Corporate Finance Commons^™

Insider Trading And Corporate Spinoffs, Charlie Charoenwong, Kuan Yong David Ding, Jing Pan

Research Collection Lee Kong Chian School Of Business

This paper studies insider trading to examine undervaluation as a motive behind corporate spinoffs. We show an unmistakable increase (decrease) in the number of insider purchases (sales) and net purchases (sales) in the four quarters prior to a spinoff announcement. In addition, relative to a benchmark period, insider selling is significantly lower, and their net purchases significantly higher, in the three quarters prior to a spinoff announcement compared to other periods. We find that announcement period excess returns for abnormal net insider purchases are significantly higher than excess returns for abnormal net insider sales. Moreover, only firms with abnormal net …

Initiation Payments, Scott Hirst

Faculty Scholarship

Many of the central discussions in corporate governance, including those regarding proxy contests, shareholder proposals, and other activism or stewardship, can be understood as a single question: Is there under-initiation of corporate changes that investors would collectively prefer?

This Article sheds light on this question in three ways. First, the Article proposes a theory of investor initiation, which explains the hypothesis that there is under-initiation of collectively-preferred corporate change by investors. Even though investors collectively prefer that certain corporate changes take place, the costs to any individual investor from initiating such changes through high-cost proxy contests, or even low-cost shareholder …

Does Corporate Social Responsibility Disclosure Increase The Stock Price Crash Risk? Evidence From Indonesia, Raden Roro Widya Ningtyas Soeprajitno, Zephyra Violetta Setiawan, Ainun Na’Im

Jurnal Akuntansi dan Keuangan Indonesia

Indonesia fully supports efforts to disclose corporate social responsibility (CSR) to increase awareness of issues regarding the environment globally, as stated in the Sustainable Development Goals (SDGs). The connection between the disclosure of corporate social responsibility and the stock price crash risk is examined in this study. Furthermore, we analyse and check robustness and endogeneity issues to avoid variable bias selections. The study uses as its sample companies that are listed on the Indonesia Stock Exchange and follow the Global Reporting Initiative (GRI) for corporate social responsibility. It is found that companies with corporate social responsibility disclosures have a positive …

Relationship Between Customer Expectations And Financial Performance Of Food Industry Businesses In A Customer Satisfaction Model, Petr Suchanek, Maria Kralova

Economic and Business Review

Research on customer satisfaction in repeat purchases shows that the relationship between customer expectations and customer satisfaction can be inverse to what is commonly reported. This also has an impact on the financial performance of an enterprise, which is therefore directly influenced by customer expectations. The goal of this paper is to determine whether customer satisfaction affects customer expectations and whether these expectations have a direct impact on the financial performance of an enterprise. The variables representing factors of customer satisfaction, including customer expectations, are measured using a customer survey. Business financial performance (BFP) was measured using the ROA, ROE, …

Portfolio Optimization Using Value Focused Thinking, Tyler Martin

Theses and Dissertations

This thesis explores the application of Value Focused Thinking (VFT) and multi-objective portfolio optimization to create a well-aligned portfolio for an organization faced with over 50 alternatives and limited funding. A novel technique is proposed to develop an optimized portfolio based on VFT scores, utilizing heuristic approaches like evolutionary algorithms. The research outcomes include an optimized portfolio, the total value evaluation of alternatives, and a sensitivity analysis. The new approach outperforms the organization’s previous method, resulting in a portfolio that better addresses the organization’s core values and objectives, scoring 21.21% higher.

Essays On Tax Impacts On Corporate Finance, Corporate Governance And Regional Disparity, Mei Li

Dissertations, Theses, and Capstone Projects

This dissertation consists of three chapters that cover topics on tax impacts on corporate finance, regional disparity and corporate governance.

Chapter 1 - How Do Net Operating Loss Carryforwards Affect Tax Impact on Corporate Capital Structure? This paper examines the impact of net operating loss (NOL) carryforwards on the tax implications of corporate capital structure. Leveraging the Tax Cuts and Jobs Act of 2017 (TCJA), the largest tax reform in four decades, this paper investigates the effect of NOL carryforwards on firms' sensitivity to tax reforms. As NOL carryforwards have become increasingly significant since 2000, but not widely researched due …

Esg Ratings Rewriting Or Recalibration?, Chengshuang Zhang

Dissertations and Theses Collection (Open Access)

