This research paper explores differences in company performance levels, as measured by selected company fundamentals and annual return, with regard to the marital status of top executives, specifically the chief executive officer and the chief financial officer. It examines whether the differences in firm performance are determined by the marital status of the respective business executive. Groups of never married, married, and divorced executives are compared against each other to establish if and how the company performance changes between these groups. Summary statistics of the examined variables in conjunction with the results of the simple and multiple regression analyses indicate that marriage clearly has a detrimental effect on a firm’s performance. By contrast, divorce is beneficial as it contributes to improved firm performance. As previous research has revealed, professional performance of top executives, particularly CEOs, as well as money managers is influenced by distractions originating in their personal life events. Because human attention is naturally limited, major life events, such as marriage or divorce, can have detrimental effects on the professional performance of a business executive, and therefore also on the firm performance. Consistent with the results of previous research, the data analysis identifies marital status of CEOs and CFOs as a significant determinant of firm performance.

In this thesis, I investigate the amount of underpricing in FinTech companies compared to non-FinTech companies. Both data sets contain thirty companies spanning from 1993 to 2018. Each FinTech company is matched to a non-FinTech company by year and comparatively similar revenue. Prior research explores underpricing on different industries, but it hasn’t yet explored underpricing in the FinTech segment. The variables considered in this paper are offer price, close price, shares offered, number of banks involved, fees per share, and money left on the table. I find some evidence that the average amount of underpricing in both dollars and by percent is higher with non-FinTech companies than FinTech companies. However, difference in means tests show statistically significant differences only for the number of shares offered. It cannot be reliably said whether investors perceive a higher risk in FinTech companies or non-FinTech companies.

No description available.

No description available.

<p>This thesis explores the following three important issues in the field of corporate finance: window dressing in corporate cash holdings, market effects of SEC regulation of short-term borrowing disclosure and market response to dividend change announcements by unregulated versus regulated firms.</p> <p>First, I find strong evidence of upward window dressing in cash holdings by U.S. industrial firms during the fourth fiscal quarter. This behavior is robust to several controls and a December year-end dummy. Further cross-sectional analysis reveals that the window dressing is sensitive to firm size and level of information asymmetry. I also find that firms manipulate discretionary accruals to dress up fourth quarter cash, perhaps to gain favourable credit terms on issuing short-term debt.</p> <p>Second, I use portfolios of financial and non-financial SEC registrants to examine the market reaction to proposed SEC short-term borrowing disclosure regulation. Using event study methodology, I find that the market reaction is positive and significant at the announcement date and negative and significant at the voting date. Overall, I observe a positive market reaction, indicating the usefulness of the disclosure from the vantage point of users. The results for various subsets confirm the expectations and suggest that a “one-size-fits-all” approach to regulation is undesirable.</p> <p>Finally, I use large samples of dividend increase and decrease announcements for the period 1960 to 2010 in order to compare stock price reactions of unregulated and regulated firms. I observe a stronger market reaction to the dividend increase announcements of unregulated firms compared to those of regulated firms after controlling for firm characteristics, market factors and contemporaneous earnings announcements, a result consistent with the dividend signaling hypothesis and uniqueness argument for regulated firms. However, I find that the market reaction to dividend decrease announcements is similar for unregulated and regulated firms. The cross-sectional analysis further confirms that the stronger stock price reaction to dividend increase announcements of unregulated firms is associated with the level of information asymmetry.</p> / Doctor of Philosophy (PhD)

[pt] Uma extensa literatura em Finanças Corporativas sugere que investidores e empresas respondem a incentivos advindos do sistema jurídico vigente. Neste trabalho, exibimos um exemplo em que várias empresas brasileiras reagiram com atraso à Lei 9249 de dezembro de 1995, que, com uma simples trocas de rubricas contábeis (dividendos para juros sobre capital), permite reduzir o lucro tributável da pessoa jurídica. Documentamos o atraso médio no uso do benefício fiscal e, através de um modelo de Regressão Descontínua, mostramos que o atraso médio está relacionado à baixa sofisticação jurídica das empresas. / [en] An extensive literature in Corporate Finance suggests that investors and companies respond to incentives arising from the legal system. In this paper, we show an example in which various Brazilian companies reacted late to Law 9249 of December 1995, with a simple exchange of accounting lines (dividends to interest on capital), reduces the taxable income of the corporation. Documented the average delay in the use of the tax benefit and, through a Discontinuous Regression model, we show that the average delay is related to the low sophistication of legal firms.

Thesis advisor: Donald Cox / Does a CEO’s narcissism influence the company’s stock? Would it matter if it is a media company? The Efficient Market Hypothesis claims that it matters little given market efficiency, as narcissism has been priced in stock based on the Capital Asset Pricing Model. Existing literature is divided on whether CEO narcissism influences corporate efficiency. This paper refines assumptions on asset pricing by indicating when market inefficiency occurs through panel studies, which the Adaptative Market Hypothesis overlooks. A case study on Elon Musk suggests that the CEO’s narcissism with media involvement creates temporary market inefficiency. This paper innovatively combines an event study of Elon Musk's Twitter activities on Tesla and Twitter with a panel analysis of 17 S&P 500 CEOs. The finding shows that younger and female CEOs, who derive narcissism supply and lead media companies, are more inclined to take risks on stock returns. This result suggests re-evaluating stock market efficiency to include CEO demographics and personality, which extends beyond traditional CAPM models. / Thesis (BA) — Boston College, 2024. / Submitted to: Boston College. Morrissey School of Arts and Sciences. / Discipline: Economics. / Discipline: Departmental Honors.

