scholarly journals Career Risk and Market Discipline in Asset Management

2019 ◽  
Vol 33 (2) ◽  
pp. 783-828 ◽  
Author(s):  
Andrew Ellul ◽  
Marco Pagano ◽  
Annalisa Scognamiglio
Keyword(s):  
Adverse Selection ◽  
Asset Management ◽  
Significant Loss ◽  
Relative Performance ◽  
Oxford University ◽  
Top Managers ◽  
The Impact ◽  
Asset Managers ◽  
Published Paper ◽  
Scarring Effects

Abstract We establish that the labor market helps discipline asset managers via the impact of fund liquidations on their careers. Using hand-collected data on 1,948 professionals, we find that top managers working for funds liquidated after persistently poor relative performance suffer demotion coupled with a significant loss in imputed compensation. Scarring effects are absent when liquidations are preceded by normal relative performance or involve mid-level employees. Seen through the lens of a model with moral hazard and adverse selection, these scarring effects can be ascribed to a drop in asset managers’ reputation. The findings suggest that performance-induced liquidations supplement compensation-based incentives. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Performance of physical asset management using the analytic hierarchy process

2019 ◽  
Vol 37 (3) ◽  
pp. 327-345 ◽  
Author(s):  
Fawzeia Abdulla Al Marzooqi ◽  
Matloub Hussain ◽  
Syed Zamberi Ahmad
Keyword(s):  
Analytic Hierarchy Process ◽  
Asset Management ◽  
Analytic Hierarchy ◽  
Content Type ◽  
Equal Importance ◽  
The Analytic Hierarchy Process ◽  
Physical Asset ◽  
The Impact ◽  
Hierarchy Process ◽  
Asset Managers

Purpose The purpose of this paper is to explore certain resources, capabilities and competencies needed to improve the performance of physical asset management (PAM). Design/methodology/approach The analytic hierarchy process (AHP) is used to select and prioritize the most appropriate factors for improving performance. A multi-criteria approach is used to analyze and compare the importance of 6 main criteria and 18 subcriteria identified from a survey of relevant literature. Findings The study revealed that not all factors are viewed as having equal importance in improving PAM performance, as three of the main factors attained greater importance among the six factors. Research limitations/implications This study explored the factors required for managing assets only within the third stage of asset lifecycle, that is, the utilization stage. It is recommended that future studies be conducted in such a way as to determine the importance of similar factors in the other stages of the asset lifecycle, or to identify new factors and add new criteria. Practical implications Knowledge of the differential impacts of the factors on the performance of PAM can impact asset managers and decision makers in their allocation of resources and focus their work on the highest-ranked rather than the lowest-ranked factors. Also, AHP used provides an effective mean for asset managers to identify priorities among decision criteria in their organization. Originality/value To date, no study has explored the impact of six combined factors on the performance of PAM. Previous studies have found that these factors each had equal importance. However, their relative ranking in practice and when they appear together have remained unrecognized.

scholarly journals Destructive Creation at Work: How Financial Distress Spurs Entrepreneurship

2019 ◽  
Vol 33 (9) ◽  
pp. 4061-4101 ◽  
Author(s):  
Tania Babina
Keyword(s):  
Economic Activity ◽  
Financial Distress ◽  
Web Site ◽  
High Tech ◽  
High Wage ◽  
New Firms ◽  
Oxford University ◽  
Service Sectors ◽  
The Impact ◽  
Published Paper

Abstract Using U.S. Census firm-worker data, I document that firms’ financial distress has an economically important effect on employee departures to entrepreneurship. The impact is amplified in the high-tech and service sectors, where employees are key assets. In states with enforceable noncompete contracts, the effect is mitigated. Compared to typical entrepreneurs, distress-driven entrepreneurs are high-wage workers who found better firms, as measured by jobs, pay, and survival. Startup jobs compensate for 33% of job losses at the constrained incumbents. Overall, the financial inability of incumbent firms to pursue productive opportunities increases the reallocation of economic activity into new firms. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Ambiguity, Volatility, and Credit Risk

2019 ◽  
Vol 33 (4) ◽  
pp. 1618-1672 ◽  
Author(s):  
Patrick Augustin ◽  
Yehuda Izhakian
Keyword(s):  
Credit Risk ◽  
Negative Impact ◽  
Risk Exposure ◽  
Standard Deviation Increase ◽  
Oxford University ◽  
Credit Default ◽  
Significant Negative Impact ◽  
The Impact ◽  
Independent Preferences ◽  
Published Paper

