The classical Artificial Neural Network (ANN) has a complete feed-forward topology, which is useful in some contexts but is not suited to applications where both the inputs and targets have very low signal-to-noise ratios, e.g. financial forecasting problems. This is because this topology implies a very large number of parameters (i.e. the model contains too many degrees of freedom) that leads to over fitting of both signals and noise. This results in the ANN having very good in-sample performance on the data used for its training but poor performance outof-sample for forecasting. The main contribution of my research is to develop a new heuristic method called “ANN reduction” for optimising the topological structure of a feed-forward ANN in order to improve its out-of-sample performance (using an RMS measure). The research concentrated on the topological optimization of the graph representing an ANN, which reduces the effective degrees of freedom of the ANN whilst still maintaining its feed-forward (but incomplete) topology. Such reductions in the number of parameters have been attempted before in the literature, but our procedure is of a different (graph theoretic) nature and (in extremis) optimal for small-size ANNs. Two applications of the ANN reduction are also implemented and programmed for empirical simulations. For this purpose, two datasets generated from deterministic functions and three datasets derived from foreign exchange market prices are used for evaluating the ANN reduction applications. These applications generate new ANN topologies with some clear performance advantages over those obtained by the best complete ANNs, improving the generalization (out-of-sample) performance by up to 27.6% compared to the complete ANN on the function generated datasets and up to 14.1% on the financial forecasting problem for the FX data.

Chapter 1 “The Term Structure of Equities” examines the term structure of equities. Using observed prices of dividend strips, prices of zero-coupon equities are extracted, and their yields and returns characteristics are documented. An affine term structure model is used to model the term structure of equities. The model is estimated, and model-implied equity yields and returns are shown to match the data well. However, the modelimplied long-run risk-neutral mean of the short rate is implausible. (The next chapter takes this into account and estimates bond and equity yield curves jointly using data on both zero-coupon bonds and zero-coupon equities.) Chapter 2 “Estimating a Unified Framework of Co-Pricing Stocks and Bonds” estimates a maximal identifiable affine term structure model that explains the joint prices of stocks and bonds. Using the test assets of Treasury bonds and dividend strips, it is shown that the estimated model can generally match the time series and cross-sectional properties of zero-coupon bonds, zero-coupon equities and the aggregate stock index. Moreover, imposing restrictions prevalent in the co-pricing literature on the maximal model enhances certain features of the model such as the high return of the short-term dividend strip, but reduces the model’s ability to fit other aspects of the data such as the level of the market risk premium. Chapter 3 “The Role of Asian Countries” Reserve Holdings on the International Yield Curves” studies the effect of Asian countries’ reserve holdings on the yield curves of six industrialized countries: the United States, the United Kingdom, Germany, Canada, Switzerland and Australia. A Gaussian affine term structure model with three yield factors and three unspanned macro factors including reserves is estimated to fit the yield curve of each country. Impulse responses and variance decompositions show that Asian countries’ reserve holdings are an important factor affecting the international yield curves.

Chapter 1. We examine the determinants of success in venture capital transactions using the largest deal-level data set to date, with special emphasis on comparing European to US transactions. Using survival analysis, we show that for both regions the probability of exit via initial public offering (IPO) has gone down significantly over the last decade, while the time to IPO has gone up – in contrast, the probability of exit via trade sales and the average time to trade sales do not change much over time. Contrary to perceived wisdom, there is no difference in the likelihood or profitability of IPOs between European and US deals from the same vintage year. However, European trade sales are less likely and less profitable than US trade sales. Venture success has the same determinants in both Europe and US, with more experienced entrepreneurs and venture capitalists being associated with higher success. The fact that repeat or ‘serial’ entrepreneurs are less common in Europe and that European VCs lag US VCs in terms of experience completely explains any difference in performance between Europe and the US. Also, contrary to perceived wisdom, we find no evidence of a stigma of failure for entrepreneurs in Europe. Chapter 2. Association of insiders’ selling decision of VC-backed initial public offerings (IPOs) with the post-IPO long-run performance is analyzed. I find that the selling decision by insiders, measured as a fraction of shares sold by the selling stockholders to total shares sold in the offering, has significant positive association with the long-run profitability and negative association with the risk after the IPO. Furthermore, when venture capitalists sell shares in the IPO there is positive concave parabolic association between the selling decision and the post-IPO long-run market performance. However, venture capitalists selling of over-allotted shares and stock redemptions are not associated with superior post-IPO performance. Evidence on selling decision of venture capitalists confirms the importance of reputation as a factor affecting insiders’ selling decisions.

