I find evidence to support the negative impact of growth options on corporate social responsibility (CSR). I propose that attention-constrained managers reduce corporate goodness to focus on growth opportunities. The effect is more pronounced for well-governed firms, for financially-constrained firms, and for capital-intensive social dimensions. Firms reduce their research and development (R&D) and capital expenditures, and experience lower annual buy-and-hold abnormal returns (BHAR) subsequent to significant increases in their social performance. I also report value implications of CSR investments. The empirical evidence suggests that managerial choices to divert attention from growth projects toward CSR hurt shareholders.

This paper investigates whether CEO supplemental executive retirement plans (SERPs) are associated with firm risk. Sundaram and Yermack (2007) show that CEOs manage their firms more conservatively as their debt incentives increase. Using new executive compensation disclosures mandated by the SEC, I find a negative association between CEO SERPs and firm risk but only for unsheltered SERPs. I find that when a CEO SERP is protected by a lump sum payment or by a trust (i.e. sheltered), the negative association between SERPs and firm risk is greatly diminished and even eliminated in some models. Furthermore, I show that having a greater proportion of outside CEOs on a compensation committee when a new CEO is hired is associated with a higher likelihood of the new CEO having a SERP. These findings have implications for the method in which executives are compensated with retirement pay and address the SEC’s growing concern about the link between compensation and firm risk management practices.

Since 1992, India has grown as a global player in the finance world. In spite of its success, India has not been able to rid itself of potentially harmful practices. One such practice is the issuing of Participatory Notes (PN) to foreign investors, so that they can anonymously purchase securities or derivatives listed on the Indian Stock Exchanges. This instrument came into public view when it accounted for approximately 50% of all foreign portfolio assets in India. Since then, the laws regarding PNs have evolved to become a more transparent version of the old rules. Although PN levels are not close to as high as 2007, a rising trend in PNs has been observed from September to November 2012. Regulation may have helped figure out who the end PN holder is, but it has not helped mitigate the inherent volatility that some scholars argued PNs had. This paper follows previous researchers claims to try to resolve the issue using rigorous econometric analysis. It uses the Vector Auto Regression (VAR) Model to find the coefficient of change in Participatory Note volume when regressed against the U.S. Dollar Indian Rupee Nominal Exchange Rate. Although the model’s results are interpreted, a problem of serial correlation existed in the model, thus impairing the results.

In this thesis, I study the variance risk premium in Gold VIX market. Using synthetically created variance swaps, I quantify the variance risk premium to be average -0.068 in absolute terms and -0.358 in log return terms, meaning that purchasing volatility in Gold VIX is generally unprofitable. Although the average negative risk premium is not statistically significant, the mean log return of risk premium is robust with Newey-West test. Furthermore, I attempt to test whether risk premium vary with time or the level of the swap rate, but obtain unclear results.

Using a sample of 279 buyout backed firms, I examined the effect of lockup agreements on the firm’s stock returns. I found there to be a negative .8 percent cumulative abnormal return for the three-day period surrounding lockup expiration. Consistent with my hypothesis the CAR for the three-day period surrounding lockup expiration was less negative for buyout backed IPOs compared to venture capital backed IPOs. In addition, I found there to be an abnormal 24.24 percent increase in trading volume for the three days surrounding lockup expiration.

With players in the National Football League (NFL) making what seems to be the most money out of any entry-level position, it might come as a shock to many people to hear that so many players end up in financial distress afterwards. Sports Illustrated has put this number at 78% of players filing for bankruptcy or are in serious financial trouble within only two years of leaving the league (Torre). The problems that the players run into are their short careers, which average 3 ½ years, their poor financial decisions and their very optimistic approach to life. The 3 ½ years means that they should approach their employment as more of a lottery winning than a long term career. With so much income, the players might want to take out large mortgages and could be in trouble. They would believe that they would be the exception and not the rule for this because they are constantly succeeding as well. The players should set up a budget to fix this. They should defer the maximum amount of compensation possible and invest most of the rest. The athletes should have enough still to have a comfortable few years in the NFL. The football players should also be smart and get a college degree while they can for free.

This thesis uses synthetically created variance swaps on VIX futures to quantify the variance risk premium in VIX options. The results of this methodology suggest that the average premium is -3.26%, meaning that the realized variance on VIX futures is on average less than the variance implied by the swap rate. This premium does not vary with time or the level of the swap rate as much as premiums in other asset classes. A negative risk premium should mean that VIX option strategies that are net credit should be profitable. This thesis tests two simple net credit strategies with puts and calls, and finds that the call strategy is profitable while the put strategy is not.

Over the Past two and a half years banks have failed at the fastest pace since the Great Depression. These rapidly mounting bank failures have rekindled a debate surrounding the use of fair value accounting, with many arguing that fair value has exacerbated the severity of the recent financial crisis through asset devaluation and the forced sale of assets in an effort to meet capital requirements. This paper seeks to test if an entity’s exposure to fair value which includes assets available-for-sale, trading assets, and loans held-for-sale as a percent of total assets increases the probability of bank failure through testing different prediction models of bank failure that use ratios generated from publicly available Call Report data. Two models are generated from these ratios, one to determine the significance of an entity’s fair value exposure in predicting risk of failure, and the other to determine if a better model can be generated in the absence of the Fair Value Exposure/Total Assets ratio. The first model shows that Fair Value Exposure/Total Assets is a statistically significant ratio, and that the model employing Fair Value Exposure/Total Assets has greater bank failure predictive power than the second model that excludes this ratio. Contrary to expectations, the study determines that greater fair value exposure actually decreases a bank’s risk of failure, rather than increases it. A number of possibilities as to why this may be are presented in the conclusion of the paper.

The purpose of this study was to determine what the critical factors are to an airline’s financial turmoil, leading ultimately to a bankruptcy filing. Over the past decade, the airline industries’ performance has been dismal, leading to 20 bankruptcy filings. As competition increases, it is crucial for airlines to know which core business areas are essential to success. This paper identifies 8 specific industry metrics that are used to compare airlines, revealing where certain airlines falter and others shine. Some of these metrics are later applied to a case study examining Trans World Airlines (TWA) and American Airlines (AA), highlighting the factors leading to TWA’s bankruptcy filing during the same time period American Airlines remained profitable. The results show that the labor inefficiency, operating inefficiencies, unsuccessful fuel hedging programs, and high long-term debt are critical factors leading to an airlines bankruptcy. Four recommendations for airlines are provided, namely: 1.) The cross-utilization of employees, 2.) Maintain Cost Discipline, 3.) Focus on Breakeven Load Factor, and 4.) Do not neglect the intangibles such as brand reputation.

I examine investors’ reaction to the announcement of mergers and acquisitions in the pharmaceutical and biotechnology industry from 2002 to 2008. Over this period, investors anticipate the announcements, as demonstrated by the fact that the cumulative abnormal returns are not statistically significant. In addition, I test to determine the effect of excess capacity on investors’ reactions. From 2002 to 2004, investors do not recognize acquisitions as a response to excess capacity, as the excess capacity measures utilized have no effect on the size of the cumulative abnormal return. From 2005 to 2008, however, excess capacity measures have a positive effect on cumulative abnormal return, indicating that investors started to recognize the threat of excess capacity and acquisitions as a response to that threat.