Finance and Financial Management Commons^™

Triple Crown And The Stock Market, Steven D. Dolvin

All Chapters

The "Super Bowl Indicator" is widely known, as the winner of the Super Bowl has been correlated to overall stock market performance. While this does not imply causation, is does make for an interesting discussion of market efficiency. A similar item is the performance of the stock market in years when a horse wins the Triple Crown--the results are not good. So, many people may be watching how California Chrome does in the upcoming Belmont Stakes. See article here, WSJ.

Market Frictions And The Efficiency Of Capital Allocation, William J. Hippler Iii

LSU New Orleans Theses and Dissertations

The following dissertation contains two unique empirical studies that contribute to the overall literature in the field of Financial Economics in the areas of mutual fund investing and financial intermediation and regulation. The first Chapter, entitled “The Impact of Macroeconomic Stress on the U.S. Financial Sector”, examines the relative impact of macroeconomic stress on financial and non-financial U.S. firms. Empirical results show that macroeconomic shocks appear to have a larger impact on financial firms. Additionally, the sensitivity of financial firms to macroeconomic events can be traced to the influence of non-depository institutions, or “shadow banks”, like finance and investment companies, …

Two Essays In Finance: Analyzing The Value Of Cash To U.S. And Non-U.S. Firms And Institutional Trading In Stock Index Futures, Li Xu

LSU New Orleans Theses and Dissertations

In the first chapter, we analyze the role of market development, risk premium, and transparency as factors influencing the value of cash in firms listed as American Depository Receipts. Based on the method by Pinkowitz and Williamson (2002), our primary results are as follows. The market value of cash is greater on average for ADR firms than for U.S. firms, and within the ADR sample the value of cash is greater for firms based in less developed countries after 2007 financial crisis but not before. Together, the results suggest that the market development is especially important during more volatile periods. …

Fees Matter, Steven D. Dolvin

All Chapters

A 1% annual fee doesn't sound like much, but when compounded, fees paid to advisors and managers can have a significant impact on an investor's ending portfolio value. For example, consider two investors who each invest $200,000 and earn 8%/year (before fees) for 30 years. The first investor uses an ETF that charges 0.04%/year in fees, while the second investor uses a mutual fund charging 1.25%/year. The first investor ends with roughly $2 million, while the second nets about $1.4 million. The difference is purely driven by fees -- this is a huge cost. (See article here, Wall Street …

How Do Bond Specific, Firm Specific And Macroeconomic Factors Influence Corporate Credit Spreads?, Michael Mayberger

Honors Projects

The recession of 2008-2009 showcased the critical role that the corporate bond market plays in providing firms with access to capital, a role reflected by a 300% increase in corporate bonds issued from $600 billion issued in 2007 to $1.8 trillion issued in 2012. In this study, I investigate the bond specific, firm specific and macroeconomic factors that explain the change in corporate credit spreads within the Consumer Staples industry between 2005 and 2013. The results show that the firm specific variables, debt and total assets, have the largest impact on the corporate credit spreads. However, there is a weaker …

Impact Of The Ceo Effect On Premiums In Mergers And Acquisitions, Caitlin Duncan

Honors Scholar Theses

The rationale behind a merger or acquisition is to improve the financial performance of the acquiring firm. Many factors go into the the valuation of a company and consequently the premium paid.

This paper will examine what impact upper management, specifically the CEO, has on the valuation of a company during mergers and acquisitions. This impact, called the CEO effect, will be central to the paper. Different valuation methods of this effect, as well as firm valuations, will be analyzed and considered. Specifically, how the CEO effect affects the premium paid by the acquiring firm will be the main focus. …

Buy? Sell? Or Hold?, Singapore Management University

Perspectives@SMU

Equity research is more valuable when times are bad

A Comparison Of The Financial Characteristics Of U.S. And German Manufacturing Firms, Daniel Folkinshteyn, Ozge Uygur, Gulser Meric

Rohrer College of Business Departmental Research

The U.S. and Germany rank #1 and #3, respectively, in the world, in terms of the total amount of international trade. U.S. and German firms compete with one another for a larger market share in other countries and in each other’s local markets. And yet, there are no published studies that compare the financial management practices of U.S. and German firms. In this paper, we make a contribution to the finance literature on this subject by comparing the financial characteristics of U.S. and German manufacturing firms. Our findings provide valuable insights for corporate financial managers and for investors who invest …

