Finance and Financial Management Commons^™

Essays On Risk Management Of Insurance Companies, Olga Kanj

Theses and Dissertations (Comprehensive)

This dissertation examines the risk management of insurance companies. It consists of three essays, which study the risk management of property and casualty (P/C) insurance companies. The first essay examines the impact of board diversity on firms’ risk-taking strategies using Canadian P/C insurance companies. The findings show that board ethnic diversity significantly decreases company risk as measured by reinsurance, asset risk, and leverage risk. Ethnic background values of the board members could be the reason behind this effect, board members with ethnic backgrounds from countries with high (low) Uncertainty Avoidance Index (UAI) decrease (increase) the risk. Results also show that …

How Efficient Is Market Pricing: Can Investors Beat The Market? Further, Are Prices Always Right As Stated In The Efficient Market Hypothesis?, Porter M. Mcmanus

Honors Theses and Capstones

The Efficient Market Hypothesis is a widely accepted economic theory developed by economist Eugene Fama. The theory states that at any given time, an asset’s price reflects all available public information and will always trade at fair value. The motivation for this research is derived from the content taught in undergraduate finance courses. In undergraduate academia finance students are introduced to the idea of market efficiency, as it is a building block for future theory and application. However, this theory is rarely questioned in the world of undergraduate academia, rather just taken as fact by students.

The underlying research in …

The Future Of Actively Managed Funds, Oliver M. Botthof

Honors Theses and Capstones

This study analyzes the relationship between actively managed U.S. equity funds and passively managed U.S. equity funds over the past 20 years. This study concludes with a prediction as to where these markets are headed based off related literature and regression based tests run a a sample of funds.

Healthcare Stocks And Presidential Elections, Jake Yennaco

Honors Theses and Capstones

In this study I examine the impact presidential elections have had on health care stock returns. Through my own data collection and analysis, I sought to examine the performance of stocks across election cycles in addition to the performance of healthcare stocks across election cycles. Using data from 1998-2019 I find that 1.) In election years, the stock market underperforms relative to non-election years; 2.) Healthcare stocks underperform the broader market during election years; 3.) The impact on healthcare stocks is consistently poor in election years yet contained to only that year; 4.) The Presidential Election Cycle, stating that stocks …

What Drives Prices In Financial Markets?, Sinead Brid Mcdonagh

Honors Theses and Capstones

No abstract provided.

The Impact Of Tax Breaks & Incentives For Corporations On Local Economies, Chad Supranowicz

Honors Theses and Capstones

One of perhaps the most pressing political debates since the 2016 Presidential election has been centered around the impacts of the many tax breaks and incentives given to large corporations. These breaks, used most often to draw a company to a certain geographic area, are typically granted with good intention. For example, a local or state government will pursue a company by enticing them to relocate to their area in order to help boost their economy because people, jobs, and money will come with them. This can also lead to spin-off development, meaning even more people could flock to the …

Market Effects Of Local Media Employment Reductions On The Idiosyncratic Risk Of Nearby Firms; Returns, Valuation, And Debt; And Firm Meet-Beat Behavior And Ceo Turnover And Compensation, C. Kyle Jones

Open Access Theses & Dissertations

This research examines the effects of reductions in local and regional media employment on firms' information environment. A reduction in the number of local media employees available to provide coverage of firms is associated with persistent levels of increased idiosyncratic risk. The source of that firm-level risk appears to be increased estimation risk among investors, rather than decreased awareness about the investment opportunities or real effects on firms' product market competition. I also demonstrate that overall levels of local media coverage are associated with differences in returns similar to those associated with coverage in national outlets. While a reduction in …

