Finance and Financial Management Commons^™

Sustainable Architecture Design: Environmental And Economic Benefits, Michael Babcock

Senior Honors Theses

This thesis examines the movement of environmentalism, and its impact on architecture and construction. During an interview with a professional architect, a basis for research of sustainable design was devised, when he explained that “good” architecture attempts to holistically integrate the external and built environment. Presently, the main measurement for sustainability is energy efficiency. Therefore, architects constantly implement new technology in an attempt to unify both the external and built environment in an energy efficient manner. Furthermore, this thesis provides an environmental and financial cost analysis of implementing sustainable design and build. Research shows that the life cycle and up-front …

Media Coverage And The Stock Market Valuation Of Tarp Participating Banks, Tee Yong Jeffrey Ng, Florin P. Vasvari, Regina Wittenberg-Moerman

Research Collection School Of Accountancy

We examine the impact of media coverage of the Capital Purchase Program (CPP) under the Troubled Assets Relief Program on the equity market valuation of participating bank holding companies (CPP banks). We document substantial negative coverage of the CPP and its participants over the five quarters following the program's initiation. We find that the extent of negative media coverage about the CPP exerted substantial downward pressure on the stock returns of CPP banks, decreasing their valuation relative to bank holding companies not participating in the program. We show that our findings cannot be explained by differences in the banks’ financial …

Thought Leaders: Faculty Who Shape Business Theory And Practice Through Research

Business Exchange

Profiles of seven DePaul professors and the research they are conducting in areas as diverse as work-life balance and investor behavior: James D. Shilling, Real Estate Studies; R. David McLean, Investment Management; Kelly Richmond Pope, Accountancy; Andrew Gallen, Marketing; Alyssa J. Westring, Management; William Sander, Economics; and Misty Johanson, Hospitality Leadership.

Both A Borrower And A Lender Be: A Look At The Local Economy And Credit Culture In The Tarap Valley In Dolpa, Nepal, Alexa Adams

Independent Study Project (ISP) Collection

Being in such a remote location, the Tarap valley in the Dolpa district of Nepal has only recently experienced the influences of a modern, cash-based economy in full force. Historically, the economy of the Dolpo-pa in Dho Tarap was almost entirely rooted in agriculture, animal husbandry, barter, and exchange. While these themes are still incredibly important foundations of the economic practices and systems in the valley, the introduction of Yartsa gumbu, the highly valuable caterpillar fungus used in Chinese medicine, has transformed the local economy of the region and propelled it into the arms of a consumeristoriented and cash-based economy. …

Do Analysts Understand The Economic And Reporting Complexities Of Derivatives?, Hye Sun Chang, Michael Donohoe, Theodore Sougiannis

Research Collection School Of Accountancy

We investigate whether and how the complexity of derivatives influences analysts earnings forecast properties. Using a difference-in-differences design, we find that, relative to a matched control sample of non-users, analysts earnings forecasts for new derivatives users are less accurate and more dispersed after derivatives initiation. These results do not appear to be driven by the economic complexity of derivatives, but rather the financial reporting of such economic complexity. Overall, despite their financial expertise, analysts routinely misjudge the earnings implications of firms derivatives activity. However, we find evidence that a series of derivatives accounting standards has helped analysts improve their forecasts …

Benchmarking And Currency Risk, Massimo Massa, Yanbo Wang, Hong Zhang

Research Collection Lee Kong Chian School Of Business

We show that the currency risk embedded in the benchmarks of international mutual funds negatively affects fund performance. More specifically, a high benchmark-implied currency risk induces funds to invest in markets with less volatile currencies, leading to a higher degree of currency concentration in portfolio holdings. This currency concentration, however, departs from the optimal equity allocation strategy across countries and reduces fund performance. We document that funds resorting to high currency concentrations underperform funds with low currency concentrations by as much as 1%-2% per year.

