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Title: Three essays on the impact of analyst recommendations in the banking industry.
Creator: Premti, Arjan, Madura, Jeff, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: By analyzing the information provided by analyst recommendations in the banking industry, I find that analyst recommendations trigger an immediate impact on the value of banks (Essay 1), they profitably guide the investment decisions of investors for periods of up to three months (Essay 2), and they also have an immediate impact on the values of rival banks (Essay 3). In addition, I find that analysts’ ability to provide new information depends on the information environment of the bank. The...
Show moreBy analyzing the information provided by analyst recommendations in the banking industry, I find that analyst recommendations trigger an immediate impact on the value of banks (Essay 1), they profitably guide the investment decisions of investors for periods of up to three months (Essay 2), and they also have an immediate impact on the values of rival banks (Essay 3). In addition, I find that analysts’ ability to provide new information depends on the information environment of the bank. The degree of information asymmetry, the degree of complexity, the risk of the bank, the risk of the time period, as well as regulatory reforms that affect these characteristics, have a significant impact on the analyst’s ability to provide new information to the investors. Specifically, I find that analyst recommendations are more informative when banks suffer from a high degree of information asymmetry. In addition, regulatory reforms that reduced the information asymmetry of the banking industry also diminished the analyst’s ability to provide new information. Similarly, I find that analyst recommendations have a greater impact on the values of the rated and the rival banks when these banks operate in a risky environment. This result is robust to several measures of bank risk, period risk, and regulatory events that affected the risk of the banking industry. However, the results of Essay 2 show that positive recommendations that occur during riskier periods or after regulatory events that increased the risk of the banking industry result in lower value for the investors over the following 1-month or 3- month periods. Lastly, I find that as banks become more complex, analyst recommendations have a smaller immediate impact on the value of the bank, deliver a smaller investment value for the investors, and also have a smaller immediate impact on the value of the rival banks.
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Date Issued: 2014
PURL: http://purl.flvc.org/fau/fd/FA00004151, http://purl.flvc.org/fau/fd/FA00004151
Subject Headings: Financial engineering, Investment analysis, Portfolio management, Risk management
Format: Document (PDF)

Title: The Real Effects of Shareholder Proposals: Purpose in the Context of Climate Change.
Creator: Tindall, Greg, Javakhadze, David, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: Extant literature has struggled to identify definitive purpose for shareholder proposals, finding them to depend on their context. Progressively, climate change has gathered interest at annual meetings where shareholders present proposals related to the subject. The literature builds expectations for the role of obsolescence, regulation and other forms of activism to motivate innovation with respect to these proposals. The literature also establishes how diversification can serve as a defense...
Show moreExtant literature has struggled to identify definitive purpose for shareholder proposals, finding them to depend on their context. Progressively, climate change has gathered interest at annual meetings where shareholders present proposals related to the subject. The literature builds expectations for the role of obsolescence, regulation and other forms of activism to motivate innovation with respect to these proposals. The literature also establishes how diversification can serve as a defense. I test the impact that shareholder proposals have on the information environment and on the corporate behaviors of innovation and diversification. I find that capital markets are responsive to proposal pressures and that there are improvements in the information environment. I find that firms in receipt of shareholder proposals related to climate change innovate and diversify more. I find wealth enhancements for these corporate behaviors spurred by climate-related proposals. While definitive statements on causality may elude, my results suggest that shareholder proposals have real effects.
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Date Issued: 2020
PURL: http://purl.flvc.org/fau/fd/FA00013437
Subject Headings: Corporations--Investor relations, Shareholder proposals, Climatic changes
Format: Document (PDF)

