Finance and Financial Management Commons^™

Unions’ Impact On Firms’ Financial Decision Making: A Look At Right-To-Work Laws And Their Impact On Firms’ Leverage Decisions, Rachana Muvvala

CMC Senior Theses

I study the impact of unions on firms’ financial decision making by exploring their capital structure, specifically leverage. I test two opposing hypotheses to understand the relationship between unions and firms’ leverage: (1) the bargaining hypothesis which suggests that firms use higher leverage as a bargaining device with unions, and (2) the crowding-out hypothesis which suggests that firms have lower leverage because unions crowd out their debt capacity due to their perceived riskiness. Focusing on the 2007 to 2022 period, I examine right-to-work (RTW) laws, since they are exogenous shocks that decrease union power in five different states. Then, I …

Market Reaction Test On Banks & Brokers Based On Bitcoin Price History. A Look At National Commercial Banks And Security Broker, Exchanges, And Service Stocks Following The Most Volatile Swings In Bitcoin’S Price., Payton Earl

CMC Senior Theses

This paper examines if there is an inverse correlation between Bitcoin’s most volatile price swings and national commercial banks and security brokers, exchanges and service companies performance. Company performance in the dataset is measured by Cumulative Abnormal Returns during 2021 within a two-day period where Bitcoin has had the most significant uptick and downtick events. Using a market-adjusted model for my regression, it is concluded that Bitcoin’s largest uptick event did indeed have an inversely negative effect on traditional banks and trading securities companies, as the Cumulative Abnormal Returns were negative for my 107 observations and the event was statistically …

Bio-Bust: Investigating Biotech Stock Factors Contributing To Abnormal Returns In The Wake Of Silicon Valley Bank's Failure, Spencer Kent

CMC Senior Theses

Following the unprecedented collapse of Silicon Valley Bank (SVB) in March 2023, this study explores abnormal stock price reactions within the biotechnology sector. As the chosen financial institution for countless Silicon Valley-type technology and healthcare firms, SVB's failure had a profound impact on small to mid-sized biotech companies. Analyzing a dataset of 180 biotech firms during a two-day event window over SVB’s collapse, I investigate whether exposure to SVB, or other factors, was the primary contributor to negative abnormal stock price reactions, considering variables such as the percentage of cash held at SVB, whether a firm maintained an active SVB …

Ai-Nvesting: An Empirical Analysis With Sector Categorization And Prompt Complexity Considerations Assessing The Predictive Power Of Chatgpt In Stock Market Forecasting, Ian J. Larson

CMC Senior Theses

Abstract

This paper investigates whether ChatGPT has any predictive power when it comes to the stock market. Since its public release in December 2022, OpenAI’s ChatGPT has become a popular tool for millions of users across the world. With new use cases being found every day, I explore whether the system has any utility at predicting where stock prices will go. Using a 10-year study window, I prompt ChatGPT to give U.S. equity picks on a one-year holding period basis, segregating its picks into 3 different category sizes across 8 directed prompts. I examine the 24 equal weight portfolios of …

Ceo Characteristics That Lead To Extreme Outperformance: A Statistical Analysis Of William Thorndike’S “The Outsiders”, William Turner

CMC Senior Theses

What makes a high-performing CEO? What CEOs should you invest in? These are the questions that the Board of Directors, headhunters, academics, and investors all seek the answer to. This paper explores the answer to this question by examining CEO performance at the extremes. Inspired by the work of William N. Thorndike’s “The Outsiders: Eight Unconventional CEOs and Their Radically Rational Blueprint for Success,” this study expands upon his methodology, employing a statistical approach to analyze a broader dataset of CEOs over the past thirty years. Using a logit model of hyper-outperforming versus hyper-underperforming CEOs, it assesses the …

Towards Algorithmic Justice: Human Centered Approaches To Artificial Intelligence Design To Support Fairness And Mitigate Bias In The Financial Services Sector, Jihyun Kim

CMC Senior Theses

Artificial Intelligence (AI) has positively transformed the Financial services sector but also introduced AI biases against protected groups, amplifying existing prejudices against marginalized communities. The financial decisions made by biased algorithms could cause life-changing ramifications in applications such as lending and credit scoring. Human Centered AI (HCAI) is an emerging concept where AI systems seek to augment, not replace human abilities while preserving human control to ensure transparency, equity and privacy. The evolving field of HCAI shares a common ground with and can be enhanced by the Human Centered Design principles in that they both put humans, the user, at …

