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Articles 31 - 57 of 57
Full-Text Articles in Corporate Finance
What Drives Merger Waves? A Study Of The Seven Historical Merger Waves In The U.S., Katherine Ching
What Drives Merger Waves? A Study Of The Seven Historical Merger Waves In The U.S., Katherine Ching
Scripps Senior Theses
Historically, merger and acquisition (or M&A) activity has occurred in cyclical patterns, forming what are known as “merger waves.” To date, there have been a total of seven waves. Though it is widely acknowledged that merger waves exist, there is no consensus on what drives these waves. Through both qualitative and quantitative analysis, this paper aims to determine the causes of merger waves and looks at those causes through two different lenses: the neoclassical view, which states that economic shocks cause merger waves, and the behavioral view, which states that increases in merger activity are due to managerial behavior and …
Financing Method And Abnormal Returns In Corporate Mergers And Acquisitions, Patrick Thomas
Financing Method And Abnormal Returns In Corporate Mergers And Acquisitions, Patrick Thomas
CMC Senior Theses
This study analyzes the impact of merger and acquisition financing method on buyer cumulative abnormal returns. The model builds on findings in previous literature by including deal structure variables, company variables, industry variables, time variables, and post-acquisition announcement return data from 2000 to 2018. The analysis does not find a statistically significant relationship between cash plus debt/stock financing and cumulative abnormal returns. However, significant coefficients for buyer and target industry suggest that deal structure varies and ultimately effects cumulative abnormal returns within specific industries. Additionally, significant results for buyer profitability and time variables provide insight on how the financial market …
Pipe Discounts, Premia, And Performance, Jason S. Barbarosh
Pipe Discounts, Premia, And Performance, Jason S. Barbarosh
CMC Senior Theses
This paper explores private investments in public equity (PIPE) deals as a means of alternative firm financing. Poorly performing companies often look towards PIPEs to quickly raise capital when traditional means of financing are limited. This study provides an analysis on both the discount and premia that PIPEs are issued at, as well as the performance of firms after the deal announcement. Overall, this study finds that successful PIPEs from the investor’s perspective are issued at a discount of close to 17%, and unsuccessful PIPEs are issued at an average of a 15% premium. I find substantial cumulative abnormal returns …
Leveraged Buyouts: The Predictive Power Of Target Firm Characteristics, Yutao (James) Jiang
Leveraged Buyouts: The Predictive Power Of Target Firm Characteristics, Yutao (James) Jiang
CMC Senior Theses
This paper utilizes a hazard model to predict the probability of leveraged buyout transactions for public firms. Rather than testing specific hypotheses, this paper incorporates all plausible predictors identified in existing literature to better delineate the effects of different characteristics. Largely confirming past results, I find that LBO transactions are more likely to occur for companies with more stable cash flows, less market visibility, lower market valuation, lower ownership concentration and lower costs of financial distress. By including LBO transactions from 1980 to September 2018, I find preliminary evidence that since the financial crisis of 2008 – 2009, private equity …
Are Women Executives Hurting Firm Performance? An Examination Of Gender Diversity On Firm Risk, Performance, And Executive Compensation, Krystal Diane Sung
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 …
Is The Accruals Anomaly More Persistent In Firms With Weak Internal Controls?, Kanishk Kapur
Is The Accruals Anomaly More Persistent In Firms With Weak Internal Controls?, Kanishk Kapur
CMC Senior Theses
In 1996, Sloan identified the accruals anomaly, in which the negative relationship between the accruals component of current earnings and subsequent stock returns can be exploited to generate excess returns. One would expect the accruals anomaly to dissipate and ultimately disappear as investors take advantage of the now-public information. However, nearly two decades later, it persists as one of the most prominent and contentious anomalies; its magnitude of current and future excess returns still remain controversial. The main reason for its persistence is that extreme accrual firms possess characteristics that are unappealing to most investors. These characteristics, which include insufficient …
You Can Run But You Can’T Hide: The Advance Of Shareholder Activism, Kendall Greenberg
You Can Run But You Can’T Hide: The Advance Of Shareholder Activism, Kendall Greenberg
CMC Senior Theses
Shareholder activism has exploded in popularity since the turn of the century, due in large part to impressive relative returns generated by its major participants. The result has thus been a surge in assets invested in the category, to in excess of $170 billion today up from less than $3 billion in 2000 (Inglis 2015; Romito 2015). This influx of capital, in absolute dollars and pace of growth, has caused many to wonder whether activists truly create shareholder value and, if so, if the value generated is sustainable. Numerous studies of activist interventions prior to 2009 reveal significant stock price …