This thesis is concerned with different sources of risk occurring in financial markets. We follow a bottom-up approach by carrying out an analysis from the perspective of a single investor to the whole banking system. We first consider an investor who faces parameter uncertainty in a continuous-time financial market. We model the investor’s preference by a power utility function leading to constant relative risk aversion. We show that the loss in expected utility is large when using a simple plug-in strategy for unknown parameters. We also provide theoretical results that show the tradeoff between holding a well-diversified portfolio and a portfolio that is robust against estimation errors. To reduce the effect of estimation, we constrain the weights of the risky assets with a norm leading to a sparse portfolio. We provide analytical results that show how the sparsity of the constrained portfolio depends on the coefficient of relative risk aversion. Based on a simulation study, we demonstrate the existence and the uniqueness of an optimal bound on the norm for each level of relative risk aversion. Next, we consider the interbank lending market as a network in which the nodes represent banks and the directed edges represent interbank liabilities. The interbank network is characterised by the matrix of liabilities whose entries are not directly observable, as bank balance sheets provide only total exposures to the interbank market. Using a Bayesian approach, we assume that each entry follows a Gamma distributed prior. We then construct a Gibbs sampler of the conditional joint distribution of interbank liabilities given total interbank liabilities and total interbank assets. We illustrate our methodology with a stress test on two networks of eleven and seventysix banks. We identify under which circumstances the choice of the prior influences the stability and the structure of the network.

Entrepreneurship and small firms are regarded by policy makers and academics alike as being an important catalyst for economic growth. However, a perennial question is why firms do, or do not, grow. Therefore, much research has been undertaken over many decades capturing different environments to answer this complex phenomenon. Nevertheless, after the ‘9/11 attacks’, a new environment has emerged which many people call ‘the conflict environment’. To date, little research has been conducted and no rich empirical data is present in the entrepreneurship and small firm literature. To investigate small firms operation in a conflict environment and an associated poor infrastructure (which itself may pre-date the actual conflict) this study examines how a sample of firms grow and/or struggle in the province of Khyber Pakthunkawa, Pakistan. Two broad objectives were set for this study. The first and primary objective was to understand the growth behaviours of SME manufacturing firms and how they grow and struggle in a conflict and poor infrastructure environment. This was captured by examining their existing resources; entrepreneurial orientation behaviour; the impact of the conflict environment on their entrepreneurial activities; how the conflict and poor infrastructure environment was handled; and, lastly, business barriers they identified and their impact. The second objective was to consider available support and their perception on the effectiveness of such support. One hundred and ten manufacturing SMEs in the Swat Valley that met the selection criteria were studied and a mixed method was used. An initial survey was administered and respondents categorized themselves as either growing (30 firms) or struggling (80 firms). The thirty ‘High entrepreneurial’ firms stated that they have achieved and maintained growth despite the conflict and poor infrastructure environment, whilst the eighty ‘Low entrepreneurial’ firms stated that they are struggling. To gain further insight, sixteen semi-structured interviews were conducted from within this sample in order to elaborate the quantitative findings. Furthermore, four support organizations who were most mentioned by the participants were interviewed, thus allowing a consideration of the nature of any perceived gap between them and the SMEs. This research provides empirical evidence that as the conflict has developed in the Swat region, a few businesses have grown whilst the majority are struggling - but in their own way they are all ‘survivors’. It is argued that both growing and struggling firms show enterprise and entrepreneurship in this conflict zone. However, growing firms develop and exploit features which enable them to realise more entrepreneurial intentions as compared to struggling firms. These might be their access to human and non-human resources, and strong networks would be one of them. The conflict environment has created immense difficulties for both growing and struggling firms but paradoxically it has also benefited firms in the region. One positive consequence was that employees were prepared to help the entrepreneurs to overcome problems. This was seen through an increase in the autonomy dimension of entrepreneurial orientation. Another positive consequence was the spotting of new opportunities by the entrepreneurs in this harsh and changed environment. However, some entrepreneurs see opportunities whilst some see threats. Furthermore, both growing and struggling firms showed dissatisfaction with the existing business support but made useful suggestions as to how this could be improved. This would facilitate growing firms to grow faster and struggling firms to achieve growth which will help to enhance employment opportunities in the region and better contribute towards peace. Entrepreneurs were also keen to increase their business activities because they were optimistic that by creating new entrepreneurial opportunities in the region it will be harder for the terrorists and insurgents to succeed. Such groups target the deprivation arising from unemployment.