ESG ratings are the nexus of sustainable development. Are ongoing retroactive adjustments of ESG scores rewriting or recalibration? Using datasets from 20 random weeks of downloads of Refinitiv ESG universe between 7 October 2021 to 14 December 2022, we find that the positive link between ESG scores or E&S scores to firms’ stock returns existed between 2011 to 2017, disappeared between 2002 to 2011 and attenuated between 2017 to 2021. Using the formation of the International Sustainability Standard Board on 3^rd November 2021 as the external shock event, we further find that the retroactive ESG score adjustments are not …

Assessing Diversification Of S&P500 And Cdx Indexes, Jeffrey A. Palma

Doctoral Dissertations (DBA)

In this paper, I conduct a study of comovement between equity and corporate bonds using S&P500 and Investment Grade and High Yield CDX Indexes to evaluate the diversification benefits of holding these assets in portfolios. I assess comovement and diversification potential using DCC-GARCH and copulas. This approach allows for a review of equity and credit linkages through multiple lenses and evaluation of how these relationships have evolved over time. In general, I find only modest potential for diversification between equity and CDX markets and strong evidence of increased comovement over time.

Growing Up Under Mao And Deng: On The Ideological Determinants Of Corporate Policies, Hao Liang, Rong Wang, Haikun Zhu

Research Collection Lee Kong Chian School Of Business

Historically, economic activities have been organized around certain ideologies. We investigate the impact of politicians’ ideology on corporate policies by exploring a unique setting of ideological change—China from Mao to Deng around the 1978 economic reform—in a regression discontinuity framework. We find that the age discontinuity of politicians around 18 years old in 1978, who had already joined the Chinese Communist Party (CCP) or joined soon thereafter and later became municipal paramount leaders, has had a lasting effect on contemporary firm- and city-level policies. In particular, firms in cities with mayors that joined the CCP under the ideological regime of …

The Effect Of Risk Profile In Pandemi Outbreak To Banking Financial Performance Case Study In Indonesia, Fajar Abdullah

Journal Of Middle East and Islamic Studies

The risk profile that occurred within the scope of banking during the Covid 19 pandemic which was quantitatively reflected in the microeconomic ratios of the BOPO, NPF/NPL, FDR/LDR ratios, and macroeconomics in this case, inflation and the USD exchange rate, were the main factors in the decline in the soundness level bank which is reflected in the value of the bank's financial performance ratio, namely Return on Assets due to. The objects in this study are the general Islamic and conventional banking industry, with data observations including BOPO, NPF/NPL, FDR/LDR, inflation, and the USD exchange rate. By comparing the effect …

How Does Credit Risk Affect Cost Management Strategies? Evidence On The Initiation Of Credit Default Swap And Sticky Cost Behavior, Jing Dai, Nan Hu, Rong Huang, Yan Yan

Research Collection School Of Computing and Information Systems

In this paper, we examine the effect of credit defaults swaps (CDS) initiation on reference firms' cost management strategies. CDS contracts provide insurance protection for creditors, inducing a shift in bargaining power from borrowers to creditors and an excessive incidence of bankruptcy. Anticipating more intransigent creditors in debt renegotiations and higher bankruptcy risk, CDS firms are incentivized to mitigate risk through decreasing cost stickiness after CDS initiation, as cost stickiness lowers liquidity and triggers early covenant violations. We find that, on average, CDS initiation is associated with a decline in reference firms' cost stickiness. This association is more pronounced for …

Corporate Governance And The Audit Function In Jordan And The Uk: A Comparative Perspective, Bashar Malkawi

Global Business Law Review

Superior corporate governance forms the bedrock of a prosperous economy. An integral component of outstanding corporate governance is the role of transparent, accurate and freely available information with respect to a company’s books and records. Numerous stakeholders including current and potential investors, business partners, employees, regulators and the public, rely on the integrity of the financial reporting. The law on external auditors in Jordan has undergone significant improvement, yet substantial gaps exist between current law and best practices. The Article focuses on the role of the auditor in ensuring superior corporate governance. The goal of this Article is to assess …

But Is It Material? A Case Study Evaluating Climate Risk’S Place In Financial Disclosures, Matilda Lindberg

Student Theses and Dissertations

The year of 2022 highlighted the importance of understanding how Environment, Social, and Governance (hereafter, ESG) factors impact investors. By the end of 2021, 37.8 trillion USD had been invested in ESG funds, a number expected to grow to $53 trillion by the end of 2025. Despite this bullish projection, controversy has grown about the “materiality” of ESG factors, especially climate risks, as defined by the Securities and Exchange Commission (hereafter, SEC). On March 21, 2022, the SEC proposed rules to enhance the standardization of climate- related disclosures (hereafter The Proposal) to promote consistent, comparable, and reliable information for investors …

