• Determinants of bankruptcy protection duration for Canadian firms

      Xing, Dan; Faculty of Business Programs (Brock University, 2011-05-17)
      The present thesis examines the determinants of the bankruptcy protection duration for Canadian firms. Using a sample of Canadian firms that filed for bankruptcy protection between the calendar years 1992 and 2009, we fmd that the firm age, the industry adjusted operating margin, the default spread, the industrial production growth rate or the interest rate are influential factors on determining the length of the protection period. Older firms tend to stay longer under protection from creditors. As older firms have more complicated structures and issues to settle, the risk of exiting soon the protection (the hazard rate) is small. We also find that firms that perform better than their benchmark as measured by the industry they belong to, tend to leave quickly the bankruptcy protection state. We conclude that the fate of relatively successful companies is determined faster. Moreover, we report that it takes less time to achieve a final solution to firms under bankrupt~y when the default spread is low or when the appetite for risk is high. Conversely, during periods of high default spreads and flight for quality, it takes longer time to resolve the bankruptcy issue. This last finding may suggest that troubled firms should place themselves under protection when spreads are low. However, this ignores the endogeneity issue: high default spread may cause and incidentally reflect higher bankruptcy rates in the economy. Indeed, we find that bankruptcy protection is longer during economic downturns. We explain this relation by the natural increase in default rate among firms (and individuals) during economically troubled times. Default spreads are usually larger during these harsh periods as investors become more risk averse since their wealth shrinks. Using a Log-logistic hazard model, we also fmd that firms that file under the Companies' Creditors Arrangement Act (CCAA) protection spend longer time restructuring than firms that filed under the Bankruptcy and Insolvency Act (BIA). As BIA is more statutory and less flexible, solutions can be reached faster by court orders.
    • Do pervasive economic factors explain momentum?

      Chen, Lemeng; Faculty of Business Programs
      This thesis investigates the relationship between the profitability of momentum strategies and macroeconomic variables associated with the business cycles. We hypothesize that momentum is a risk factor that correlates with economic dynamics, which drive stock prices. We apply the two-state Markov regime switching model of Hamilton (1989) to capture the dynamic behavior of the time series of momentum return across different regimes. We include both univariate and multivariate regressions to examine the explanatory power of independent variables during different states. Moreover, we explore whether economic dynamics and investor sentiment are the only sources of the pricing effect of momentum. We adjust the momentum returns for selected macroeconomic variables, risk factors and proxy for investor sentiment. We define the residuals from the model as “pure momentum” and test the pricing capability of pure momentum in a standard asset pricing model. Using a sample of monthly data of US market covering the period between August 1962 and December 2014, we document that macroeconomic factors, risk factors and investor sentiment are unable to fully explain the momentum profits. Using a sample of monthly return on portfolios constructed by double-sorting stocks on size and book-to-market equity ratio, which include NYSE, AMEX, and NASDAQ stocks, we show that the pricing capability of momentum cannot be entirely explained by macroeconomic variables, risk factors and investor sentiment.
    • Does e-Government Always Fit? Moderating Role of Technology-Job Fit on Employee Acceptance of e-Government Technology.

      Belkhiria, Fares; Belkhiria; Faculty of Business Programs
      E-government technologies have widely been praised by academics, policy makers and the public. However, despite that many governments heavily invest in these technologies, they still struggle to implement them into their organisations because of employees not accepting them. In my study, I argue that this is due to the lack of “fit” of these technologies with the structure, processes, and practices of the employees. Against this backdrop, my study draws from organisational job fit, task-technology fit and technology acceptance literatures to examine the “Technology-Job fit” construct and explore its moderating role on how employees of government organisations perceive and adopt e-government technologies. I test my model on a sample of 347 employees of different government organisations in a developing country (Thailand). I find that employees’ judgements and satisfaction regarding a technology are significantly moderated by their perception of fit of the technology with their job. My study presents several contributions to research, policymaking, and practice of e-government and technology acceptance.
    • Does zero lower bound policy affect managerial risk-taking and executive compensation?

