Business and Management

Accounting and Finance research seminars

Accounting and Finance seminars take place on the following Thursdays at 12.30pm-2pm in Jubilee G30, unless otherwise specified.

Summer Term 2015

14 May
International Financial Integration and IPO Performance
Dr Gianluca Marcato (ICMA Centre University of Reading)

Abstract

Using a large dataset of 11,550 IPOs across 49 countries, this paper represents a first attempt to investigate the relationship between IPO underpricing and financial globalization. We argue that financial globalization affects IPO underpricing in both direct and indirect ways. Directly, financial globalization increases both the importance and efficiency of the process of financial intermediation via tradable securities, including IPO underwriting, which in turn negatively affects the level of underpricing of IPOs. Using a hierarchical linear modelling, we are able to test whether financial globalization adds explanatory power to the initial returns of IPOs after controlling for firm-, issuing- and country-specific characteristics. Our results provide evidence for a negative relationship between financial globalization, measured by the volume-based international financial integration, and IPO underpricing. Indirectly, financial globalization encourages more global IPOs in order to avoid weak domestic institutions and, therefore, weakens the explanatory power of the home-country institutions in the cross-country variation in the IPO underpricing. Once accounting for financial globalization, we a moderation effect such that the quality of the country-level institutions - i.e. home bias and legal framework - becomes less important in the explanation of IPO underpricing.

Bio

Gianluca Marcato is Associate Professor in Real Estate Finance and Director of the PhD Program at the School of Real Estate and Planning, Henley Business School (University of Reading). Previously he worked at CASS Business School and Bocconi University and was visiting fellow at NYU and LSE. Starting from a background in corporate finance, he developed an interest in real estate finance, asset pricing (with focus on liquidity and real options) and portfolio management. Lately his research interest is expanding into mortgage finance, IPOs and behavioural finance. As a consultant, Gianluca has worked on several projects and offered training for financial institutions (e.g. Legal and General, Prudential, MSCI) and public bodies (e.g. Bank of Italy).

21 May 
Dr Sabri Boubaker (ESC Troyes, France)
The Role of Multiple Large Shareholders in the Choice of Debt Source

Sabri Boubaker paper [PDF 301.64KB]

Abstract

This article examines the impact of multiple large shareholders (MLS) on the choice of debt source. Using a sample of 5,230 firm-year observations covering 643 French listed firms from 1998 to 2010, we find that reliance on bank debt financing increases with the presence of MLS and with the contestability of the controlling owner¡¦s power. Our findings are robust to endogeneity concerns and to a battery of sensitivity tests. In addition, we show that the identity of the second largest shareholder influences the choice of debt source. Moreover, we find that the effect of MLS on debt choice is more pronounced when agency problems between controlling and minority shareholders are more severe. Taken together, our results suggest that the presence of MLS reduces the incentive of the controlling owner to avoid scrutiny and to insulate herself from bank monitoring, leading to more reliance on bank debt.

Bio 

Sabri Boubaker is Associate Professor of Finance at Champagne School of Management (Groupe ESC Troyes en Champagne, France) and Research Fellow at the Institut de Recherche en Gestion (University of Paris Est). He is now visiting researcher at Cass Business School (London, UK). He holds a Ph.D. in Finance from University of Paris Est (2006) and a HDR degree (Habilitation for Supervising Doctoral Research) in 2010 from the same university. He was a visiting professor at IESEG School of Management (France) and IAE Paris Gustave Eiffel (France). He has recently published several academic papers in international refereed journals including Journal of Banking and Finance, International Review of Financial Analysis, Journal of International Financial Markets, Institutions and Money, Economic Modeling, Multinational Finance Journal, and Global Finance Journal. Dr. Boubaker is now editing/co-editing several special issues in peer-reviewed journals (International Review of Financial Analysis, Journal of Management and Governance & Bankers, Markets and Investors) and edited several books on corporate governance and corporate social responsibility issues. He is a co-founder of the Paris Financial Management Conference (PFMC, Paris, France) and co-chair of the 6th International Research Meeting in Business and Management (IRMBAM-2016, Nice, France).

