• 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.
    • Examining Competitive Intensity and Social Enterprise Performance

      Wood, Patrick; Faculty of Business Programs
      This thesis explores how Social Enterprises’(SE) manage their economically-driven activities with their mission-related activity and how these impact their relative economic and social performance. Given the little research that has been done on external factors within SEs, competitive intensity and its impact on the performance of hybrid SEs was also examined in terms of how it might influence the above trade-offs. The authors looked at longstanding, social enterprises within the second-hand textile industry as a suitable model for SEs participating in a competitive environment. What the authors found was that while economically-driven activities appeared to have a negative impact on social performance, counter-intuitively, mission-driven activity had a positive effect on both social and financial performance. Furthermore, while competitive intensity has a positive buffering effect between mission-driven activity and both economic and social performance, the opposite is true of economic-driven activity, where competition seems to have a negative buffering impact. These findings demonstrate the need for further research into the role competition plays within hybrid organizations and from a practical position, may inform the strategic decisions of managers who might expect a linear relationship between the type of activity engaged and outcomes.
    • Explaining voice behaviour: The roles of personal resources, social interdependence, and supervisor leadership style

      Li, Ran; Faculty of Business Programs
      This study contributes to current research on voice behaviour by investigating several under-explored drivers that motivate employees’ expression of constructive ideas about work-related issues. It draws from the concept of psychological climate to examine how voice behaviour is influenced by employees’ (1) personal resources (tenacity and passion for work), (2) perceptions of social interdependence (task and outcome interdependence), and (3) supervisor leadership style (transformational and transactional). Using a multi-source research design, surveys were administered to 226 employees and to 24 supervisors at a Canadian-based not-for-profit organization. The hypotheses are tested with hierarchical regression analysis. The results indicate that employees are more likely to engage in voice behaviour to the extent that they exhibit higher levels of passion for work. Further, their voice behaviour is lower to the extent that their supervisor adopts a transformational leadership style characterized by high performance expectations or a transactional leadership style based on contingent rewards and contingent punishment behaviours. The study reveals that there are no significant effects of tenacity, social interdependence, and behaviour-focused transformational leadership on voice. The findings have significant implications for organizations that seek to encourage employee behaviours that help improve current work practices or undo harmful situations.
    • Exploring the Effect of Tourism Type on Green Consumption Intentions in the Hotel Industry: The Moderating Roles of Benefit Type and Benefit Time

      JIA, YIDAN; Faculty of Business Programs
      Green consumption behaviour has been widely investigated. Scholars have suggested that a luxury tourism product type can be a negative predictor of environmentally friendly consumption intentions. However, conditions under which green practices can be most effective still need to be discovered, particularly in the tourism industry. Therefore, the objective of this present research is to explore the moderation effect of benefit type (self versus other) and benefit timing (now versus future) in the relationship between tourism product type and environmentally friendly consumption intentions, respectively. Specifically, this thesis hypothesizes that a self-benefit appeal will lessen the negative relationship between luxury product type and consumers’ green consumption intentions. In addition, a now-time benefit appeal will strengthen the weak relationship between non-luxury product type and consumers’ green consumption intentions. The hypotheses are tested using two experimental studies in the hotel industry. By understanding the moderating roles benefit type and benefit timing play in the relationship between tourism product type and consumers’ green consumption intentions, the current research advances our understanding in how different types of incentives motivate green consumption behaviours, and provides managerial implications for promoting environmentally friendly practices and programs to tourists more effectively.
    • False Discoveries in the Performance of Canadian Equity Mutual Funds

      Tran, Nhan; Faculty of Business Programs
      This thesis assesses the performance of Canadian equity mutual funds over the period 1991-2016 using the False Discovery Rate (FDR) methodolody. We find that around 85% of the sampled funds are genuinely zero-alpha, and the majority of skilled funds lies in the extreme right tail. Overall, false positive rates in the studied population are found to be approximately 20% for gross returns, and 55% for net returns, and respectively 6% and 22% in the case of false negative rates across all factor models. Contrast to negative FDRs, positive FDRs exhibit abnormality among funds from before 2008, and greatly vary across fund groups. In addition, different bootstrap methods confirm the existence of manager stock-picking skill among the fund sample.
    • Forecasting the Yield Curve of Government Bonds: A Comparative Study

