Matching Items (10)

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Short-Run Performance of Technology Initial Public Offerings

Description

In 1991, Jay R. Ritter published a paper titled The Long-Run Performance of Initial Public Offerings. In this paper, he found that companies performing an initial public offering (IPO) significantly

In 1991, Jay R. Ritter published a paper titled The Long-Run Performance of Initial Public Offerings. In this paper, he found that companies performing an initial public offering (IPO) significantly underperform in comparison to companies that have not issued stock over the previous 5 years. It was in this paper that Ritter made the observation that the first 6 months after IPO and SEO had the closest performance with their matching non-offering firms. This led me to several questions. First, since it has been over 25 years since this research was performed, is this phenomenon still relevant? Second, if this phenomenon is still relevant, does the first 6-month performance after IPO still align with matching firms? Third, if this phenomenon is still relevant, is there a potential arbitrage opportunity for short-term investors?
In this paper, I show that this phenomenon of underperformance is still relevant today for initial public offerings within the technology sector. Additionally, I show that the 6-month performance for IPOs no longer aligns with matching firm performance. The mean performance of companies performing IPOs is significantly less than their matching firms. The average 6-month return of IPO companies was -8.43%, versus an average return of 16.46% for matching firms within the same industry and an average return of 24.22% for matching firms in different industries. Finally, I discuss the potential arbitrage opportunity for short-term investors looking to capitalize on this performance disparity.

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Created

Date Created
  • 2020-05

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Risk, Performance, and Returns: Mutual Funds vs. Exchange Traded Funds

Description

There is a long standing debate on the various forms of investment in the growing marketplace as to which is best for the individual investor needs. Two similar types of

There is a long standing debate on the various forms of investment in the growing marketplace as to which is best for the individual investor needs. Two similar types of investments are mutual funds and exchange-traded funds (ETF), which are both securities that are made up of a pool funds. They are comparable in concept but have key differences that make this study unique. Mutual funds are much more commonly used and are more prevalent in investment publications. This study addresses the benefits and drawbacks of mutual funds and ETFs and how their structures influence returns over a period of time. The purpose of this study was to take historical data of both mutual funds and ETFs to find their returns and see which, if either, outperformed the other based on several different calculations and performance measures. To improve the validity of this study, we found funds from both the technology and utility sector, for each investment vehicle in order to evaluate different classes of risk. We kept the study consistent and compared technology mutual funds to technology exchange traded funds, and so on with the utility sector. We created four portfolios consisting of around eight to ten high quality funds based on criteria. Results indicated that ETFs outperformed mutual funds in both the utility and technology sectors. In order to adjust for risk, we ran Jensen's measure and found that ETF's still outperformed mutual funds. This is significant because mutual funds are highly regarded in the investment world and often thought of as better than ETFs mainly due to their active management and long term results as they have been around for longer than ETFs. This study proves that investors should be putting more money into ETFs because they yield higher returns over time and cost less in fees, allowing the investor to retain a larger portion of their investment.

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Created

Date Created
  • 2016-05

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Improving Forecasting Accuracy in the Manufacturing Business Cycle

Description

The purpose of the present study is to examine how the Sales and Operation Plan (S&OP) process can be improved in the manufacturing industry by using a cost model to

The purpose of the present study is to examine how the Sales and Operation Plan (S&OP) process can be improved in the manufacturing industry by using a cost model to evaluate changes in the manufacturing forecast in addition to reviewing past financial performance. The additional use of a cost model transitions form using a standard traditional S&OP process to dynamic modeling and scenario analysis that may lead to different decisions being made. The manufacturing company S&OP processes in scope of this project is suspected to not be using a cost model when making financial decisions but rather the traditional S&OP process. They do not have a rolling budget in place, but rather a static budget also known as an Annual Operating Plan.

