Finance and Financial Management Commons^™

An Examination Of The Stock Market's Effect On Economic Inequality, Nicholas Golina

Williams Honors College, Honors Research Projects

The economic literature on economic inequality has shown that it can negatively impact aggregate demand because it indicates a higher concentration of wealth in the hands of the top 10% as opposed to the poor and middle class, who are more likely to consume. The literature has identified many factors that can lead to increasing inequality. The stock market could be one of those factors since it can either create an upward redistributive effect towards the top 10% or redistributive effect towards the middle class. This paper tested the effect of the stock market on inequality. This study contributes to …

Essays On Financial Incentives, Tyson D. Van Alfen

Theses and Dissertations--Finance and Quantitative Methods

In my first chapter, I use a novel dataset of customer reviews from Amazon.com to study the impact of managerial myopia on product market reputation. Using exogenous variation due to the timing of CEO equity vesting events, I show that short-term incentive shocks predict declines in reputation. A changing product market lineup and a deterioration of existing products are two mechanisms through which reputation is affected. The effect is larger when the CEO has other short-term concerns and when the firm has a low reputation in the product market. However, higher advertising expenses mitigate the negative reputational effect among consumers. …

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 …

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 …

How Ceo Wealth Affects The Riskiness Of A Firm, Sonik Mandal, Charlie Swartz, Sanjib Guha, Carl B. Mcgowan Jr.

Finance Faculty Publications

The objective of this paper is to analyze the relationship between the ownership level of managers and the risk averse behavior of the firm. We measure the ownership level of the managers by the ratio of their ownership of the company relative to their total wealth for a sample of 69 individuals from the Forbes 400 list of the wealthiest individuals in the world for the period from 2001-11 using an unbalanced panel data analysis. The dependent variable is the Altman Z-score of each firm and we further test these relationships using financial leverage. The independent variables are delta and …

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".

Failed Anti-Activist Legislation: The Curious Case Of The Brokaw Act, Alon Brav, J.B. Heaton, Jonathan Zandberg

The Journal of Business, Entrepreneurship & the Law

The Brokaw Act was proposed legislation aimed at “financial abuses being carried out by activist hedge funds who promote short-term gains at the expense of long-term growth . . . .” Sponsoring Senators named it after a small town in Wisconsin that, according to the Act’s sponsors, was decimated by the actions of a hedge fund activist in shutting down the local paper mill with a loss of hundreds of jobs. The Brokaw Act represented the first attempt at federal legislation aimed at restricting hedge fund activism. Since then, new and similar bipartisan proposals have appeared as have threats of …

Innovation, Ownership And Ipo Underpricing, Roman Bohdan

LSU New Orleans Theses and Dissertations

This dissertation consists of two empirical essays. The first chapter titled: “Hedge Fund Activism and Dual Ownership of U.S. Multinationals”. Harford, Wang & Zhang (2017) conclude that holding high cash balances abroad to avoid US taxes causes internal capital markets and investments distortions. We posit that hedge funds target MNCs with more severe internal capital and agency problems. We demonstrate that upon acquiring dual ownership in these firms, hedge funds reduce internal capital problems and improve investment, especially innovation, efficiencies. To further reduce agency costs of foreign cash holdings, hedge funds engage dual firms in focused acquisitions. These improvements are …

Ford Motor Company's Financial Analysis, Azbayar Enkhbayar

Dissertations, Theses, and Projects

The goals and objectives of this financial report are to value the common stock of Ford Motor Company and provide a recommendation to buy, sell, or hold. Quantitative and qualitative data about Ford Motor Company, its competitors, and the markets it operates in were analyzed for this report. A discounted cash flow model was used to forecast future free cash flows. The model estimated Ford’s common stock to be fairly valued at USD 9.81 per share. This is slightly higher than the current price of $9.41 and a hold recommendation is made.