      He, Chao; Faculty of Business Programs (Brock University, 2013-11-21)
      For the past 20 years, researchers have applied the Kalman filter to the modeling and forecasting the term structure of interest rates. Despite its impressive performance in in-sample fitting yield curves, little research has focused on the out-of-sample forecast of yield curves using the Kalman filter. The goal of this thesis is to develop a unified dynamic model based on Diebold and Li (2006) and Nelson and Siegel’s (1987) three-factor model, and estimate this dynamic model using the Kalman filter. We compare both in-sample and out-of-sample performance of our dynamic methods with various other models in the literature. We find that our dynamic model dominates existing models in medium- and long-horizon yield curve predictions. However, the dynamic model should be used with caution when forecasting short maturity yields
    • History and Theorizing: The Case of Winemaking in the Ontario Wine Industry

      Hills, Shilo; Faculty of Business Programs (Brock University, 2012-05-17)
      Despite the fact that theorization has been established as an important social mechanism in a variety of contexts, little research has explicated how this process works. I argue that theorization entails strategic constructions of history, or rhetorical history, in order to persuade audiences of legitimacy. I examine the role that history plays in actors’ theorizations of the Ontario wine industry as world class. By conducting a rhetorical analysis of the newsletters and websites of Ontario wineries, I find that various themes of history are routinely employed to re-theorize the industry as one that produces world class wines. In general, the findings suggest that the narratives of Ontario wineries tap into global repertoires of fine wine to portray the continuity of current practices with those of Old World winemaking. In addition, wineries sometimes tap into local histories to convey a sense of uniqueness, but they also obscure the history of poor winemaking in the region.
    • Idiosyncratic Momentum and Option Markets

      Guo, Songchan; Faculty of Business Programs
      This study examines whether the idiosyncratic momentum strategy can generate excess returns following the emergence of traded options. Portfolios are formed based on past residuals of the Fama-French three factor model in idiosyncratic momentum, while those are formed based on past total returns in traditional momentum. We find that the idiosyncratic momentum profits show attenuation since options started trading in 1996. Our results show that momentum returns for stocks with options in idiosyncratic momentum are positive and significant for three, six, and twelve months following the formation date, while those for stocks with options in traditional momentum are insignificant or even turn to negative. We also find strong evidence that the enhanced information efficiency led by allowing short selling has more impact on traditional momentum returns than on idiosyncratic momentum returns. Overall, our results show that the idiosyncratic momentum strategy demonstrates an even bigger challenge to the conventional asset pricing literature.
    • The Impact of a Corporate Name Change on Stock Price and Trading Volume of Canadian Companies

      Durrani, Farooq; Faculty of Business Programs (Brock University, 2013-07-26)
      This thesis examines the impact of a corporate name change on stock price and trading volume of Canadian companies around the announcement date, the approval date, and the adoption date over the time period from 1997 to 2011. Name changes are classified into six categories: major and minor, structural and pure, diversified and focused, accompanied with a change in ticker symbol and without a change in ticker symbol, “Gold” name addition and deletion, and different reasons for name changes (e.g., merger and acquisition, change of structure, change of strategy, and better image). The thesis uses the standard event study methodology to perform abnormal return and trading volume analyses. In addition, regression analysis is employed to examine which type of a name change has the largest impact on cumulative abnormal returns. Sample stocks exhibit a significant positive abnormal return one-day prior to the approval day and one day after the adoption date. Around the approval date we observe significant abnormal returns for stocks with a structural name change. On the day after the adoption date we document abnormal returns for stocks with major, minor, structural, pure, focused, and ticker symbol name changes. If a merger or acquisition is the reason for a name change, companies tend to experience a significant positive abnormal return one-day before the approval date and on the adoption date. If a change of structure is the reason for a name change, companies exhibit a significant positive abnormal return on the approval date and a significant negative abnormal return on the adoption date. In case of a change of strategy as the reason for a name change, companies show a significant negative abnormal return around the approval date and a significant positive abnormal return around the adoption date.
    • Impacts of Executive Compensation on Employee Wages

      Zhu, Baoqi; Faculty of Business Programs
      We study the impact of CEO equity-based compensation (EBC) on employee wages. Using pay-performance sensitivity (PPS) as a measure for CEO equity-based compensation, we find that CEOs with higher EBC tend to pay their employees lower wages. We also examine the impact of EBC on average employee wage in different industries and find that such an impact is more evident in non-technology firms than in technology firms. Finally, we find that CEOs with higher pay-performance sensitivities are more likely to depress employee wages when the business cycle shows downturn. While the literature of CEO compensation suggests that EBC can mitigate agency conflicts between managers and shareholders, we find that the high level of EBC can create another aspect of agency conflicts between managers and shareholders, contributing to income inequality even within corporations.