Working Paper Series in Strategic Business Valuation

2014 Working Papers   |   2015 Working Papers   |   2016 Working Papers   |   2017 Working Papers   |   All Working Papers

This working paper series presents original contributions focused on the theme of creation and measurement of value in business enterprises and organizations.

2015 Working Papers

Discretion in Bank Loan Loss Allowance, Risk Taking, and Earnings Management
Justin Jin, Kiridaran Kanagaretnam, and Gerald J. Lobo | 2015-12 | Download the PDF

We study whether bank managers’ use their discretion in estimating the allowance for loan losses (ALL) for efficiency or for opportunistic reasons. We do so by examining whether the use of this discretion relates to bank stability and bank risk taking, or whether it relates to earnings management to meet or beat earnings benchmarks. We … Continue reading Discretion in Bank Loan Loss Allowance, Risk Taking, and Earnings Management

Determining hurdle rate and capital allocation in credit portfolio management
Peter Miu, Bogie Ozdemir, Evren Cubukgil, and Michael Giesinger | 2015-11 | Download the PDF

We examine two interrelated issues in risk-adjusted return on capital performance measurement: estimating hurdle rates and allocating capital to debt instruments in a portfolio. We consider a methodology to differentiate hurdle rates for individual debt instruments that incorporates obligor-specific information. These instrument-specific hurdle rates, which define the required compensation of the shareholders, enable a granular … Continue reading Determining hurdle rate and capital allocation in credit portfolio management

Conceptualization and Measurement of Virtuous Leadership: Doing Well by Doing Good
Gordon Wang and Rick D. Hackett | 2015-10 | Download the PDF

Despite a long history in eastern and western culture of defining leadership in terms of virtues and character, their significance for guiding leader behavior has largely been confined to the ethics literature. As such, agreement concerning the defining elements of virtuous leadership and their measurement is lacking. Drawing on both Confucian and Aristotelian concepts, we … Continue reading Conceptualization and Measurement of Virtuous Leadership: Doing Well by Doing Good

Social Capital and Bank Accounting Transparency
Justin Jin, Kiridaran Kanagaretnam, and Gerald J. Lobo | 2015-09 | Download the PDF

Using a sample of public and private banks and a county-level index for social capital, we study how social capital relates to accounting transparency. In a region with high social capital, individuals have a greater propensity to honor an obligation and there is greater mutual trust within a much denser network that deters opportunistic/self-serving actions … Continue reading Social Capital and Bank Accounting Transparency

Temperature Shocks and the Cost of Equity Capital: Implications for Climate Change Perceptions
Ronald Balvers, Ding Du, and Xiaobing Zhao | 2015-08 | Download the PDF

Financial market information can provide an objective assessment of losses anticipated from climate change. In a Merton-type asset pricing model, with asset prices affected by perceived changes in investment opportunities due to climate change, the risk premium is significantly negative, loadings for most assets are negative, and asset portfolios in more vulnerable industries have stronger … Continue reading Temperature Shocks and the Cost of Equity Capital: Implications for Climate Change Perceptions

International Diversification, SFAS 131, and Post-Earnings Announcement Drift
Tony Kang, Inder Khurana, and John Wang | 2015-07 | Download the PDF

Using data from 1990-2013, we show 1) the serial correlation of analyst forecast errors increases in the extent of international diversification, 2) PEAD based on analyst forecast errors increases in the extent of international diversification, and 3) the impact of international diversification on the serial correlation of analyst forecast errors and the associated drift is … Continue reading International Diversification, SFAS 131, and Post-Earnings Announcement Drift

Conflict and Performance in Channels: A Comparative Synthesis of Empirical Findings
Kamran Eshghi and Sourav Ray | 2015-06 | Download the PDF

We conduct a comprehensive meta-analysis of the literature on the role of channel conflict in channel performance. In particular, we assess the existing empirical evidence to compare two rival views of conflict. In the first view, conflict is a residual outcome of business processes that reduces joint profit and is efficiency depleting. Reduction or elimination … Continue reading Conflict and Performance in Channels: A Comparative Synthesis of Empirical Findings

On business theory and influential scholarship: What makes research interesting?
Vishwanath V. Baba | 2015-05 | Download the PDF

Couched within a theory of business, this paper explores what makes business scholarship influential and probe into mechanisms that make a paper interesting to its audience. It presents a framework to combine several attributes of influential scholarship and presents a model for making research interesting. Examples of interesting scholarship are provided and speculations about why … Continue reading On business theory and influential scholarship: What makes research interesting?

The Reallocative Employee Costs of Corporate Bankruptcy
John R. Graham, Hyunseob Kim, Si Li, and Jiaping Qiu | 2015-04 | Download the PDF

This paper examines how bankruptcy by a firm leads to costs borne by its employees due to reallocation of the workforce. Using worker-firm matched data from the U.S. Census Bureau’s LEHD program, we demonstrate that annual wages deteriorate by about 10% upon corporate bankruptcy and remain below pre-bankruptcy wages for (at least) six years. In … Continue reading The Reallocative Employee Costs of Corporate Bankruptcy

Profitability, Value and Stock Returns in Production-Based Asset Pricing without Frictions
Ronald J. Balvers, Li Gu, and Dayong Huang | 2015-03 | Download the PDF

In a production-based asset pricing model without adjustment costs and with decreasing returns to scale following Brock (1982), stock returns at the firm level are no longer identically equal to investment returns but are determined by profitability, the book-to-market ratio, and the change in future profitability prospects. Although firms with low book-to-market ratios are normally … Continue reading Profitability, Value and Stock Returns in Production-Based Asset Pricing without Frictions

Value Creation in Strategic Alliances
Anna Sadovnikova, and Ashish Pujari | 2015-02 | Download the PDF

Many firms recognize the appeal of going green and employ strategic partnerships to manage corporate environmental strategies. Yet the mechanisms in green collaborations that create value for a firm remains mostly unexplored. To address this gap, the authors examine the effects of announcements of green strategic partnerships on a firm’s stock market value. It was … Continue reading Value Creation in Strategic Alliances

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