Has Local Informational Advantage Disappeared?, Gennaro Bernile, Alok Kumar, Johan Sulaeman, Qin (Emma) Wang

Research Collection Lee Kong Chian School Of Business

This study examines how changes in the information environment affect the informational advantage of geographically proximate agents. We find that the long-term advantage of local agents disappeared at the turn of the millennium. This is accompanied by the reduction in local bias of institutional investors and equity analysts. However, institutional investors continue to trade local stocks disproportionately more often than nonlocal stocks; moreover, their local trades outperform nonlocal trades in the short term -- even for large and liquid stocks. Our results are consistent with improvements in the information environment shortening the horizon of geographic proximity-based informational advantage.

Two Essays On Investor Emotions And Their Effects In Financial Markets, Jiancheng Shen

Finance Theses & Dissertations

This dissertation provides empirical evidences on media-based investor emotions in predicting stock return, conditional volatility, and stock and bond return comovements.

We first studied the interaction between US media content and the US stock market returns and volatility. We utilize propriety investor sentiment measures developed by Thompson Reuters MarketPsych. We select four measures of investor sentiment that reflect both pessimism and optimism of small investors. Our objective is two-fold. First, we examine the ability of these sentiment measures to predict market returns. For this purpose, we use dynamic Vector Auto-Regressive models. Second, we are interested in exploring the effects of …

Two Essays On Short Selling, Zhaobo Zhu

Finance Theses & Dissertations

This dissertation provides some new evidence that the information contained in short selling is informative about future returns, confirming the role of short sellers in the price discovery process.

The first essay examines the cross-sectional relation between the change in short interest and expected stock returns. NYSE/AMEX stocks with large decreases (increases) in short interest over past medium-term horizon experience significant and positive (negative) abnormal returns. Moreover, the positive abnormal returns are larger in absolute value and are more persistent than negative abnormal returns. The return spread between bottom and top deciles is economically and statistically significant and persistent. The …

Essays On The Equity Risk Premium, Mohamed Mehdi Rahoui

Finance Theses & Dissertations

The equity risk premium (ERP) is an essential component of any asset pricing model both for academics and practitioners alike. Nevertheless, the financial literature does not accord much attention to the ERP estimation issues (Damodaran, 2015). The first chapter of this dissertation gives a summary of the recent literature review on the subject of the ERP. The second chapter explores four of the most commonly cited models in literature for estimating the ERP: the Historical Mean of Realized Returns Model (HMRRM), the Dividend Discount Model (DDM), the Free Cash Flow Model (FCFM), and the Sharpe Ratio Model (SRM). The results …

Clawback Provisions In Real Estate Investment Trusts, George D. Cashman, David M. Harrison, Christine A. Panasian

Finance Faculty Research and Publications

Using a sample of 195 unique real estate investment trusts (REITs), we examine factors related to the adoption of clawback provisions within managerial compensation contracts. In general, we find strong and consistent empirical evidence that clawback provision are directly related to firm size, complexity, leverage, growth options, monitoring incentives, and CEO performance incentives. We also find that clawbacks are associated with enhanced market and accounting performance, with stronger performance relations observed for adoption decisions tied directly to regulatory mandates. In sum, we conclude compensation clawback provisions represent a value-relevant, strategic governance mechanism for REITs.

China Looks To Add Credit Default Swaps, Steven D. Dolvin

All Chapters

Credit Default Swaps (CDSs) enable investors to hedge the risk of bond (or other credit securities) default. Like any derivative, they essentially allow investors to transfer risk -- from hedgers to speculators (or even between hedgers or speculators with different exposures). See article here, Reuters.

Income And Spending, Steven D. Dolvin

All Chapters

Normally higher incomes lead to higher spending, but recent increases in income seem to be headed into savings. This creates a mixed picture for consumer stocks. See article here, LA Times.

Release Of Restricted Funds And How To Account For Them, Annetta M. Gibson

Faculty Publications

Presentation for treasurers of the North American Division, March 29, 2016

An Examination Of Control Fraud In Non-Banking Industries, Kaylie Takahashi

Honors Theses

William Black’s (2005) control fraud theory suggests accounting fraud initiated by CEOs is more damaging than accounting fraud that is not. However, this theory has only been applied anecdotally to financial institutions. I test Black’s theory using a sample of manufacturing, merchandising, and service firms that engaged in accounting fraud from 2007-2014. I hypothesize that firms which commit CEO-led fraud will exhibit greater growth, leverage, and have higher CEO compensation. My findings do not show that there is any evidence that control frauds are more damaging than other accounting frauds that do not involve the CEO.