      Cai, Yue; Faculty of Business Programs
      This study empirically examined whether the zero lower bound policy of 2008 promotes managerial risk-taking using samples of U.S. publicly traded firms. Based on the evidence documented in previous research, this policy can lead to a change in firms’ managerial risk-taking and in turn result in a difference in executive compensation. By conducting empirical research, it was found that managerial risk taking increases significantly after the zero lower bound policy. In addition, firms’ total executive compensation also increased significantly after the zero lower bound policy. Further analysis showed that the increase in executive compensation was caused by the partial mediation of managerial risk-taking. Moreover, robustness checks showed that the relation between zero lower bound policy and managerial risk-taking is less significant for S&P 500 firms. In addition, corporate governance moderates the relation between managerial risk-taking and executive compensation.

      Agyemang, Isaac; Faculty of Business Programs
      This paper investigates the impact of personal affinity toward a charity and information regarding financial management of potential recipient charitable organizations on decisions to donate. Using an experiment, the study examines how personal donation decisions differ from corporate donation decisions made by managers and how the emotional intelligence of donors affects donation decisions. The results indicate that threshold and financial information on charities assembled by the Better Business Bureau, a charity rating agency, made a significant impact on corporate donation decisions. The study also shows that emotional intelligence plays an important role that aids both individual donors and managers to regulate their donation decisions.
    • Drivers and Barriers of Mobile Commerce: The Role of Consumers’ Personal Innovativeness

      Anwar, Ali; Faculty of Business Programs
      Mobile commerce (m-commerce) has experienced rapid growth in recent years, gaining importance in both academia and industry. However, extant literature has paid little attention to how m-commerce value is shaped, particularly in emerging economies. This study develops a framework of m-commerce value by studying its determinants. These comprise of the benefit: ubiquity (time convenience and accessibility), and barriers to m-commerce: perceived risk (financial risk /performance risk), and perceived cost. Moreover, this research investigates the moderating role of personal innovativeness on the relationship between the drivers/barriers and value. The findings of the empirical survey-based study in emerging m-commerce economies reveal a positive impact of ubiquity on value, while risk and cost have a negative influence. Furthermore, innovativeness was found to moderate the relationships between the determinants and value, apart from that between cost and value. The results further show that value positively affects actual usage and is enhanced by consumer innovativeness.
    • Drivers of Local Firms’ Focus on Internal R&D in Emerging Economies and Their International Performance

      Gloger, Manuel; Faculty of Business Programs
      Grounded on the resource-based view of the firm, the study of this thesis investigates the effect of four internal and external factors – engineer intensity, location, affiliation with the government, government funding – on Chinese firms’ decision to either invest in internal R&D activities or external R&D and the effect of this decision on the firms’ international market success. In addition, the moderating role of the presence of foreign firms in China is examined. To understand these relationships, the thesis’ theorization focuses on the issue of how firms can combine optimally the two options – “internal R&D” and “external R&D”. In this regard I juxtapose internal R&D and external R&D and compare their advantages and disadvantages. To test my model, I apply panel data from the Annual Industrial Survey Database provided by the Chinese National Bureau of Statistics. My results show that three of the four investigated factors affect Chinese firms’ resource allocation decisions; and effective resource allocation decisions lead effectively to international market success, strengthened by the presence of foreign firms in China. Moreover the findings bear several theoretical and managerial contributions. First I propose the last dimension of the “VRIO framework” – “organization” – as an endogenous component of the VRIO framework, as my study investigated how firms can effectively combine resources to generate a competitive advantage in terms of international market success. Previous academic literature so far focused on examining whether internal and external R&D are complements or substitutes. My study fills a gap in the literature by investigating the determinants of the efficient combination of the two strategies and the outcome of the combination. One of the managerial implications is that Chinese firms can learn from foreign companies that are present in China.

