Finance and Financial Management Commons^™

The Sarbanes Oxley Act's Contribution To Curtailing Corporate Bribery, Karen Cascini, Alan Delfavero, Mario Mililli

WCBT Faculty Publications

In the wake of corporate scandals occurring in the early 2000s, a need for stricter regulation was deemed necessary by the investors of U.S. public companies. In 2002, the Sarbanes-Oxley Act (SoX) was created. Accordingly, under the rules of SoX, U.S. corporations were faced with increased oversight and also needed to substantially improve their internal controls. As companies began to scrutinize their internal affairs more closely, some businesses detected other forms of criminal activity occurring internally, such as bribery. Those companies and individuals found to have committed bribery have violated the Foreign Corrupt Practices Act of 1977 (FCPA). Throughout this …

Two Essays On The Impact Of Rational And Irrational Investor Sentiments On Equity Market Return And Volatility: Evidence From The U.S. And Brazil, Pablo Javier Calafiore

Theses and Dissertations - UTB/UTPA

This dissertation consists of two essays on how investor sentiments affect the returns and volatility of the Brazilian stock market. Both essays share a similar methodological approach. The first one analyzes the effect of investor sentiments on the returns and volatility of the Brazilian stock market using a model that accounts for fundamentals (rational) and noise components (irrational) of investor sentiments on the Sao Paulo leading index Bovespa. This research finds a statistically significant positive (negative) impact of rational (irrational) sentiments on market returns. Moreover, there are statistically significant impacts of irrational components of the sentiment indexes on Bovespa volatility …

A New Regulatory Framework Of Financial Institutions In The Aftermath Of The Global Financial Crisis, Ingrid Zantis

WCBT Undergraduate Publications

Three years since the outbreak of the global financial and economic crisis and two years since the global markets’ turmoil following the Lehman Brothers’ bankruptcy and the US government’s bail-out of AIG, reforming the regulatory structure for financial institutions and platforms has achieved some visible progress. Though the new architecture is far from being finished, the main challenge is to implement what has been agreed upon in commitments and framework legislation, without losing track of the target to soundly improve global financial stability and effectively resolve future global crises on its way.

Against this background, this paper examines the emerging …

Auditor Choice, Audit Fees And Internal Governance In Family Firms, Shaohua He

Lingnan Theses

I study the role of auditing in mitigating agency concerns in family firms. Family firms face less severe agency problems due to the separation of ownership and control (Type 1) but more severe agency problems between controlling and noncontrolling shareholders (Type 2). As family firms make up a large part of most free enterprise economies it is important to examine these two agency problems with respect to auditor choice and audit effort. I find that family firms are more likely to choose a specialist auditor than nonfamily firms, consistent with the argument that family firms need to signal their non-expropriating …

How The Madoff Fraud Could Affect Your Cpa Practice, Stephen Scarpati

WCBT Faculty Publications

With an estimated $65 billion lost from trust funds, retirement plans, pensions, investment funds, inheritance monies, and nonprofit organizations, many people have been adversely affected by the Ponzi scheme perpetrated by Bernard L. Madoff. When you combine a lot of lost money with a lot of angry people, the result is a lot of lawsuits. The breadth of those lawsuits will encompass all associated with the affected organizations--including CPAs. Those messages were loud and clear at the May 27, 2009, breakfast symposium "Are CPAs the Next Madoff Victims? The Accountant's Liability," sponsored by The CPA Journal.