Title: Two Essays on Mutual Funds Herding and the Information Content of Their Trades.
Creator: Carrete Rodriguez, Angel Francisco, Agapova, Anna, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: Information asymmetry literature has developed models that explain the relation between uninformed traders and informed traders. In general, these models have shown that first, information asymmetry is a driving force for investor buying and selling behavior. Second, the trades of informed investors reveal some of the information they possess suggesting that the trades of informed investors are informative to market makers. Third, when information about a stock enters the market, the...
Show moreInformation asymmetry literature has developed models that explain the relation between uninformed traders and informed traders. In general, these models have shown that first, information asymmetry is a driving force for investor buying and selling behavior. Second, the trades of informed investors reveal some of the information they possess suggesting that the trades of informed investors are informative to market makers. Third, when information about a stock enters the market, the characteristics of the firm can change, e.g., a better information environment reduces the cost of capital (Admati, 1985; Easley and O‟Hara, 2004; Wang, 1993). In this study, I apply information asymmetry theory to explore the trading behavior of active equity mutual fund managers and their role as facilitators of information. In the first essay, I study the information environment of firms mutual funds choose to add to their holdings and how it changes after the inclusion. I identify all new additions to the mutual fund holdings universe from 2002 to 2015 and compare them to the available universe of firms not yet owned by mutual funds. I find that active equity mutual fund managers behave as informed investors and prefer to buy stocks with more opaque information environments i.e., firms with larger spreads, lower trading volume, smaller firms with more growth opportunities, and firms that tend to use more accruals. Fund managers also show a preference for firms that have less analyst following, those in which analysts are less likely to agree on their EPS estimates, and firms in which analysts are more likely to err in their predictions. In other words, mutual fund managers prefer firms that are more likely to be mispriced. Once the funds include the firms, I document a strong improvement in their information environment. Firms attract more analyst coverage, reduce its use of accruals, produce more guidance, increase their market cap, and show increased turnover. The second essay focuses on the herding behavior of mutual funds. The study is the first to document the herding of mutual fund managers after creation of toehold positions by portfolio managers. I use a hand-collected dataset consisting of all toehold acquisitions reported to the SEC from 1995 to 2015 to document a strong herding reaction of active equity mutual funds after toehold announcements. This herding reaction is several times stronger than other mutual fund herding events reported by previous literature. I also document that the strength of the herding reaction varies depending on the identity of the filer or the characteristics of the firm acquired. The herding reaction is stronger for toehold announcements of firms with a smaller market capitalization, better growth opportunities, and those that are more illiquid. I also find that the herding reaction is weaker after the filings of hedge fund managers. My results support the informational herding cascade hypothesis.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013127
Subject Headings: Information asymmetry, Mutual funds, Herding
Format: Document (PDF)

Title: Two Essays on Media Connections and Corporate Finance Policies.
Creator: Hossain, Md Miran, Javakhadze, David, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: The study examines the effects of executives’ media connection on corporate policies. Extant literature in finance, economics and journalism provide inconclusive evidence in determining whether media works as watchdog to the financial market or whether media facilitates bias through manipulation of corporate news events. I introduce two competing hypotheses that may explain the research question. Information Efficiency Hypothesis predicts that media connected firms mitigate information...
Show moreThe study examines the effects of executives’ media connection on corporate policies. Extant literature in finance, economics and journalism provide inconclusive evidence in determining whether media works as watchdog to the financial market or whether media facilitates bias through manipulation of corporate news events. I introduce two competing hypotheses that may explain the research question. Information Efficiency Hypothesis predicts that media connected firms mitigate information asymmetry among its investors, enjoy better governance, and are less likely to manipulate information on corporate policy choices. Manipulation Hypothesis, in contrary, suggests that firms may strategically utilize media connections to alter the information flow that may paint a tainted picture of the firm’s prospects, thereby facilitating greater misvaluation and devising of opportunistic corporate finance policies. I test these hypotheses on a set of investment policies (mergers outcomes and innovative efficiency) and financing policies (seasoned equity offerings and share repurchases). In the first essay, I find that media connection increases merger announcement return, reduces takeover premium, increases the likelihood of deal completion, although post-merger long term performance exhibit inconclusive results. Also, media connection reduces innovative efficiency and change in innovative efficiency attributable to media connections is harmful for the firm in the long run. Overall, results are consistent with the manipulation hypothesis to some extent though further investigation is required before disregarding the information efficiency effect. In the second essay, results show that media connection increases the likelihood of an SEO event, reduces the announcement period CAR. However, analysis of post SEO long term operating and stock performance show mixed results. For repurchasing firms, media connection increases announcement returns, increases the likelihood of repurchase and the amount repurchased. Media connection also increases the likelihood that repurchase is preferred over dividends as a mode of payout. Post repurchase long term operating and stock performance, however, provide inconsistent results. In general, results are consistent with the manipulation hypothesis though information efficiency hypothesis could not be ruled out entirely.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013070
Subject Headings: Corporations--Finance., Mass media and business., Corporations--Public relations.
Format: Document (PDF)

