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2008

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Articles 31 - 41 of 41

Full-Text Articles in Portfolio and Security Analysis

Offshore Financial Havens: Their Role In International Capital Flows, Zhixiang Sun Jan 2008

Offshore Financial Havens: Their Role In International Capital Flows, Zhixiang Sun

Dissertations and Theses Collection (Open Access)

The purpose of this paper is to study the role of offshore financial havens in international capital flows. We examine the effects of being a tax haven, a money laundering centre or an offshore financial centre (OFC), which often overlap. We want to see whether these places are used as entrepots (which means temporary storage for funds) or as investment places or both. We mainly use two complementary data sets: bilateral cross-border asset holding and financial intermediation. One is a stock variable and the other one is a flow variable. We apply the gravity model to bilateral cross-border asset holding …


Rolling Adf Tests: Detecting Rational Bubbles In Greater China Stock Markets, Peng Huang Jan 2008

Rolling Adf Tests: Detecting Rational Bubbles In Greater China Stock Markets, Peng Huang

Dissertations and Theses Collection (Open Access)

Following Phillips, Wu and Yu (2007), this paper extends their bubble detecting work to several Greater China stock markets. Two alternative bubble detecting methods, the forward recursive ADF tests raised by Phillips et al. (2007) and the modified version, forward rolling ADF tests, are implemented and compared. Monte Carlo simulations are performed to determine the critical values of the ADF statistic under different sample size. Empirical results demonstrate that only rolling ADF tests are successful in detecting rational bubbles by overcoming the problem of periodically collapsing bubble. As we have expected, bubbles in China Mainland stock market are detected. Out …


Stock Markets And Income Inequality: A Cross-Country Study, Elizabeth Mathew Jan 2008

Stock Markets And Income Inequality: A Cross-Country Study, Elizabeth Mathew

Dissertations and Theses Collection (Open Access)

This paper conducts a comprehensive analysis to understand how stock market ratios affect net income inequality. The study of how finance impacts income distribution is relevant as the income distribution of a nation influences savings decisions, resource allocation, innovation incentives and public policy and hence impacts the process of economic development. Using a cross-sectional data set of 68 countries and panel data set of 61 countries from 1975 to 2005, I apply cross-sectional OLS and panel regressions to look at how stock market size, liquidity, and activity impact income inequality. While stock market size is found to strongly impact income …


Flow-Performance Relationship And Tournament Behavior In The Mutual Fund Industry, Baoling Ma Jan 2008

Flow-Performance Relationship And Tournament Behavior In The Mutual Fund Industry, Baoling Ma

Dissertations and Theses Collection (Open Access)

In this paper, we interpret the flow-performance relationship as an incentive scheme implicitly given to mutual fund managers by mutual fund investors. We show that the flow-performance relationship varies not only with economic activity but also across fund attributes. We provide evidence that the degree of convexity of the flow-performance relationship has a positive effect on the magnitude of tournament behavior. Different from the conventional tournament hypothesis, we show that although the convexity of the flow-performance relationship does produce implicit incentives for fund managers to modify risk-taking behavior as a function of their prior performance, whether or not the mid-year …


An Efficient Method For Maximum Likelihood Estimation Of A Stochastic Volatility Model, Junying, Shirley Huang, Jun Yu Jan 2008

An Efficient Method For Maximum Likelihood Estimation Of A Stochastic Volatility Model, Junying, Shirley Huang, Jun Yu

Research Collection Lee Kong Chian School Of Business

In this paper an efficient, simulation-based, maximumlikelihood (ML) method is proposed for estimating Taylor’sstochastic volatility (SV) model. The new method isbased on the second order Taylor approximation to the integrand.The approximation enables us to transfer the numericalproblem in the Laplace approximation and that inimportance sampling into the problem of inverting two highdimensional symmetric tri-diagonal matrices. A result recentlydeveloped in the linear algebra literature shows thatsuch an inversion has an analytic form, greatly facilitatingthe computations of the likelihood function of the SVmodel. In addition to provide parameter estimation, the newmethod offers an efficient way to filter, smooth, and forecastlatent log-volatility. The …


The Effect Of Rivals When Firms Emerge From Bankruptcy, Gary L. Caton, Jeffrey Donaldson, Jeremy Goh Jan 2008

The Effect Of Rivals When Firms Emerge From Bankruptcy, Gary L. Caton, Jeffrey Donaldson, Jeremy Goh

Research Collection Lee Kong Chian School Of Business

Studies on the announcement effects of bankruptcy filings have found that when a firm files for Chapter 11 bankruptcy protection its shareholders suffer significant losses. A recent paper extends these findings by investigating the announcement effect on rival companies, while another examines the equity performance of firms emerging from bankruptcy. We combine these two lines of inquiry by examining the effect on rivals when a firm emerges from the protection of Chapter 11. We find both significant negative stock market returns and significant negative revisions in analysts’ earnings forecasts for rivals of successfully reorganized companies.