Abstract We explore the implications of ambiguity for the pricing of credit default swaps (CDSs). A model of heterogeneous investors with independent preferences for ambiguity and risk shows that, because CDS contracts are assets in zero net supply, the net credit risk exposure of the marginal investor determines the sign of the impact of ambiguity on CDS spreads. We find that ambiguity has an economically significant negative impact on CDS spreads, on average, suggesting that the marginal investor is a net buyer of credit protection. A 1-standard-deviation increase in ambiguity is estimated to decrease CDS spreads by approximately 6%. (JEL C65, D81, D83, G13, G22) Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

scholarly journals Auto Credit and the 2005 Bankruptcy Reform: The Impact of Eliminating Cramdowns

2019 ◽  
Vol 32 (12) ◽  
pp. 4734-4766 ◽  
Author(s):  
Rajashri Chakrabarti ◽  
Nathaniel Pattison
Keyword(s):  
Interest Rates ◽  
Strong Evidence ◽  
Web Site ◽  
Causal Effect ◽  
Oxford University ◽  
Editorial Decision ◽  
Historical Variation ◽  
The Impact ◽  
Published Paper ◽  
Rule Out

Abstract Auto lenders were perhaps the biggest winners of the 2005 Bankruptcy Reform, as Chapter 13 bankruptcy filers can no longer “cramdown” the amount owed on recent auto loans. We estimate the causal effect of this anticramdown provision on the price and quantity of auto credit. Exploiting historical variation in states’ usage of Chapter 13 bankruptcy, we find strong evidence that eliminating cramdowns decreased interest rates and some evidence that loan sizes increased among subprime borrowers. The decline in interest rates is persistent and is robust to a battery of sensitivity checks. We rule out other reform changes as possible causes. Received September 29, 2016; editorial decision January 15, 2019 by Editor Philip Strahan. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

A game-theoretic model for roadway performance management

2014 ◽  
Vol 4 (1) ◽  
pp. 40-54 ◽  
Author(s):  
Hesham Osman ◽  
Mazdak Nikbakht
Keyword(s):  
Asset Management ◽  
Decision Makers ◽  
Theoretic Model ◽  
Theoretic Approach ◽  
Political Decision ◽  
Content Type ◽  
Road Users ◽  
Game Theoretic ◽  
The Impact ◽  
Asset Managers

Purpose – The purpose of this paper is to present a socio-technical approach to modeling the behavior of roadway users, asset managers, and politicians toward roadway performance and asset management. This approach models the complex interactions that occur between these agents in a complex system. Most modeling approaches in the domain of infrastructure asset management take a purely asset-centric approach and fail to address these socio-technical interactions. Design/methodology/approach – Interactions among political decision makers, asset management strategy developers, and road users are modeled using a game-theoretic approach. The interactions are modeled as a non-cooperative game in which politicians, asset managers, and road users are the main players. Each player is autonomous and aims to come up with the set of moves to maximize their respective level of satisfaction in response to other players’ moves. Multi-attribute utility theory is used to deal with multitude of players’ goals, and the Nash equilibria of the game are south out to develop appropriate strategies for different players. Findings – An illustrative example for a road network of a Canadian city is used to demonstrate the developed methodology. The developed methodology demonstrates how behaviors of various agents involved in the sphere of asset management impacts their collective decision-making behavior. Originality/value – The developed framework provides asset managers and political decision makers with a valuable tool to evaluate the impact of public policy decisions related to asset managers on road performance and the overall satisfaction of road users.

scholarly journals The Limits of Lending? Banks and Technology Adoption across Russia

2019 ◽  
Vol 33 (2) ◽  
pp. 536-609 ◽  
Author(s):  
Çağatay Bircan ◽  
Ralph De Haas
Keyword(s):  
Productivity Growth ◽  
Credit Markets ◽  
New Products ◽  
Bank Lending ◽  
Bank Credit ◽  
Import Competition ◽  
Data Set ◽  
Oxford University ◽  
The Impact ◽  
Published Paper

