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The goal of this dissertation was to model and test whether political parties once in power skew the federal budget in favor of their base. The theory includes the formation of a comprehensive theoretical model, which divided the budgetary instruments into two categories: monetary and political transfers. Using statistical tools, the dissertation examines the budgetary bias itself, the timing of its usage across the electoral cycle, and the substitutability of the instruments. The results found that political parties do bias budgetary funds towards their base. However, they tend to use tools, which are less visible to the opposition party and more evident to their base. The results confirmed that when parties use more of one type of transfer, they use less of the other. Finally, parties use alterations in total transfers to influence their base early in the election cycle, and move on to other means, such as platform alterations, as the next election draws closer. / Economics

This study was designed to compare the financial situation of both remarried and first-married families from a large randomly selected sample. An adaptation of Campbell, Converse, and Rogers' "Model of Life Satisfaction" was used as the theoretical basis for this investigation. Data were compared to assess differences in (a) personal characteristics; (b) objective attributes, the personal resources of homeowners hip, income, education, employment status, and occupation; (c) perceived attributes, financial attitudes and management behaviors of respondents; (d) evaluated attributes, an assessment of financial situation; and (e) satisfaction level with financial situation. The respondents were a sub-set from pre-collected data sets entitled Financial Attitudes and Practices of Virginia Citizens, Form A and Form B, (N=1098). Responses to items identical in both survey forms were merged to create a new data base which was used in this study. A sample of 173 remarried and 173 first-married respondents was used. Descriptive statistics were used to profile the two respondent groups. Independent t test and chi-square analyses were used to compare responses by marital status. Remarried and first-married respondents were similar in personal characteristics except in ethnicity and gender role philosophy with the remarrieds having a more egalitarian than traditional philosophy. The two groups were similar in objective attributes except in educational attainment. The remarried spouses were not as well educated as their counterparts. Financial management behavior and attitudes were similar for both groups except in the area of risk management and capital accumulation. Both groups reported a positive net worth and adequate income, however, remarrieds were less satisfied with their financial situation than first-marrieds. The results of this study demonstrated differences in the financial domain of remarried and first-married households and pointed to areas of concern for educators and family life specialists. / Master of Science

Portfolio optimization is a process in which the capital is allocated among the portfolio assets such that the return on investment is maximized while the risk is minimized. Portfolio construction and optimization is a complex process and has been an active research area in finance for a long time. For the portfolios with highly correlated assets, the performance of traditional risk-based asset allocation methods such as, the mean-variance (MV) method is limited because it requires an inversion of the covariance matrix of the portfolio to distribute weight among the portfolio assets. Alternatively, a hierarchical clustering-based machine learning method can provide a possible solution to these limitations in portfolio construction because it uses hierarchical relationships between the covariance of assets in a portfolio to distribute the weight and an inversion of the covariance matrix is not required. A comparison of the performance and analyses of the difference in weight distribution of two optimization strategies, the traditional MV method and the hierarchical risk parity method (HRP), which is a machine learning method, on real price historical data has been performed. Also, a comparison of the performance of a simple non-optimization technique called the equal-weight (EW) method to the two optimization methods, the Mean-variance method and HRP method has also been performed. This research supports the idea that HRP is a feasible method to construct portfolios with correlated assets because the performance of HRP is comparable to the performances of the traditional optimization method and the non-optimization method.

