

Research Collection School Of Accountancy

In this paper, we examine why Chinese reverse merger (RM) firms have lower financial reporting quality than U.S. IPO firms. We find that the financial reporting quality of U.S. RM firms is similar to that of matched U.S. IPO firms, but Chinese RM firms exhibit lower financial reporting quality than Chinese ADR firms. We also find that Chinese RM firms exhibit lower financial reporting quality than U.S. RM firms. These results indicate that the use of the RM process is associated with poor financial reporting quality only in firms from China, where legal enforcement and investor protection are weak. In …

Feats And Failures Of Corporate Credit Risk, Stock Returns, And The Interdependencies Of Sovereign Credit Risk, Uche C. Isiugo

LSU New Orleans Theses and Dissertations

This dissertation comprises two essays; the first of which investigates sovereign credit risk interdependencies, while the second examines the reaction of corporate credit risk to sovereign credit risk events. The first essay titled, Characterizing Sovereign Credit Risk Interdependencies: Evidence from the Credit Default Swap Market, investigates the relationships that exist among disparate sovereign credit default swaps (CDS) and the implications on sovereign creditworthiness. We exploit emerging market sovereign CDS spreads to examine the reaction of sovereign credit risk to changes in country-specific and global financial factors. Utilizing aVAR model fitted with DCC GARCH, we find that comovements of spreads …

Social Media Information And Analyst Forecasts, Mahfuja Malik, Rajib Hasan, Abu S. Amin

WCBT Faculty Publications

In the past decade, social networking has changed the landscape of information dissemination. The rapid diffusion of social media services such as Facebook and Twitter is unprecedented and offers immense possibilities for corporations to communicate with, and engage core stakeholders in, various business decisions. In this study, we investigate whether social media play any role as a source of information for financial analysts. We specifically focus on information revealed on the official Facebook pages of S&P 500 firms. We define information content on a Facebook page as the total number of posts by the corporations and the comments, likes and …

Leveraging Foreign Institutional Logic In The Adoption Of Stock Option Pay Among Japanese Firms, Xuesong Geng, Toru Yoshikawa, Asli M. Colpan

Research Collection Lee Kong Chian School Of Business

We investigate why Japanese firms have adopted executive stock option pay, which was developed with shareholder-oriented institutional logic that was inconsistent with Japanese stakeholder-oriented institutional logic. We argue that Japanese managers have self-serving incentives to leverage stock ownership of foreign investors and their associated institutional logic to legitimize the adoption of stock option pay. Our empirical analyses with a large sample of Japanese firms between 1997 and 2007 show that when managers have elite education, high pay inequality with ordinary employees, and when firms experience poor sales growth, foreign ownership is more likely associated with the adoption of stock option …

The Role Of The Media In Promoting Real Sector Finance., Gbenga Adefaye

Bullion

This paper would focus on the Role of the Media as a social institution, why it should promote real sector financing and how it can promote real sector financing. This is premised on the belief that previous papers have dwelt sufficiently on the issue of technicalities of real sector and aspects of financing.

Macroeconomic Stability And The Role Of Financial Institutions In Promoting Financial Inclusion In Nigeria, Mbutor O. Mbutor, Ibrahim A. Uba

Bullion

This article discusses the role of financial institutions in promoting financial inclusion in Nigeria as well as its macroeconomic stability. Positive growth of the economy is prerequisite for financial inclusion but the stability of the economy is sine qua non for economic growth. Therefore, the discussion of financial inclusion is best served when enclosed in the framework of the extent to which the economy is stable. The article further highlights financial inclusion and its related concepts and the role of financial institutions in promoting financial inclusion.

Endogeneity In Ceo Power: A Survey And Experiment, Zhichuan Li

Business Publications

The endogeneity problem has always been one, if not the only, obstacle to understanding the true relationship between different aspects of empirical corporate finance. Variables are typically endogenous, instruments are scarce, and causality relations are complicated. As the first attempt to summarize different econometric methods that are commonly used to address endogeneity concerns in the context of corporate governance, we explore the relation between CEO power and firm performance, as an experiment, to illustrate how these methods can be used to mitigate the endogeneity problem and by how much. After carefully dealing with the endogeneity issues, we find strong evidence …

Shareholder Advocacy In Corporate Elections: Case Studies In Proxy Voting Websites For Retail Investors, Robin Miller

Sustainability and Social Justice

One of the key rights shareholders retain is the right to vote on issues affecting the companies in which they invest. This voting right is seen as one of the primary means of exercising diligent corporate governance (Cole 2003, Fairfax 2009). Only 28 percent of individual investors vote in corporate elections compared with 91 percent of institutional investors. Informed voting decisions at corporate elections can be very information intensive, and theories of rational apathy and the free rider problem may explain a lack of participation from individual investors.

