Finance and Financial Management Commons^™

Financial Statement Racing, Marie Kelly, Nikki Shoemaker

Faculty Publications

This paper describes an active learning activity called Financial Statement Racing. This game has been used in several introductory financial accounting courses to help students understand the normal balances and financial statement classifications of multiple financial statement accounts. The activity encourages students to work together in a team to place racecars on the appropriate financial statement racetrack in the correct debit or credit lane. These teams compete against other teams in the class to try to win the race to the end of the financial statement racetrack.

Financialisation Of Commodity Markets: Boon Or Bane?, Singapore Management University

Perspectives@SMU

An influx of investment money into commodity futures can distort the broader economic picture, but it can also help commodity producers hedge price risks

Credit Cards, Financial Responsibility, And College Students: An Experimental Study, Lucy F. Ackert, Bryan K. Church

Faculty Articles

Policymakers are concerned about the limited financial expertise of young adults because their naiveté leaves them vulnerable to the perils of excess debt. We report the results of three experiments designed to investigate college students' mental representations of credit cards, focusing on linkages to financial responsibility. Students complete an inferential reasoning task in which they assess conditional relations to provide evidence on their rudimentary understanding of what credit card ownership entails. The findings suggest that students readily associate credit card ownership with the need to exercise financial responsibility. Yet, they have difficulty correctly assessing conditional relations. While these young adults …

Derivatives Pricing With Accelerated Trinomial Trees, Conall O'Sullivan, Stephen O'Sullivan

Articles

Accelerated Trinomial Trees (ATTs) are a derivatives pricing lattice method that circumvent the restrictive time step condition inherent in standard trinomial trees and explicit finite difference methods (FDMs) in which the time step must scale with the square of the spatial step. ATTs consist of L uniform supersteps each of which contains an inner lattice/trinomial tree with N non-uniform subtime steps. Similarly to implicit FDMs, the size of the superstep in ATTs, a function of N, are constrained primarily by accuracy demands. ATTs can price options up to N times faster than standard trinomial trees (explicit FDMs). ATTs can be …

Are The Parents To Blame? Predicting Franchisee Failure, Ilan Alon, Michèle Boulanger, Everlyne Misati, Melih Madanoglu

Faculty Publications

The Small Business Administration (SBA) supports franchising by backing up loans issued by regular lending organizations. However, the SBA does not directly consider firm strategies as part of its lending process. To appreciate how franchisor characteristics influence franchisee failure, we developed a heuristic model using the methodology and power of predictive analytics. We use multi-year data from the World Franchising Council’s surveys on franchisors’ characteristics and from the SBA on franchisee loan defaults. The data cover 271 diverse US franchise chains that are present in both databases. Our model predicts potential defaults of SBA-backed loans issued to American franchisees and …

Global Financial Model For The Value Chain, Robert Rainish, Pawel Mensz, James Mohs

Finance Faculty Publications

The objective of this paper is to describe how a valuation decision model for a firm in a multi-country environment can be used to determine the optimal value chain. The paper extends the initial work of Rainish and Mensz (2012). The paper examines how a global firm can optimize its value chain and how that chain will be affected when the value of various key variables change. Variables were selected (e.g. labor costs, transportation costs and transfer price tax rates) from recent studies by consulting firms Deloitte (2013) and the Boston Consulting Group (2014). The data used in the model …

What Do Institutional Investors Know And Act On Before Almost Everyone Else: Evidence From Corporate Bankruptcies, Elena Precourt, Henry Oppenheimer

Accounting Department Faculty Journal Articles

We analyze investment behavior of institutional managers who hold and trade shares of firms that file for bankruptcy. We find that during the five-year period preceding a bankruptcy filing, institutional investors (except those managing investment companies) are net buyers with a positive abnormal net number of shares traded during the period. Institutional managers start to sell shares of bankrupt firms sooner in some firms than in others; these earlier sales are of smaller firms with weaker operating performance, and lower equity risk. We do not find evidence that institutional stockholders trade strategically and avoid material price declines before they occur.

Ryanair Holdings, Nicole Blake Tran, Jamie Perkinson, Caron Sinnenberg, Lionel Tarcia, Jeffrey S. Harrison

Robins Case Network

The crass Irish CEO of Ryanair presides over a modern miracle. Ryanair, with its ridiculously low prices and poor reputation for service, has become one of Europe’s largest and most successful airlines. Employees pay for their own training, flights are cancelled if they won’t be full enough to be profitable, and the concept of “no frills” is heartily embraced. However, some new competitors have come on the scene, and Ryanair may be forced to improve its service and reputation to keep up.