Interest Convergence And Neoliberalism: Effects On Entry-Level Staff Of Color Who Perform Diversity, Equity, And Inclusion In Higher Education, Jesse N. Avila

Master's Theses

Higher education was not originally built to benefit people of color. Diversity, equity, and inclusion (DEI) are many ways in which universities seek to change higher education. However, higher education has a staff retention problem and is at risk of losing more than half of its current workforce. Retention problems also impact entry-level staff of color who perform DEI in universities. Through a lens of interest convergence and neoliberalism, this qualitative study gathered the experiences of entry-level staff of color who perform DEI in student affairs, looked at how their experiences are shaped by the structures of the university, and …

Diverse Analyses Of Accounting: A Series Of Case Studies, Hannah Harris

Honors Theses

This thesis consists of a diverse variety of case studies surrounded accounting and accounting-related issues. The first five cases span a broad range of topics, such as 9/11 and COVID-19 and their effects on the accounting industry. The last five cases, which were completed as a team, provide an in-depth analysis of Goldman Sachs, mostly through the team’s study of their 2020 and 2021 financial statements. These cases provide an overview of the company and the team’s suggested improvements in each line of service—audit, tax, advisory, and risk advisory. Through these cases, I was provided a much deeper insight into …

Meme Corporate Governance, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee

Law & Economics Working Papers

Can retail investors revolutionize corporate governance and make public companies more responsive to social concerns? The U.S. stock market offered an unusual experiment to test the impact of retail investors in 2021, when there was a dramatic influx of retail investors into the shareholder base of companies such as GameStop and AMC. The meme surge phenomenon elicited a variety of reactions from scholars and practitioners. While some worried that affected companies’ share prices were becoming disjointed from their financial fundamentals, others predicted that retail shareholders will reduce the power of large institutional investors and democratize corporate governance. This Article presents …

Stock Splits And Corporate Peer Effects, Albert J. Saad

Theses and Dissertations

We find that a company’s decision to execute a stock split is affected by the number of stock splits carried out by its peers. Through the use of a broad peer group construction methodology, we also reveal the presence of asymmetric effects with regard to companies of different market capitalization size. In the periods of 1983–1996 and 1997–2009 we find that firms are more likely to split their stock if more of their peers have recently done so. However, in the period of 2010–2019 we see that the opposite is true. These results provide further evidence on social learning from …

2023 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital in today’s economic …

A Walk-Through Corruption On Wall Street, Allison Ciocan

Finance Undergraduate Honors Theses

Wall Street is viewed as the center of global finance. Although surrounded by a vast amount of popularity, Wall Street has had its fair share of unethical scandals. Despite numerous rules and regulations existing with the hopes of suppressing unethical behavior, multiple infamous individuals and companies have discovered ways around these rules which have led to detrimental effects on consumers, employees, companies, and the economy as a whole. Often, corruption can be traced back to one of three reasons. First, the individuals that are employed at big firms could lack morals and good character, which affects overall company culture. Second, …

How The Finance Industry Is Shaped By Technology – A Corporate Experience, Max Pabin

Finance Undergraduate Honors Theses

For this paper, I want to analyze how new technology affects the financial industry for individual clients. My internship at Fidelity Investments provided me with a back-end view of the technology used for clients, while my Chase experience has provided me with an in-depth view of how clients use technology daily. I believe that the financial services industry is being taken over by new technology. This has created a new experience for customers that has made it easier for them to bank, apply for credit, and invest their money. I find this subject to be very interesting as someone who …

Internship Experience At Accenture, Drew Keatts

Finance Undergraduate Honors Theses

This paper discusses my internship experience at Accenture and all of the things I learned from it. I worked out of Dallas, Texas, and it was a 10-week internship. Some of the things I discuss include financial management, financial analysis, profit margins, and professionalism. I cannot express how amazing this experience was and I am so grateful to have had the opportunity to work for Accenture. I hope you enjoy my experience and the key takeaways I had from it.

Multinational Corporations Use Of Operational And Financial Hedging For Foreign Exchange Risk – Walmart Global Treasury, Zachary Hassan

Finance Undergraduate Honors Theses

This paper examines how multinational corporations can leverage different types of hedging tools to avoid foreign exchange risk. We look at two different hedging methods, financial and operational hedging. Weighing the costs benefit relationship of both of these methods we come to a resolution that a balance of both of these methods is most optimal for multinational corporations.