Do Market Anomalies Add Up?, Larissa C. Steinfeldt

Undergraduate Honors Theses

This is a study about abnormal characteristics in the stock market and how to successfully use them in personal portfolios. Market anomalies are unexpected excess returns that occur in relation to certain variables. Five commonly known market anomalies (market cap, price-earnings ratio, price-book value, momentum, volatility) are tested to give evidence for their presence. Existing variables are then combined in different portfolios in order to observe whether they generate greater excess returns combined rather than individually. This study will also reveal whether long-term holding is possible and how the anomalies react in bullish and bearish markets.

An Exercise In Bayesian Econometric Analysis Probit And Linear Probability Models, Brooke Jeneane Siler

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

The aim of this paper is to carry out a Bayesian econometric application. Using a dataset obtained from Wooldridge's Introductory Econometrics textbook, each step in conducting a Bayesian econometric analysis is performed and explained. For illus- trative and comparative purposes, two limited dependent variable regression forms were used: a linear probability model and a probit model. This paper covers the ben- ets of Bayesian methodology, including selection of distributions for the prior and the likelihood. Additionally, a series of diagnostic checks are done after the models are computed.

Diversifying A Portfolio Using Vix Options, Alec J. Amos

Finance Undergraduate Honors Theses

Ubiquitous investment strategies often include similar forms of diversification – holding stocks of differing industries, exposed to different business cycles, in order to reduce idiosyncratic risk. During the recession, these strategies failed as the markets fell substantially leaving investors exposed to great amounts of systematic, or “un-diversifiable” risk. Throughout this paper, I will examine the effects of diversifying a portfolio using call options on the CBOE Volatility Index (VIX) to try and alleviate systematic risk from a portfolio, allowing an investor to capitalize from short-term market fluctuations arising from financial, economic, and geopolitical risks.

A Relook At The Turn Of The Month Anomaly, Ryan Joseph Marchewka

Finance Undergraduate Honors Theses

This paper seeks to research the turn-of-the-month anomaly in the stock market. Prior studies have covered the anomaly’s effect from 1962-2004. This study continues on the work of past research while also testing to find a shift backwards to the end of the month due to market timers anticipation of the anomaly. Empirical analysis is conducted using CRSP data of value and equal weighted market indexes along with historical returns of the S&P 500 from the Wharton Data Research Institute. Findings show that there is continued evidence of the anomaly in recent years (2005-2014), and there is subtle evidence of …

Improving And Monitoring The Microlending Program In Belize, Mark Mccallum

Finance Undergraduate Honors Theses

This paper assesses the Microlending and Cayes to Business Programs within the Community Development in Belize Study Abroad Program at the University of Arkansas. The Microlending Program makes low-interest loans to small businesses primarily in Dangriga, Belize. Recently, the lending activity has expanded and concerns about repayment have increased. This paper proposes various improvements to maintain consistent loan repayment and healthy expansion of the Microlending Program. The most important ideas are to enhance social pressure on the borrowers and improve monitoring in-country after the loans have been disbursed. Cayes to Business, an educational program required for microloan applicants, is also …

The Current State Of Financial Literacy Of University Of Arkansas Students: 2014, Stacia Tianne Baughman

Finance Undergraduate Honors Theses

In light of recent events in the global economy, more attention has been given to the subject of personal financial management. With a sluggish economy, rising student debt levels, increasing attention and concern, universities are considering if something should be done in an attempt to make students more financially literate. In order to better understand the current level of financial literacy, a survey of students at the University of Arkansas was conducted and compared to the same national survey conducted by Jump$tart. University of Arkansas students were found to have slightly lower levels of financial literacy than their national counterparts …

The Financial Crisis Was Good For Something: Improved Nonprofit Efficiency, Caitlin Paige Britt