Nonperforming Loans: Asset Pricing And Determinants Of Profitability, Tyler Wheetley Amaya
Nonperforming Loans: Asset Pricing And Determinants Of Profitability, Tyler Wheetley Amaya
CMC Senior Theses
I formally analyze the role of nonperforming loan (NPL) characteristics in explaining NPL profit outcomes compared to the current pricing model for NPLs. I expected that factors included in the current NPL model would not be statistically significant in determining profit outcomes as those factors were considered in determining the purchase price of the asset. Surprisingly, I find that interest rates are statistically significant and negatively correlated with IRR. This is surprising because interest rates are considered in the current NPL pricing model. The results suggest that greater weight should be given to interest rates in determining the purchase price …
The Effect Of Mandatory Adoption Of Ifrs On Transparency For Investors, Crystal Anderson
The Effect Of Mandatory Adoption Of Ifrs On Transparency For Investors, Crystal Anderson
CMC Senior Theses
This paper examines the effect of the mandatory adoption of the International Financial Reporting Standards (IFRS) on transparency for investors by measuring the increase in earnings management during the post-adoption period of IFRS. One sign of earnings management is current year earnings being only slightly higher than the previous year’s earnings. An increase in earnings management means a decrease in accounting quality and a decrease of transparency for investors. By comparing firms that mandatorily adopted IFRS to similar benchmark firms in terms of strength of legal enforcement, book-to-market ratios, market values and net incomes, I am able to run empirical …
Stock Returns And Industrial Production: A Sectoral Analysis, Griffin Lazarus
Stock Returns And Industrial Production: A Sectoral Analysis, Griffin Lazarus
CMC Senior Theses
This paper analyzes the relationship between stock returns and future industrial production growth rates from 1926-1940. It replicates the work of Fama (1990) and Schwert (1990) with the intent to see if the relationship continues to hold using sector data. Furthermore, this paper focuses on the 1926-1940 sample period to explore how the relationship is affected by the stock market crash of 1929. It is expected that the relation will be weak for the industry sectors experiencing strong growth prior to the crash. The results indicate that the relationship between stock returns and future industrial production growth rates persists on …
The Risk-Return Characteristics And Diversification Benefits Of Fine Wine Investment, Tania Salomon
The Risk-Return Characteristics And Diversification Benefits Of Fine Wine Investment, Tania Salomon
CMC Senior Theses
This thesis evaluates the risk-return characteristics and diversification benefits of fine wine investment. It compares the historical performance of wine to that of equity, fixed income, real estate, and commodities. I calculate the correlation, volatility, and expected returns of these assets to examine whether adding wine to a portfolio increases its risk-adjusted return. I do this through the Markowitz portfolio optimization technique. The findings suggest that wine has a low correlation with traditional assets, providing diversification benefits. My results also show that adding wine to a portfolio increases its risk-adjusted return only when there is an allocation constraint of 0 …
Is Silence The Answer?, Gator Adams
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
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.
Short-Termism And Corporate Myopia: The Values Assigned By The Market To Short-Term And Long-Term Firms, Justin Alexander
Short-Termism And Corporate Myopia: The Values Assigned By The Market To Short-Term And Long-Term Firms, Justin Alexander
CMC Senior Theses
Short-termism and myopia on the part of corporate managers, analysts, and investors have created a business environment driven by the excessive focus on short-term results and the need to meet earnings targets at the expense of long-term value creation. These are accompanied by numerous consequences, including the potential for short-term-oriented firms, particularly in the U.S., to lag behind global long-term-oriented firms, as well as the potential for short-term mindsets in the corporate world to catalyze financial crises. In this paper, I demonstrate that the market generally assigns higher values to long-term firms rather than short-term ones. This is evidenced by …
Esports In Korea: A Study On League Of Legends Team Performances On The Share Price Of Owning Corporations, Filbert Goetomo
Esports In Korea: A Study On League Of Legends Team Performances On The Share Price Of Owning Corporations, Filbert Goetomo
CMC Senior Theses