The Opportunities And Challenges Of Automation: Insights From An Internship Experience At Ultrasource Llc, Olivia Madden

Finance Undergraduate Honors Theses

This thesis provides insight into Olivia Madden's time as an intern at UltraSource LLC. UltraSource LLC is a Kansas City company that produces meat manufacturing equipment and operational supplies. Olivia worked as a finance intern, where she was tasked with automating processes for the accounts receivable and payable teams and also did ad hoc projects for the finance department as a whole. These insights are recorded through weekly journal entries describing what was done and what was learned every week.

These insights are translated into research on the opportunities and challenges of automation, and the impact automation has on worker …

Financial Advising Experience, Joshua Wittenauer

Finance Undergraduate Honors Theses

Building wealth can be easier with the help of a financial advisor. Wealth consists of assets and savings, and while there are many ways to save, there are some basic steps to get started:

1) Earn enough money to live and have some left over for saving. 2) Control your spending so you can save. 3) Invest your money in different assets – “Don’t put all your eggs in one basket.”

Reducing Maintenance Supervisor Overtime In Aviation, Michael J. Hulke

Finance Undergraduate Honors Theses

Covid-19 caused chaos in the aviation industry and left companies understaffed when travel demand picked up in the summer of 2022. This caused companies like American Airlines to call in overtime for many different airline functions. This paper outlines the problem, process, and result, of a project to reduce line maintenance supervisor overtime at American Airlines.

Project Foresight Annual Report, 2021-2022, Paul J. Speaker

Faculty & Staff Scholarship

Project FORESIGHT is a business-guided self-evaluation of forensic science laboratories across the globe. The participating laboratories represent local, regional, state, and national agencies. Economics, accounting, finance, and forensic faculty provide assistance, guidance, and analysis. Laboratories participating in Project FORESIGHT have developed standardized definitions for metrics to evaluate work processes, linking financial information to work tasks, and functions. Laboratory managers can then assess resource allocations, efficiencies, and value of services—the mission of Project FORESIGHT is to measure, preserve what works, and change what does not.

The benchmark data for the 2021-2022 performance period includes laboratory submissions for a variety of fiscal …

Fixed Assets Accounting: How It Can Impact Employees, Auditors & Shareholders, Zach Markey

Accounting Undergraduate Honors Theses

In this thesis, I demonstrate how the proper, or improper, accounting of fixed assets can distinctly impact employees, auditors, and shareholders of publicly traded companies. As a foundation for this thesis, I give an overview of fixed assets accounting by explaining its magnitude on the balance sheet and income statement in addition to the differences between financial and tax accounting for fixed assets. Next, I focus on three areas relating to fixed assets accounting that I find the most compelling for this thesis: capital expenditures, auditing and fraud. Each of these subtopics will share studies, procedures, and stories on how …

Does Disclosure Of Advertising Spending Help Investors And Analysts?, Sungkyun Moon, Kapil R. Tuli, Anirban Mukherjee

Research Collection Lee Kong Chian School Of Business

Publicly listed firms have the discretion to disclose (or not) advertising spending in their annual (10-K) reports. The disclosure of advertising spending can provide valuable information because advertising is a leading indicator of future performance. However, estimates of advertising spending are available from data providers, arguably mitigating the need for its formal disclosure. This study argues that firms’ disclosure of advertising spending provides more complete and public information and therefore lowers investor uncertainty about future firm performance (idiosyncratic risk). Empirical analyses show this effect is largely driven by the negative effect of disclosure of advertising spending on analyst uncertainty. Consistent …

Cryptocurrency And The Stock Market, Can We Trust Them?, Natalie Snead

Honors College Theses

Cryptocurrency is a relatively new investment method and currency. Daily, the news media reports about its instability and the perceptions surrounding it. To provide a measure of its perceived stability and trustworthiness, I have conducted a survey of undergraduate and graduate students in various accounting courses. The questions asked in this survey are used to gauge the overall perceptions and opinions of students concerning the stock market and cryptocurrency. The survey uses a five point opinion ranking system, ranging in opinions from 1-5 (strongly disagree, disagree, neutral, agree, and strongly agree). This survey is also used in conjunction with questions …

The Meme Stock Frenzy: Origins And Implications, Dhruv Aggarwal, Albert H. Choi, Yoon-Ho Alex Lee

Law & Economics Working Papers

In 2021, several publicly traded companies, such as GameStop and AMC, became “meme stocks,” experiencing a sharp rise in their stock prices through a dramatic influx of retail investors into their shareholder base. Analyses of the meme stock surge and its implications for corporate governance have focused on the idiosyncratic creation of online communities around particular stocks during the COVID-19 pandemic. In this Article, we argue that the emergence of meme stocks is part of longer-running digital transformations in trading, investing, and governance. On the trading front, the sudden abolition of commissions by major online brokerages in 2019 reduced entry …