Activism Aftershocks: Looking Beyond The Short-Term Stock Surges Caused By Activist Hedge Fund Campaign Announcements, Zara Vakath

CMC Senior Theses

It is well known that firms targeted by activist hedge funds experience positive abnormal stock returns during the campaign announcement window. However, the link between these short-term returns and the impact to long-term target firm performance has not been established. In this study, I find essentially no link between the positive announcement window returns and long-term performance improvements, using a variety of different methods. I examine performance changes over time and also relative to a matched sample of firms that have not been targeted by activist hedge funds. Additionally, I assess the correlation between the magnitude of short-term abnormal stock …

The Impact Of Wars On Us Defense Stock Returns, Viksit Verma

CMC Senior Theses

This thesis examines the financial performance and market impact of defense and aerospace companies during periods of war and conflict. The study examines a sample of 9 firms representing the defense sector, and utilizes an event study methodology to assess stock returns during specific geopolitical events, namely the Russia-Ukraine War and the Israel-Hamas conflict. The study generally reveals positive abnormal returns during conflicts, indicating lower volatility and reduced market risk for the sample of defense firms compared to the broader market. All abnormal returns are statistically significant for the Russia-Ukraine War. For the Israel-Hamas conflict, abnormal returns for 4 out …

Heterogeneity Of Capital Structure Adjustment Speed Across Industry Sector: Evidence From Non-Financial Firms In Malaysia., Mei-Shan Chua, Noor Maimun Abdul Wahab, Siti Nurhidayah Mohd Roslen, Soo-Cheng Chuah, Nurhuda Nizar, Hon-Choong Chin

The Indonesian Capital Market Review

This study investigates the speed of adjustment (SOA) to target leverage for different industry sec- tors in Malaysia. Using the two-step system generalized method of moments for 415 non-financial firms from 2010 to 2021, we found that the SOA for the overall sample is 38.6% and 22.0% for total debt and long-term debt, respectively. Our paper reveals the heterogeneity of SOA based on industry sectors. The industrial sector has the slowest adjustment speed (14.1%), whereas the healthcare in- dustry has the quickest adjustment speed (80.4%) to target leverage. Our results are consistent with the dynamic capital structure theory regarding the …

Determinants Of Islamic Banks’ Stability In Malaysia And Indonesia, Siti Zaitun Saddam, Mohamad Nizam Jaafar, Amirul Afif Muhamat, Nurien Syahirah Mohd Nizam, Nurin Aqilah Halim

The Indonesian Capital Market Review

The economic prosperity of any nation relies on its banking sector, which serves as the linchpin of the economy. This paper investigates key bank-specific factors influencing the stability of Islamic banks in Malaysia and Indonesia from 2012 to 2021. Using panel data analysis, the study identifies the fixed effect model as the optimal approach. The subsequent fixed effect regression analysis highlights the significance of the cost-to-income ratio in determining financial stability for both Malaysian and In- donesian Islamic banks. Notably the study reveals that the non-performing loan ratio is the primary stability indicator in Malaysia, while Indonesian counterparts prioritize maintaining …

Impact Of The Relationship Among Financial Development, Ict And English Proficiency On Income Inequality: Evidence From Malaysia, Norhasimah Shaharuddin, Abdul Hafiz Mohd Azam, Mohd Hafiz Abdul Wahab, Norzitah Abdul Karim, Nurul Hilmiyah, Sharul Shahida Shakrein, Adibah Alawiah Osman

The Indonesian Capital Market Review

Income inequality is a persistent phenomenon and fundamental issue of concern, especially in this new digital era, because unequal access to finance has long been recognized as a critical mechanism for generating persistent income inequality. ICT tools and approaches are being used widely today due to their convenience, omnipresence and economy. This study examines the influence of financial development, ICT, and English proficiency on income inequality in Malaysia during the period of 1979-2019. The empirical results based on the ARDL bounds test indicated that financial develop- ment and English proficiency support the hypothesis that both factors can reduce the income …

Exoneration Finance, Kay L. Levine, Russell M. Gold

Faculty Articles

The path to financial compensation for the wrongfully convicted can be complex and time-consuming. Exonerees often struggle to make ends meet and function in free society, let alone navigate serpentine processes while waiting years for the recovery they deserve. Securing the assistance of an attorney is often a critical step, but too few lawyers are willing to risk accepting these complicated cases on a contingency-fee basis—the only way that exoneree-clients can likely pay their lawyers without outside help.