Finance Undergraduate Honors Theses

This study explores the need for financial performance measures in the nonprofit sector and the impact the 2008-2009 Financial Crisis had upon nonprofits’ efficiency. This analysis tests the hypothesis that the financial crisis actually improved nonprofit efficiency by forcing nonprofits to eliminate unnecessary costs, continue to produce their services, thus improving operational efficiency, despite decreased donor contributions and increased user need. Entries reported on nonprofits’ IRS 990 forms from 2003-2010 determined whether nonprofit efficiency was significantly different after the crisis. The efficiencies used to measure the impact of the Financial Crisis include: Program Expense Efficiency, Administrative Expense Efficiency, Fundraising Expense …

Are Un-Registered Hedge Funds More Likely To Misreport Returns?, Jorge Perez

Financial Analyst

This paper seeks to introduce an empirical finance analysis of the relationship between misreporting behavior in hedge funds at the return level and registration as an investment adviser with the SEC, a law that has been enacted, overturned and re-enacted in the last decade. We hypothesize that hedge funds that are not registered with the SEC will be more likely to misreport returns so that a fund will seem as if it is generating positive returns more often than not. We test our hypothesis on the return level by conducting several statistical tests and regression models on hedge fund monthly …

Structural Changes Associated With Temporal Dispersion In Software Development Teams: Evidence From Open Source Software Project Teams, Jorge A. Colazo

School of Business Faculty Research

Collaboration structure and temporal dispersion (TD) in teams have been studied independently so far. This study uses Media Synchronicity Theory (MST) to derive hypotheses positing that the structure of collaboration networks in distributed teams changes when those teams are more temporally dispersed. The empirical test of hypotheses using ordinary least squares with archival data from 230 open source software (OSS) projects shows that the collaboration structure networks of those OSS teams that are more temporally dispersed are sparser and more centralised, and these associations are stronger in those teams exhibiting higher relative performance. Theoretical and practical consequences are discussed.

Influence Of National Culture On Accounting Conservatism And Risk-Taking In The Banking Industry, Kanagaretn Kiridaran, Chee Yeow Lim, Gerald J. Lobo

Research Collection School Of Accountancy

Using an international sample of banks and country-level indices for individualism and uncertainty avoidance as proxies for national culture, we study how differences in culture across countries affect accounting conservatism and bank risk-taking. Consistent with expectations, our cross-country analysis indicates that individualism is negatively (positively) related to conservatism (risk-taking) and uncertainty avoidance is positively (negatively) related to conservatism (risk-taking). We also find that cultures that encourage higher risk-taking experienced more bank failures and bank troubles during the recent financial crisis.

Bayesian Inference: Probit And Linear Probability Models, Nate Rex Reasch

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

The following paper analyzes the benets of Bayes' theorem in applied econo- metrics. This is accomplished by demonstrating each step in conducting Bayesian inference. This includes the prior selection, the likelihood function, posterior simula- tion, and model diagnostics. To provide a concrete example I replicate, by Bayesian inference, the main model of Blau, Brough, and Thomas.(2013) This model is found in their research paper titled, Corporate lobbying, Political Connections, and the Bailout of Banks. The analysis focuses on two dierent forms of limited dependent variable regressions, the probit and linear probability model. The benets of Bayesian econo- metrics were extensive …

Lattice Methods For The Valuation Of Options With Regime Switching, Atul Sancheti

UNLV Theses, Dissertations, Professional Papers, and Capstones

In this thesis, we have developed two numerical methods for evaluating option prices under the regime switching model of stock price processes: the Finite Difference lattice method and the Monte Carlo lattice method.

The Finite Difference lattice method is based on the explicit finite difference scheme for parabolic problems. The Monte Carlo lattice method is based on the simulation of the Markov chain. The advantage of these methods is their flexibility to compute the option prices for any given stock price at any given time. Numerical examples are presented to examine these methods. It has been shown that the proposed …

Improving Financial And Personnel Management At Petsfirst! Wellness Center, Andrew Arveseth

Undergraduate Honors Capstone Projects

A part of my coursework in the Jon M. Huntsman School of Business, I was able to participate in a management internship at PetsFirst! Wellness Center. This internship provided me with the opportunity to really evaluate and understand multiple elements of a management position. I specifically focused on client incentives, cost management, and human resources during the course of my internship project at this veterinary clinic. My responsibilities in each of these business functions helped me develop the skills necessary to effectively hold a management position after graduation.