This thesis utilises event studies to measure the impact of League of Legends Esports s teams on the share prices of their main sponsors and parent company, namely, the CJ Corporation, Korean Air, the Kt Corporation, Samsung Electronics Co Ltd and SK Telecom. Hypothetically, the success of a team, the acquisition of a major player or the beginning of a sponsorship would have a positive effect on the corporation reflected in an increase in the firm’s daily share price returns. Results showed that this was indeed true especially for a team’s success in large competitions such as the SBENU Summer …
The Benefits Of Having A Comprehensive Financial Plan For The Average Consumer, And The Necessary Components Comprised To Make An Effective And Efficient Plan, Nicholas M. Lund
The Benefits Of Having A Comprehensive Financial Plan For The Average Consumer, And The Necessary Components Comprised To Make An Effective And Efficient Plan, Nicholas M. Lund
CMC Senior Theses
Socioeconomic changes in American society over the past few decades, as well as an overwhelming amount of uncertainty and misconceptions, have resulted in a majority of Americans to fall short of their financial goals in the short-term, the mid-term, and the long-term. Without proper preparation and financial planning, it is likely that these Americans, and many more, will be unable to reach these goals as well as retire comfortably. Many Americans are overwhelmed with the immense amount of financial information, tools and resources, and as a consequence are unable to plan their finances efficiently and effectively. Americans need a better …
Do Internal Funds Play An Important Role In Financing Decisions For Constrained Firms?, Barun Roychowdhury
Do Internal Funds Play An Important Role In Financing Decisions For Constrained Firms?, Barun Roychowdhury
CMC Senior Theses
In this paper, I discuss the importance of internal funds for corporate investment among financially constrained firms. I use the paper ‘Financing Constraints and Corporate Investments’ by Fazzari, Hubbard and Petersen.as a base for my framework. I focus on a specific paper refuting their findings and their response in order to fully understand the benefits and costs of the framework. I then apply the original framework to a recent sample that covers the Great Recession to see the results of the initial paper are still valid today and if the recent recession and elongated recovery had an even more adverse …
The Deadweight Loss Of Equity-Based Compensation, Jessica Pence
The Deadweight Loss Of Equity-Based Compensation, Jessica Pence
CMC Senior Theses
In order to maximize shareholder value, firms attempt to align the incentives of the executives with those of the shareholders by giving them equity as a portion of their compensation package. The terms associated with this equity compensation forces the executives to hold undiversified portfolios, resulting in a sizeable deadweight loss. This paper uses the formula developed by Meulbroek (2001)1 to calculate the dollar value of this deadweight loss, in order to quantify the costs associated with equity-based compensation. We find that the 56 executives in our data set have a combined deadweight loss of $70 billion, and that on …
Mergers & Abenomics: The Determinants Of M&A In Japan's New Economy, Ethan S. Hallberg
Mergers & Abenomics: The Determinants Of M&A In Japan's New Economy, Ethan S. Hallberg
CMC Senior Theses
This paper investigates the influence of various macroeconomic variables on Japan’s merger and acquisition (M&A) activity, both in terms of total deal value and total number of deals. Looking at monthly data from June 1997 to December 2013, I use econometric time-series analysis to find that: First, total deal value per month is not well explained by our macroeconomic variables, but about half of the variation in number of deals per month can be explained by our dataset. Second, the most important determinant in the total number of deals per month during our period is the level of national debt, …
A Statistical Analysis Of Public Sector Corruption And Economic Growth, Kaycea Campbell
A Statistical Analysis Of Public Sector Corruption And Economic Growth, Kaycea Campbell
LUX: A Journal of Transdisciplinary Writing and Research from Claremont Graduate University
This study reports on the results of a statistical analysis in which the relationship between the independent variable of corruption, as measured by the World Bank, and the dependent variable of economic growth, as measured by percentage of GDP growth per year, was examined. The purpose of this study is to apply empirical methods to the debate on corruption and growth, in which neoclassical theory predicts that corruption retards growth but in which other models, such as Lewis growth and the Kuznets Curve, suggest that corruption may actually speed up growth in underdeveloped countries. The main finding of the study …
The Impact Of Prior Performance On Leadership Appointment In A Merger Of Equals, David A. Hirsch
The Impact Of Prior Performance On Leadership Appointment In A Merger Of Equals, David A. Hirsch
CMC Senior Theses
Leadership appointment during mergers has a logical and established precedent when there is a clear target and acquirer. However, in the extraordinary case of Merger Of Equals (MOEs) – where this is relative equal ownership, board representation, earnings contribution etc - this process is much less defined and can often have serious consequences on the merger, both in closing negotiations as well as post-merger performance. Intuition assumes the better performing CEO should and will be appointed. In practice, however, that is often not the case. It is arguable that performance can be defined through objective means (financially & operationally), yet …
