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Financial markets, where companies are characterized by a separation of ownership from control and interactions are opaque to a large majority of uninformed investors provide a fertile ground for executives to conduct practices that push the ethical boundaries of accepted and expected behavior. Furthermore, some practices such as tunneling of funds in business groups and backdating of executive's stock option grants exhibit remarkable proliferation among many disparate actors, ones who will argue for the merits of these practices even after they are exposed. In this dissertation I examine the antecedents of widely practiced financial frauds, processes that lead to what I call "legitimized unethicality"- unethical behavior that gains credence among perpetrators while remaining clearly illegal to outsiders. In chapter 1 I look at skewed investments of mutual funds in affiliated companies when these go public, highlighting how shared ownership over financial and non financial companies can lead mutual funds to transfer funds from savers who's portfolios they manage to the business group to which they belong. In chapter 2 I examine the diffusion pattern of stock option backdating among executives in the United States, where co-location (both spatial and temporal) creates clusters of bad behavior among clients of audit firms. I isolate a key "agent of diffusion" that gives credence to the practice of stock option backdating- the local office of the companies' auditor and show, using multiple methods, that this geographical concentration of backdating is the result of heterogeneous acceptance of backdating among local auditors and is dependent on the level of competition among the local offices of these auditors. In the third chapter I turn to look at the social characteristics that promote adoption of stock option backdating and show that this practice is adopted by those executives who experience a gap between their realized compensation and the expected compensation level when comparing to their peers. Backdating is therefore one form of catching up to perceived "fair" levels of compensation. Together these papers demonstrate that some unethical practices can gain legitimacy by perpetrators, and spread widely among them, while remaining clearly unethical to outsiders until exposed.

This dissertation examines three topics in law and finance. In Chapter 1, I show that consumers are more likely to keep a repayment promise they make themselves. When a scheduling conflict prevents a borrower from attending a mortgage closing, a Power of Attorney (POA) empowers a third party to sign the documents promising that the borrower will repay the loan. POAs arise after loan terms are locked in, making POA and non-POA loans virtually indistinguishable. Comparing within-borrower and within-property, I link POAs to greater delinquency and foreclosure. Loan performance data show that POAs are uncorrelated with cash flow shocks but reflect reduced promise-keeping conditional on financial distress. Consistent with prior work on salience and personal responsibility, promise-keeping is higher for loans serviced by the originating lender. Financial intermediation may play an important role in consumer lending. In Chapter 2, using a unique episode in which the SEC distributed securities disclosures to some investors before the public, we study the impounding of private information into stock prices. Because the delay between the private and public release of the information was random, our setting offers a rare natural experiment for studying how markets process private information. As theory predicts, speculators seem to smooth out the price impact of their trading, and more information is impounded into prices during the expected rather than the actual delay before the information becomes public. Finally, we document investor overreaction when already-stale filings are publicly released. Finally, in Chapter 3, we use quantitative data to show a systematic relationship between the appointment of a hedge fund nominated director to a certain corporation and an increase in informed trading in that corporation’s stock (with the relationship being most pronounced when the fund’s slate of directors includes a hedge fund employee). From a governance perspective, activist hedge funds represent a new and potent force in corporate governance. This is the first attempt to investigate whether the activist hedge fund also imposes new agency costs through widened bid/ask spreads and informed trading. We assembled a data set of 475 settlement agreements, between target companies and activist funds relating to the appointment of fund nominated directors, from 2000 and 2015, in order to focus on what happens once such a fund-nominated director goes on the board.

This dissertation explores the role of law in the financial development of an emerging economic country. Its main proposition is that law plays a fundamental part in both the construction and the subsequent failure of a financial system, in addition to the function of reducing frictions and distortions in order to maintain the orderly running of the market. The dissertation illustrates the aforementioned proposition with an in-depth case study of the Asian Financial Crisis (AFC) which was initially rooted in the Thai financial sector. Aided by the analytical paradigm offered by Legal Theory of Finance, it parses the legal and institutional aspects of the rapidly developing financial markets in Thailand and her investing partners. This allows the ensuing Crisis to be seen from the previously underexplored institutional underpinning of the volatile financial cycle which characterized the region at the time. Subsequently, the dissertation employs the same intellectual framework in order to explain the post-crisis reform initiatives and their systemic implications for the regional financial architecture under the auspices of the Association of the South East Asian Nations. This dissertation cuts across a number of disciplines: law and finance, law and economic development, financial and banking regulation, international financial law, to name but a few.

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The research is on the assessment of municipalities within the Eastern Cape Province to determine the capacity they have towards implementing the Municipal Finance Management Act No 56 of 2003 (MFMA). The research targeted Municipal Managers and Chief Financial Officers as these are the people charged by the Act with the responsibility of ensuring proper implementation and compliance by the Municipalities with the Act. The project was conducted at the level of the district municipality. This level of municipalities was considered sufficient as it would ensure a broad and in depth coverage of the assessment throughout the Province. This project aims to uncover strengths and weaknesses of municipalities. Municipalities with strong features are appraised of their strengths and recommendations are given towards the end of the dissertation to change the negatives into positives. The prime source used in developing the questionnaire is the MFMA. The questionnaire looks at various aspects of the Act and assesses capacity in terms of fourteen specific areas. / Thesis (MBA)-University of KwaZulu-Natal, Durban, 2006.

Submitted in fulfilment of the requirements of the Masters of Technology degree in Cost and Management Accounting, Durban University of Technology, Durban, South Africa, 2015. / The National Credit Act No. 34 of 2005 (NCA) was introduced by the South African government mainly to bring about accessibility to credit markets, protect consumers from malpractices and market abuses by credit providers and reduce consumer over indebtedness. As a result, credit providers are compelled to apply stringent rules and regulations when assessing a credit consumer’s affordability prior to granting home loans. This study aims at investigating the impact of the NCA on the affordability of home loans within the Pinetown metropolitan area. The literature review presents an overall view of affordability of home loans in developed and emerging countries and also provides an in-depth explanation of factors that affect affordability of home loans in South Africa. The predominant factors, amongst others that hinder the housing market, are: an increase in house prices; elevated interest rates and household debt which include inflation, transportation cost and low wage increase. A mixed methods approach was utilized for the research, analyzing both quantitative and qualitative data. Respondents (home loan borrowers) completed a questionnaire by indicating if assessments were conducted in terms of their affordability prior to the approval of their home loan and their view on the impact that the NCA had on their home loan. The data suggested strongly that credit providers had conducted proper credit and affordability assessments prior to granting home loans and that most home loan borrowers’ level of debt had remained stable since acquiring their home loans as they continue to meet their debts. An overall analysis revealed that the application of the NCA had a positive impact on the affordability of home loans in the research area and that compliance with NCA, when granting credit, resulted in the reduction of reckless lending, a decline in the level of consumer indebtedness and a reduction in payment default.

Thesis (MPA) --University of Limpopo, 2005 / This research has attempted to investigate whether there were proper financial controls at Bankuna High School of the Ritavi Circuit in the Tzaneen Area of the Limpopo Province of the Republic of South Africa. The researcher has, after an extensive evaluation of data arrived at some conclusions and he had made a few recommendations. The researcher is of the belief that the results of this research can be applied in most former historically disadvantaged African schools. Also this study can help Provincial Departments of Education in their future training on Financial Management for poor African schools.

University of Macau / Faculty of Social Sciences and Humanities / Department of Economics