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Using the U.S. Gramm-Leach-Bliley Financial Modernization Act ("GLBA") as a model, I argue that this act of financial reform, promulgated in November 1999, is a result of "Re-regulation", rather than "Deregulation" as suggested by most scholars. I emphasize the linear development of the GLBA, from 'regulation' to 'deregulation' and then further to 're-regulation'. This linear direction denotes sequential regulatory development that concerns the gradual relaxation of permissible banking activities, which is correspondingly marked by the Glass-Steagall Act of 1933, the Bank Holding Company Act of 1956, and the GLBA of 1999. The GLBA enabled the U.S. financial services industry to begin offering all round financial services under the single roof of the Financial Holding Company("FHC"). The GLBA's mandate is to provide the U.S. financial services industry with a level playing field and allow them to compete with their strongest rivals from th eEuropean Union. European Union banks already operate under a liberal regime, following the success of the Second Banking Directive of 1989 that embraces financial liberalization. Taiwan's Financial Holding Company Act ("FHCA"), promulgated in July 2001,owes much of its content to its U.S. counterpart, the GLBA. Taiwan's FHCA is basically modeled after the U.S. GLBA but selectively adopts parts of the E.U. model. The U.S. model is represented by the GLBA while the E.U. model is represented by the Second Banking Directive. Through cross-selling and cross-marketing, financial holding companies in the U.S. model and universal banks in the E.U. model, both can achieve economies of scale and scope. This dissertation is otherwise devoted to providing a comparative analysis on certain key elements of the U.S. GLBA and Taiwan's FHCA, although I sometimes refer to the E.U.'s Second Banking Directive. I conclude that while Taiwan's FHCs lack the economic scale of U.S. FHCs, the adoption of the U.S. model in the FHCA offers Taiwan's FHCs better fire wall protection than the E.U. model would. More generally speaking, there are pros and cons to Taiwan's adoption of the GLBA. The GLBA and by extension the FHCA require its domestically established FHCs be pure holding companies, as opposed to the E. U. model which requires the parent companies (universal banks) to also be operating holding companies.

Regulators and the general public frequently advocate for higher-quality disclosure policies to reduce information asymmetry. Research and anecdotal evidence documents sizable benefits to firms that maintain high quality disclosure. This thesis explores the costs and benefits of changing disclosure quality from the perspective of the financial analysts, a sophisticated user group. This thesis presents a comprehensive view of analysts’ evaluations of disclosure quality. I investigate capital market reaction when firms experience a sustained decrease in analyst disclosure ratings. The results demonstrate that firms with deteriorating disclosure experience negative consequences, consistent with increasing information asymmetry. However, the magnitude is not as large as expected given the benefits enjoyed when disclosure quality improves. Given that firms that allow their disclosure quality to decline give up benefits they previously enjoy, I investigate why they allow this decline to occur. The deterioration is negatively associated with the interaction between capital demand and expected earnings performance implying that when firms require capital, but are expecting poor future earnings, they are more likely to permit a deterioration to occur. Declines are also associated with the occurrence of various disruptive events that imply greater uncertainty about the firm. These firms have a strong demand for external capital which they satisfy by accessing private and public debt markets. Overall, firms that experience disclosure ratings declines are not a mirror image of firms that experience ratings increases. Finally, I investigate the association between the disclosure ratings and quantitative disclosure characteristics. The results indicate significant associations, consistent with the assumption that easily accessible and quantifiable disclosure measures are captured in analysts’ ratings of disclosure quality. This thesis adds to the literature by providing insight into how analysts evaluate disclosure quality and what managers are willing and able to deliver. The research documents attributes of disclosure quality that are regarded as important by financial analysts. While analysts are a key set of financial statement users, there are many other types of users. By understanding disclosure quality from a user's perspective, regulators and researchers are more able to anticipate the implications of a proposed change in disclosure rules.

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My dissertation investigates the behavior of consumers and banks in the presence of government as the credit insurer of last resort. Consumers have an option to file for bankruptcy under law when there are unexpected adverse shocks, while banks, especially large banks, are supported by the government during financial crisis because of systemic risk. I explore the heterogeneous behavior among consumers and banks with adverse shocks. In the first chapter of my dissertation, my inquiry focuses on the heterogeneous behavior of households in filing for bankruptcy. In the literature, there are two theories in explaining personal bankruptcy: adverse event theory and strategic timing theory. Fay, Hurst and White(FHW) 2002(AER) include both financial benefit and adverse event variables in explaining the bankruptcy decision, and they find only financial benefit from filing is significant in explaining whether to file or not. Our argument is that adverse events may not work directly on bankruptcy decisions, however, they operate by running a higher amount of debt. Thus FHW's setting may not be appropriate. Instead, adverse event consumers' debt occurs after adverse events, while strategic timing consumers' debt decision and bankruptcy decision are jointly determined, which means their debt or financial benefit is endogenous; thus we propose that the endogeneity test of financial benefit is a way to distinguish the two types of consumers. Assuming only one type exists in the sample, we find support for adverse event theory. Extending the analysis to allow for both adverse events and strategic timing consumers shows existence of both types of filers, and strategic timing filers are more sensitive to financial benefit. Additionally, lower access to debt markets and lower income significantly increase the chance of strategic behavior. The second part of my dissertation is to study the effectiveness of the Troubled Asset Relief Program(TARP) on banks' loan to asset ratio. One of the fundamental objectives of the Troubled Asset Relief Program (TARP) is to stimulate bank loan growth. I use panel data to study the dynamic effect of TARP investments on banks' loan to asset ratio (LTA). I find that TARP stimulate recipients' LTA growth as a whole, and the effect is significant only for medium banks(asset between 1 billion and 10 billion), with an annual decrease of 14 percentage points in LTA with the LTA in treatment quarter as benchmark. In terms of a dollar amount, 7.71 dollar more loans are generated for every TARP dollar invested in medium banks, compared with the average level of the quarters before TARP. There is no significant effect on small banks or big banks. Using graphs and different regression models, I argue that the dynamic setting, rather than the cross-sectional comparison, is more appropriate.

In this thesis we investigate whether firms’ relationships with non-financial stakeholders affect their financing policies. We find that the firms that place a higher value on reputation for treating employees generously maintain lower debt ratios. Furthermore, we find that the firms whose business relies on major customer-supplier relationships adopt more flexible payout policies because of relationship-specific investments. Finally, we find that the high financial distress costs rather than the hold-up problem associated with relationship-specific investments affect firms’ financing policies. Overall, our results suggest that firms’ relationships with non-financial stakeholders are important determinants of their financing policies. / Thesis (Ph.D, Management) -- Queen's University, 2011-04-17 06:13:01.556

This study is a theoretical and historical study of the combined issues of destabilizing speculation and financial crises. First, we critically examine the orthodox mathematical theory of a speculative bubble. This model, we determine, is inadequate for the empirical purposes of identifying and fully explaining a bubble. Next, we examine the 19th-century British Classical view of the mania-crisis phenomenon and compare it with some of the leading early 20th-century views. We find that the 20th-century writers maintained a distinctly Classical view of the issues and that this view is fundamentally different from the orthodox mathematical theory. We also find that the Classical theory, though richer than the mathematical theory, inadequately explains the phenomenon. We then turn to a comparative history of selected mania-crisis episodes. From a detailed analysis of these episodes, we establish those stylized facts which characterize unstable periods of financial activity. We complete the study with a new perspective on financial instability.