Title: Operating Leverage’s Role in Stock Returns, The Value Premium, and the Profitability Premium: International Evidence.
Creator: Jansen, Benjamin A., Garcia-Feijoo, Luis, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: This dissertation investigates the association of operating leverage with stock returns, the value premium, and the profitability premium. Results in the first essay support the hypothesis that operating leverage is related to stock returns and the value premium across the sampled countries. Results are robust to cross-country differences, typical controls, multiple definitions of operating and financial leverage, and while controlling for the endogeneity of operating and financial leverage....
Show moreThis dissertation investigates the association of operating leverage with stock returns, the value premium, and the profitability premium. Results in the first essay support the hypothesis that operating leverage is related to stock returns and the value premium across the sampled countries. Results are robust to cross-country differences, typical controls, multiple definitions of operating and financial leverage, and while controlling for the endogeneity of operating and financial leverage. This suggests that the rational explanation for the presence of the value premium lies in the underlying risk exposure of fixed asset risk of operating leverage which is expressed through the value premium. Results further support the hypothesis of strengthening labor protection increasing operating leverage. In turn, increased labor protection marginally negatively associated with the value premium, suggesting that labor protection reduces the value premium through financial leverage. However, because operating and financial leverage are oppositely affected by employment protection, the joint effect of this association may be cumulatively washed out in estimating value premium with employment protection legislation. Results in the second essay further support the hypothesis that operating leverage is related to stock returns and additionally support the hypothesis of operating leverage being associated to the profitability premium. The profit premium tends to be insignificant when generated within operating leverage portfolios, and the profit premium only tends to be significantly positive in the higher operating leverage portfolios. Furthermore, once operating leverage and profitability are orthogonalized from one another, the estimated coefficient of profitability is reduced by a magnitude of roughly 10. These results provide evidence in support of the profit premium being based on the riskiness of the firm through operating leverage, and therefore the profit premium is a rationally priced risk factor in stock returns.
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Date Issued: 2018
PURL: http://purl.flvc.org/fau/fd/FA00013074
Subject Headings: Operating leverage., Stocks., Financial leverage., Corporations--Valuation., Labor--Protection.
Format: Document (PDF)

Title: On Mutual Fund Family Diversification, Performance, Persistence and Flows.
Creator: Kaprielyan, Margarita, Agapova, Anna, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: The first essay introduces a portfolio theory motivated approach to measuring mutual fund family-level diversification and hedging strategies. Diversification of idiosyncratic risk (systematic risk) is measured by the average cross-fund correlation in idiosyncratic returns (predicted returns from the multifactor model). Using new methodology, I find evidence of cross-sectional variation in family-level diversification and examine several fund families’ characteristics as the determinants of...
Show moreThe first essay introduces a portfolio theory motivated approach to measuring mutual fund family-level diversification and hedging strategies. Diversification of idiosyncratic risk (systematic risk) is measured by the average cross-fund correlation in idiosyncratic returns (predicted returns from the multifactor model). Using new methodology, I find evidence of cross-sectional variation in family-level diversification and examine several fund families’ characteristics as the determinants of this crosssectional variation. On average, fund families that offer more objectives are more diversified in terms of both idiosyncratic and systematic risks; however, in the subsample of larger fund families, greater number of objectives is associated with increase (decrease) in idiosyncratic (systematic) risk diversification. Families that concentrate in the retail sector are more diversified. I also find that less diversification of idiosyncratic risk on the family level is associated with better risk-adjusted performance, while greater diversification of systematic risk is associated with greater performance during an economic downturn. The second essay examines whether new measures of diversification are additional determinants of fund family flows and flow volatility. I find that fund family capital flows increase in systematic risk focus, as more of the fund family’s assets are held by institutional investors. Family flow volatility decreases in diversification of systematic risk during market downturn, increase in market uncertainty and during recession. I further find that families with greater concentration in the retail sector (institutional sector) exhibit less family capital flow volatility as the diversification of systematic risk (idiosyncratic risk) increases. Fund-level volatility of focused and concentrated funds within diversified families is greater than in less diversified families, signaling that diversification on the family level may decrease participation costs for the investors. Moreover, in support of participation cost hypothesis, I find that the performance of worst performing funds within fund families increases in the family-level diversification; thus, family-level diversification affects the convexity in the fund flowperformance relation documented in the previous studies. On the family-level, diversification is associated with convexity in flow-performance relation, while family focus with more direct flow-performance relation.
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Date Issued: 2017
PURL: http://purl.flvc.org/fau/fd/FA00004990
Subject Headings: Dissertations, Academic -- Florida Atlantic University
Format: Document (PDF)