Crony Chronicles Website Redesign, Lindsey Marie Mcbride

Undergraduate Honors Capstone Projects

The policy team at the Charles Koch Institute is broken into different areas of research. During my summer internship, I was assigned to research crony capitalism with four other members of the policy team. Along with their research on crony capitalism, these team members maintained a website called cronychronicles.org. For a definition of crony capitalism, or cronyism, see Appendix C. The goal of the website was to be "the leading online resource for everything related to cronyism" (About Us). I was very interested in the research I was conducting on crony capitalism, and enjoyed contributing information to the Crony Chronicles …

A Management Buyout In The Lower Middle Market, James Kenneth Allred

Undergraduate Honors Capstone Projects

ABC Inc., "ABC" or "The Company", is a leading manufacturer of precision rotary valves, feeders, screw conveyors, and components found in industrial material handling systems. Due to their proprietary products, exceptional durability, and custom design and manufacturing processes, ABC has developed a reputation as a premium manufacturer and supplier of choice across various industries. ABC initially targeted the wood products industry, and pulp and paper remains its largest industry segment today, but The Company has since expanded its services to mining, cement, chemical companies as well as coal and biomass burning plants. In addition to its proprietary products, ABC provides …

Bank Accounting Conservatism And Bank Loan Pricing, Chu Yeong Lim, Edward Lee, Asad Kausar, Martin Walker

Research Collection School Of Accountancy

This paper studies the effects of bank accounting conservatism on the pricing of syndicated bank loans. We provide evidence that banks timelier in loss recognition charge higher spreads. We go onto consider what happens to the relationship between spreads and timeliness in loss recognition during the financial crisis. During the crisis, banks timelier in loss recognition increase their spreads to a lesser extent than banks less timely in loss recognition. These findings are broadly consistent with the argument that conditional accounting conservatism serves a governance role. The policy implication is that banks timelier in loss recognition exhibit more prudent and …

Irrational To Expect Low Risk And High Returns, Benedict Koh

Research Collection Lee Kong Chian School Of Business

The low interest paid on Central Provident Fund (CPF) balances when compared with the relatively high returns earned by government investment entities such as Temasek Holdings and GIG is a common gripe.

Realistic Ways To Raise Cpf Returns, Benedict Koh

Research Collection Lee Kong Chian School Of Business

The CPF Investment Scheme can be modified to help financially illiterate members make better investment decisions.

Wealth Management In Singapore, Francis Koh

Research Collection Lee Kong Chian School Of Business

As early as 2015, Singapore may oust Switzerland as the world’s top finance hub. But the path forward requires adjustments in the strategic direction of individual firms. Wealth management in Singapore is vibrant, growing, challenging.

Apple Issues Debt To Buyback Stock, Steven D. Dolvin

All Chapters

Apple has $150 Billion in cash, yet it has decided to issue $17 Billion in new debt to fund its stock repurchases. Why not just use cash on hand? One reason is that almost 90% of the cash is held outside the US, and repatriating the cash would trigger significant tax liabilities. Another reason is that interest rates are so low, and if Apple can earn a higher return than the cost, the added financial leverage will be a benefit to shareholders. (See article here, CNBC.)

Usage Of Derivatives In Business Today, Duston J. Hodgkins

Honors Scholar Theses

Derivatives were created as a method of hedging risks. Yet in today's society, derivatives have taken on many new roles, and with it have systemically changed the way the financial industry operates. Warren Buffett called these powerful tools "financial weapons of mass destruction." No longer do these tools simply mitigate risks; instead, they are creating new and potentially lethal risks. How did their usage shift from risk management? This thesis delves into what actions occurred over the past half century that drove derivatives usage to what is facing the market today. Through the exploration of major successes and failures of …

Is Geographic Diversification Associated With Increased Risk? Evidence From The Spanish Banking Crisis, Briana Anderson

Business and Economics Honors Papers

This paper examines the association between geographic diversification and Spanish savings bank (caja) failure. The paper focuses on the geographic expansion of cajas between 2002 and 2012 and failure of several cajas between 2008 and 2011 during the Spanish banking crisis. Employing financial statement and branch location data collected from the CECA, logit models were used to test the association between failure and geographic and cultural diversification. This paper finds that, depending on the model estimated, geographic and cultural diversification of cajas either reduced or had no effect on the odds ratio of failure, suggesting that the benefits …