Effects Of Early Round Venture Capital Syndication On Ipo Exits In Europe And The United States, Rosabella M. Magat
Effects Of Early Round Venture Capital Syndication On Ipo Exits In Europe And The United States, Rosabella M. Magat
CMC Senior Theses
While the importance of venture capital (VC) can be highlighted by policy goals outlined in the 'Lisbon agenda', the European VC industry remains nascent in comparison to the more sophisticated VC market in the US. Researchers have identified key determinants that foster VC success on a broad level, and have often identified syndication as an important factor of success. This paper seeks to understand the role of syndication on the VC-backed company's success. I take a novel departure from past research in this area in three ways 1) I measure performance from the perspective of the portfolio company, rather than …
Finding Profitability Of Technical Trading Rules In Emerging Market Exchange Traded Funds, Austin P. Hallett
Finding Profitability Of Technical Trading Rules In Emerging Market Exchange Traded Funds, Austin P. Hallett
CMC Senior Theses
This thesis further investigates the effectiveness of 15 variable moving average strategies that mimic the trading rules used in the study by Brock, Lakonishok, and LeBaron (1992). Instead of applying these strategies to developed markets, unique characteristics of emerging markets offer opportunity to investors that warrant further research. Before transaction costs, all 15 variable moving average strategies outperform the naïve benchmark strategy of buying and holding different emerging market ETF's over the volatile period of 858 trading days. However, the variable moving averages perform poorly in the "bubble" market cycle. In fact, sell signals become more unprofitable than buy signals …
Carbon Affect On European Oil And Steel Companies: An Empirical Analysis On The Second Phase Eu Ets, Joseph Anderson
Carbon Affect On European Oil And Steel Companies: An Empirical Analysis On The Second Phase Eu Ets, Joseph Anderson
CMC Senior Theses
This paper uses timer series panel data from Bloomberg to ascertain the affects that carbon prices and other factors have on European oil and steel companies. This paper finds inconclusive evidence of carbon price return correlation with oil and steel company equity return. However it does find a strong positive correlation between the market portfolio excess return, which is the return on the DJS 600 EUR index minus the German three-month T-bill rate, and oil and steel excess equity return.
Determinants Of Corporate Cash Holdings, Yun Lai (William) Li
Determinants Of Corporate Cash Holdings, Yun Lai (William) Li
CMC Senior Theses
The paper explores the driving forces behind corporate cash holdings by analyzing past literature and extending this research to the behavior of firms after the 2008 recession. I look at the cash to assets and net debt to assets ratios from October 1980 to October 2011 to obtain an understanding of the past and current state of cash holdings. A comprehensive literature review is done on agency costs and transactional motives to give the reader an overview of the costs and benefits of holding cash. This provides the foundation for the precautionary motives for companies today to keep cash as …
Analyzing The Effects Of Credit Rating Changes, The Recent Financial Crisis And Other Variables On Firms' Debt Levels, Sean M. Wasserman
Analyzing The Effects Of Credit Rating Changes, The Recent Financial Crisis And Other Variables On Firms' Debt Levels, Sean M. Wasserman
CMC Senior Theses
This paper utilizes a sample of firms over the years 2000–2009 to test the effects of credit rating changes, the financial crisis, interest rates, and other variables on short-term, long-term, and total debt levels on the balance sheet. Each independent variable was created using a one year lag in order to run the regressions. The values of these variables from the previous year are being analyzed to see if they can predict debt levels for the following year. The results of this paper suggest that levels of long-term and total debt are somewhat reliant on and are positively correlated with …
Analysis Of Acquirer Stock Performance In Mergers And Acquisitions In Alberta's Oil And Gas Industry, Harrison A. Zivot
Analysis Of Acquirer Stock Performance In Mergers And Acquisitions In Alberta's Oil And Gas Industry, Harrison A. Zivot
CMC Senior Theses
This paper develops a framework that analyzes how mergers and acquisitions in Alberta’s oil and gas industry affect stock prices. In this experiment, a multivariate regression is applied to several industry-specific variables to determine if they have impacts on the abnormal stock returns of acquirers. The results show that abnormal returns 5 days prior to the public announcement of the transaction are, in fact, driven by several industry-specific variables. However, the returns immediately after the M & A announcements are similar to previous research done in other industries. Acquirers’ gains 2 days after the announcement are essentially unaffected by the …