The U.S. Economic Crisis: Another "Lost Decade"?, Paula Chungsathaporn

Honors College Theses

America is experiencing the worst economic downturn since the Great Depression originating with problems from mortgage backed securities and seeping into every major sector in the economy. We have witnessed the downfall or government takeover of some of the most powerful companies in the country, contributing to the highest unemployment rate America has seen in decades. During the 1990s, Japan experienced what is commonly referred to as “the lost decade,” a period of prolonged stagnant growth. Many similarities can be drawn between the current U.S. crisis and the Japanese crisis of the late 90s. The macroeconomic conditions that caused the …

Venture Capitalists' Confidence, Capital Commitments, And Capital Investments, Mark V. Cannice, Cathy S. Goldberg

Entrepreneurship, Innovation, and Strategy

Confidence among consumers and managers continues to be a closely watched economic indicator. Venture capitalists are essential in the development of many high-growth ventures; however, VC sentiment has not before been systematically tracked. We surveyed VC confidence quarterly since Q1 2004 and find that increasing VC confidence is coincident with increasing VC investment; however, VC confidence decreases one quarter after their increased investment activity, possibly due to buyer's remorse. Additionally, VC confidence decreases one quarter after increasing capital commitments to VC industry funds, possibly due to concern of too much money chasing too few good deals.

Stock Markets And Household Wealth: Can A Stock Market Crash Cause A Recession In The U.S. Economy?, Ishan Singh

Honors Theses

Stock market wealth effects on the level of consumption in the United States economy have been constantly debated; there is evidence for arguments for and against its prominence and its symmetry. This paper seeks to investigate the strength of its negative effect by creating models to analyze unexpected shocks to the Standard and Poor's 500 index. First, a transmission mechanism between the stock market and GDP is established through the use of second-order vector autoregressive models. Following which, theory from the life cycle model and adaptations of previous researchers' models are used to create a structural model. This paper finds …

An Assessment Of The Impact Of The Sarbanes-Oxley Act On The Investigation Violations Of The Foreign Corrupt Practices Act, Karen Cascini, Alan L. Delfavero

WCBT Faculty Publications

During the late 1990s and early 2000s, a plethora of corporate scandals occurred. Due to these corporate debacles, corporate executives have been placed under fire. In response to such unethical conduct with regard to internal practices and financial reporting, legislation has been passed in order to ensure that corporations conduct their business in an ethical manner. The purpose of this paper is to assess the connection between the Foreign Corrupt Practices Act of 1977 (FCPA) and the Sarbanes-Oxley Act of 2002 (SOx), to determine whether SOx has influenced the FCPA’s investigative violation activities by examining the number of such investigations …

Real Estate Mutual Funds: A Style Analysis, Crystal Lin, Kenneth Yung

Finance Faculty Publications

We find that the characteristics of real estate related securities are different from those of the general common equities. To help investors understand better the products offered by real estate mutual funds, we develop style descriptors that are specifically created for real estate related securities. Among the universe of real estate securities, we find real estate funds tilt toward large stocks and favor growth moderately over value. Growth managers outperform value mangers in this sector by 1.51% to 2.30% per year. However, there is evidence of shifts in the investment style among the funds. Our results help investors in evaluating …

Financing Port Dredging Costs: Taxes Versus User Fees, Wayne K. Talley

Economics Faculty Publications

The article examines the use of user fee and tax programs to finance the cost of port dredging. The article discusses the U.S. Water Resources Development Act, the Harbor Maintenance Trust Fund, the Harbor Maintenance Tax, which is an ad valorem tax on the cargo's value, the Omnibus Budget Reconciliation Act, articles from the General Agreement on Tariffs and Trade, national user fee program proposals by the former U.S. President Bill Clinton administration, Moriarity's Rule, and the Shapley Value Rule.

Corporate Governance, Public Accounting Firm And Multinational Corporation: The Us Sox Act Perspective, Marc Massoud, Eunsup Daniel Shim

WCBT Faculty Publications

The purpose of this paper is to review US corporate governance systems and to highlight the mandated roles of audit committee and external auditor within the SOX Act. In addition, it discusses requirements and implications of the SOX Act for the foreign accounting firms and multinational corporations. Finally this paper provides a perspective on improvement of corporate governance and financial integrity. In order to regain trust from the financial market, the SOX Act mandates (1) to improve auditor’s independence by reducing conflicts of interest; (2) to increase corporate financial reporting responsibility by requiring a CEO or a CFO certify accuracy …

Changes In The Intertemporal Relation Between The U.S. And Japanese Stock Markets, Rustin Paul Diehl

Undergraduate Honors Capstone Projects

This paper finds a decreasing relationship between daytime trading in previous-day US equity markets and the Japanese market performance in the current period. On the other hand, the connection has increased between current US equity markets and current, after-hour Japanese markets. These changes have corrected a previous violation of the efficient market hypothesis, and suggest that as internet trading has increased volumes of off-hour trading, the Japanese equity markets have been better able to digest information from current US markets.

