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<p> Over the past two decades, hedge fund activism has emerged as a new mechanism of corporate governance that brings about operational, financial and governance reforms to a corporation. Many prominent business executives and legal scholars are convinced that the American economy will suffer unless hedge fund activism with its <i>perceived</i> short-termism agenda is significantly restricted. Shareholder activists and their proponents claim they function as a disciplinary mechanism to monitor management and are instrumental in mitigating the agency conflict between managers and shareholders. I find statistically meaningful empirical evidence to reject the anecdotal conventional wisdom that hedge fund activism is detrimental to the long term interests of companies and their long term shareholders. Moreover, my findings suggest that hedge funds generate <i>substantial long term</i> value for target firms and its long term shareholders when they function as a shareholder advocate to monitor management through active <i>board engagement.</i></p>

<p> Results from previous studies testing for under-reaction and overreaction in the commodity futures market are mixed and inconclusive. Using a data of more than 20 categories of future contacts ranging from agricultural, metal and energy, we have found significant evidence of under-reaction in food and agricultural commodities but not in the energy and metal sector. It is also found that those relatively inactive commodity future contracts tend to have a stronger tendency to under-react than commodity future contracts are very actively traded. The result also agrees with the behavioral hypothesis that under-reaction is caused by gradual incorporation of information among investors.</p>

<p> This study examines the role of financial socialization in low-income Hispanic households in order to determine if there was evidence of the transmission of values about behaviors such a saving and searching for the cheapest price from parent to child. This aim was achieved by generating measures for time and goods socialization and by making the assumption that when a parent and child share analogous financial attitudes, this provides evidence for the presence of financial socialization. A failure to match indicates otherwise. The empirical results from multinomial logit and probit models provide several cases that present evidence for the presence of financial socialization. Numerous noteworthy relationships are investigated including the impact of marriage, income, and educational attainments on the probability of generating a like-minded child. Using survey data on 8th grade students and their parents, the findings of the logit and probit models illustrate the impact of financial socialization while concurrently emphasizing the repercussions when not utilized.</p>

<p> Operational risk is the risk of losses arising from the failure of people, processes, and systems, and from external events. A general opinion is that, unlike market risk and credit risk, operational risk is idiosyncratic in the sense that when it manifests in one firm, it does not spread to other firms. This view implies the absence of contagion and that operational risk is firm-specific, not systemic, but there is some new evidence from the Federal Reserve Bank (FRB) that suggests frequencies track both firm and macro variables. </p><p> Until the emergence of the &ldquo;Basel 2&rdquo; reforms to banking supervision in the mid to late 90s, operational risk was largely an afterthought because these uncertainties were difficult to quantify, insure against, and manage in traditional ways. The last 15 years have witnessed the rapid emergence of operational risk from this low status to its institutionalization as a key component of enterprise risk management and global banking regulation. Some authors find it tempting to regard Nick Leeson, the &ldquo;rogue&rdquo; trader attributed with the destruction of the legendary Barings bank in 1995, as the true inventor of &ldquo;operational risk.&rdquo; </p><p> The magnitude of loss and the impact of operational risk and losses to date are difficult to ignore. We have seen an increase in the number of large operational losses during times of economic stress. The times of market and economic stress magnify the severity of the large operational losses and lead to the eventual unraveling of the losses in the public eye. </p><p> The research reveals a significant number of similarities between the cases of rogue trading. These results support the hypothesis that failures both internal and external to the companies analyzed facilitated the emergence of rogue trading activities, specially driven by fragmented control environments and incentive schemes undermining financial institutions&rsquo; risk culture. </p>