Title: THREE ESSAYS ON CEO-BOARD SOCIAL CONNECTIONS AND CORPORATE POLICIES: AN INTERNATIONAL PERSPECTIVE.
Creator: Bhuyan, Md Nazmul Hasan, Javakhadze, David, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: The proposed study examines the effect of CEO-board social connections on corporate policies. Motivated by the independent board view and collaborative board view, I propose two opposing hypotheses explaining the effect of CEO-board connections on corporate policies: monitoring hypothesis and advising hypothesis. In my first essay, I validate the two competing hypotheses of CEO-board connections by investigating the effect of CEO-board connections on monitoring and advising role of the board,...
Show moreThe proposed study examines the effect of CEO-board social connections on corporate policies. Motivated by the independent board view and collaborative board view, I propose two opposing hypotheses explaining the effect of CEO-board connections on corporate policies: monitoring hypothesis and advising hypothesis. In my first essay, I validate the two competing hypotheses of CEO-board connections by investigating the effect of CEO-board connections on monitoring and advising role of the board, and firm valuation. I find that CEO-board connections have a negative effect on board monitoring and positive effect on board advising and firm valuation. The results are robust to endogeneity concerns and different model specifications. Disentangling the Channels, I also show that the predicted effect of CEO-board connections on board monitoring and advising have opposite effects on firm valuation. Lastly, I provide evidence that the effect of CEO-board connections on firm performance is stronger in firms with high growth opportunities.
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Date Issued: 2020
PURL: http://purl.flvc.org/fau/fd/FA00013515
Subject Headings: Chief executive officers, Boards of directors, International perspectives
Format: Document (PDF)

Title: THE IMPACT OF CEO PAST PROFESSIONAL EXPERIENCE AND SOCIAL CAPITAL ON CORPORATE POLICIES AND FIRM PERFORMANCE.
Creator: Faulkner, Matthew, Garcia-Feijoo, Luis, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: Increasing evidence suggests the personal traits of chief executive officers (CEOs) can influence corporate policies. We examine how one dimension, past professional experiences, can affect corporate payout policy. Exploiting exogenous CEO turnovers and future employment, we hypothesize that CEOs experiencing a distress event in their past career alter the corporate payout policy at their subsequent firm of employment. We discover that CEOs having experienced prior professional career...
Show moreIncreasing evidence suggests the personal traits of chief executive officers (CEOs) can influence corporate policies. We examine how one dimension, past professional experiences, can affect corporate payout policy. Exploiting exogenous CEO turnovers and future employment, we hypothesize that CEOs experiencing a distress event in their past career alter the corporate payout policy at their subsequent firm of employment. We discover that CEOs having experienced prior professional career distress are less likely to pay dividends and use repurchases and pay out lower levels for each type of payout. Additionally, when CEOs with distress do have a payout policy greater than zero dollars, there exists a preference toward the use of repurchases in the payout policy, adding to the literature of substitution and differences between the two forms of payout. We find that dividend smoothing is reduced by CEOs that have past professional distress.
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Date Issued: 2019
PURL: http://purl.flvc.org/fau/fd/FA00013305
Subject Headings: Chief executive officers, Social capital (Sociology), Experience, Dividends, Payouts
Format: Document (PDF)

Title: Strategic information disclosure when there is fundamental disagreement: an empirical investigation.
Creator: Volkov, Nikanor, Agapova, Anna, Florida Atlantic University, College of Business, Department of Finance
Abstract/Description: I empirically investigate the managements’ decision to voluntarily disclose strategic information. While carrying a benefit of reduced information asymmetry, strategic information disclosure carries a cost of investors disagreeing with managements’ strategy and thus refusing to provide funding to the firm. Using a hand- collected sample of information releases, I identify firm characteristics that affect the likelihood of strategic information disclosure.
Date Issued: 2015
PURL: http://purl.flvc.org/fau/fd/FA00004473, http://purl.flvc.org/fau/fd/FA00004473
Subject Headings: Corporate governance, Corporations -- Auditing, Disclosure of information, Management information systems, Social responsibility of business, Strategic planning
Format: Document (PDF)

Title: EQUAL EMPLOYMENT OPPORTUNITY: A STUDY OF EEO IN FIVE SELECTED MANUFACTURING COMPANIES.
Creator: BENNETT, GEORGE NORMAN., Florida Atlantic University, Abbott, Jarold G., College of Business, Department of Finance
Abstract/Description: This thesis surveys equal employment opportunities in selected manufacturing firms since the passage of Title VII of the 1964 Civil Rights Act and its amendments. Companies who have government contracts are now required by law to have written affirmative action programs that outline positive steps in providing equal opportunities in employment for minorities and women. Case studies of the five selected firms are conducted by the author. These studies involve analyzing and evaluating the...
Show moreThis thesis surveys equal employment opportunities in selected manufacturing firms since the passage of Title VII of the 1964 Civil Rights Act and its amendments. Companies who have government contracts are now required by law to have written affirmative action programs that outline positive steps in providing equal opportunities in employment for minorities and women. Case studies of the five selected firms are conducted by the author. These studies involve analyzing and evaluating the affirmative action programs and indicating the changes that have taken place in personnel policies and practices.
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Date Issued: 1974
PURL: http://purl.flvc.org/fcla/dt/13658
Subject Headings: Business Administration, General
Format: Document (PDF)