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Created

Date Created
  • 2018-12

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Aggregated Insider Trading Signals and Their Implications

Description

This paper provides evidence through an event study, portfolio simulation, and regression analysis that insider trading, when appropriately aggregated, has predictive power for abnormal risk-adjusted returns on some country and

This paper provides evidence through an event study, portfolio simulation, and regression analysis that insider trading, when appropriately aggregated, has predictive power for abnormal risk-adjusted returns on some country and sector exchange traded funds (ETFs). I examine ETFs because of their broad scope and liquidity. ETF markets are relatively efficient and, thus, the effects I document are unlikely to appear in ETF markets. My evidence that aggregated insider trading predicts abnormal returns in some ETFs suggests that aggregated insider trading is likely to have predictive power for financial assets traded in less efficient markets. My analysis depends on specialized insider trading data covering 88 countries is generously provided by 2iQ.

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Created

Date Created
  • 2014-05

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Growth Cycles in the Classification of Modern Commercial Banking: An Evolutionary History of the Western System

Description

An integral part of the financial system, the evolutionary history of commercial banking remains largely uncharted and is often grouped into banking development as a whole. Previous research on banking

An integral part of the financial system, the evolutionary history of commercial banking remains largely uncharted and is often grouped into banking development as a whole. Previous research on banking has primarily relied on economic analysis or has placed banking in a larger social context. This work aims to bridge the two by classifying commercial banking growth into four cycles of expansion, application, and decline. Drawing from historical accounts and growth cycle theory, this framework for classification is developed to better synthesize its progress and the fundamental innovations that changed the banking system. Beginning in 1150 with the foundation for deposit banking, the next three cycles of 1500, 1750, and 1933 mark periods of great innovation and a push toward the regulatory environment, technology, and globalization that define modern commercial banking. Paralleling the economic, financial, and political development of the Western World, its evolution is guided by three themes: the increased accumulation and flow of capital, regulation, and market expansion.

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Created

Date Created
  • 2013-05

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The Looming Eviction Crisis: Renters in Peril during the COVID-19 Pandemic

Description

This thesis will be exploring the situation of one of the most vulnerable groups during the COVID-19 pandemic, low-income renters. As businesses and whole states were shutdown, jobs and wages

This thesis will be exploring the situation of one of the most vulnerable groups during the COVID-19 pandemic, low-income renters. As businesses and whole states were shutdown, jobs and wages were lost and the over 100 million renters in the United States, many of whom spend a significant chunk of their income on their rent, were forced into a precarious situation. <br/><br/>The Federal Rent Moratorium that is currently in effect bars any evictions for missed rent payments, but these are expenses that if left unpaid, are just continuously accruing. These large sums of rent payments are currently scheduled to be dropped on struggling individuals at the end of the recently extended date of June 30th, 2021. As these renters are unable to pay for their housing, landlords lose the revenue streams from their investment properties, and are in turn unable to cover the debt service on the financing they utilized to acquire the property. In turn, financial institutions can then face widespread defaults on these loans.<br/><br/>The rental property market is massive, as roughly 34% of the American population consist of renters. If left unaddressed, this situation has the potential to cause cataclysmal consequences on the economy, including mass homelessness and foreclosures of rental properties and complexes. Everyone, from the tenants to the bankers and beyond, are stakeholders in this dire situation and this paper will seek to explore the issues, desires, and potential solutions applicable to all parties involved. Beginning with the pre-pandemic outlook of the rental housing market, then examining the impact of the coronavirus and the resulting federal actions, to finally explore solutions that may prevent or mitigate this potential disaster.

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Created

Date Created
  • 2021-05

Gridiron Arbitrage: What Financial Markets Can Teach Us About Fantasy Football

Description

Fantasy football is a game derived from America’s National Football League and involves players managing “teams” of fantasy football players. Given that the game contains elements of value, risk, and