      Yang, Jie (Stephan); Faculty of Business Programs (Brock University, 2014-05-15)
      The Meese-Rogoff forecasting puzzle states that foreign exchange (FX) rates are unpredictable. Since one country’s macroeconomic conditions could affect the price of its national currency, we study the dynamic relations between the FX rates and some macroeconomic accounts. Our research tests whether the predictability of the FX rates could be improved through the advanced econometrics. Improving the predictability of the FX rates has important implications for various groups including investors, business entities and the government. The present thesis examines the dynamic relations between the FX rates, savings and investments for a sample of 25 countries from the Organization for Economic Cooperation and Development. We apply quarterly data of FX rates, macroeconomic indices and accounts including the savings and the investments over three decades. Through preliminary Augmented Dickey-Fuller unit root tests and Johansen cointegration tests, we found that the savings rate and the investment rate are cointegrated with the vector (1,-1). This result is consistent with many previous studies on the savings-investment relations and therefore confirms the validity of the Feldstein-Horioka puzzle. Because of the special cointegrating relation between the savings rate and investment rate, we introduce the savings-investment rate differential (SID). Investigating each country through a vector autoregression (VAR) model, we observe extremely insignificant coefficient estimates of the historical SIDs upon the present FX rates. We also report similar findings through the panel VAR approach. We thus conclude that the historical SIDs are useless in forecasting the FX rate. Nonetheless, the coefficients of the past FX rates upon the current SIDs for both the country-specific and the panel VAR models are statistically significant. Therefore, we conclude that the historical FX rates can conversely predict the SID to some degree. Specifically, depreciation in the domestic currency would cause the increase in the SID.
    • Dynamic Performance Evaluation of Canadian Fixed-Income Funds using Markov Regime Switching Models

      Liao, Yusui; Faculty of Business Programs (Brock University, 2013-09-09)
      This thesis examines the performance of Canadian fixed-income mutual funds in the context of an unobservable market factor that affects mutual fund returns. We use various selection and timing models augmented with univariate and multivariate regime-switching structures. These models assume a joint distribution of an unobservable latent variable and fund returns. The fund sample comprises six Canadian value-weighted portfolios with different investing objectives from 1980 to 2011. These are the Canadian fixed-income funds, the Canadian inflation protected fixed-income funds, the Canadian long-term fixed-income funds, the Canadian money market funds, the Canadian short-term fixed-income funds and the high yield fixed-income funds. We find strong evidence that more than one state variable is necessary to explain the dynamics of the returns on Canadian fixed-income funds. For instance, Canadian fixed-income funds clearly show that there are two regimes that can be identified with a turning point during the mid-eighties. This structural break corresponds to an increase in the Canadian bond index from its low values in the early 1980s to its current high values. Other fixed-income funds results show latent state variables that mimic the behaviour of the general economic activity. Generally, we report that Canadian bond fund alphas are negative. In other words, fund managers do not add value through their selection abilities. We find evidence that Canadian fixed-income fund portfolio managers are successful market timers who shift portfolio weights between risky and riskless financial assets according to expected market conditions. Conversely, Canadian inflation protected funds, Canadian long-term fixed-income funds and Canadian money market funds have no market timing ability. We conclude that these managers generally do not have positive performance by actively managing their portfolios. We also report that the Canadian fixed-income fund portfolios perform asymmetrically under different economic regimes. In particular, these portfolio managers demonstrate poorer selection skills during recessions. Finally, we demonstrate that the multivariate regime-switching model is superior to univariate models given the dynamic market conditions and the correlation between fund portfolios.
    • Earnings Announcement Premium: Evidence from the XBRL Mandate

      Hasan, Mohammad Maruf; Faculty of Business Programs
      In 2009, the SEC implemented the eXtensible Business Reporting Language (XBRL) filings of company reports to facilitate better analysis and interpretation of financial statements. In this study, I analyze whether the XBRL filings has an impact on the earnings announcement premium of the three different sizes (tiers) of XBRL firms. In cross-sectional analysis, I find that there has been a significant increase in the earnings announcement premium for the larger and medium firms in the post-XBRL period, whereas the change in announcement premium for the smaller firms is not significant. I also find that in the post-XBRL period, there has been an increase in abnormal idiosyncratic volatility and abnormal volume for all the three different tiers of firms. Results indicate that announcement premium may have increased as a result of an increase in information asymmetry between the larger and smaller firms in the post-XBRL period as documented by Blankespoor et al. (2014).
    • The Effect of Brand Crowding on Brand Differentiation: The Moderating Effect of Product Knowledge