Title: ESSAYS ON MANAGERIAL OPPORTUNISM, PENSION DE-RISKING, AND CORPORATE INVESTMENT POLICIES.
Creator: Silverstein, Brian, Pennathur, Anita K., Javakhadze, David, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: In the first essay, I examine how managerial opportunism affects corporate investment efficiency and, ultimately, firm performance. Prior research establishes corporate investment efficiency as a function of the firm’s information environment and internal governance. To measure managerial opportunism, I use an ex-ante firm level measure of managerial opportunism based on insider trading patterns and test its effects on investment efficiency and performance. Extant research associates...
Show moreIn the first essay, I examine how managerial opportunism affects corporate investment efficiency and, ultimately, firm performance. Prior research establishes corporate investment efficiency as a function of the firm’s information environment and internal governance. To measure managerial opportunism, I use an ex-ante firm level measure of managerial opportunism based on insider trading patterns and test its effects on investment efficiency and performance. Extant research associates opportunistic insider trading with opaque information environments about the firm and weak firm governance, making it an apropos proxy for opportunistic managerial behavior. Despite the clear establishment of opportunistic insider trading as an agency problem in the literature, it remains unanswered how the managerial insider trading decision’s economic irrationality might reflect a broader agency problem that affects firm investment policy and performance. I introduce competing hypotheses that managerial opportunism may positively associate with overinvestment through “empire building” and excessive risk taking at shareholders’ expense. On the contrary, manv agerial opportunism may lead to underinvestment through rent seeking behavior. My results show that managerial opportunism decreases firm investment efficiency and negatively affects accounting and stock performance. Further tests show that both the quality of the information environment and internal governance moderate the effects of managerial opportunism, providing a unique perspective on how insider trading policy and regulation can affect corporate investment policy.
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Date Issued: 2021
PURL: http://purl.flvc.org/fau/fd/FA00013681
Subject Headings: Corporations, Pensions
Format: Document (PDF)

Title: ESSAYS ON IMP ACT OF BUYBACKS ON BONDHOLDERS AND LONG-TERM SHAREHOLDERS.
Creator: De Almeida, Pedro Monteiro, Garcia-Feijoo, Luis, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: This dissertation investigates the consequences of stock repurchase programs on long-term shareholders and bondholders. In the first essay, I present evidence that stock buybacks reduce investment inefficiencies associated with short-term ownership. For a sample of U.S. firms from 1988 to 2018, I first document that stock buybacks are associated with lower and short-term investors with higher corporate investment and net hiring. However, contrary to the conventional view, I find that buybacks...
Show moreThis dissertation investigates the consequences of stock repurchase programs on long-term shareholders and bondholders. In the first essay, I present evidence that stock buybacks reduce investment inefficiencies associated with short-term ownership. For a sample of U.S. firms from 1988 to 2018, I first document that stock buybacks are associated with lower and short-term investors with higher corporate investment and net hiring. However, contrary to the conventional view, I find that buybacks reduce overinvestment related to short-term owners rather than increasing underinvestment. I conclude that firms have been using buybacks as an efficient mechanism to align the interest of short-term and long-term investors. Results are robust to alternative measures of stock repurchase and ownership investment horizon and to endogeneity concern In the second essay, I test the signaling and wealth transfer hypotheses for share repurchase announcements using daily bond and stock returns. I distinguish between governance mechanisms protecting shareholders or bondholders and between internal and external shareholder governance strength. I find that stock and bond returns react positively to buyback announcements only at companies with strong internal shareholder governance mechanisms. Moreover, I reveal the positive impact of internal governance on the relation between stock and bond return is more pronounced in the firms where managerial compensation is more tied to stock performance and where the wealth transfer is expected. I found no evidence that high short-term oriented ownership increases the wealth transfer in repurchase announcements. Finally, I show that bonds with distribution covenants are negatively impacted by repurchase announcements, which supports the view that the market punishes these bonds when firms are likely to use repurchase stocks to bypass their covenants.
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Date Issued: 2022
PURL: http://purl.flvc.org/fau/fd/FA00013976
Subject Headings: Stock repurchasing, Bondholders, Stockholders
Format: Document (PDF)