Many shareholders cannot attend annual corporate meetings, so they …

On The Behavior Of Entrepreneurial Factor Supply To The Firm, Nicos Zafiris

The Journal of Entrepreneurial Finance

This paper draws on an existing, but little used, approach to the choices governing the supply of ‘entrepreneurial’, in the sense of ‘residually remunerated’, resources to an enterprise, especially post start up. It focuses in particular on the hybrid ‘own factor demand/supply curve’ to the firm of Bronfenbrenner (1960), but attempts to treat such supply in conjunction with ‘contractual’ employment of resources, thus making use of gearing and portfolio concepts. To achieve this, it is found necessary for the hybrid schedule to be reinterpreted and recast as the locus of the relevant utility maximising choices. A model is presented which …

Reanalyzing The Political Stability Of Britain's Democratization, Nathan R. Burton

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

A recent article in Journal of Economic History by Dasgupta and Ziblatt uses bond yields to analyze the political risk of the 19th century democratization legislation of Britain known as the Reform Acts. Dasgupta and Ziblatt find that the volatility of yields is relatively high during periods of legislation, and model the yields via GAM method, concluding that the political risk associated with the Reform Acts was high. I reproduce the study and comparing those times of 'high' volatility to all periods and find nothing to compare high-volatility periods to, suggesting that it is inconclusive whether the Reform Acts were …

Financial Performance In Upstream, Downstream, And Integrated Oil Companies In Response To Oil Price Volatility, Jonathan P. Garcia

Finance Undergraduate Honors Theses

This paper investigates the relation between crude oil price volatility and stock returns among oil companies using a three-part methodology, by using the West Texas Intermediate (WTI) as oil price benchmark. I asses the various indicators that set signals for oil price volatility and the interpretation of each (PMI, S&P500, DJIA, and World Crude Oil Output). This research also focuses on the relation between different types of companies in the oil industry (integrated, upstream, and downstream) and how each type of company will be assessed in a particular way to predict abnormal returns, based on market data and statistical analyses …

Us Airport Ownership, Efficiency, And Heterogeneity, Levent Kutlu, Patrick Mccarthy

School of Economics and Finance Faculty Publications

All US commercial airports are in the public sector yet not all have the same ownership type. For medium and large hub US airports we use stochastic frontier analysis to analyze the efficiency differences for alternative airport ownership types. We find that while form of ownership may matter for cost efficiency, in general its effect is relatively small. Yet type of public sector ownership does have cost efficiency implications in certain environments. Further, when heterogeneity is not controlled, the results change substantially so that type of ownership matters much more which demonstrates the importance of controlling for cross section heterogeneity.

Financial Health And Corporate Performance: A Comparison Of Manufacturing Companies In China And India, See Liang Foo, Shaakalya Pathak

Research Collection School Of Accountancy

The People’s Republic of China (China) and India are two leading economies in Asia Pacific. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in these two markets. A linear regression was conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a fourteen-year period are also analysed. The analysis covers the period from 2000 to 2013 (inclusive) and yielded a statistically positive correlation between ROE and the Z-Score for both …

Financial Health And Corporate Performance Of Listed Manufacturing Companies In South Korea And Taiwan: A Comparative Study Of The Two Asian Tigers, See Liang Foo, Shaakalya Pathak

Research Collection School Of Accountancy

South Korea and Taiwan are two leading economies in Asia Pacific. This study examines the relationship between the financial health, as measured by the Altman Z-Score, and corporate performance, as measured by the Return on Equity (ROE), of listed manufacturing companies in these two markets. A linear regression was conducted between these variables to determine the magnitude and direction of their relationships. The trends of Z-Scores over a fourteen-year period are also analyzed. The analysis covers the period from 2000 to 2013(inclusive) and yielded a statistically positive correlation between ROE and the Z-Score for both markets. South Korea and Taiwan …

Social Capital, Informal Governance, And Post-Ipo Firm Performance: A Study Of Chinese Entrepreneurial Firms, Jerry X. Cao, Yuan Ding, Hua Zhang

Research Collection Lee Kong Chian School Of Business

Social capital can serve as informal governance in weak investor-protection regimes. Using hand-collected data on entrepreneurs' political connections and firm ownership, we construct several original measures of social capital and examine their effect on the performance of entrepreneurial firms in China after their initial public offerings. Political connections or a high percentage of external investors tend to enhance firm performance, but intragroup related-party transactions commonly lead to performance decline. These forms of social capital have a strong influence on the performance of Chinese firms, whereas formal governance variables such as board size or board independence have little effect. Although social …

The Big Short, Elizabeth Armon

Communication Studies

The Big Short (McKay, 2015), adapted from the non-fiction novel The Big Short: Inside the Doomsday Machine by Michael Lewis (2010), follows three separate but parallel stories leading up to the United States housing crisis of 2008. On a macro-level, the film brilliantly depicted the creation, and the ultimate burst, of the credit and housing market bubble. However, on a micro-level the audience is given an opportunity to realize and empathize with the internal struggle that many of the main characters faced as they grappled with the fact that their financial gain from shorting the market came with the caveat …