Litigation finance—an important tool for increasing access to justice in tort cases—could help close this access to justice gap for exonerees. In …

How Integrity Culture Affects Trade Credit Availability, Sarocha Limchaisiri

Chulalongkorn University Theses and Dissertations (Chula ETD)

This study examines whether corporate integrity culture plays a role in shaping firms’ access to trade credit. Focusing on a panel of U.S. publicly listed firms from 2002 to 2021, it employs a text-based proxy for integrity constructed from annual reports and uses pooled OLS regression with industry and year fixed effects. The goal is to understand how ethical culture, as a non-financial factor, influences trade credit availability beyond traditional financial metrics. While the measure used—accounts payable to COGS ratio—is commonly applied in the literature, it reflects both the willingness of suppliers to extend credit and the firm’s decision to …

Impact Of Diversity, Inclusion, And People Development (Dip) To Firm’S Value: Moderating Role Of Institutional Ownership And Governance In Emerging Asia, Jaruwan Wankeaw

Chulalongkorn University Theses and Dissertations (Chula ETD)

This study investigates the impact of Diversity, Inclusion, and People development (DIP) on firm value (Tobin’s Q) in Emerging Asia by utilizing DIP index during 2016-2023 and explore the moderating roles of institutional ownership and corporate governance. This study employs OLS regression models with fixed effect controls. The results reveal that the composite DIP score is positively and significantly associated with firm value, indicating that firms investing in people-centered practices benefit from enhanced market valuation. This study suggests that institutional ownership significantly moderates the effect of people development, they enhance the effectiveness of firm-level investments in employees. However, it does …

A Profitability Analysis Of Products And Services In The Biotechnology Industry, Olivia Halverson

Senior Honors Theses and Projects

This paper will discuss the various ways to address profitability within firms and compare the profitability of three firms within the same industry. It will also touch upon rebranding within firms, the differences between brand and reputation, and how companies decide to use these leverages. Within, the paper dives into one successful account of a rebranding and its positive or negative effects in the long run. This will mainly be reflected in the literary review. In the profitability review, I will review three comparable companies within the biotechnology industry, including two public companies and one owned by a private equity …

2024 Finance Calendar, Amanda Christensen, Melanie Jewkes, Andrea Schmutz, Vincenza Vicari-Bentley, Kelan Combe, Rochelle Allen, Jenny Weller, Lauren Olsen, Rachel Booth

All Current Publications

The 2024 Finance Calendar outlines monthly steps to improve your personal finances over the course of the year.

2024 Crummer Truist Portfolio Recommendations: Crummer Investment Management 25th Anniversary, Ryan Astley, Bryan Campbell, Bridget Collis, Axel Einarsson, Caroline Gastonguay, Valeria Hernandez-Grisanti, Jay Kineon, Catherine Mitchell, Charlie Putrino, Nicholas Rojas, David Scupholm, Trevor Siemon, Lily Thornewill, Cole Trinter, Nick Villamil, Brad Vincent, Zane Williams

Crummer Truist Portfolios

We would like to thank you for your service to the Crummer Truist Portfolio. Without your participation, Crummer students would not benefit from the unique insight you bring to managing an active portfolio. We have been fortunate to listen and learn from some outstanding guest speakers who have been generous with their time and expertise: J. Clay Singleton, Emeritus Professor, Crummer Graduate School of Business; Phillip Rich, Chief Investment Officer, United Community Bank; Rasha Mesharafa, Registered Associate, Wells Fargo Advisors; James Bishop, Director, Streamwise Capital; Matej Sušec, Research Analyst, DePrince, Race, and Zollo; Robert Zhang, Senior Research Analyst, DePrince, Race …

Three Essays On Mutual Fund Flows, Yi-Ju Chien

Finance and Real Estate Dissertations - Archive

This dissertation comprises three essays that investigate the impact of real interest rates (real rates) on mutual fund dynamics, specifically focusing on the performance-flow relationship (PFR) and the size-flow relationship (SFR).