Title: Are There Disparate Outcomes by Race in the Market for Reverse Mortgages?.
Creator: Tayar, George, Cole, Rebel, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: Reverse mortgages are designed to allow house-rich but cash-poor homeowners the ability to tap the equity in their homes. This unique mortgage product has several features that distinguish it from a traditional mortgage, including that no principal or interest payments are made to the lender. Using 2018 - 2020 HMDA data, I test for disparate treatment in outcomes by race, ethnicity and gender. I test for redlining disparate outcomes using the census track minority population percentage as a...
Show moreReverse mortgages are designed to allow house-rich but cash-poor homeowners the ability to tap the equity in their homes. This unique mortgage product has several features that distinguish it from a traditional mortgage, including that no principal or interest payments are made to the lender. Using 2018 - 2020 HMDA data, I test for disparate treatment in outcomes by race, ethnicity and gender. I test for redlining disparate outcomes using the census track minority population percentage as a proxy for neighborhood and test for loan pricing disparate outcomes using the interest rate charged. I test for origination disparate outcomes by comparing approval denial rates. My findings indicate (i) that lenders are more likely to reject applications from borrowers in census tracks with higher percentages of minorities, (ii) that lenders are more likely to reject applications from minority borrowers and (iii) that lenders charge higher interest rates to minority borrowers. I do not find that lenders charge higher interest rates in census tracks with higher percentages of minorities.
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Date Issued: 2022
PURL: http://purl.flvc.org/fau/fd/FA00014038
Subject Headings: Mortgage loans, Reverse, Discrimination, Minorities
Format: Document (PDF)

Title: TWO ESSAYS ON PEER EFFECTS AND DIVERSITY WITHIN THE BOARDROOM.
Creator: Damm, Jason, Javakhadze, David, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: In this manuscript, I present two essays which examine the role of diversity within the corporate boardroom. The first essay determines that board compensation practices at competing firms influence the remuneration arrangements of directors. Consistent with the observational learning perspective, directors mimic the behavior of peer firms in setting their own compensation, but that diversity, in the form of gender, race/ethnicity, education, and experience moderates this relationship....
Show moreIn this manuscript, I present two essays which examine the role of diversity within the corporate boardroom. The first essay determines that board compensation practices at competing firms influence the remuneration arrangements of directors. Consistent with the observational learning perspective, directors mimic the behavior of peer firms in setting their own compensation, but that diversity, in the form of gender, race/ethnicity, education, and experience moderates this relationship. Diversity also leads to better board performance measured through its impact on excess CEO compensation and CEO turnover sensitivity. In the second essay, I document the presence of peer influence in diversity hires. As firms within an industry hire more women and minority directors, others will do the same. This type of herding behavior has both positive and negative outcomes. Firm stock and operating performance is worse in the years after a peer-driven diversity hire, yet board performance is better. I conclude that peer-driven decisions may be suboptimal, but that diversity can promote better governance in the boardroom.
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Date Issued: 2022
PURL: http://purl.flvc.org/fau/fd/FA00013907
Subject Headings: Boards of directors, Executives--Salaries, etc, Diversity
Format: Document (PDF)

Title: ESSAYS ON BANK FAILURE PREDICTION.
Creator: Taylor, Jon R., Cole, Rebel, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: Researching the determinants of bank failure is an important task, yet the extant literature on bank failure early warning models fail to identify which model technique, sampling methodology, or set of coefficients provides the most accurate model when predicting failure on out-of-sample data. In this two-essay study, I examine previously published studies on bank failure prediction to determine with statistical significance which among the chosen set is most accurate. I also examine the...
Show moreResearching the determinants of bank failure is an important task, yet the extant literature on bank failure early warning models fail to identify which model technique, sampling methodology, or set of coefficients provides the most accurate model when predicting failure on out-of-sample data. In this two-essay study, I examine previously published studies on bank failure prediction to determine with statistical significance which among the chosen set is most accurate. I also examine the effects of bias-adjusting models from the Machine Learning literature to determine if bias-correcting sampling algorithms improve accuracy. In the first essay, I replicate three bank failure models (Martin (1977), Cole and White (2012), and DeYoung and Torna (2013) and use them to demonstrate the importance of out-of-sample predictive accuracy using bias-adjusting metrics and the use of McNemar’s Test to show, with statistical significance, that one set of predictive variables is better than the rest. Future researchers may use this framework to demonstrate significant contributions to the field, and regulators may apply these strategies to choose between candidate early warning models. I also test whether including savings banks (in addition to commercial banks) affects out-of-sample predictive accuracy.
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Date Issued: 2022
PURL: http://purl.flvc.org/fau/fd/FA00014046
Subject Headings: Bank failures, Banks and banking
Format: Document (PDF)