External Management Reserve: Overview And Performance Of Major Asset Classes For The Period 2000-2016, Mujtaba Muhammad Farouk, Abdurrahman Abdullahi

Bullion

This paper discusses in detail, various asset classes available to both active and passive reserves managers and analyse the performance of the asset classes held mostly by central banks. Following an introduction, the paper is structured as follows: Section two reviewed literature on reserves management, including motives and what guides the decisions of the investment committee in determining asset classes. Section three analysed the various asset classes that reserves managers invest in, while section four evaluates the major central banks' asset classes' performance over the lost fifteen years covering the period before and after the 2008 global financial crisis. Section …

Analysis Of The Factors Impacting Etfs Net Fund Flow Changes, Stoyu Ivanov

Faculty Publications

PurposeThe purpose of this study is to identify the factors that impact the exchange-traded funds net fund flow changes on a daily basis.Design/methodology/approachA total of 1,212 different exchange-traded funds with a proprietary daily net fund flow data and logistic regressions were studied because the majority of the 1,212 exchange-traded funds have mostly zero daily net fund flow changes.FindingsIt was documented that in the period December 22, 2005 to July 28, 2010 autocorrelation at the daily frequency is not universally present for the 1,212 exchange-traded funds that we study, despite the fact that this is the case in the monthly data …

Informational Efficiency And The Reaction To Terrorism: A Financial Perspective, Nicholas Roland

Honors Undergraduate Theses

The purpose of this study is to measure the message terror organizations hope to convey using the financial markets as a proxy of measurement to determine patterns within the marketplace and the effects on the terrorists’ ability to deliver a desired message due to the increased use of digital devices and access to instantaneous news, seen over the past decade. Using death count, geographic location, and event type, this study identified 109 attacks between 1985 and 2015 to be analyzed against 5 market indices and 5 securities. Measuring the effects within a 10-day sample window from the time of the …

Corporate Reorganisation Of China’S Listed Companies: Winners And Losers, Zinian Zhang

Research Collection Yong Pung How School Of Law

This article is the first empirical study investigating the corporate reorganisation of Chinese domestically-listed companies. Through examining these cases, it challenges the assertion made by most of these corporate reorganisation plans and by Chinese state-run media reports that creditors and general public shareholders were the major beneficiaries. Through an analysis of the data generated from all forth-three such cases, this articles reveals that: First, unsecured creditors could have, on average, received 61.37% more of their claims if the fundamental value distribution principle, the absolute priority norm, could have been complied with in these reorganisations; Second, if the general-public-shareholder-protection scheme issued …

Study Of Reit Etf Beta, Stoyu Ivanov

Faculty Publications

PurposeThe aim of this study is to examine real estate investment trust exchange-traded funds (REIT ETFs) and test for the existence of the “asymmetric beta puzzle” phenomenon in these financial instruments that are relatively new and are gaining popularity. The “asymmetric beta puzzle” phenomenon is used to identify the hedging and diversification benefits of a financial instrument. “Asymmetric beta puzzle” exists when betas in declining markets are higher than betas in advancing markets.Design/methodology/approachTo study 14 REIT ETFs by using monthly and daily Center for Research in Security Prices (CRSP) data. Capital asset pricing model (CAPM) and Fama–French three-factor model were …

An Examination Of U.S. Restaurant Firms' Internationalization In A Risk Context, Soyeon Jung

UNLV Theses, Dissertations, Professional Papers, and Capstones

The purpose of this dissertation is to advance the theoretical and practical understanding

of the relationship between publicly traded U.S. restaurant firms’ internationalization as a

corporate strategy and risks using a comprehensive set of risk measures: 1) market-based risk (i.e., systematic and unsystematic risk) and 2) accounting-based risk (i.e., standard deviation of return on assets (ROA), return on equity (ROE), and earnings per share (EPS) during the period of 2000-2013. This dissertation further investigates linear, nonlinear, and lagged effects of internationalization on restaurant firms’ risks. In summary, the findings of this dissertation reveal that internationalization tends to mitigate systematic risk, …

A State-Stewardship View On Executive Compensation, Hao Liang, Luc Renneboog, Sunny Li Sun

Research Collection Lee Kong Chian School Of Business

We take a state-stewardship view on corporate governance and executive compensation in economies with strong political involvement, where state-appointed managers act as responsible ‘stewards’ rather than ‘agents’ of the state. We test this view on China and find that Chinese managers are remunerated not for maximizing equity value but for increasing the value of state-owned assets. Managerial compensation depends on political connections and prestige, and on the firms’ contribution to political goals. These effects were attenuated since the market-oriented governance reform. In a social welfare perspective, such compensation stimulates not the maximization of shareholder value but the preservation of the …