Discussion Of The Potential Of Blockchain In Finance, Andrew Kincaid

Finance Undergraduate Honors Theses

This paper analyzes the current application of blockchain technology to demonstrate its disruptive potential has across different financial industries. This paper analyzes the potential difficulties that blockchain technology must face and overcome to realize this potential. Blockchain is currently in a stage in its development where there has not been enough research done to provide empirical answers to its benefits or added costs; however, there have been many early innovations that have helped propel blockchain forward. Blockchain in corporate finance is primarily used in corporate governance where blockchain has the ability to increase transparency and reduce possible corruption. Blockchain has …

Impact Of Airplane Crashes On Firm's Credit Risk Under The Creditgrades Model, Alexandros Bougias

Undergraduate Economic Review

The paper examines the impact of airplane accidents with 40 or more fatalities, on airline's firm credit risk. The sample contains 20 airplane crashes for the period 2000-2017. The analysis proposes the CreditGrades model introduced by Finger et al. (2002) , which is an extension of the first passage time model of Black and Cox (1976). The study concludes that airplane accidents lead to a statistically significant increase in airline's Probability of Default. The results are both significant and robust under the t-Test and the non-parametric Wilcoxon Signed-rank test.

2018 Q4 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Pepperdine Graziadio Business School, in partnership with Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

Ceo Compensation After Harvester Director Departure, Victor Jarosiewicz

Finance Department Faculty Journal Articles

I examine the effects of board member departures on CEO compensation using a sample of high growth IPO firms. Agency theory predicts that a reduction in board monitoring by harvester directors (VCs and private equity investors) will result in an increase in CEO pay. I find that departures of the last harvester director on a board result in an immediate and lasting increase in CEO equity compensation, while prior departures by other harvester directors are not significant. The results hold even when controlling for other governance mechanisms such as CEO wealth, CEO turnover, board composition, and external blockholder ownership.

Gender Performativity And Hegemonic Masculinity In Investment Management, Corina Sheerin, Prof. Margaret Linehan

Dept of Applied Social Science

Purpose

Through an examination of the everyday organisational and social practices, this paper aims to consider gender performativity and hegemonic masculinity within front office investment management. At the core of this research is the need to understand the interactions between gender, power and patriarchy.

Design/methodology/approach

An interpretivist philosophical stance underpins the study. A theory-building approach using 19 semi-structured interviews with investment management employees based in Ireland was undertaken.

Findings

The findings highlight a sector in which gender is performed in line with sectoral expectations, which place men in positions of dominance with hegemonic masculinity inherent. The organisational structures and daily …

New Factors Wanted: Evidence From A Simple Specification Test, Ai He, Dashan Huang, Guofu Zhou

Research Collection Lee Kong Chian School Of Business

In this paper, we examine the pricing errors (PEs) of three kinds of factor models: a) six well known ones– the CAPM, the Fama-French three-factor model, the Carhart four-factor model, the Fama-French five-factor model, the Hou-Xue-Zhang Q-factor model, and the Stambaugh-Yuan mispricing-factor model; b) principal component factors of sixty-two anomalies; c) extracted statistical factors. We find that there is a systematic PE reversal pattern. A spread portfolio that buys stocks in the bottom PE decile and sells stocks in the top PE decile earns significant abnormal returns across all the models, implying that none of them is adequate in explaining …

Stock Buyback Announcements: An Examination Of Abnormal Returns In Stock Price & Credit Default Swaps For S&P100 Companies, Alan L. Delfavero

Doctoral Dissertations (DBA)

This event study examines the short-run effect of stock buyback announcements on stock price and credit default swaps (CDS) exclusively for mega capitalization S&P 100 companies. The research sample consists of 53 S&P 100 companies and includes 133 buyback announcement events occurring between September 2011 and May 2018. The study utilizes the market model to estimate expected returns and to compute abnormal returns (AR) for equity and abnormal change (AC) in CDS. Based on an initial analysis, it’s determined that there is a statistically significant AR and cumulative abnormal return (CAR) for stock price, and a significant AC in CDS, …

Reflective Practice Series: Selected Instructional Models Using Synchronous Video Conferencing Software, Martin W. Sivula