Managerial Entrenchment And Financial Reporting Comparability, Qifeng Wu

Open Access Theses & Dissertations

This study examines whether managerial entrenchment has an association with firms' financial statement comparability. I find that managerial entrenchment has a significant negative association with financial statement comparability, providing a new notion about the management influence on financial reporting quality. Moreover, by using the business segment as a proxy for business complexity, I find that the variation of accounting comparability with its peer firms mainly stems from managers' investment choice. This finding supports FASB's assertion that financial statement comparability is a reporting quality that should be enhanced among firms with similar economic events. Lastly, I test if managerial entrenchment mitigates …

Hot Or Not – Which Features Make Fintechs Attractive For Investors?, Johannes Klein, Leonard Stuckenborg, Jens Leker

The Journal of Entrepreneurial Finance

Attracting investors and generating funding is a key issue for all start-ups. The information asymmetries between investor and start-up need to be reduced. Despite the overwhelming literature on venture capital financing and different signals reflecting venture quality, pinpointing the signals which impact funding decisions remains an open issue. This study presents an empirical examination of the effectiveness of different signals to convince investors and generate funding. We examine the impact of signals concerning venture quality (classic ones such as human capital, intellectual capital and social alliance/network capital as well as the strategic orientation in terms of business model patterns. Based …

Potential Pilot Problems: Treatment Spillovers In Financial Regulatory Experiments, Ekkehart Boehmer, Charles Jones, Xiaoyan Zhang

Research Collection Lee Kong Chian School Of Business

In analyzing regulatory experiments, a fundamental assumption is that the control group is unaffected. However, in many settings, this assumption may not hold. Generally, the total effect of a regulatory change consists of direct and indirect effects, but the standard difference-in-difference approach measures only direct effects. We apply our methods to the 2007 repeal of the uptick rule by the SEC. The indirect effects are substantial, because unlike the 2005 partial repeal, total repeal enables aggressive portfolio shorting. In particular, we find that short sellers become much more aggressive across the board, and shorting activity increases, even in control stocks …

Financial Vulnerability And The Reproduction Of Disadvantage In Economic Exchanges, Tianyu He, Rellie Derfler-Rozin, Marko Pitesa

Research Collection Lee Kong Chian School Of Business

Integrative value generation through negotiated business deals is a fundamental way in which organizations and economic systems attain economic benefits. It is also an important way in which individuals can improve their financial situation. We propose that individuals most in need of improving their financial standing, those in a financially vulnerable situation, are least likely to reap the benefits of integrative value generation. We theorize that financial vulnerability induces a more zero-sum construal of success, or a view that success for one person must come at another person’s success. A more zero-sum construal of success, in turn, hampers negotiators’ ability …

Sale-Leaseback Transactions: Price Premiums And Market Efficiency, C. F. Sirmans, Barrett A. Slade

Faculty Publications

Sale-leaseback transactions are ubiquitous in real estate markets in the United States with annual volume estimated to be greater than $7 billion. However, there is no evidence concerning the price impact of such transactional arrangements. Using a data set of sale-leaseback transactions, this study examines the price impact on commercial property transactions across seven markets. The findings reveal that transactions structured as saleleasebacks occur at significantly higher prices than market transactions. In addition, after accounting for income differentials, buyers and sellers are appropriately pricing the transactions resulting in no undue advantage to either party, that is, the expected price premium …

Real Effects Of Search Frictions In Consumer Credit Markets, Bronson Argyle, Taylor Nadauld, Christopher Palmer

Faculty Publications

We establish two underappreciated facts about costly search. First, unless demand is perfectly inelastic, search frictions can result in significant deadweight loss by decreasing consumption. Second, whenever cross-price elasticities are non-zero, costly search in one market also affects quantities in other markets. As predicted by our model of search for credit under elastic demand, we show that search frictions in credit markets contribute to price dispersion, affect loan sizes, and decrease final-goods consumption. Using microdata from millions of auto-loan applications and originations not intermediated by car dealers, we isolate plausibly exogenous variation in interest rates due to institution-specific pricing rules …