Success Factors Of Small Business Owners Of Independent Financial Planning Firms, Joanne Snider

2010-2016 Archived Posters

Small Business Administration (SBA, 2014) statistics indicate 20% of small businesses fail within 2 years and 50% fail within 5 years. Interviews with 12 successful small business owners of independent financial planning firms revealed these success factors: (a) training in business operations, (b) business differentiation, and (c) website marketing.

Financial Resources And Technology To Transition To 450mm Semiconductor Wafer, Thomas Earl Pastore

2010-2016 Archived Posters

Financial models that can be applied by management to build giant wafer foundries to manufacture low cost semiconductor products are demonstrated. This advanced semiconductor technology will likely drive a new frontier called the Internet of Everything, an expected $14 trillion market that will likely contribute to global positive social change.

Essays On Horizontal Divestitures And Product Market Relationships, Norkeith Ervin Smith

Wayne State University Dissertations

This dissertation is the first to study the product effect of horizontal divestitures on upstream and downstream firms. This first essay examines product market impact of a sample of horizontal asset sales from 1988 to 2005 on corporate customers, suppliers, and industry rivals. I create a sample of firms that classifies corporate customers, suppliers, and industry competitors of firms proposing horizontal asset sales, and employ this data set to investigate the wealth effects at announcement. This study also considers post-divestiture changes in abnormal operating performance for divesting firms, customers, and suppliers.

I document evidence that divestiture related wealth effects for …

Promoter Ownership And Working Capital Management Efficiency Of Indian Manufacturing Firms, John D. Obradovich

Faculty Publications and Presentations

Poor cash flow leads to insolvency of the firm. One of the most important factors that lead to poor cash flow is the inefficiency of working capital management. This study investigates relationships between promoter ownership and working capital management efficiency of Indian manufacturing firms. A sample of 151 manufacturing firms was selected from Top 500 Companies listed on the Bombay Stock Exchange (BSE) for a period of five years (from 2010-2014). Results indicate that changes in promoter ownership play a role in changing working capital management efficiency of Indian manufacturing firms by reducing their cash conversion cycle and by improving …

Benefits Of Lending Relationships In Public Debt Markets: Empirical Evidence From The Commercial Paper Market, David W. Blackwell, Vladimir Kotomin, Drew B. Winters

Faculty Publications – Finance, Insurance, and Law

There is a large body of literature on the benefits of established lending relationships with banks, which is an intermediated debt market. We extend the literature by testing for benefits from direct lending relationships in the commercial paper market, which is a public debt market. Diamond (1991) suggests that firms access public debt markets when they have enough reputation to no longer require the close monitoring by banks. Using daily rate data for dealer-placed and directly placed commercial paper, we find that the year-end liquidity squeeze is less pronounced in the directly placed commercial paper than in the dealer-placed commercial …

Modeling Risk Management In Banks: Examining Why Banks Fail, Daniel O. Okehi

2010-2016 Archived Posters

The aim of this research was to determine why there have been persistent bank failures in Nigeria and to investigate whether ineffective risk management in banks, coupled with poor corporate governance practices and nonadherence to regulations (independent variables), play a significant role in the banks' performance(dependent variable).

A Cross-Regional Comparison Of Fabricated Metals' Manufacturing Sector Resiliency, Linda Ann Holt

Walden Dissertations and Doctoral Studies

Fabricated metals' manufacturing sector employment in the United States declined following the onset of the 2008 recession. Premium compensation and benefits afforded to employees within the manufacturing sector amplified the negative effects of recessionary job losses. Using the regional macroeconomic complex adaptive systems (CAS) framework, the purpose of this study was to examine the geographic distribution of job losses, recovery rates, and adaptive behavior after the recession for the fabricated metals manufacturing sector by measuring and comparing effects in 50 East North Central division MSAs and 50 South Atlantic division MSAs in the United States. Independent sample t tests compared …

Differences In Financial Performance And Risk Tolerance At Faith-Based Credit Unions, Bruce J. Toews