      Lau, Yu Hang Francis; Faculty of Business Programs
      Brand differentiation is a commonly examined phenomenon in marketing. Among the many antecedents of brand differentiation, brand crowding has not been examined, especially in the context of the chocolate industry. This paper proposes that brand crowding has a positive effect on brand differentiation. It further suggests that product knowledge has a positive effect on this relationship while brand differentiation has a positive effect on both brand preference and purchase intention. Chocolate brands are used in one study to test the hypotheses. Examining the relationship between brand crowding and brand differentiation will help marketing managers create strategies to ensure crowding does not have an adverse effect on their brands.
    • The Effect of Competition on Real Earnings Management – A Re-examination

      Yeboah, David; Faculty of Business Programs
      This study examines the effect of competition in the product and labour markets on real earnings management (REM). REM is accomplished by firms changing investing or operating decisions primarily to increase current period earnings and can affect future cash flows negatively. Using data from Standard and Poor’s 1500 index firms from 1992 to 2015, I find strong support for the prediction that managers in more competitive labour markets are more inclined to use REM activities. However, I find little evidence that firms in more competitive product markets will reduce their engagement in REM activities. The results from the interaction of these two markets show that managers are more inclined to use REM activities whenever they face high labour market competition. This suggests that managers’ primary concern as they make REM decisions is the impact on their career.
    • Effect of executive compensation on firm performance

      Abedin, Mohammad Yameenul; Faculty of Business Programs
      The paper finds evidence that the equity-based CEO pay is positively related to firm performance and risk-taking. Both stock price and operating performance as well as firm's riskiness increase in the pay-performance sensitivities (PPS) provided by CEO stock options and stock holdings. PPS can explain stock returns better as an additional factor to the Fama-French 3-factor model. When CEOs are compensated with higher PPS, firms experience higher return on asset (ROA). The higher PPS also leads to the higher risk-taking. While CEO incentive compensation has been perceived mixed on its effectiveness, this study provides support to the equity-based CEO compensation in reducing agency conflicts between CEOs and shareholders.
    • The effect of governance mechanism and structure on fees and performance of Mutual Funds in Canada

      Singh, Deepak; Faculty of Business Programs (Brock University, 2012-04-27)
      Taking advantage of the unique Canadian setting, this study empirically analyzes the impact of presence of the board of directors, as an internal governance mechanism, on fees and performance of mutual funds. Further, the impact of the board structure on fees and performance of corporate class funds is analyzed. We find that corporate class funds, which have a separate board of directors for the fund, charge higher fees; however, they also provide superior performance than trust funds. Furthermore, we find that for corporate class funds, smaller board, with higher percentage of independent directors, and with the fund CEO acting as the chairman of the board is likely to charge lower fees. Also, more independent boards are strongly associated with superior fee-adjusted performance.
    • Effects of credit rating change on risk-taking

      Malik, Asif Iqbal; Faculty of Business Programs
      This thesis investigates whether there are changes in risk-taking behavior following an upgrade or downgrade in credit ratings. Research on effects of rating changes on capital markets is well-documented but the literature on how rating changes may affect firm behavior is sparse. Following, a downgrade in credit rating, managers may increase risk-taking to improve their overall performance or reduce risk-taking following upgrades to ensure that their performance is assessed more on the basis of what they may deem success in the form of an upgrade. Using a sample of firms trading in the U.S from 1994-2013, we find evidence of change in risk-taking behavior. We use cross-sectional regressions and matching using propensity scores and Barber and Lyon (1997) methodology to measure changes in risk-taking and we do find evidence of changes in managerial risk-taking behavior. Furthermore, we find that the direction of change (increase or decrease) in some cases is dependent on the type of measure rather than the type of rating change.
    • Effects of Image Temperature and Types of Messages on Advertisement and Product evaluations

      Feng, Junhui; Faculty of Business Programs
      This study examined the effects of images and messages in advertisement and product evaluations. The study categorized advertisements into two parts: images (warm and cold imagery) and messages (abstract and concrete messaging). It is expected that an advertisement with warm images and concrete messages, cold images and abstract messages is more effective in stimulating positive advertisement and product evaluations. The study also explored the mediating role of processing fluency toward advertisement and product evaluations. Results suggest that a warm image fits better with abstract messages, a cold image fits better with concrete messages, which could generate more positive advertisement and product evaluations. In addition, the effect of the “fit condition” of image and message on advertisement and product evaluations is mediated by viewers’ advertisement processing fluency.
    • The Effects of Organizational Forms of Mutual Fund Management Company on Mutual Fund Performance