Which Early Withdrawal Penalty Attracts The Most Deposits To A Commitment Savings Account?, John Beshears, James J. Choi, Christopher Harris, David Laibson, Brigitte C. Madrian, Jung Sakong

Faculty Publications

Previous research has shown that some people voluntarily use commitment contracts that restrict their own choice sets. We study how people divide money between two accounts: a liquid account that permits unrestricted withdrawals and a commitment account that is randomly assigned in a between-subject design to have either a 10% earlywithdrawal penalty, or a 20% early withdrawal penalty, or not to allowearlywithdrawals at all (i.e., an infinite penalty).When the liquid account and the commitment account pay the same interest rate, higher early-withdrawal penalties attract more commitment account deposits. This pattern is predicted by the hypothesis that some participants are partially- …

Building Emergency Savings Through Employer-Sponsored Rainy-Day Savings Accounts, John Beshears, James J. Choi, Mark Iwry, David John, David Laibson, Brigitte C. Madrian

Faculty Publications

Many Americans live paycheck to paycheck, carry revolving credit balances, and have little liquidity to absorb financial shocks. One consequence of this financial vulnerability is that many individuals use a portion of their retirement savings during their working years. For every $1 that flows into 401(k)s and similar accounts, between 30¢ and 40¢ leaks out before retirement (Argento, Bryant, and Sabelhaus 2015). We explore the practical considerations and challenges associated with helping households accumulate liquid savings that can be deployed when urgent pre-retirement needs arise. Automatically enrolling workers into an employer-sponsored “rainy- day” or “emergency” savings account—terms that we use …

Financial Costs Of Judicial Inexperience: Evidence From Corporate Bankruptcies, Benjamin Iverson, Joshua Madsen, Wei Wang, Qiping Xu

Faculty Publications

Exploiting the random assignment of judges to corporate bankruptcy filings, we estimate financial costs of judicial inexperience. Despite new judges’ prior legal experience, formal education, and rigorous hiring process, their public Chapter 11 cases spend 19% more time in bankruptcy, realize 31% higher legal and professional fees, and 21% lower creditor recovery rates. Examining possible mechanisms, we find that new judges take longer to rule on motions and cases assigned to these judges file more plans of reorganization. Conservative estimates suggest that minor policy adjustments could increase creditor recoveries by approximately $16.8 billion for the public firms in our sample.

A Pedagogical Model For Teaching Data Analytics In An Introductory Information Systems Python Course, Heber C. Brau, James C. Brau, Mark Keith

Faculty Publications

In this paper we answer the call of Sheppard (2012) and Brunner & Kim (2016) and present a model for teaching data analytics in an introductory information systems class using the Python programming language. The pedagogy follows an active-learning strategy in which students are assumed to have no statistical or Python programming training prior to class. The learning outcomes include: 1) Data: write code to import and manipulate data; 2) Visualization: write code to generate useful and theoretically sound data visualizations; 3) Feature Engineering: write code to generate, condense, or recombine variables (i.e., "features") of any type (numeric, categorical, ordinal, …

Budget Habits Of College Students: An Empirical Analysis Of Expectations And Realizations, James C. Brau, Marshall Ringwood, Jessica West

Faculty Publications

Using a sample of more than 500 college students from a large, private university, this study seeks to analyze spending expectations of students, their realized habits, and the dispersion between the two. We first ask the students to project what they think their monthly budget will be throughout the semester. We then ask them to track their expenses for three months. The students do the same for income they receive. The students then report their actual spending habits and answer various questions related to their demography, family, and life experience. We use simple univariate correlation methods to explain factors that …

The Narrowness Of Shorting Profitability, Karl B. Diether

Faculty Publications

I examine the persistence in stock level short-selling profitability by using contract level shorting data. I do find that short-sellers are profitable on average using an approach that takes into account the exact timing of the opening and closing of short positions. But I also find that this profitability is driven by the set of stocks for which short-sellers previously had strongly profitable outcomes. I find that if short-selling contracts for a given stock are profitable in the last six months that on average short sellers continue to make profitable trades in that stock in the future. For stocks with …