In the first essay we study whether and how personal off-the-job managerial indiscretions impact corporate insiders’ trading behavior. We find that executives accused of personal indiscretions earn significantly higher abnormal returns from their insider purchases and sales in a 15-day window around each trade. The results are robust to matched sample analyses. Further, insiders’ historical trading pattern or corporate culture has less explanatory power than personal attributes. We also document that exposure of these indiscretions to the public provides a disciplinary effect, as insider trading profits significantly drop following the announcement of an indiscretion, despite this drop being temporary. Corporate governance mechanisms, such as blackout policies, significantly reduce abnormal returns earned by indiscretion executives. In the second essay we find that individualistic countries regulate insider trading activities more intensely. The result is robust to controlling for alternative culture variables, additional controls, and instrumental variable analysis. We also document that individualism’s effect is magnified in democratic countries. In addition, we study the economic and financial consequences of individualism, insider trading regulation, and its enforcement. The analysis suggests that individualism and the enforcement of insider trading regulation promote financial development. Interaction effects reveal that individualism and insider trading regulation serve as complements to promote financial development. These findings contribute to the insider trading debate since regulation alone may not be the primary determinant of market efficiency. Combined, our results challenge prior works concluding that individualism is anti-regulation. In the last essay we explore the relation between insider trading regulation and the cost of equity in a country. Bhattacharya and Daouk (2002) conduct a comprehensive survey of 103 countries on whether insider trading law exists and has been enforced. They find that the enforcement of insider trading law, not the existence, can significantly reduce the cost of equity in a country. In this paper, we use an updated sample to reevaluate this topic and answer whether this relation still holds after adding 20 years of new data. Preliminary results show that countries with lighter insider trading regulation and countries that have enforced insider trading laws tend to experience lower cost of equity.

Diese Dissertation besteht aus drei Essays, welche empirisch den Einfluss von Manager-Optimismus auf verschiedene unternehmenspolitische Entscheidungen untersuchen. Der Ausdruck Manager-Optimismus wird hierbei verwendet um Agenten (Manager) zu beschreiben, die im Interesse der Prinzipale (Aktionäre) zu handeln glauben, aber tatsächlich ins Positive verzerrte Vorstellungen über ihre eigenen Fähigkeiten und somit über die zukünftige Performance ihrer Firmen haben. Das erste Papier untersucht den Einfluss von Manager-Optimismus auf Ausstattungsmerkmale von Fremdkapitalverträgen. Konsistent mit nach oben verzerrten Erwartungen über die zukünftigen Cash Flows ihrer Firmen zeigt sich, dass Firmen mit übermäßig optimistischen Managern häufiger Performance abhängige Verträge nutzen und zugleich eine schlechtere Performance nach Aufnahme des Fremdkapitals aufweisen als solche mit rationalen Managern. Der zweite Artikel untersucht unternehmerisches Risikomanagement. Es stellt sich heraus, dass Firmen mit optimistischen Managern signifikant weniger wahrscheinlich Finanzderivate zur Absicherung ihrer Fremdwährungsrisiken nutzen als solche mit rationalen Managern. Dieses Verhalten ist mit einer Unterschätzung von Insolvenzkosten bzw. Kosten einer finanziellen Notlage konsistent. Der dritte Teil der Arbeit untersucht empirisch das Verhältnis zwischen Manager-Optimismus und der Nutzung von großen Abschreibungen im Rahmen von CEO-Wechseln. Nach dem Abgang von CEOs kann man häufig beobachten, dass deren Nachfolger ein so genanntes big bath accounting durchführen. Hierbei werden durch Abschreibungen Verluste dem Vorgänger zugeschrieben und Verdienste für zukünftige Performanceverbesserungen für sich beansprucht. In Übereinstimmung mit den verzerrten Erwartungen über zukünftige Cash Flows ihrer Firmen zeigt sich, dass Unternehmen, welche einen optimistischen Manager einstellen, weniger wahrscheinlich ein solches earnings bath durchführen, als Firmen, die rationale Manager einstellen. / This thesis consists of three essays that empirically investigate to what extent managerial optimism affects corporate financial policy decisions. The term managerial optimism is used to describe agents (managers), who believe to act in the principals’ (shareholders’) best interest but in fact have upwardly biased views about their own abilities and consequently about the performance of their firms. The first paper investigates the impact of managerial optimism on debt contract design. Consistent with their upwardly biased view on their firm’s future cash flow, we find that firms with overly optimistic managers are more likely to choose performance sensitive debt (PSD) contracts and show worse post issue performance than firms with rational managers. The second paper analyzes corporate risk management. We find that firms with overly optimistic managers are significantly less likely to use financial derivatives to hedge their currency exposures than those with rational managers. This behavior is consistent with an underestimation of bankruptcy or financial distress costs by overly optimistic managers. The third paper empirically tests the relationship between managerial optimism and the use of large write-offs following CEO turnover. Subsequent to CEO turnover, it is often observed that incoming CEOs engage in this so called big bath accounting. Losses incurred during the big bath are attributed to the predecessors and the incoming CEOs take credit for future performance improvements. Consistent with their upwardly biased expectations concerning future firm cash flow, we find that firms hiring optimistic managers are less likely to experience an earnings bath in the year of the turnover than those hiring their rational counterparts.

With increasing scrutiny over standards of financial statement transparency, this paper attempts to resolve misconceptions about effects of negative special items on future earnings. Value investor Benjamin Graham advises students to avoid firms that consistently post special items, because it is indicative of the volatility of the business. Using panel data from 2003 to 2014 and a regression structure used by Burghstaler et al. (2002), I find in contrast to Graham’s warning, that negative special items significantly increase earnings in the four quarters following its occurrence. Furthermore, I analyze results by sector and find that negative special items in the Information Technology sector have the most dramatic positive effects on future earnings. This study gives investors more insight as to what negative special items mean for future earnings of a company.