Non-deal roadshows (NDR) are privately held one-on-one meetings between the buy-side of financial institutions and firm management. Using a novel dataset of these meetings, I examine the effects that NDR meetings have on the outcomes of two important corporate events: seasoned equity offerings (SEOs) and mergers and acquisitions (M&As). I also study the potential implications of the information content in NDRs on the behavior of stock returns following earnings announcements, which has been the subject of much academic work. I structure the dissertation in three essays. In the first essay, I examine the relationship between NDR activity and the underpricing of SEOs. I find that NDRs are associated with lower SEO underpricing. This association is stronger for firms with infrequent NDR activity, for smaller firms, and for firms with higher analysts' forecast errors. These findings suggest that NDRs reduce the level of asymmetric information between firms and investors, which results in a lower cost of raising equity. In Essay 2, I investigate whether the occurrence of NDR meetings affects post-earnings-announcement drift (PEAD). I find that PEAD declines after NDR activity when the most recent NDR meeting occurs within one month before the earnings announcement. This decline is most pronounced among smaller firms, firms with high idiosyncratic volatility, and firms with Friday earnings announcements. These findings suggest that NDRs are mechanisms to convey earnings-specific information about forthcoming earnings. In the third essay I explore the relationship between NDRs, the medium of exchange used in M&As and the value created by this important corporate event. I show that NDR activity is important to understand the cross-sectional variation of the excess returns around M&As, and the bid premium. NDRs are also relevant to understand the medium of exchange. This relevance of NDR is more pronounced when the firms involved have higher levels of asymmetric information. My findings suggest that NDRs convey relevant information about acquiring and target firms, and this information affects the financing of M&As and the value created by these combinations. Taken together, the results reported in this dissertation highlight the relevance of the NDR as a mechanism to reveal information.

I analyzed a sample of 228 U.S. bank acquisitions announced from January 1996 to December 2015. This dissertation explores whether acquiring banks pay more for targets with a higher capital ratio using a better measure of goodwill than previous studies. Specifically, this study uses manually collected goodwill to evaluate the value of bank capital, a measure that I argue is superior to those used in prior studies. I collect information about goodwill for 203 merger and acquisition (M&A) deals. I find a positive relation between the target's capital ratio and the goodwill paid for targets, which is consistent with previous cross sectional analysis on the relation between bank equity capital and value. This positive relation exists in the deals with a bank target, but not when the target is a savings institution. Furthermore, I find that the positive association between the target's capital ratio and goodwill paid by the acquirer only exists in the sample of acquisitions of banks announced before the 2007 financial crisis. This dissertation also evaluates the value of bank capital by analyzing the changes in shareholders' wealth around the announcement of M&As. My empirical analysis shows that banking mergers create value for the shareholder of targets. However, I find a significantly negative association between target's capital ratio and cumulative abnormal return to acquirers in M&As. Furthermore, I also report that this negative association only holds in M&As announced during and after the financial crisis. This dissertation also investigates the impact of bank capital on the cost of equity, another channel through which capital can influence banks' value. This dissertation tests the potential impact of bank capital on the cost of equity in the context of bank M&As. M&As are a good laboratory to study the relation between bank capital structure and the cost of equity capital because M&A transactions alter capital structure, and thus could change the cost of equity capital of the acquiring bank. My empirical results show a positive association between the target's capital ratio and the change in acquirer's annual cost of equity capital after the completion of the deals. Additionally, I also analyze a sample of non-US bank M&As and find a negative association between the target's capital ratio and the cumulative abnormal return of banks acquired in M&As.

Master of Arts / Department of Economics / William F. Blankenau / The financial crisis that began in the summer of 2007 has greatly tested the abilities of central banks to counter financial instability and economic slowdown through traditional monetary policy. This paper will examine in detail the monetary response of both the Federal Reserve Bank of the United States (Fed) and the Bank of England to the turmoil in the financial markets. The Bank of England, which adopted inflation targeting after the Black Wednesday crisis in 1992, and the Fed, which has no such stated policy, allows us to compare two different monetary regimes in the aftermath of a crisis. To counter the financial crisis the Bank of England resorted to unconventional monetary policies that included expansion of liquidity easing operations and a policy of quantitative easing through purchase of debt securities. The Fed also made use of both traditional tools as well as more innovative measures to combat liquidity concerns in the financial market. A multitude of new programs was initiated by the Fed to supply liquidity to susceptible lending institutions and lower the spreads on commercial loans and securities. Overall, we find that the actions of the Bank of England and the Fed were effective in restoring stability to financial markets and preventing a prolonged economic depression. Further, the Bank of England's inflation targeting framework did not hinder its ability to respond to the crisis and there was no major divergence in the policy actions of the two central banks.