21 May 
Dr Mike Osborne (University of Sussex)
Title TBC

Abstract and Bio TBC

9 June
Prof Jay Ritter (University of Florida) 
Corporate Cash Shortfalls and Financing Decisions

Abstract

An influential paper by DeAngelo, DeAngelo and Stulz (2010) concludes that near-term cash needs are the primary motive for seasoned equity offerings. We find that this is even more true for debt issues. Conditional on external financing, Tobin’s Q and firm size are highly important predictors for the choice between debt and equity, even for firms that are running out of cash. Our findings suggest that a near-term cash need is the primary motive for debt issues, but market timing, precautionary saving, and corporate lifecycle motives are of primary importance for equity issues and the debt versus equity choice.

Bio

Since 1996, Jay R. Ritter has served as the Joseph Cordell Eminent Scholar in the Department of Finance at the University of Florida. Prof. Ritter is best known for his articles concerning equity issuance, including "The Long-Run Performance of Initial Public Offerings," which won the Smith Breeden Award for the best article in the Journal of Finance during 1991, and “The Marketing of Seasoned Equity Offerings,” with Xiaohui Gao, which won the Jensen Prize for the best corporate finance article in the Journal of Financial Economics in 2010. His paper with Rongbing Huang, “Testing Theories of Capital Structure and Estimating the Speed of Adjustment,” won the Journal of Financial and Quantitative Analysis Sharpe Award for the best article published in 2009, and his 2013 JFQA article “Where Have All the IPOs Gone?” with Xiaohui Gao and Zhongyan Zhu, won the Sharpe Award for 2013. He has served as a Director of the American Finance Association, and is President of the Financial Management Association for 2014-15. Prof. Ritter is an Associate Editor of numerous academic journals and has over 29,000 citations on Google Scholar. He has also consulted on valuation and market manipulation cases, as well as securities issuance, and is frequently quoted in the financial press. Ritter received his BA, MA, and PhD (1981) degrees in economics and finance from the University of Chicago.

Past seminars

Spring Term 2015
5 February 
Stock market mean reversion and portfolio choice over the life cycle
Prof Alex Michaelides (Imperial College London)

 Bio

Alexander Michaelides is a Professor of Finance at Imperial College Business School since September 2013 and Research Fellow at CEPR (International Macroeconomics and Financial Economics Programmes), at CFS (Frankfurt) and NETSPAR (The Netherlands). His research interests include household finance (for example, portfolio choice over the life cycle), asset pricing with heterogeneous agents and financial frictions, housing markets and topics in the intersection of macroeconomics and finance. He was previously a lecturer (2001-2006) and associate professor (2006-2010) at the Department of Economics, London School of Economics, and a professor of finance at the Department of Public and Business Administration, University of Cyprus in 2010-2014. He holds a Ph.D. in Economics from Princeton University (1997) and a B.A. in Economics from Harvard (1993).

12 February 
IPO survival and institutional investment 
Dr Mohamed Abdulkadir (University of Liverpool)

Abstract

This study examines the survival rates of stocks newly listed on the Hong Kong stock exchange between 1990 and 2010 and tracked until the end of 2013. Average survival rates on the Hong Kong market are high compared to other developed markets and the lowest is 78 percent over five years post listing. Stocks listed on the Hong Kong Stock Exchange are exposed to low failure risks even during and after financial crises. Investigating the determinants of survival rates, we find that family owned IPOs have higher survival rates than non-family owned IPOs. Furthermore, the survival rates are influenced by the investors’ types at the time of listing. We find that the survival rates are higher, when investors have long term investment horizon (Strategic investors) than when they have short term horizon (Cornerstone investors). This evidence is robust using different measures of strategic and cornerstone investors."

Bio

Abdulkadir Mohamed is an Assistant Professor of Finance at Liverpool University Management School. His research focuses on private equity, venture capital, mergers and acquisitions, and IPOs. Before joining Liverpool University, he was a research associate at Manchester Business School and a consultant on a project for the British Venture Capital Association (BVCA). He has published in the Journal of Banking and Finance, Journal of Business Finance and Accounting, European Journal of Finance, International Review of Financial Analysis and Financial Markets, Institutions and Instruments.

6 March 
The effects of investment bank rankings: Evidence from M&A
Professor Francois Derrien (HEC Paris)

Abstract

This paper explores how league tables, which are rankings based on market shares, influence the M&A market. A bank’s league table rank predicts its future deal flow, above and beyond other determinants of this future deal flow. This creates incentives for banks to manage their league table ranks. League table management tools include selling fairness opinions and reducing fees. Banks use such tools mostly when their incentives to do so are high: when a transaction affects their league table position or when they lost ranks in recent league tables. League table management seems to affect the quality of M&A transactions.