Walden Dissertations and Doctoral Studies

In the United States, faith-based and other small credit unions are vanishing at the rate of nearly a credit union each workday. The purpose of this causal-comparative study was to provide managers of faith-based credit unions with information about differences in financial performance and risk tolerance between faith-based and non-faith-based credit unions in order to improve their investment strategy and long-term sustainability. The study included a comparison of ratios measuring the financial performance and risk tolerance of randomly selected faith-based credit unions in the United States with the corresponding ratios of non-faith-based credit unions of similar size and location from …

College Retention Connections With Multiple Influencing Factors, Jamie Esther Mccracken

Walden Dissertations and Doctoral Studies

There are many challenges associated with student retention. Saint Mary-of-the-Woods College (SMWC) has focused on determining the factors affecting student retention across its campus and distance course delivery formats in order to improve student retention. The purpose in this study was to explore the extent to which age, course delivery, technical ability, and financial background determine retention at SMWC. Retention and attrition models of Tinto and Walleri laid the foundation of this study. Qualitative data on technical ability were collected from 69 students who responded to the survey instrument on Survey Monkey. Quantitative data on retention, age, course delivery, and …

Performance Implications Of Fortune 500 Companies' Self-Interest In Corporate Social Responsibility Activities, Peter M. Neeves

Walden Dissertations and Doctoral Studies

Numerous prior studies examining the relationship between Corporate Social Responsibility (CSR) and corporate financial performance have produced mixed results. Consumers expect alignment between corporation's CSR and business activities, yet a paucity of research examines the nature of CSR activities as related to corporate financial performance. Corporate leaders lack direction as to what CSR activities are most impactful. CSR is grounded in stakeholder theory, ethical work climate, and servant leadership theories. The relationship between self-interest in CSR activities, an index of alignment between business activities and CSR activities, and financial performance as measured by return on assets (ROA), return on equity …

Relationship Between Bootstrap Financing, Number Of Employees, And Small Business Success, Robin Marie Schofield

Walden Dissertations and Doctoral Studies

Small business entrepreneurs face high failure rates, yet the success of local, state, and national economies relies on the success of small business. With a lack of capital commonly cited as a reason for failure, entrepreneurs must find ways to predict business survival. Grounded in pecking order and enactment theory, the purpose of this correlational study was to examine the efficacy of bootstrap financing and numbers of employees in predicting business survival, measured by the business age. The research question was answered by using a predictive correlational quantitative research method with a cross-sectional survey design. The central question was whether …

Cyclical Economic Impacts On Aggregated Fiscal Imbalance Levels In The United States, Douglas Arthur Merriman

Walden Dissertations and Doctoral Studies

Cyclical Economic Impacts on Aggregated Fiscal Imbalance Levels in the United States

by

Douglas A. Merriman

MSM, University of Maryland University College, 2004

BS, Central Washington University, 1983

Dissertation Submitted in Partial Fulfillment

of the Requirements for the Degree of

Doctor of Philosophy

Applied Management and Decision Science

Walden University

July 2015

The impacts of cyclical economic volatility on state-level fiscal imbalance levels have gained attention, given that beginning in late 2007, the United States experienced the deepest and longest-lasting recession in its history. The problem addressed by this study was whether there was a statistically significant relationship between certain …

A Case Study Of Blue-Collar Worker Retirement Investment Decisions, Mark Eldridge Griffin

Walden Dissertations and Doctoral Studies

The finances of blue-collar workers were the most acutely impacted as these workers lost their jobs during the Great Recession of 2007 through 2009. The literature revealed a minimal understanding of how blue-collar workers allocated funds for their retirement, and what their investments might be when they invested. To address this problem, the current qualitative study addressed (a) how blue-collar workers chose to invest or not invest for retirement and (b) how blue-collar workers diversified their portfolio if they chose to invest. Theoretical foundations of the study were based on regret theory and prospect theory. A nonrandom purposeful sample of …

Corporate Risk-Taking And Public Duty, Steven L. Schwarcz

Faculty Scholarship

No abstract provided.

Next Focal Point Of China's Stock Market: Earnings-But Can We Trust The Numbers?, Shaomin Li, Seung Ho Park

Management Faculty Publications

[Introduction] The recent stock market turmoil and the economic slowdown in China have kept analysts busy projecting where the economy is going and what the government will do. The Chinese government has also issued a number of reforms of state-owned enterprises and other aspects of the economy. However, these reforms and increased scrutiny by both regulators and investors will be futile unless larger problems with market fundamentals in Chinese companies are addressed.

