ABSTRACT TWO ESSAYS ON INVESTOR SENTIMENT AND EQUITY OFFERINGS BY HSIN-HUI CHIU May 2, 2006 Committee Chair: Dr. Jason T. Greene Major Department: Finance Using monthly open-end mutual fund flows as a proxy for investor sentiment, I am able to examine the impact of sentiment on IPO volume and underpricing. I find that issuers’ filing decisions are significantly affected by the predicted future sentiment around the expected IPO dates. Furthermore, sentiment has an impact on the final offer price setting and over-allotment options exercised. While previous research documents IPO cycles with respect to other proxies for investor sentiment, I am able to examine IPO cycles and underpricing with respect to sentiment along with investor risk preferences. I hypothesize that a going public firm will try to issue its IPO when investor risk preferences are favorable to the firm’s own risk characteristics. Empirical results based on 5,661 initial public offerings between 1986 and 2004 are consistent with my hypotheses that issuers not only time the market with sentiment in general, but also attempt to incorporate investor risk preferences into their going public decisions. Furthermore, underpricing is more severe when firms issue equity during months with large inflows into equity mutual funds. In my second essay, I find that SEO firms appear to time market efficiently because of the shorter filing periods compared to the average 2-3 months of the IPOs. Also, sentiment not only affects a SEO offer price setting but also affects the over-allotment options exercised. I examine two subgroups of the SEO samples: shelf registration and non-shelf SEOs. I find that shelf-registered SEOs incorporate investor sentiment into offering price to a greater degree compared to regular SEOs. Lastly I find that investor risk preference plays a role in firms’ decision to file prospectuses with the SEC. In other words, firms rationally decide the timing of filing based on the predicted investor preference and try to match firm characteristics with investor preference around the expected SEO date.

ABSTRACT Deposit Insurance: Is it good for the development of Financial Markets? BY Kaysia Therese Campbell April 25, 2006 Committee Chair: Dr. Stephen Smith and Dr. James Owers Major Department: Finance The literature on deposit insurance has focused primarily on the role it plays in promoting banking sector stability and growth, while little attention has been placed on its possible effect on the development of other markets. Failure to examine the impact of deposit insurance on other markets could lead to premature conclusions about the full effect it has on total financial market development and, in turn, economic growth. Using panel data and cross sectional averages on 96 countries covering the time period 1975 – 2004 to distinguish between short run and long run effects, and including a host of controls, I find evidence that deposit insurance is associated with greater long run, total financial market development, as measured by the size and activity of banks, equity markets, bond markets and non-bank financial intermediaries. This indicates that it is able to accelerate banking sector development without necessarily retarding the development of other markets so that overall financial market development is improved. It is important to note that this is primarily evident for countries with a strong legal and contracting environment. The results also suggest that the immediate impact of deposit insurance is greatest for middle income economies but over time there is no clear evidence that this persists. Using design features thought to contribute to the generosity and ability of the scheme to curb moral hazard and provide a credible guarantee, I construct two indices to summarize the various design features and examine their impact on financial market development. I find that countries adopting more credible schemes appear to have smaller and less active markets over time. However the results also indicate that more credible and generous design features are better able to promote total market activity in the long run. The hopeful conclusion to be made from this study is that the positive influence of deposit insurance on the banking sector is translated into the entire financial market system over time and may be irrespective of a country’s particular stage of economic development.

By construction, actively managed portfolios must differ from passively managed ones. Consequently, the manager’s problem can be viewed as selecting how to deviate from a passive portfolio composition. The purpose of this study is to see if we can infer the presence of superior skills through the analysis of the portfolio deviations from a benchmark. Based on the Black-Litterman approach, we hypothesize that positive signals should lead to an increase in weight, from which should follow that the largest deviations from a benchmark weight reveal the presence of superior skills. More precisely, this study looks at the subsequent performance of the securities corresponding to the largest deviations from different external benchmarks. We use a sample of 8385 US funds from the CRSP Survivorship bias free database from June 2003 to June 2004 to test our predictions. We use two external benchmarks to calculate the deviations: the CRSP value weighted index (consistent with the Black-Litterman model) and the investment objective of each fund. Our main result shows that a portfolio of the securities with the most important positive deviations with respect to a passive benchmark (either CRSP-VW or investment objective), would have earned a subsequent positive abnormal return (on a risk-adjusted basis) for one month after the portfolio date. The magnitude of this return is around 0.6% for all the funds, and can be as high as 2.77% for small caps value funds. This result is robust to all the performance measures used in this study.

The research addresses the management dilemma of a decrease in the number of capital project investments, due to the current methods of capital budgeting (i.e. net present value analysis using discounted cash flows) being ineffective, because it does not effectively deal with uncertainty in the investment, and also does take management's flexibility into account. It has been determined that a strategic options framework can be used to provide a more meaningful assessment of future business opportunities under uncertainty. The options approach complements the conventional net present value criterion in evaluating risky investment. The options approach provides an immediate and important perspective on value creation because the options approach takes into consideration that management have the choice of deferring the investment to a later date when circumstances are more certain, and there is less risk involved, or the choice of completely abandoning the investment. / Thesis (MBA)-University of Natal, Durban, 2003.

The primary purpose of this study is concerned with providing improved understanding of both accounting and management systems through the use of case study based research. To provide this improved understanding, this research study is based upon several key assumptions which are also key conclusions. Firstly, that management and accounting systems and practices exist in organisation contexts. Secondly, that these systems and practices obtain their meaning, in part, from the organisation contexts in which they are situated. Thirdly, that accounting knowledge and management theory, to-date, has failed to provide adequate descriptions and prescriptions for the organisations. Fourthly, that the key problem in accounting knowledge and management theory which has prevented adequate understanding is to do with the ontological issues which underlies such knowledge. The contents of this study can be seen to be divided into three parts. The first outlines the nature of management accounting knowledge paying particular attention to the ontological and epistemological assumptions. Through analysis of these assumptions, the importance of understanding the complexity of social reality is introduced. A model of a 'temporal-spatial' reality is introduced and described. The conclusion from this part is that the main problem in understanding accounting practices is linked with the ontological issues and that a more complex subjective reality needs to be explored. Part two provides the description of the case-study utilised to understand accounting practices in an organisational context. Part three provides an analysis of the use of the management and accounting systems by providing an understanding of the social-reality of the dominant decision-makers within the case-study. The conclusion forthcoming from this study is four-fold and stated in paragraph one. However, these have major considerations to the development of accounting knowledge and require major shifts in the dominant methodology of accounting thought. ix.

This paper is a review of the literature on quality management practices and firm performance. Theoretical frameworks linking ISO 9000 and Total Quality Management (TQM) were analyzed. ISO 9000 has been recommended to be used as a route to TQM. The emergence of constructs of quality management practices was examined. Eight most popular constructs have been identified - top management support, quality information availability, quality information usage, employee training, employee involvement, product/process design, supplier quality and customer orientation. A thorough review of the literature pointed to three categories of empirical studies on quality management practices and firm performance, i.e., comparative studies, longitudinal studies and impact studies. This paper suggests that future research in quality management should focus on the link between quality management and financial performance. / Thesis (DBA(DoctorateofBusinessAdministration))--University of South Australia, 2004.

Thesis (M.H.A.)--University of Michigan, 1961.

Thesis (M.H.S.A.)--University of Michigan, 1983.

Thesis (M.H.S.A.)--University of Michigan, 1983.

Thesis (M.H.A.)--University of Michigan, 1961.