Determining The Optimal Work Breakdown Structure For Government Acquisition Contracts, Brian J. Fitzpatrick

Theses and Dissertations

The optimal level of Government Contract Work Breakdown Structure (G-CWBS) reporting for the purposes of Earned Value Management was inspected. The G-Score Metric was proposed, which can quantitatively grade a G-CWBS, based on a new method of calculating an Estimate At Completion (EAC) cost for each reported element. A random program generator created in R replicated the characteristics of DOD program artifacts retrieved from the Cost Analysis Data Enterprise (CADE) system. The generated artifacts were validated as a population, however validation at the demographic combination level using an artificial neural network was inconclusive. Comparative WBS forms were created for a …

Predicting Schedule Duration For Defense Acquisition Programs: Program Initiation To Initial Operational Capability, Christopher A. Jimenez

Theses and Dissertations

Accurately predicting the most realistic schedule for a defense acquisitions program is an extremely difficult task considering the inherent risk and uncertainties present in the early stages of a program. We use a multiple regression analysis to predict schedule duration in a defense acquisition program. The prediction scope of our research is limited to predicting schedule duration from program initiation to initial operation capability (IOC).We use the data from 56 programs across all services, which was acquired from a SAR database created by RAND. We were able to achieve an R2 of 0.429 and an Adjusted R2 of 0.384 in …

Predicting Cost Growth Using Programs Reviews And Milestones For Dod Aircraft, Scott J. Kozlak

Theses and Dissertations

Past research shows predicting cost growth is an important topic with DoD systems. Researchers have attempted to predict total program cost growth as well as identify predictors of program cost growth. Our research addresses this through examining cost growth at reviews and milestones along an aircrafts schedule. We assess cost growth factors at four major reviews, Critical Design Review, First Flight, Development Test and Evaluation End, and Initial Operating Capability. The first portion of the analysis focuses on identifying cost growth factors and percent of total cost growth at the four program reviews. The second portion identifies predictors of cost …

Earned Value Reporting On Agile Software Development Programs Within The Department Of Defense, Elizabeth G. Hodson

Theses and Dissertations

The correct measurement of earned value on agile software development programs has recently been identified as a concern by software developers implementing agile development methods. This research attempts to address the difficulties in reporting earned value on agile development programs, and the differences between the measures of completion in agile development versus earned value reporting. The major difference was identified to be in translating between the work originally planned and the work that was “recently” planned as part of the agile development process. This difference, if not transparent, leads to different measurements of earned value and inconsistent reports of a …

Cost Analysis Reform: Where Do We Go From Here? A Delphi Study Of Views Of Leading Experts, Thomas W. Lamb

Theses and Dissertations

The Department of Defense (DOD) has faced many fiscal challenges in recent years, and these challenges have driven cost saving initiatives across all services and career fields. Many improvement initiatives or new policies aimed at better estimating, controlling, and reducing costs have been initiated to meet fiscal challenges. The senior leaders within the cost analysis workforce are faced with the challenge of managing change within their organizations to improve cost analysis processes and practices, while continuing to provide key decision support in the form of ongoing quality cost estimates.

This purpose of this research is to generate applicable research thrust …

Conflict Of Interest In 401(K) Funds, Steven D. Dolvin

All Chapters

Companies often hire third party administrators (TPAs) to manage their respective 401(k) plans. Some companies simply provide documentation and advice; however, other TPAs actually offer their own proprietary (in-house) funds as investment alternatives. New research () shows that these funds often carry higher fees and have lower returns, illustrating the impact of a conflict of interest. This is particularly pronounced for banks and insurance companies acting as TPAs.

The Rise Of The Robo-Advisor, Steven D. Dolvin

All Chapters

In response to high fees and varying levels of quality/service across traditional human advisors, new firms are transitioning to a fully automated framework. These so-called "Robo-Advisors" provide fully automated allocation and management strategies. This approach significantly reduces costs and standardizes risk-return matching strategies. See article here, CFA Institute.