Bio

François Derrien obtained his PhD from HEC Paris in 2002. After spending five years as an assistant professor at the Rotman School of Management, University of Toronto, he returned to HEC Paris in 2007, where he became full professor in 2010. His research interests are in the areas of corporate finance and financial intermediation, with a focus on initial public offerings, the role of security analysts, and the impact of investor horizons on firm policies. François Derrien’s work has appeared in finance journals like the Journal of Finance, the Review of Financial Studies and the Journal of Financial Economics.

Autumn term 2014
18 September
When chasing the offender hurts the victim: Collateral damage from insider legislation
Dr Thomas Stöckl (Innsbruck University)

Abstract

Backers and opponents argue over the pros and cons of legislation forbidding insider trading. At the same time, the lack of reliable empirical data caused by the currently prevailing legal systems inhibits an exhaustive scientific evaluation. We circumvent this problem by resorting to laboratory market data and show that insider legislation has significant negative effects on multiple market dimensions: Under insider legislation, (i) the liquidity and informational efficiency of markets are reduced, while spreads are unaffected, (ii) uninformed traders' losses (before redistribution) are higher due to deteriorating market quality, and (iii) overall welfare suffers due to the lower information content of prices and the cost of enforcement. In summary, insider legislation leads to welfare losses while failing to deliver the expected benefits for uninformed investors.

16 October
Why bidders lose?
Andrey Golubov (Cass Business School)

Abstract

A quarter of value-destroying acquisitions result in bidder losses in excess of deal value. This cannot be rationalized by hubris- or agency-related overpayment, but is consistent with stand-alone revelation. Without such deals, the average return to acquisitions more than doubles. We further show that acquisition attempts convey negative information about the bidder’s prospects by studying failed bids, which enable a clean before-and-after comparison of the bidder as is. Following failed bids, bidders’ operating performance declines. The performance decline correlates with the stock price change during the bidding period. If the market reaction to acquisitions reflects negative information about bidders’ assets-in-place, stock-returns-based measures of value creation are underestimated.

Bio

Dr Andrey Golubov is Lecturer in Finance at Cass Business School, where he is also the Academic Director of the M&A Research Centre. During his term at Cass, he has also held a Visiting Scholar position at NYU Stern School of Business. Member of the corporate finance group, Andrey studies firms' investment and financing decisions, particularly those involving corporate governance and control considerations. His current research examines various aspects of mergers and acquisitions, corporate governance, and firm value and performance. Andrey's research is published or forthcoming in journals such as Journal of Finance and Journal of Financial Economics.

14 November
Title TBC
Professor Jean Chen (University of Southampton)

Please note: This seminar will take place in Fulton 104 from 12.30-2pm rather than the usual time and venue

25 November
The European sovereign debt crisis and the rold of credit swaps
Professor Eleutherious Thalassinos (University of Piraeus, Greece)

Please note: This seminar will take place in Fulton 202 from 12.30-2pm rather than the usual time and venue.

Abstract

The global financial crisis of 2008–2009 along with the crashing of private toxic money, the Collateralized Debt Obligations (CDOs) and the lack of liquidity as a result of the banking crisis and the accumulated European sovereign debt has turned out to create “Bankruptocracy”. Its European version in 2010 revealed the European Monetary Union’s (EMU) architectural deficiencies which led to the increase of risk premia and poverty, especially for the South-West Euro-Area Periphery (SWEAP) countries.
The main objectives of this research are to determine the factors responsible for the market pricing of sovereign default risk, to analyze the causalities of Credit Default Swaps (CDSs) spreads that have been taken as a proxy variable for the market pricing of sovereign default risk, to examine possible pricing discrimination and asymmetries between SWEAP and non-SWEAP countries, structural changes in the pattern of the CDS spreads throughout and after the crisis and possible evidence of speculation against the SWEAP group of countries.
In a panel data regression setting we have constructed a dynamic pricing model of sovereign default risk for 13 Euro area countries using quarterly data for the period 2008–2013. We spotted structural changes in the pattern of CDS spreads across 2010, identified as the worst year of the Eurozone crisis, as well as significant speculation and financial discrimination against SWEAP countries by the financial intermediaries associated with this derivative market. Significant variables comprise of the grading rate forward one period, the current governments’ bond yield, the inflation rate as well as the variable related to the public debt lagged one period. All variables, amongst others robust predictors of the CDS spreads, have been proven statistically and economically significant, except for the fiscal space of one quarter forward of the fiscal balance proven to be only weakly significant. More specifically, the variables related to fiscal space (public debt and fiscal balance) as well as the inflation rate have been proven statistically significant throughout the global financial crisis (2008-2010) and the grading rate in the period 2011-2013. Nevertheless, governments’ bond yield remained significant at all time. The main limitation of this research, the endogeneity between bond and CDS-derivative markets, emerges from the latter. In total, our evidence of self-fulfilling expectations and herding behavior may indicate the logic of second generation crisis model for the crisis in Eurozone 2010.