Title: CORPORATE SOCIAL RESPONSIBILITY INITIATIVES & DIRECTOR COMPENSATION STRUCTURE.
Creator: Dubois, Philippe, Javakhadze, David, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: This study examines the association between corporate social responsibility (CSR) and director compensation arrangements. I develop two competing hypotheses— based on the optimal contracting and rent extraction frameworks—arguing that CSR could shape director reputation or bargaining power, and consequently director pay structure. I further propose that monitoring or advising needs of the company as well as diversity of the board could moderate the proposed association. Finally, I argue that...
Show moreThis study examines the association between corporate social responsibility (CSR) and director compensation arrangements. I develop two competing hypotheses— based on the optimal contracting and rent extraction frameworks—arguing that CSR could shape director reputation or bargaining power, and consequently director pay structure. I further propose that monitoring or advising needs of the company as well as diversity of the board could moderate the proposed association. Finally, I argue that CSR-induced director compensation changes could have implications for firm performance. I document a positive and significant effect of CSR initiatives on director compensation. I also show that the effect is stronger for boards with greater advising but not monitoring needs. Boardroom gender diversity somewhat diminishes the effect of CSR. Finally, CSR-induced director compensation has mixed implications for firm performance. Overall, my results are more consistent with the rent extraction view of director pay arrangements.
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Date Issued: 2022
PURL: http://purl.flvc.org/fau/fd/FA00014080
Subject Headings: Corporate social responsibility, Social responsibility of business, Directors of corporations, Compensation
Format: Document (PDF)

Title: ESSAYS ON FINANCIAL MARKETS AND CORPORATE POLICIES.
Creator: Akter, Maimuna, Cumming, Douglas, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: The recent increase in common ownership makes it imperative to study the impact of common ownership on corporate policies. In this two-essay study, I examine how common owners interact with firms to make decisions and how they moderate the impact of market manipulation on corporate culture. In the first essay, I examine whether firms in the same industry make similar investment and financial policies when their large institutional owners overlap. This relationship is important given the...
Show moreThe recent increase in common ownership makes it imperative to study the impact of common ownership on corporate policies. In this two-essay study, I examine how common owners interact with firms to make decisions and how they moderate the impact of market manipulation on corporate culture. In the first essay, I examine whether firms in the same industry make similar investment and financial policies when their large institutional owners overlap. This relationship is important given the tremendous rise of common institutional owners and their significance on their portfolio firms’ policies. I hypothesize that common institutional owners cause their portfolio firms in the same industry to make similar policies by creating anti-competitive incentives, reducing information asymmetry, and influencing governance.
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Date Issued: 2023
PURL: http://purl.flvc.org/fau/fd/FA00014168
Subject Headings: Finance, Corporations—Finance, Corporate culture
Format: Document (PDF)

Title: CEO SOCIAL CAPITAL AND STOCK PRICE INFORMATIVENESS: US AND INTERNATIONAL PERSPECTIVES.
Creator: Malinin, Artem, Garcia-Feijoo, Luis, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: In Essay 1, I investigate the association between CEOs’ social capital and stock price informativeness in a sample of US firms. After accounting for the fact that larger networks attract more analysts following, I find that firms with larger CEO social capital exhibit higher private information incorporation and hence more informative stock prices. Results are consistent for five different proxies for stock price informativeness. Furthermore, the positive association between social capital...
Show moreIn Essay 1, I investigate the association between CEOs’ social capital and stock price informativeness in a sample of US firms. After accounting for the fact that larger networks attract more analysts following, I find that firms with larger CEO social capital exhibit higher private information incorporation and hence more informative stock prices. Results are consistent for five different proxies for stock price informativeness. Furthermore, the positive association between social capital and informativeness is driven by more diverse networks, as measured by gender, nationality, education, or professional diversity. Overall, results suggest that private information existing in networks may result in markets that are more informationally efficient. In Essay 2, I show that CEOs’ social capital has a positive impact on stock price informativeness in an international sample. Different robustness and endogeneity tests confirm those results. Moreover, I find that factors present at the country level can mitigate or reinforce social capital’s impact on informativeness. I consider characteristics not observable within one country that can influence such relation around the world including legal, cultural, and developmental. I uncover that for more developed countries and those with a higher quality of institutions a positive impact of social connectedness is more pronounced. In addition, I show the importance of CEOs’ connections characteristics for their impact on stock price informativeness. I find that if CEOs’ connections come from developed countries or countries that have better formal and informal institutions which affect information transparency, CEOs’ social capital becomes more important for informativeness.
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Date Issued: 2022
PURL: http://purl.flvc.org/fau/fd/FA00013973
Subject Headings: Chief executive officers, Social capital (Sociology), Stocks--Prices
Format: Document (PDF)

