Thomas L. Steiner

Production in the Finance Literature, Institutional Reputation, and Labor Mobility in Academia: A Global Perspective

Academic institutions are ranked on a global scale in terms of finance literature productivity. US institutions are dominant in academic publishing although European and Asian institutions have improved significantly in recent years. Additionally, we study the relationship between the quality of human capital and the likelihood of an upward career move. Our results show that an individual relocates to a higher-ranked institution exhibits a research record that is two times stronger than that of an average faculty member at the destination institution. We further model the probability of an upward move in the academic labor market as a function of human capital using an ordered logistic model. We find that publications in sixteen core journals, publications in three top journals, and the rank of the Ph.D. granting institution enhance the probability of moving to a higher ranked institution. On the other hand, the length of teaching experience decreases this probability.

Tobin’s q, managerial ownership, and analyst coverage: A nonlinear simultaneous equations model

Abstract This paper estimates a simultaneous equations model with analyst coverage, managerial ownership and firm valuation jointly determined within the system. We argue that both managerial ownership (serving an internal monitoring function) and analyst coverage (serving an external monitoring function) enhance firm value, while managerial ownership and analyst coverage are substitutes in the monitoring of the firm. The empirical results based upon a nonlinear three-stage-least-square procedure lead to several interesting conclusions: First, we find a diminishing substitution effect between managerial ownership and analyst coverage and a decreasing marginal value for managerial ownership. Second, we find support for both an alignment effect and an entrenchment effect in the relationship between managerial ownership and Tobin’s Q after controlling for the effect of analyst coverage. Third, we find support for the argument that analyst coverage serves to enhance firm valuation after controlling for the effect of managerial ownership. Finally, we find that analyst coverage, managerial ownership and firm valuation are jointly determined. Keywords: Firm value; Managerial ownership; Analyst coverage JEL classification: G30; G32

Discount rate changes, stock market returns, volatility, and trading volume: Evidence from intraday data and implications for market efficiency

We examine the eAect of discount rate changes on stock market returns, volatility, and trading volume using intraday data. Equity returns generally respond negatively and significantly to the unexpected announcements; however, the eAect of expected changes on equity returns is insignificant. Furthermore, our results indicate that equity prices respond to announcements within the trading period/hour after the information release. An indication of a return reversal is too small to cover the full transaction costs. Unexpected discount rate changes also contribute to higher market volatility although the volatility is short-lived. Similarly, unexpected changes in discount rates induce larger trading volume while expected changes do not. Abnormal trading volume occurs only in period t. Our results also support the notion that unexpected changes in the discount rates impact market returns irrespective of the Federal Reserve operating procedures. ” 1999 Elsevier Science B.V. All rights reserved.

Research productivity of the finance profession in the Asia-Pacific region

Abstract This study ranks the finance research productivity among the Asia-Pacific universities using a set of 17 finance journals during the decade of the 1990s. A total of 97 universities are ranked. The top five universities are Hong Kong University of Science and Technology, National University of Singapore, City University of Hong Kong, Chinese University of Hong Kong, and the University of New South Wales, respectively. An interesting finding is that both school history and tradition seem irrelevant to the research productivity. Several prominent universities are not ranked in the top 20. The results suggest that motivations and the degree of research emphasis play an important role in research productivity but not the tradition and the history of a university. Moreover, when compared with other North American universities, the top 20 Asia-Pacific finance programs are comparable with leading state and private universities in the North America. The comparison is even more favorable to the Asia-Pacific universities during the second half of the 1990s. A majority of the top 20 Asia-Pacific universities have significantly improved their research productivity during the time period of 1995–1999.

Developing an Integrated Finance and Marketing MBA Core Course

In recent years, the business community has placed an increasing demand on universities to develop students who can think holistically. One way that universities have responded to this challenge is by adopting a cross-functional, integrated curriculum. Although this type of curriculum may provide students with a better understanding of the dependencies between the functional areas of the firm, successfully implementing this educational change is difficult. This article addresses some of the issues encountered in developing and implementing an integrative, team-taught finance and marketing MBA core course (in its fourth semester at the time of this writing) and offers integrative applications that have proven to be successful. The article concludes with recommendations for those engaged in similar efforts.

An Agency Analysis of Firm Diversification: The Consequences of Discretionary Cash and Managerial Risk Considerations

Firm diversification is shown to be a function of excess discretionary cash flow and managerial risk considerations. We measure firm diversification using the concentric diversification index. The index is positively related to both the number of business units in the firm and the extent to which the business firms segments differ. Consequently, the measure provides a proxy for how firm diversification decisions impact the risk of the firm, and the measure is found to be inversely related to both total risk and unsystematic risk. Consistent with the agency arguments of discretionary cash flow, we find the level of excess discretionary funds in the firm to be a significant positive determinant of the level of firm diversification. We also find support for both a wealth transfer hypothesis over low levels of managerial ownership, and a managerial risk aversion hypothesis over high levels of managerial ownership.

Risk taking behaviour and managerial ownership in the United States life insurance industry

This study examines the relation between risk and managerial ownership for a sample of life insurance companies in the United States. Evidence is found that the level of life insurance company risk is dependent on the level of managerial ownership. Specifically, as the level of managerial ownership increases, the level of risk increases supporting a wealth transfer hypothesis over a risk aversion hypothesis. These results are robust across several risk measures. The findings suggest that when compensation packages encourage higher levels of managerial ownership, manager and stockholder interest converge. With respect to regulation, the results suggest that regulators can control the risk taking activities of life insurers by requiring a separation between ownership and management.