This study examines the relationship between foreign exchange reserve, Pula exchange rate and inflation in Botswana over the period 1995-2020. The period covered contains recent data on level of foreign exchange reserves through global events like Covid-19 pandemic in which significant drawdowns in foreign reserves were experienced and not covered in prior studies. Secondary time series data was sourced from Bank of Botswana financial statistics bulletin and a linear regression was run for two models using R studio statistical software. Unit root and correlation tests were run on the data to ensure the variables were stationery and error terms correlation was eliminated in the time series. Regression equation showed that the relationship between foreign exchange reserves and inflation was negative. Similarly, the second regression revealed that the correlation between foreign exchange reserves and foreign exchange rates was negative. Empirical results further revealed that foreign exchange reserves have no statistically significant impact on inflation and exchange rates in Botswana. The statistically insignificant relationship results between the variables implies that foreign exchange reserves have not significantly influenced exchange rate and inflation which may be due to sterilization by the central bank, therefore, other factors may be responsible for changes in exchange rate and inflation locally. This may indicate that the monetary policy framework which requires foreign exchange reserves have served the country well as it maintained a stable exchange rate and did not stir inflation. However, monetary authorities should note that the current framework may not be sustainable given the tremendous pressure that foreign reserved faced in recent years and a move to a floating exchange regime should be considered as a long-term policy goal. The negative correlation of foreign reserves with inflation and exchange rate further suggest to the monetary authorities that Botswana's economy may be influenced by endogenous monetary policies rather than external variables. The relationship between exchange rates and foreign reserves is consistent with elasticity approach and economic theory of modern mercantilism which predict a negative relationship between the two variables. This may provide monetary authorities and policy makers with a framework that explains the link of Botswana's foreign reserves and exchange rates.

This thesis examines topics in corporate finance and behavioral finance. First, I examine the effects of ownership structure on the amount of firm-specific information in stock prices, measured using synchronicity. With a unique dataset of 6,184 firm-year observations for Canadian companies listed on the Toronto Stock Exchange during 2000-2012, I find evidence of a significant, non-linear relationship between the size of the largest shareholder and synchronicity. Using propensity score matching (PSM) to isolate the effect of family firms on synchronicity, I find no evidence of a significant difference in synchronicity for matched pairs of family and non-family firms. Finally, I find evidence of a negative relationship between firms with multiple large controlling shareholders and synchronicity. Second, in a co-authored paper with Dr. Richard Deaves (McMaster University) and Dr. Brian Kluger (University of Cincinnati) we investigate the relationship between path-dependent behaviors (i.e., the disposition effect, house money effect and break-even effect) and investor characteristics (e.g., overconfidence and emotional stability) using experimental trading sessions. The majority of our subjects exhibit path-dependent biases and there are significant correlations between these biases. The correlations hint at the possibility that a common underlying factor may be driving all path-dependent behaviors. We also find some evidence that the existence of psychological bias (overconfidence and negative affect) leads to more bias in financial decision-making. Third, in co-authored work with Dr. Lucy Ackert (Kennesaw State University), Dr. Richard Deaves (McMaster University) and Dr. Quang Nguyen (Middlesex University) we report the results of an experiment designed to explore whether both cognitive ability (IQ) and emotional stability (EQ) impact risk preference and time preference in financial decision-making, finding evidence in support. Specifically, IQ impacts risk preferences and EQ impacts time preferences. Our results are primarily driven by our male participants. Most interestingly, EQ plays a role that is almost as meaningful as IQ when it comes to explaining preferences. / Thesis / Doctor of Philosophy (PhD)

This paper seeks to explain the frameworks that the risk accountant likely operates in. It begins with a discussion of risk in the business context. Then the paper examines existing frameworks in light of the work of management accountants. The paper looks more closely at the tools the management accountant has at his disposal to identify, assess, and communicate risk as well as issues surrounding the use of these tools such as the calculative culture of the firm and biases in risk perception. It is meant to be useful to academics pursuing future research in risk accounting and also to management accountants in risk management.

Le premier chapitre étudie comment l'introduction d'un marché à terme de l'acier affecte les producteurs d'acier et leurs clients. Le deuxième chapitre demande comment les tarifs d'importation dans les industries en amont affectent les incitations à investir des entreprises en aval. Le troisième chapitre étudie comment la propriété managériale affecte la performance dans le secteur des fonds communs de placement. / The first chapter studies how the introduction of a futures market for steel affects steel producers and their customers. The second chapter asks how import tariffs in upstream industries affect downstream firms’ incentives to invest. The third chapter studies how managerial ownership affects performance in the mutual fund industry.

Master-Arbeit Univ. St. Gallen, 2009.