MBA Faculty Conference Papers & Journal Articles

With the vast array of resources available to instructors, one would think that instruction and teaching would yield success for all learners. Now, well into the 21^st century has much changed in the classroom? Certainly, movable desks and chairs, advanced audio and visual equipment, and a plethora of all types of technologies which might be able to enhance training and education. Over the last several decades research on individualized instruction, cognitive science, educational psychology, and multimedia instruction (to name a few) have permeated the literature on instruction. With all the research and the vast array of studies on improving …

Leveling The Playing Field Between Large And Small Institutions: Evidence From The Sec’S Xbrl Mandate, Nilabhra Bhattacharya, Young Jun Cho, Jae B. Kim

Research Collection School Of Accountancy

We investigate how XBRL adoption affects smaller institutions’ access to financial statement information relative to their larger counterparts. We examine three aspects of trading responsiveness: abnormal trading volume, response speed to 10-K information, and decision to trade immediately following the 10-K filing. With regard to all three aspects of trading responsiveness, we find that small institutions’ responsiveness to 10-K news increases significantly more relative to the change experienced by large institutions from the pre- to post-XBRL periods. We further document that small institutions’ stock picking skills in the 10-K filing period increase more compared to those of large institutions following …

Warrants And Their Underlying Stocks: Microstructure Evidence From An Emerging Market, Charlie Charoenwong, David K. Ding, Nuttawat Visaltanachoti

Research Collection Lee Kong Chian School Of Business

The Stock Exchange of Thailand provides an ideal platform for comparing the trading characteristics of warrants and their underlying stocks since both of them trade in the same market under identical trading rules. If their patterns diverge significantly, it may be possible for an astute trader to devise profitable arbitrage strategies during the life of the warrants. We find that both their patterns are downward-sloping for spreads, U-shaped for flow toxicity, volatility, depth concentration, and trading volume; and upward-sloping for depth and market order flow ratio. This implies that trading under identical market structures leads to similar trading characteristics. We …

Assessing The Value Of Ventures: Crowd Investors Vs. Sophisticated Investors, Marco Bade

The Journal of Entrepreneurial Finance

Recent regulatory approaches in crowdfunding democratize capital markets. Adverse wealth effects may arise because of information asymmetry. Firoozi et al. (2017) argue that crowdfunding has wealth-reducing effects on crowd investors because they systematically assign less value to good ventures, and more to bad ventures. This paper aims to take a more differentiated perspective by incorporating two dimensions of uncertainty determining ventures’ value. It further takes into account that different investor types learn different information. This yields new findings concerning the assessment of venture value by crowd investors and sophisticated investors. Crowd investors’ may be able to better assess venture value, …

2018 Q3 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Pepperdine Graziadio Business School, in partnership with Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

Essays In Leveraged Capital Markets, Kenneth D. Ford

Graduate Theses and Dissertations

The debt capital markets for leveraged borrowers are ripe with information asymmetry, lender specialization, and borrower segmentation. In this dissertation, I explore how these factors manifest themselves and the economic consequences thereof. Essay 1 shows that adverse selection and moral hazard concerns are inherent in underwriting syndicates that differ in size and number of lead underwriters. Using a nested double selection probit model of syndicate choice, I examine the matching of issuers and underwriters and find that matches of issuer quality and underwriter reputation are positive assortative. Further, switching regressions show that yield spreads reflect uncertainty about the intrinsic values …

Choosing The Precision Of Performance Metrics, Alan D. Crane, Andrew Koch, Chi Shen Wei

Research Collection Lee Kong Chian School Of Business

There is a standard trade-off in contracts between the provision of incentives and insurance. We hypothesize that this trade-off influences the precision with which firm performance is measured. We find that firm outcomes are measured less precisely when chance plays a large role in these outcomes. Further, this precision is determined through the choice of shares outstanding. This has several novel implications. Nominal stock prices can remain constant over time, and firms with unpredictable cash flows should have more shares and lower stock price levels, all else equal. We find evidence consistent with these implications.