Effect Of Moderating Variables: Financial Leverage And Dividend Payout Of Publicly-Listed Property Sector Of The Philippines, Cynthia P. Cudia, Harrison Kendrick L. Chun, Tristan Dranel M. Papa, Raveena S. Tahilramani, Althea R. Tan

DLSU Business & Economics Review

Various studies on the relationship between financial leverage and dividend payout have been conducted; however, different factors affecting this relationship remain unexplored. This study aimed to identify the effect of different firm-specific moderating variables on the relationship between financial leverage and dividend payout of Philippine publicly-listed companies under the property sector for the years 2012–2016. These firm-specific variables were classified into two categories—company profile and financial condition. By employing multiple regression with the interaction model, the results of this study found that business risk has a significant effect on the relationship between financial leverage and dividend payout. Similarly, firm size …

Collaborative Regulatory Development In The Mobile Money Sector: A Case Study In Sri Lanka, Suwandaarachchi Chaminda Methsiri

Student Works (2020-2029)

Providing financial services for the unbanked has been challenging, mainly due to relatively high operational costs and the difficulty of reaching remote areas. Mobile money has brought bank-like facilities to the unbanked communities, through its low-cost operations and widespread agent network, thus making them financially included. Regulatory response and support are essential for this advancement, where they necessitate significant changes to the current regulatory practices. This task is difficult for regulators due to their limited technical knowledge and resources in the field of financial technologies. Regulators collaborate with industry to overcome these challenges. However, studies on such collaborations are scarce. …

Initial Public Offerings And Pricing Anomalies, Hon Wei Leow

Student Works (2020-2029)

Initial Public Offering (IPO) is a form of fundraising through the stock market of which has evolved as an essential platform to study the performance of newly issued shares. In the case of an emerging market like Malaysia, the pricing anomalies that measure the performance of initial return and flipping activity of IPO remain an interesting subject. During the period of Global Financial Crisis (GFC) in 2008-09, it is believed that the market sentiment will affect the initial return of new IPO and oversubscription will be negative, and hence firms will be unwilling to do the new listing on the …

Financial Development And Unemployment In Malaysia, Puong Hung Hii

Student Works (2020-2029)

In the past decades, the topic financial development and economic growth has been popularly discussed by scholars. From the past literature, financial development is an important component in promoting economic growth. However, there has been less study about the relationship of financial development and unemployment rate. Therefore, this study aims to investigate the relationship between the financial development and unemployment rate in the case of Malaysia from year 1981 until 2018. This study analyses the relationship by using two model equations to test separately the effect of each financial development indicators (Domestic Credit to Private Sector and Stock Market Capitalization) …

Government Debt And Economic Growth, Cai Xin Ng

Student Works (2020-2029)

The level of Malaysia government debt have been hiking in recent years which leads to controversies regarding the sustainability of the debt level. The question that borrowings will stimulate or inhibit the economy remains as an important issue to be addressed. This paper examines the impact of government debt on economic growth in Malaysia. Utilizing the macroeconomic data between 1970 and 2018, we first apply an autoregressive distributed lag (ARDL) framework to examine the relationship between government debt and economic growth. The short term and long term relationship as well as cointegrating relationship between government debt and economic growth were …

Determinants Of Defense Expenditure In South Korea, So Yeon Lee

Student Works (2020-2029)

This research pointed out the importance of defense spending as an „economic means‟ for national security in South Korea while due to the aftermath of US-China trade war, the threats and tension between North Korea and other neighboring countries such as China have become much more severe. In this context, an empirical study was conducted to investigate the factors determining national defense expenditure with secondary data from 1960 to 2018. The domestic factors namely economic growth, arms trade, the threat of North Korea and the Republic of Korea (ROK)-United States (US) defense alliance were established as those explanatory variables. The …