Fantasy football is a game derived from America’s National Football League and involves players managing “teams” of fantasy football players. Given that the game contains elements of value, risk, and reward, this project aims to draw parallels between fantasy football and Modern Portfolio Theory, a well-regarded theory describing portfolio construction and performance in financial markets. This hypothesis is tested through a simulation of the 2019 – 2020 fantasy football season using this strategy; a sample team is generated, the team is adjusted as per the rules outlined in the risk-reducing and value-preserving strategy, and the results are tabulated per the team’s fantasy football scoring output. The results show that a volatility-reducing strategy fails to achieve a consistent, good performance from the fantasy team portfolio, but can result in a relatively successful season. Key issues to consider in this outcome are the low volume of data, the high volatility and situational nature of the underlying statistics from which fantasy scoring is derived, and the inefficiency of financial markets. The value of this research demonstrates that strict algorithmic, numerical, or technical methods are insufficient to succeed in fantasy football, and that information availability, access, and speed, along with a significant allotment of luck, are needed to succeed. The implication for the financial field is that the rules and theories formulated for it are based on certain crucial assumptions such as a centralized supply and demand for securities, an objective theory of value, and efficiency of markets, which cannot be translated directly to fantasy football.

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Created

Date Created
  • 2021-05

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A digital approach to closing equity gaps in Arizona schools

Description

Schools across the United States have been subject to a rise in violent incidents since 2013. Reading about school shootings, racist acts, and violent demonstrations in schools has unfortunately become

Schools across the United States have been subject to a rise in violent incidents since 2013. Reading about school shootings, racist acts, and violent demonstrations in schools has unfortunately become commonplace, which is contributing to inequitable outcomes for some student populations. These equity gaps have triggered demands for more equitable solutions in schools, a responsibility that falls on the shoulders of stakeholders like school governing boards, principals, and parents.

Chandler Unified School District (CUSD), a large school system in Arizona that serves 45,000 students from preschool through high school, has been unable to escape similar structural and frictional inequities within its schools. One instance of a racially charged student performance at Santan Middle School motivated CUSD to take a more immediate look at equity in the district. It is during this response that our team of New Venture Group consultants engaged with Matt Strom, Assistant Superintendent of CUSD, in analyzing the important question of “how CUSD can take steps towards closing equity gaps within the district?”

CUSD defines an equity gap as any difference in student opportunity, achievement, discipline, attendance, etc. contributable to a student’s ethnicity, gender, or socioeconomic status. Currently, certain student populations in CUSD perform vastly different academically and receive different opportunities within schools, but as was our problem statement, CUSD is aiming to reduce (and eventually close) these gaps.

Our team approached this problem in three phases: (1) diagnosis, (2) solution creation, and (3) prevention. In phase one, we created a dashboard to help principals easily and visually identify gaps by toggling parameters on the dashboard. Phase two focused on the generation of recommendations for closing gaps. To achieve this goal, a knowledge of successful gap-closing strategies will be paired with the dashboard. In our final phase, the team of consultants created a principal scorecard to ensure equity remains a priority for principals.

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Agent

Created

Date Created
  • 2019-12

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Wealth Planning and Behavioral Finance of the Financially At-Risk

Description

The classification of financially at-risk is an expansive term that fits the personal profile of most individuals when it comes to the conditioning of their attitude toward money management, particularly

The classification of financially at-risk is an expansive term that fits the personal profile of most individuals when it comes to the conditioning of their attitude toward money management, particularly in the planning and investment of that money for the achievement of long-term goals. In the case of this thesis, we focus primarily on those who have made a career in professional athletics and entertainment. The behavioral finance tendencies of these two industry professions are widely regarded as insufficient and often damaging the to the longevity of achieved financial security. This ideology stems primarily from an environment where individuals enjoy rapid wealth accumulation in a highly competitive and constantly transitioning role within their respective crafts. The subjectively common behavioral shortcomings of these world-class athletes and performers and uncertain day-to-day security of the professions which these at-risk individuals possess make for highly unfavorable circumstances when striving to achieve a lifetime of income and a secure retirement. In examining individuals of these classes who have faced grave financial hardship, this thesis will serve as a basis for identifying measures to recondition problematic behavioral tendencies that ultimately cause disengagement from a prudent financial plan. Therefore, this thesis will also serve as a framework to determine what investment strategies will complement the behavioral modifications financial planners strive to instill in these individuals, so that professional athletes, celebrities, and financially at-risk professionals alike may achieve higher probability of creating financial freedom through the engaged execution of a goals-based financial plan.

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Created

Date Created
  • 2019-05