Essay 1 explores how real rates influence the PFR in equity mutual funds. The hypothesis posits that higher real rates increase investors' opportunity costs, prompting them to prioritize past performance more heavily, thus intensifying the PFR. Empirical analysis supports this hypothesis, revealing that a 1% increase in real rates correlates with a 1.816% increase in PFR, holding other variables constant. This relationship is mixed across different subgroups of funds …

Accounting-Based Variables As An Early Warning Indicator Of Financial Distress In Crisis And Non-Crisis Periods, Robert J. Powell, Dung V. Dinh, Nam T. Vu, Duc H. Vo

Research outputs 2022 to 2026

Financial integration in the Association of Southeast Asian Nations (ASEAN) region is a key focus of the ASEAN Economic Community. Whereas many studies focus on modelling corporate default, this paper identifies early warning indicators of financial distress before a default, using multiple discriminant analysis (MDA) models with a sample of listed and delisted companies in the ASEAN region. The analysis examines 720 companies in 10 different industries across six ASEAN countries from 1997 to 2016. The study constructs individual models for each country as well as an overall model for the entire region, using both in-sample and out-of-sample approaches. This …

Can Frontline Employees Help Consumers Improve Their Financial Planning Behavior? Implications From Triadic Analysis, Vida Siahtiri, Welf Hermann Weiger, Christian Tetteh-Afi, Tobias Kraemer

Research outputs 2022 to 2026

Purpose: As consumer debt can substantially impair subjective well-being, it is crucial for research to gain insights into how consumers can be motivated to improve financial planning. This paper aims to investigate how frontline employees in financial services can help consumers regulate their financial planning behaviors and how financial service providers can effectively support their frontline employees in this effort through leadership and organizational climate. Design/methodology/approach: We incorporate regulatory focus theory and conservation of resource theory to develop a conceptual model that we test in a triadic study with a unique dataset collected from consumers, frontline employees, and managers in …

Monetary Policy, Macroprudential Policy, And Bank Risk-Taking Behaviour In The Indonesian Banking Industry, Cep J. Anwar, Nicholas Okot, Indra Suhendra, Dwi Indriyani, Ferry Jie

Research outputs 2022 to 2026

There is a growing consensus on the translation of monetary policy actions into changes in credit demand on account of changes in interest rates. The study investigates monetary policy, macroprudential policy, bank-specific and macroeconomic determinants of bank risk-taking from 2010–2022 in Indonesia. The study aims to address a gap in the literature because most previous studies have focused on advanced markets. First, three POLS and fixed effect models are estimated. However, the Durbin Wu-Hausman test indicated endogeneity issues with the estimated models. The second stage uses a system GMM estimation to investigate the impact of central bank rates and macroprudential …

Characteristics Of Proliferating Cryptocurrencies: A Comparative Study Between Stable And Non-Stable Cryptocurrencies, Cheuk Hang Au, Gerrard Li, Wen Shou Hsu, Po Hsu Shieh, Kris M.Y. Law

Research outputs 2022 to 2026

The emergence of cryptocurrencies has caught the attention worldwide. Some parties have considered issuing cryptocurrencies an excellent opportunity to raise capital and other businesses. However, the factors that foster the proliferation of cryptocurrency are not fully explored. This paper documented a comparative case study of USDT (a successful stablecoin) and EOS (a successful non-stable cryptocurrency). Based on our findings and previous literature, we suggested a Technology-Institution-Market (TIM) framework for cryptocurrency proliferation. We also elaborated on previous FinTech product development and adoption theories and provided some practical implications for cryptocurrency investors, issuers and regulators.

Money Doesn’T Grow On Trees: How Financial Literacy Is Learned And Developed Within American Childhood, Nate Lewis

Soaring: A Journal of Undergraduate Research

Financial literacy refers to the ability to process and utilize economic information to make informed decisions for their wellbeing. Given concerning indicators of financial outcomes within the United States, it is crucial to understand how and when strong financial behavior is developed. Efforts to enhance financial education have explored incorporating financial concepts into children’s literature and games. Yet, research indicates that financial literacy is far more rooted in the habits learned from one’s family, despite the emphasis often placed on schooling and socioeconomic status. It is therefore evident that efforts to promote financial literacy must always involve empowering family members …

Dow Jones Sustainability Indices And Esg Scores: Do They Tell The Same Story?, Minoo Tehrani, Andreas Rathgeber, Edward Dougherty, Lawrence Fulton, James Fournier