An Empirical Review Of Us Corporate Default Swap Valuation: The Implications Of Functional Forms, Kwamie Dunbar

WCBT Faculty Publications

This paper first develops a reduced form three-factor model for valuing credit default premia that is used to provide implicit prices which are then compared with market prices of credit default swaps to determine if swap rates adequately reflects market risks. This model extends Jarrow (2001) two-factor model by adding three new features to enhance the effectiveness of the model and add to the growing debate on the empirical pricing of credit default swap and the effectiveness of reduce form models. Firstly, the extended model retains Jarrow's mean reverting properties but will be extended to be arbitrage free because of …

House Prices And Fundamental Value, John Krainer, Chi Shen Wei

Research Collection Lee Kong Chian School Of Business

The performance of the residential housing market over the last ten years has been remarkable. According to the Office of Federal Housing Enterprise Oversight (OFHEO), house prices have appreciated at an annual rate of 5.4% on average (68.9% over the whole time period). Perhaps even more remarkable is that the performance was strong even when economic activity overall was weak. Average annual appreciation rates have been 7.4% (26% in total) since the collapse of the Nasdaq in 2000 and 7.1% (20% in total) since 2001:Q1, the beginning of the 2001 recession. In contrast, since the start of the 2001 recession, …

Investigating The Effect Of The International Stock Indexes On The United States Stock Index Futures, Zehlha Illhan Ertuna

Theses and Dissertations in Business Administration

The futures market is used extensively for price discovery, arbitrage, and hedging. Since their introduction in the 1980's, the stock index futures have also become an active market and a very important research area. Any additional knowledge to understand the underlying effects on the index will help both investors and researchers. In this study, I examine the role of informational flow from the world's major stock markets (British, French, German, Japanese) to the U.S. futures market in terms of forming expectations, and offer new insights regarding the informational efficiency of the futures markets in an intenational perspective. State space modeling …

An International Survey Of Free Banking Periods: Us, California, France, Australia, Switzerland, And Scotland, Frank Doti, David Cassell

Economics Faculty Articles and Research

This article studies free banking periods worlwide.

Reverse Lbo Underpricing: Information Asymmetry Or Price Support, Gregory Noronha, Kenneth Yung

Finance Faculty Publications

Most studies attribute the underpricing of initial public offerings of equity securities to the ex ante uncertainty resulting from the information differential between the firm going public and the market. Ruud (1991, 1993), however, proposes that underpricing could result from underwriter price support in the early after-market. A paper examines firms that were once public, went private via leveraged buyout, and then went public again. It is reasonable to expect that since these reverse LBOs (RLBO) were once publicly traded, they should have less of an information differential with the market than firms going public for the 1st time. Tests …

Opportunities For Improving The Ways We Use Water, Thomas M. Stetson

Western Water: Expanding Uses/Finite Supplies (Summer Conference, June 2-4)

40 pages.

Contains references.

Case Study Of The Financing Of The Operations Of A Government Agency Under The Industrial Fund, Cecil Franklin Jones

Master's Theses

Savings aggregating millions of dollars annually have been made possible.by fundamental improvements of a Government-wide nature and the modernization and streamlining of accounting methods and systems of individual departments and agencies. The impetus for instituting these changes in fiscal procedures was provided in the recommendations of the Hoover Commission as submitted to Congress February 15, 1949.

The pilot installation, or "guinea. pig", was the Military Sea Transportation Service, a military agency within the Navy Department to which the author had been assigned as Assistant to the Comptroller after recall to active duty in November 1950. This material is presented in …