      Han, Xiaoxiao; Faculty of Business Programs
      The organizational form of a company indicates whether it is publicly-traded or privately-held. The effects of the organizational forms on a company’s operations and performances have been well documented. However, because the organizational form of companies in the finance industry is so different from those in other industries, the effect on performance is quite different. There has been little research done to determine how the organizational form of mutual fund management companies affect the performance of their mutual funds. This thesis examines the impact of mutual fund management companies on the performance of their managed funds using data that cover the period 2007 to 2016 on 782 different firms. The results showed that the performance of mutual funds managed by publicly-traded mutual fund management companies was significantly compared to those managed by privately-held companies. Based on the sample data, the hypothesis of this thesis is that publicly-traded and privately-held fund management companies have different incentives and interests that impact mutual fund performance. The thesis also addresses the issues of discontinuous returns and endogenous organizational form variables. The test results examined in this thesis support the notion that mutual funds managed by publicly-traded companies underperform compared to industry benchmarks. In addition, funds managed by publicly-traded management companies perform poorer in general compared to funds managed by privately-held companies.
    • The Effects of Perceived Product-Association Incongruity on Consumption Experiences

      Clemente, Sarah; Faculty of Business Programs (Brock University, 2013-04-01)
    • Emerging Market Indexes During the Pandemic Period

      Khan, Md Nafeesur Rahman; Faculty of Business Programs
      The thesis empirically examines and analyzes an unusual episode in the behavior of emerging indexes. Specifically, it investigates the sensitivity of high-frequency five-minute interval index price movements to COVID-19-related news announcements and macroeconomic news announcements during the pandemic. The author hypothesized that COVID-19 infection cases, deaths, vaccination counts, major vaccine development announcements, and government response measures related to COVID significantly impact the emerging equity markets’ returns and volatility, namely Argentine, Brazilian, Chilean, and Mexican equity indexes. They also hypothesized an asymmetric effect of macroeconomic news before and during the pandemic. Findings reveal that pandemic cases, vaccination, and death-related news announcements exhibit a statistically significant effect on intraday volatility but not so much on returns. At the same time, government response measures have a more pronounced and significant effect on return and volatility. Additionally, vaccine research & development and approval news increase intraday volatility. Findings also suggest that very few macroeconomic news indicators exhibit statistically significant asymmetric interaction before and during the pandemic, and fewer US macroeconomic news indicators are significant during the pandemic than before. The results support previous findings that US macroeconomic news announcements significantly impact Canadian and Mexican equity indexes, suggesting a linkage between them with US financial markets.
    • Enjoyment vs. Utility: Drivers and Consequences of Consumer M-Commerce Motivations

      Lapa, Luciano; Faculty of Business Programs
      Mobile commerce (m-commerce) has grown over the years and today represents a promising channel for marketers. Nevertheless, it has not yet lived up to its full potential. Past research has mainly treated m-commerce as a predominantly utilitarian (i.e. functional and practical) way of shopping. Moving away from this uniquely utilitarian view of m-retailing, this study explores whether hedonic motivations (i.e. experience and enjoyment related) also play an important role in driving consumer m-commerce behaviour. We conceptualize consumers’ motivations as conditions that are a consequence of their regulatory orientations. The study proposes and empirically validates that prevention-oriented consumers (i.e. vigilant and conservative) are more likely to activate utilitarian motivations to use m-commerce, whereas promotion-oriented consumers (i.e. eager and risk-takers) are more likely to activate hedonic motivations to use m-commerce. The interplay between regulatory orientations and related motivations have direct consequences on consumers’ perceptions of value and trust toward m-commerce. More specifically, we show that hedonic motivations lead to higher value and trust for promotion-oriented individuals, and that utilitarian motivations lead to higher value and trust for prevention-oriented individuals. Moreover, both hedonic and utilitarian motivations are important determinants of trust and value for moderately prevention- and promotion-oriented individuals. Equipped with this knowledge, marketers can more efficiently cater to consumers’ motivations.