Master-Arbeit Univ. St. Gallen, 2009.

This dissertation examines the effect of gender diversity on firm risk and financial performance, and on the stock ownership preferences of institutional investors. For the firm risk and financial performance analysis, we use U.S. firms listed on the S&P 500 and NSE-listed Indian companies. The two samples provide our study with the ability to study gender diversity in a developed and emerging market with distinct economic frameworks, cultural traditions, and legal environments. Our empirical tests show that firms with more gender diversity are less risky and have higher financial performance than firms with less gender influence. These results are consistent with the notion that the addition of female directors increases the collective intelligence of the board and, thus, leads to higher quality deliberations and decision-making. The results are robust to propensity score matching which help control for endogeneity. Additionally, the results are robust to various measures of firm risk, financial performance, legal environments, industry and time fixed effects, and clustered standard errors. Furthermore, this dissertation examines the ownership preferences of institutional investors, a group of investors known for their ability to acquire private information and analyze publicly-disclosed information quickly. Researchers find that firms with female directors tend to disclose more firm-specific information and tend to serve on monitoring-related committees. As higher disclosure and more monitoring decreases institutional investors’ incentive to collect and profit from private information, we hypothesize that they will invest less in gender diverse firms. For our empirical tests we use the data on US firms. We find that institutional investors tend to hold less shares in firms with more gender diversity. These results are robust to industry and time fixed effects, heteroscedasticity, and serial correlation.

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Prior research on corporations finds that there exists a large unexplained firm-specific heterogeneity in corporate behaviors stemming from the effects of managers. This research identifies managerial personalities and tests their effects on corporate behaviors both experimentally and empirically. First, the effects of managerial personalities on corporate financing decisions are tested using a laboratory experiment with managers in South Korea. The laboratory experimental market is à la Modigliani and Miller but with two frictions, bankruptcy costs and corporate taxation. Leverage choices of managers with particular personality traits are compared against the optimal capital structure computed from the static trade-off theory. The results show that extravert managers choose higher leverage ratios, with the effect being financially meaningful although not statistically significant. Secondly, I identify extravert CEOs and empirically measure its effects on corporate financing choices using Chief Executive Officers’ avocation data and corporate financial data of public, nonfinancial US companies between 1992 and 2011. The results of mean comparisons by group, fixed effects regressions, difference-in-difference regressions, and changes of leverages around CEO turnovers show that extravert CEOs tend to issue risky debt more when accessing external finance and maintain higher leverage ratios than their peers. Thirdly, I test the effects of managerial extraversion on executive compensation. I first offer an empirical compensation model of managerial bargaining power, and then empirically tests the prediction by identifying a personality trait relevant to bargaining power using a novel set of managerial hobbies data. The results provide an evidence that CEO bargaining power has an increasing effect on CEO compensation.

This dissertation examines how the structures of compensation for executives and directors are affected by the possibility that managers can influence the risk of a firm's cash flows. In chapter 1, I consider a moral hazard model which shows that a strong pay-for-performance sensitivity in managerial compensation may deteriorate shareholder value when shareholders cannot monitor managerial risk-seeking activities. Intuitively, while high-powered managerial compensation provides the manager with incentives to increase the firm's value by exerting effort, it also creates managerial incentive to engage in (unproductive) risk-seeking activities. To test this prediction, I consider a regulatory change that makes it more difficult for managers to conceal information about the (speculative) use of derivative instruments. Specifically, I examine how the structures of compensation for executives and managers are affected by the adoption of a new accounting standard, the Statement of Financial Accounting Standard No. 133 Accounting for Derivative Instruments and Hedging Activities (FAS 133) which mandates the fair value accounting for derivative holdings. Consistent with the model prediction, I find that relative to other firms, derivative users (firms that traded derivatives before adopting FAS 133) increase the pay-for-performance sensitivity of CEO/CFO compensation. In Chapter 2, I extend the model by incorporating the realistic features that shareholders delegate to the (self-interested) board the tasks of monitoring managers and of setting their compensation contracts. My analysis shows that while high-powered board compensation induces the board to monitor the firm and to properly design managerial compensation, it also provides the board with incentives to misreport managerial risk-seeking activities and to engage in collusive behavior with the manager at the expense of shareholders. From these trade-offs, I develop a number of testable hypotheses and take them to the data. Consistent with the model predictions, I find that firms in which (i) managerial risk-seeking activities are more likely to occur (e.g., high R&D firms or banks) and (ii) board monitoring costs are likely to be lower (e.g., firms that have non-officer blockholders on the board) show weaker pay-for-performance sensitivity of board compensation and stronger pay-for-performance sensitivity of CEO compensation. / text