Title: PAYOUT POLICY AND STOCK PRICE VOLATILITY: INVESTIGATING THE EQUITY DURATION HYPOTHESIS AND THE REPURCHASES SUBSTITUTION HYPOTHESIS.
Creator: Haberstumpf, Craig, Pennathur, Anita, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: In Essay 1, I investigate the Equity Duration Hypothesis, which adapts Macaulay’s fixed income analysis to equity securities, finding evidence that dividend payers are less volatile than nonpayers and that dividend yield is negatively associated with volatility for the all-firms sample. Within the payer sample, however, I find unexpected evidence of a positive association when yield includes all dividends but a conflicting negative association when yield includes only quarterly dividends....
Show moreIn Essay 1, I investigate the Equity Duration Hypothesis, which adapts Macaulay’s fixed income analysis to equity securities, finding evidence that dividend payers are less volatile than nonpayers and that dividend yield is negatively associated with volatility for the all-firms sample. Within the payer sample, however, I find unexpected evidence of a positive association when yield includes all dividends but a conflicting negative association when yield includes only quarterly dividends. This ambiguous evidence is corroborated by a one-year portfolio approach, as a previously strengthening negative relationship has transitioned to a strengthening positive one, with results demonstrably trending against the EDH in recent decades. I further find that high-yield stocks that have experienced negative price shocks are highly volatile and strong support for the EDH using firm-level earnings and cash flows as a proxy for dividends, allowing extension of the analysis to nonpaying firms. Unfortunately, I find abundant evidence supporting the assertions of many researchers who suggest that ED is not a unique asset pricing factor, but rather represents a composite of a firm’s characteristics and is redundant with other factors known to be associated with volatility.
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Date Issued: 2023
PURL: http://purl.flvc.org/fau/fd/FA00014292
Subject Headings: Dividends, Stocks--Prices, Bonds
Format: Document (PDF)

Title: LIMITED PARTNER ESG STRATEGIES AND ESG APPROACHES BY PRIVATE EQUITY FUNDS.
Creator: Buehler, Robert G., Cumming, Douglas, Florida Atlantic University, Department of Finance, College of Business
Abstract/Description: This study utilized environmental, social, and governance (ESG) data to analyze how institutional investors' strategies relate to the approaches of the private equity (PE) funds they invest in. Using limited partner (LP) investor and general partner (GP) PE fund data from Preqin, I created ESG scores for both LP and PE funds. Ordinary least-squares regression showed a significant, positive relationship between LP/GP ESG strategies. However, the relationship became negative and significant...
Show moreThis study utilized environmental, social, and governance (ESG) data to analyze how institutional investors' strategies relate to the approaches of the private equity (PE) funds they invest in. Using limited partner (LP) investor and general partner (GP) PE fund data from Preqin, I created ESG scores for both LP and PE funds. Ordinary least-squares regression showed a significant, positive relationship between LP/GP ESG strategies. However, the relationship became negative and significant when firm-, fund-, and country-level controls were added. This misalignment between statements and action, often called greenwashing, suggests that firms are driven to ESG reporting due to external factors and do not feel accountable for investment decisions that follow strategic disclosures. Investor environmental (E), social (S), and governance (G) strategies had different relationships with GP ESG approaches. Public institutional investors, fund size, and the presence of a civil law system were positive contributing factors to the LP/GP ESG relationship. Fund performance was negatively associated with the relationship. There was also a significant difference in the LP/GP ESG approach between European PE funds versus those in North America. These findings show that E, S, and G factors may be more accurately analyzed separately than as one combined cluster. The findings also show that local conditions influence ESG strategic alignment between LPs and GPs. They suggest policymakers consider unique country-level attributes and differences in fund-level characteristics when attempting to influence ESG disclosure. ESG rating services could consider including factors that measure alignment between investors’ strategic statements and their investment decisions. The results provide valuable information on corporate social responsibility (CSR) in private markets, which has yet to be broadly studied compared to the extensive CSR literature available on public companies.
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Date Issued: 2023
PURL: http://purl.flvc.org/fau/fd/FA00014300
Subject Headings: Private equity funds, Limited partnership, Social responsibility of business
Format: Document (PDF)

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