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The thesis examines how different aspects of market quality are affected by imperfect competition. The first chapter presents a model of strategic liquidity provision in a uniform-price auction that does not require normally distributed asset payoffs. I propose a constructive solution method: finding the equilibrium reduces to solving a linear ODE. With non-normal payoffs, the price response becomes an asymmetric, non-linear function of order size: greater for buys than sells and concave (convex) for small sell (buy) orders when asset payoffs are positively skewed; concave for large sell (buy) orders when payoffs are bounded below (above). The model speaks to key empirical findings and provides new predictions concerning the shape of price response. The second chapter analyses a market with large and small traders with different values. In such market illiquidity and information efficiency are complements. Policy measures promoting liquidity might be harmful for information efficiency and vice versa. An increase in risk-bearing capacity may harm liquidity. An increase in the precision of information may harm information efficiency. Increasing market power or breaking up a centralized market into two separate exchanges might improve welfare. Multiple equilibria, in which higher liquidity is associated with lower information efficiency, are possible. The third chapter (co-authored with Ji Shen) studies OTC markets. Traders in a market a-la Duffie, Garleanu and Pedersen (2005) can search via Multilateral Trading Platform (MTP), querying n dealers and running first-price auction among them. Dealers have homogenous valuation for the asset, yet the distribution of bid and ask prices is non-degenerate: uncertainty about the number of competitor dealers responded induces mixed-strategy equilibrium. We provide testable implications linking skewness and dispersion of bid and ask prices to dealers response rate in the auctions.

The thesis examines the role of accounting in configuring innovation as the driver of economic progress in modern Britain. Set against a context of changing governmental rationalities and greater attention of economic theory upon issues of R&D productivity, University-Industry interrelations have come to represent, since the 1980s, a laboratory where British government has experimented with programmes for both promoting and decentralising innovation, while maintaining at a distance control through mandated calculations and calculative devices. The thesis brings accounting into the discussion of how private and public agencies of governance steer innovation by exploring the paradoxical phrase: “controlling innovation, innovating control”. The phrase questions the extent to which accounting discipline and practices have changed in order to keep pace with the progressive economic and social agenda of innovation. By means of an in-depth study of accounting practices, corroborated by forty semi-structured interviews, the thesis explores the action of controlling innovation across three main sites where university-industry interrelations are enacted, namely technology transfer, technology incubation, and corporate R&D. Drawing on the concept of socio-technical agencement (Callon 2005) the thesis seeks to identify and analyse the economic agencies that configure and assemble innovation as an actor capable of influencing government policies, corporate strategies, and universities’ mission. The thesis shows that controlling innovation involves calculative action that is mainly distributed across accounting devices (e.g. Discounted Cash Flow, R&D budget, and input-output performance indicators), non-accounting devices, and human entities. Drawing on, and expanding, the work of Beunza & Garud (2007) on calculative frames, the thesis finds patterns of regularity occurring in the mechanisms through which economic action within innovation is organized and distributed. The thesis also accounts for the tensions arising in the negotiation of different versions of the value of innovation. Finally, while controlling innovation is performed through a variety of accounting devices, the thesis shows that such devices are not new to the accounting discipline and practice, but rather are traditional accounting tools that adapted to the innovation rationale in virtue of their fluid and combinable properties.