2016 Private Capital Markets Report, Craig R. Everett

Pepperdine Private Capital Markets Report

The Pepperdine private cost of capital survey was originally launched in 2007 and is the first comprehensive and simultaneous investigation of the major private capital market segments. This year’s survey specifically examined the behavior of senior lenders, asset‐based lenders, mezzanine funds, private equity groups, venture capital firms, angel investors, privately‐held businesses, investment bankers, business brokers, limited partners, and business appraisers. The Pepperdine survey investigated, for each private capital market segment, the important benchmarks that must be met in order to qualify for capital, how much capital is typically accessible, what the required returns are for extending capital in today’s economic …

Establishing Construct Validity And Reliability: Pilot Testing Of A Qualitative Interview For Research In Takaful (Islamic Insurance), Maryam Dikko

The Qualitative Report

This paper describes the process of the conduct of preliminary tests to determine the construct and content validity of the chosen data collection method for a study into the relationship between Islamic principles and objectives, Islamic financial law and takaful (slamic Insurance) operations and practices in Nigeria. Semi-structured interviews were tested on a select group of respondents mirroring the intended subjects in the field. The pilot test showed the construct to be both valid and reliable while giving the opportunity to insert refinements to the research tool.

Nasdaq To Acquire Ise, Steven D. Dolvin

All Chapters

Nasdaq is set to acquire the International Securities Exchange (ISE). The combined firm will manage six exchanges, representing 38 percent of US options trading. This will surpass the CBOE, which manages about 27 percent of the option trading market. See article here, Bloomberg.

Indiana Transportation Funding Update, Dan Brassard

Purdue Road School

This presentation will provide an update on the current and future state of Indiana’s transportation funding.

Target Date Funds And Dollar Cost Averaging, Steven D. Dolvin

All Chapters

Target Date Funds simplify the investment process for investors, as such funds oversee changing asset allocations through time. A secondary benefit is that with these "set it and forget it" funds, investors are less likely to try to time the market. This is good since such activity generally hurts (rather than helps) most investors. In fact, staying the course allows investors to benefit from downside market volatility, as continued investment enables investors to buy more shares at lower prices, so-called dollar cost averaging. See article here, WSJ.

The New Requirements Relating To Going Concern Evaluation And Disclosure Provide A Critical Improvement To The Financial Statements Taken As A Whole, Achraf A. Seyam, Sharon Brickman

Publications and Research

The going concern principle assumes that an entity will continue to exist into the future. This assumption implies that the entity will not be compelled to end their operations, liquidate their assets, or go into bankruptcy. It is an integral assumption in financial statements since it allows for the deferral of recognition of certain expenses until a period of time into the future, when the company is still assumed to exist. Members of management, as well as financial statement auditors, are required to identify signs that could indicate that an entity will not be able to continue their operations into …

Federal Home Loan Bank Advances And Small Business Lending, Travis R. Davidson, W. Gary Simpson

The Journal of Entrepreneurial Finance

Adequate credit availability for small businesses is an important public policy issue because small businesses are essential for employment and economic growth for the economy. The Gramm-Leach-Bliley Act of 1999 includes a provision that could potentially support financial institutions in the provision of credit to small businesses through the use of advances from the Federal Home Loan Bank (FHLB) system that are secured with small business loans. We explore the relation between FHLB advances to financial institutions and the provision of loans to small businesses. We find a positive link between the change in FHLB advances and the change in …

Commercial Bank Small Business Lending Pre And Post Crisis, Kevin T. Jacques, Richard Moylan, Peter J. Nigro

The Journal of Entrepreneurial Finance

We analyze small business lending at U.S. commercial banks, how it has changed over time and how it differs by bank size. Specifically, we examine the impact of government policy intervention on small business lending in the aftermath of the financial crisis. We find several important results. First, we find that the Troubled-Asset Relief Program’s (TARP) $200 billion Capital Purchase Program (CPP) had little impact on the banks that received capital injections’ small business lending. Second, the Small Business Loan Fund (SBLF) lending program appears to have been a success as banks participating in the loan fund increased their lending …