Business Faculty Publications

The focal point of this research is to compare two of the largest global organizations’ sustainability indices and scores, namely Dow Jones Sustainability Indices (DJSIs) and Standard & Poor’s Global (S&P Global) ESG scores (environmental, social, and governance), which rank companies based on their sustainability practices, and to learn if they correspond to each other. Considering that Germany is the hub of large companies from leading global industries, this research compares the ESG scores of the German companies that appear on the Dow Jones Sustainability Indices. Several statistical analyses are conducted to determine if the German companies on the DJSIs …

How Company Age Affects Esg Ratings, Jonathan Thomas

Honors Program Theses

As environmental, social, and governance, or ESG, has only gained prominence in the 21st century, a great host of data has become available from company’s sustainability reports which have yet to be fully analyzed. This paper examines the ESG ratings of publicly traded companies based on the different ages of the companies, Using company founding dates from FactSet Research Systems Inc. and ESG ratings from HIP Investor Inc. on companies that the agency evaluates, the average ESG ratings of companies were compared between four groups of companies divided based on their ages to determine whether results vary for the different …

Initial Financial Assessment Of The Fraport Greece Cluster A Concession, Dimitrios V. Siskos, Alexander Maravas, Ronald Mau

International Journal of Aviation, Aeronautics, and Aerospace

There is a worldwide trend in the privatization of transport infrastructure and airports. Likewise, the Greek government launched an extensive privatization program that granted Fraport AG the right to operate 14 airports for the next forty years. The two separate concessions for clusters of seven airports each are named "Cluster A" and "Cluster B." The financial assessment of privatization contracts is crucial so decision-makers can accurately assess the value of aviation enterprises. This paper applies the Economic Value Added (EVA) methodology and enterprise valuation on Cluster A by assessing the concession company's balance sheets and income statements. We concluded that …

Ceo Marital Status And Corporate Cash Holdings, Ahmed M. Elnahas, Md Noman Hossain, Siamak Javadi

Finance Faculty Publications

We examine the effect of CEO marital status on corporate cash holdings. Consistent with the classical agency framework, we find that firms with single CEOs hold more cash compared to otherwise similar firms with married CEOs and that the excess cash held by single CEOs is significantly discounted by shareholders. Our findings survive a battery of tests to ease endogeneity and selection bias, confirming that results are not simply reflecting innate heterogeneity in preferences. Overall, our findings indicate that a variable outside the common firm- and macro-level determinants, CEO marital status, can significantly influence corporate policies.

Credit Risk Correlation And The Cost Of Bank Loans, Siamak Javadi, Theophilus T. Osah

Finance Faculty Publications

Using several approaches to compute firms’ credit risk correlation, we provide robust empirical evidence that lenders charge higher loan spreads to borrowers with higher credit risk correlation. Consistent with the theoretical literature, we find that the credit risk correlation effect is concentrated in investment-grade firms, driven by tightening lending conditions, and more pronounced for firms with higher rollover risk. We also show that banks whose borrowers have higher average credit risk correlation, have greater default risk themselves. Overall, our results indicate that banks view credit risk correlation as an important risk factor.

A Study How Gender Equality Affect Financial Inclusion In Pakistan, Mehwish Javed

MS Islamic Banking and Finance Research Projects/Theses

The study focused on the relationship of gender equality with financial stability and financial inclusion in Pakistan. Time-series balanced annual frequency data between 2007 and 2023 (17 consecutive years) was collected from World Development Indicator (WDI), Global Financial Development Index (GFDI), and Country Policy and Institutional Assessment (CPIA) databases. The results demonstrated positive relationship between gender equality and financial inclusion. This manifested the fact that gender equality, macroeconomic policies optimizations, adequate operational procedures, and risk management are all top priority areas that require attention to generate sustainable development of the Pakistani banking sector and enhanced financial inclusion. The research proposes …

Corporate Bond Etfs, Bond Liquidity, And Etf Trading Volume, Thomas Marta

Business Faculty Publications

This study investigates the impact of corporate bond ETFs on the liquidity of their underlying securities. By alternatively utilizing panel regressions in levels, in changes, controlling for past liquidity, subsample tests—including periods of market stress and arbitrage—and a novel quasi-natural experiment, this study addresses self-selection and index effect identification issues. The findings indicate that ETFs significantly reduce transaction costs and enhance bond liquidity. Notably, the trading volume of ETFs, which is 6.67 times greater than their arbitrage, appears beneficial.