The Impact We Can Make Through Investment: Securing Financial Freedom By Serving Others, Miles A. Flett

Honors Projects

Wage disparity is a major political issue in the United States, but it has far more to do with the health of the economy as a whole. Statistically speaking, it is very difficult for women to participate equally in an economy where they are systematically marginalized. This hurts businesses, it hurts global markets and it damages overall GDP. Statistical data drawn primarily from the Bureau of Labor Statistics underline the differences that women face from various standpoints. Race is a primary influencer, but across the board all women make significantly less than men of the same background for the same …

The Competitive Landscape Of High-Frequency Trading Firms, Ekkehart Boehmer, Dan Li, Gideon Saar

Research Collection Lee Kong Chian School Of Business

We examine product differentiation in the high-frequency trading (HFT) industry, where the “products” are secretive proprietary trading strategies. We demonstrate how principal component analysis can be used to detect underlying strategies that are common to multiple HFT firms, and show that there are three product categories with distinct attributes. We study how HFT competition in each product category impacts the market environment, presenting evidence that indicates how it influences the short-horizon volatility of stocks as well as the viability of trading venues.

The Wall Street Gap: A Theoretical Analysis Of Company Valuation Discrepancy, Peter Twomey

Undergraduate Economic Review

Examination of prior research suggests that affiliated sell-side analysts are subject to conflicts of interest that cause them to issue optimistically biased stock recommendations for investment banking clients. Using a sample of public technology companies, I find that analysts have a theoretical discrepancy of up to 26% when valuing companies using a discounted cash flow model, and a 19-22% theoretical discrepancy when using comparable company analysis. I showcase how conventional valuation methodologies can allow sell-side analysts significant leeway that can be used to further unethical agendas and draw conclusions around the usefulness of regulatory intervention in the financial services industry.

The Impact Of Governance Mechanism On Performance And Survival Of Entrepreneurial Firms, Noura S. Metawa

LSU New Orleans Theses and Dissertations

The dissertation consists of two essays.

The first essay studies governance structures and their effectiveness for start-up companies and their survival. We utilize data from the Kauffman Survey, which tracks a sample of firms from their inceptions through their first eight years of existence. We hypothesize and find evidence that a startup's governance system affects its survivability as well as its performance. We show that controlling for the firm size and the industry, cross-sectional variations in the performance of the start-up firms can be explained by governance variables; the presence of one or more independent board member on the board, …

2018 Q2 Private Capital Access Index Report, Craig R. Everett

Pepperdine Private Capital Access Report

The Pepperdine Private Capital Access Index (PCA) is a quarterly indicator produced by the Pepperdine Graziadio Business School, in partnership with Dun & Bradstreet. The index is designed to measure the demand for, activity, and health of the private capital markets. The purpose of the PCA Index is to gauge the demand of small and medium sized businesses for financing needs, the level of accessibility of private capital, and the transparency and efficiency of private financing markets.

Avis Budget Group: A Financial Analysis, Tralonie Perkins

Dissertations, Theses, and Projects

This paper presents a financial analysis behind Avis Budget Group, Inc. (CAR), a leading global provider of vehicle rental and car sharing services, operating three of the most recognized brands in the industry: Avis, Budget and Zipcar. Utilizing both qualitative and quantitative analysis, this report encompasses comprehensive data regarding the industry in which CAR competes, the company’s recent financial results, and forecasts of its future growth with five-year pro forma financial statements used to build a valuation model.

High Returns And Low Volatility: The Case For Mid-Cap Stocks, Ryan Lynch

Undergraduate Honors Theses

This study examines excess risk-adjusted returns generated by mid-cap firms with an average market equity between $2.4 billion and $5.5 billion in 2017. Researchers have heavily studied the small-firm effect since its identification in the early 1980s, leading investors to overweight small-cap securities. Additional investments in the small-cap segment caused the small-cap anomaly to weaken. This study finds that excess returns of small-cap firms compared to mid-cap firms are not statistically significant in the periods 1946 – 2017 and 1982 -2017. However, mid-cap firms generate significantly higher 3-year average returns relative to small and large-cap firms after the initial identification …