27 November
A fool and his money are soon parted: Identifying and exploiting traders’ behavioural biases
Professor Johnie Jonson (University of Southampton)

Abstract

The presentation explores the nature and the degree of individual financial market traders’ reactions to dynamic information and to different environmental conditions. The advantages of employing speculative market data to help understand the behavioural response of individual investors to such factors will be highlighted. Results of three speculative market studies will be presented in order to illustrate the nature and value of this line of research: the degree to which individual traders effectively handle dynamic information, the manner in which individual traders’ decisions are impacted by environmental factors and to what extent their degree of over/under-reaction to new information is exploitable. The presentation concludes that investors are good at handling some types of complex information but emotional reactions hinder their effective decision making.

Bio

Johnnie E.V. Johnson is Professor of Decision and Risk Analysis and Director of the Centre for Risk Research in the Southampton Business School, University of Southampton. His research focuses on risk taking behaviour in uncertain environments. Johnnie has a background in the Lloyd’s insurance market, where he worked as a risk financing and assessment executive. Johnnie has published widely in the areas of behavioural aspects of risk taking and decision making under uncertainty, particularly in relation to decisions in speculative financial markets. He is currently involved in a number of EPSRC and ESRC funded research projects with city-based firms, particularly related to spread-trading. Johnnie has also been responsible for advising a number of organisations on aspects of risk taking – one project, for example, involved the design of a risk-hedging system which handles an annual turnover of £1 billion.

Summer term 2014

13 May 

Political money and contributions of US IPO firms 

Dr Dimitrios Gounopoulos (Sussex) 

20 May

Genetic biodiversity and corporate performance 

Professor Manthos Delis (Surrey)

27 May

On the real effects of financial pressure: Evidence from euro area firm-level employment during the recent financial crises

Professor Alexandros Kontonikas (Glasgow)

3 June

TBC

Professor David Newton (Nottingham)

10 June

Two stage exits: An empirical analysis of the dynamic choice between IPOs and acquisitions by European private firms' with Thomas Chemmanur

Professor Silvio Vismara (Bergamo)

17 June

The levers of control framework in shipping companies: A mixed methods approach

Dr Androniki Triantafylli (Queen Mary)

1 July

TBC

Professor Eleutherios Thalassinos (Piraeus, Greece)

Spring term 2014

8 April

TBC

Professor Taufiq Choudhry (Southampton)

1 April

Excess control rights, corporate governance and cash flow sensitivity of cash

Associate Professor Sabri Boubaker (Troyes University, France) 

25 March

Initial public debt offerings

Professor Raghavendra Rau (Cambridge)

18 March

TBC

Professor Stuart McLeay (Sussex)

12 March

CEOs turnover in LBOs: The role of boards

Professor Francesca Cornelli (London business school)

26 February

Picking winners? Investment consultants' recommendations of fund managers

Professor Tim Jenkinson (Oxford)

4 February

The impact of investment networks on venture capital firm performance

Professor Igor Filatochev (Cass Business School)

Autumn term 2013

10 December

Do gendered boards in community organisations have superior financial management?

Professor Anne Marie Ward (University of Ulster at Jordanstown)

26 November

Market conditions and soundness: Islamic and conventional banks in MENA

Professor Claudia Girardone (Essex)

12 November

Bankrupt firms: Who's buying?

Professor Richard Taffler (Warkwick) 

5 November

European asset swap spreads

Professor Ranko Jelic (Birmingham)

22 October

Which way do foreign branches sway? Evidence from the recent UK domestic credit cycle

Mr Glenn Hoggarth (Bank of England)

11 October

Designed risk profilers in the laboratory

Professor Thorsten Hens (Zurich)

1 October

Comparative advantage as a source of exporters pricing power: Evidence from China and India

Professor Sushanta Mallick (Queen Mary, School of Business and Management)