Firm Diversification And Earnings Management: Evidence From Seasoned Equity Offerings, Chee Yeow Lim, Tiong Yang Thong, David K. Ding Jan 2008

Firm Diversification And Earnings Management: Evidence From Seasoned Equity Offerings, Chee Yeow Lim, Tiong Yang Thong, David K. Ding

Research Collection Lee Kong Chian School Of Business

Popular press suggests that diversified firms are more aggressive in managing earnings than non-diversified firms. We examine this claim in the seasoned equity offering (SEO) setting, where firms have been shown to have the incentive to manage earnings upwards. Using the cross-sectional modified Jones [(1991) J Accounting Res 29:193–228] model to measure discretionary current accruals, we find that discretionary current accruals are higher among diversified firms than in non-diversified ones. Our evidence is consistent with the view that the extent of firm diversification is directly related to the degree of earnings management. We further show that diversified issuers with high …


Implications Of Transaction Costs For The Post-Earnings-Announcement Drift, Jeffrey Ng, Rodrigo Verdi, Tjomme Rusticus Jan 2008

Implications Of Transaction Costs For The Post-Earnings-Announcement Drift, Jeffrey Ng, Rodrigo Verdi, Tjomme Rusticus

Research Collection School Of Accountancy

This paper examines the effect of transaction costs on the post–earnings announcement drift (PEAD). Using standard market microstructure features we show that transaction costs constrain the informed trades that are necessary to incorporate earnings information into price. This implies weaker return responses at the time of the earnings announcement and higher subsequent returns drift for firms with higher transaction costs. Consistent with this prediction, we find that earnings response coefficients are lower for firms with higher transaction costs. Using portfolio analyses, we find that the profits of implementing the PEAD trading strategy are significantly reduced by transaction costs. In addition, …


Test For Infinite Variance In Stock Returns, Xian Ning Yan Jan 2008

Test For Infinite Variance In Stock Returns, Xian Ning Yan

Dissertations and Theses Collection (Open Access)

The existence of second order moment or the finite variance is a commonly used assumption in financial time series analysis. We examine the validation of this condition for main stock index return series by applying the extreme value theory. We compare the performances of the adaptive Hill's estimator and the Smith's estimator for the tail index using Monte Carlo simulations for both i.i.d data and dependent data. The simulation results show that the Hill's estimator with adaptive data-based truncation number performs better in both cases. It has not only smaller bias but also smaller MSE when the true tail index …


The Cross-Section Of Stock Return And Volatility, Hongchao Han Jan 2008

The Cross-Section Of Stock Return And Volatility, Hongchao Han

Dissertations and Theses Collection (Open Access)

There has been increasing research on the cross-sectional relation between stock return and volatility. Conclusions are, however, mixed, partially because volatility or variance is modeled or parameterized in various ways. This paper, by using the Jiang and Tian (2005)'s model-free method, estimates daily option implied volatility for all US individual stocks from 1996:01 to 2006:04, and then employs this information to extract monthly volatilities and their idiosyncratic parts for cross-sectional regression analyses. We follow the Fama and French (1992) cross-sectional regression procedure and show that each of the 4 monthly measures of change of total volatility, total volatility, expected idiosyncratic …


The Impact Of Credit Watch And Bond Rating Changes On Abnormal Stock Returns For Non-Usa Domiciled Corporations, Benjamin Boon Ching Ee Jan 2008

The Impact Of Credit Watch And Bond Rating Changes On Abnormal Stock Returns For Non-Usa Domiciled Corporations, Benjamin Boon Ching Ee

Dissertations and Theses Collection (Open Access)

In this paper, we investigate whether credit watches and bond rating changes issued by Moodys' and S&P Credit Rating Agencies provide significant new information to investors for Non-USA domiciled corporations. We also examine whether the stock related cumulative abnormal return (CAR) differs according to the classification of the country of domicile (emerging or developed) of the corporation, and varies by state of the local stock market during the time of the rating event.
We find that on average, negative credit watches as well as long term rating downgrades result in significant stock related CAR for Non-USA domiciled 4 corporations. However, …