Corporate scandals and financial crises have focused attention on corporate governance (CG), including the quality of transparency and disclosure (T&D). Although many empirical studies have been carried out on CG in developed countries, an insignificant portion of that literature is focused on T&D in developing countries. Taking a sample of 27 financial companies, this research looks at the issue of T&D in Libya. Employing both primary and secondary data, the study covers the period 2005-2008 during the emergence of the Libyan Stock Market (LSM). The research objective, questions and hypotheses are mapped onto a research framework that includes antecedent and subsequent variables of T&D. Firstly, the study uses time-series data to provide empirical evidence relating to the level of T&D in annual reports by Libyan financial companies. The results reveal that overall T&D, three categorises and most of the twelve subcategories showed a statistically significant increase over the period under review, but that it was still low in Libya compared to other countries (developed and developing) when applying Standard & Poor’s (S&P) data, and variation in levels of T&D from company to company in Libyan. Secondly, this research analyses and explores the consequences of six characteristics on the level of T&D in annual reports. The characteristics being; listed status, ownership structure, company size and age, type of industry and audit peer reviews. The results revealed that T&D and three categories in general associated with all variables displayed a statistically significant increase during the examination period of four years. All corporations tested conformed to this rule with the exception of large companies, although the results were mixed statistically when tested with twelve subcategories. Furthermore, companies listed in LSM provided more T&D than those not listed, the public sector provided more T&D than the private sector, the banking sector provided more T&D than the insurance sector and companies with audit peer reviews provided more T&D than those without. Whilst small companies provided more T&D than other companies, and the variation in levels of T&D for different age groups was unclear. Thirdly, the research investigates the relationship between fourteen variables related to T&D practice and three accounting measures of financial performance: return on capital employed(ROCE), return on equity (ROE) and return on assets (ROA). The study finds that there is a relationship between four variables and ROCE, two variables and ROE, and three variables and ROA. However, only one variable (disclosure of material foreseeable risk factors) has a relationship with all three financial performance measures. Disclosure on the corporate governance framework has the most impact on ROCE and ROA, while disclosure relating to major share ownership and voting right has the most impact on ROE. The thesis makes several contributions. It adds to the limited literature on T&D in developing countries, especially to a transition economy like Libya’s. In doing so, it provides a benchmark for further studies of T&D by Libyan companies. In particular, it pioneers the use of S&P’s T&D index methodology in Libya, which enables a comparison with T&D in other countries. A notable feature of the research is the relatively comprehensive set of variables used, including “audit peer review” as a corporate characteristic that might affect the level of T&D, and the exploration of the possible relationship between fourteen variables of T&D and three financial performance measures. Future research should be able to build on this study and perhaps examine other company characteristics (e.g. size/type of auditor, and external auditor’s reviews that are limited to quarterly reviews), use other measures of company performance (e.g. Tobin's Q or specific elements such as competitive strategy, corporate culture or business ethics) or include samples from other industries as the Libyan economy and stock market develop.

Strategic thinking (ST) is a process by which managers and employees try to find alternative ways to solve problems in order to deal with rapid changes and forces in a business environment. Strategic thinking was established and has been used extensively in developed countries. However, strategic thinking in developing countries has received little attention. The research described in this thesis is an attempt to assess the extent of knowledge of and familiarity with the concept and purpose of strategic thinking, as well as to assess the extent of practice of strategic thinking factors in Jordanian publicly quoted companies. Also, this research explores the barriers which prevent the practice of strategic thinking in these companies. Data was collected by using both quantitative and qualitative methods (i.e. questionnaires and interviews) which were employed at three different levels of company structures. The questionnaires aimed to investigate knowledge of and familiarity with the concept and purpose of strategic thinking, the extent of strategic thinking practices, and the barriers which prevent the practice of strategic thinking in Jordanian publicly quoted companies. 336 questionnaires were collected from 112 Jordanian publicly quoted companies, followed by eight semi-structured interviews with eight of the companies to support the study objectives and to achieve a good understanding of strategic thinking practices in Jordanian companies. The main findings of this research are that the surveyed companies in Jordan have good knowledge of and are familiar with the concept of strategic thinking; that the age of a company has a moderate relationship with knowledge of the concept and purpose of strategic thinking, while the size of a company has no relationship with knowledge of the concept and purpose of strategic thinking; and that few differences exist between the four business sectors concerning the contribution to knowledge of and familiarity with the concept and purpose of strategic thinking. The majority of surveyed companies in Jordan use strategic thinking skills extensively in their companies. The findings also show that Jordanian publicly quoted companies face different barriers which prevent the practice of strategic thinking in their companies. The study makes an original contribution to academic and practical knowledge in the field of strategic management. This study is considered an important empirical study of strategic thinking practices in publicly quoted companies in Jordan. Some recommendations for further research have been derived from this study.