While the world's attention has been fixed on what the Chinese government is going to do next, there has been a tendency to neglect market fundamentals and to …

Investcorp, Jeremy Kappes, Haynes King, Jamie Mattioli, Prasad Vaze, Timothy Kyle Benusa, Sam Gottwald, Thomas Arnold, Jeffrey S. Harrison

Robins Case Network

Investcorp is a publicly traded global alternative asset management company headquartered in Manama, Bahrain. It manages a huge hedge fund, along with other assets. The case describes Investcorp’s history, investment strategies, and major competitors. The company has a highly aggressive growth strategy, but it is also facing the retirement of its CEO.

Salesforce.Com, Sean Bielawski, Charles Kempe, Austin Mcdaniel, Adam Tate, Jeffrey S. Harrison

Robins Case Network

Innovation! One of the most innovative companies, and also one of the best companies to work for, is losing money. This case traces the meteoric rise of the number one customer relationship management service provider against huge rivals such as Microsoft and Oracle. Detail regarding their highly innovative Scrum system is provided, along with detail regarding their marketing approach. How can Salesforce.com regain profitability while continuing to grow in a highly competitive industry?

10b5-1 Plans And Earnings Management By High-Level Executives, Joshua A. Thomas

CMC Senior Theses

Using historical firm financial and insider trading information, this paper examines whether high-level insiders manipulate earnings ahead of their own 10b5-1 equity transactions. The empirical evidence suggests that high-level executives appear to manipulate earnings through real activities such as abnormal discretionary expenditures and abnormal cash flows from operations to influence equity prices ahead of their own transactions under Rule 10b5-1. Evidence also suggests that executives appear to be unlikely to engage in earnings management through highly scrutinized means such as accruals. An interpretation of these results is that high-level executives may be using 10b5-1 plans as an offensive tool to …

Experiential Learning In Personal Finance: A Principles And Applications Based Approach, James C. Brau, Jacob K. Nielson, Bryan L. Sudweeks

Faculty Publications

This paper discusses the need for increased financial literacy among college-aged students and then presents and analyzes a personal finance class taught at a large, private university. The course is designed around five characteristics which, when combined, result in a high value-added pedagogy. These characteristics are the following: a humanistic approach to personal finance, a principles-based approach, an applications-based curriculum, a partnership with Intuit's Quicken, and a serviceteaching requirement. With a track record of over a dozen years and 3,128 students, the course continues to be one of the best-rated courses among both students and alumni.

Curtain Call Executive Services, Steven D. Dolvin

Scholarship and Professional Work - Business

This case would be considered a critical incident, as it focuses on one primary issue – the valuation of a private equity investment in the underlying business. I have constructed the case based on consulting work I completed for the actual company, as they needed a valuation model for accounting purposes. So, all data, including the legal characteristics, are obtained directly from the company. However, for confidentiality reasons, the name of the firm has been changed.

This case itself concerns the valuation of an investment by a private equity firm in a mid-market business. The student must evaluate and understand …

Spend Now Or Spend Later: The Role Of A Business Education And Critical Thinking Skills In Increasing Retirement Plan Saving Rates For New, Young Enrollees, Priscilla Arling, Jill Kirby, Kegan Saajasto

Scholarship and Professional Work - Business

For college graduates entering the workforce, contributing to an employer-sponsored 401(k) retirement plan can be an important way of saving for the future. However, contribution rates for young people in these plans are far below recommended percentages, leading to concerns about future financial stability for these individuals. Prior work has shown that a college student’s major and academic coursework affect their general financial knowledge. However, little is known about what content within a course of study correlates with specific financial decisions. The decision of how much to save in a 401(k) plan is complex and requires thinking beyond a present-day …

Profitable Momentum Trading Strategies For Individual Investors, Bryan Foltice, Thomas Langer

Scholarship and Professional Work - Business

For nearly three decades, scientific studies have explored momentum investing strategies and observed stable excess returns in various financial markets. However, the trading strategies typically analyzed in such research are not accessible to individual investors due to short selling constraints, nor are they profitable due to high trading costs. Incorporating these constraints, we explore a simplified momentum trading strategy that only exploits excess returns from topside momentum for a small number of individual stocks. Building on US data from the New York Stock Exchange from July 1991 to December 2010, we analyze whether such a simplified momentum strategy outperforms the …