AbstractWe exploit historically determined variation in local credit markets to identify the impact of bank lending on innovation across Russian firms. We find that deeper credit markets increase firms’ use of bank credit, their adoption of new products and technologies, and their productivity growth. This relationship is more pronounced in industries farther from the technological frontier, more exposed to import competition, and that export more. These impacts are also stronger for firms near historical R&D centers or railways and in regions with supportive institutions. Consistent with these results, credit markets contribute to economic growth in such regions.Authors have furnished a data set, which is available on the Oxford University Press Web site next to the link to the final published paper online.

scholarly journals Strategic Liquidity Mismatch and Financial Sector Stability

2019 ◽  
Vol 32 (12) ◽  
pp. 4696-4733 ◽  
Author(s):  
André F Silva
Keyword(s):  
Default Risk ◽  
Financial Stability ◽  
Strategic Behavior ◽  
Oxford University ◽  
Collective Decisions ◽  
Editorial Decision ◽  
Transformation Activity ◽  
The Impact ◽  
Published Paper ◽  
Identification Strategy

Abstract This paper examines whether banks strategically incorporate their competitors’ liquidity mismatch policies when determining their own and the impact of these collective decisions on financial stability. Using a novel identification strategy exploiting the presence of partially overlapping peer groups, I show that banks’ liquidity transformation activity is driven by that of their peers. These correlated decisions are concentrated on the asset side of riskier banks and are asymmetric, with mimicking occurring only when competitors take more risk. Accordingly, this strategic behavior increases banks’ default risk and overall systemic risk, highlighting the importance of regulating liquidity risk from a macroprudential perspective. ReceivedMay 4, 2016; editorial decision January 1, 2019 by Editor Philip Strahan. Author has furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Asset management determinants of Polish universities

2015 ◽  
Vol 17 (3) ◽  
pp. 178-197 ◽  
Author(s):  
Malgorzata Rymarzak ◽  
Dariusz Trojanowski
Keyword(s):  
Asset Management ◽  
Social Performance ◽  
Public Building ◽  
Content Type ◽  
Government Grants ◽  
Research Activities ◽  
The University ◽  
The Impact ◽  
Asset Managers

Purpose – The purpose of the paper is to offer insights into university asset management (AM) and describe the impact that the various determinants have on the process of university AM. The process of university AM is influenced by a range of determinants. Design/methodology/approach – A literature review and a case study were used to achieve the research objective. The case study involved two data collection techniques – interviews and document analysis. Findings – Changing conditions of state-run universities, such as decreasing number of students and a tendency to increase the proportion of scientific research activities, require flexible adjustments to the size and structure of the universities’ facility base. Reductions in government grants and increasing maintenance costs of university assets have made it necessary to manage both existing and future assets more effectively to achieve measured improvement of environmental and social performance, to fulfil strategic responsibilities and to create shared value. Research limitations/implications – The paper was limited to one practice case study. Additional cases could be studied to confirm the findings and increase the usefulness of the methodological framework and improve its application. Practical implications – Identifying the various factors that influence the process of university AM would be useful for universities and other public building owners and their decisions-makers, such as chancellors and asset managers. The experience of the Polish market also may support the development of university or public building AM in other countries. Originality/value – The process of optimising of university asset structure proposed in this paper can contribute to the better understanding and management of higher education institutions ' assets and to the greater competitiveness and efficiency of the Polish universities. The work is novel in that it provides insights into university AM and describes various determinants from an external (macro and micro) and internal (connected with the university itself) perspective.

The Economic Impact of Index Investing

2018 ◽  
Vol 32 (9) ◽  
pp. 3461-3499 ◽  
Author(s):  
Jonathan Brogaard ◽  
Matthew C Ringgenberg ◽  
David Sovich
Keyword(s):  
Commodity Markets ◽  
Negative Externality ◽  
Feedback Channel ◽  
Production Decisions ◽  
Market Participants ◽  
Oxford University ◽  
Editorial Decision ◽  
The Impact ◽  
Published Paper ◽  
Index Investing

Abstract We study the impact of index investing on firm performance by examining the link between commodity indices and firms that use index commodities. Around 2004, commodity index investing dramatically increased. This event is referred to as the financialization of commodity markets. Following financialization, firms that use index commodities make worse production decisions, earn 40% lower profits, and have 6% higher costs. Consistent with a feedback channel in which market participants learn from prices, our results suggest that index investing distorts the price signal, thereby generating a negative externality that impedes firms’ ability to make production decisions. Received March 31, 2017; editorial decision July 5, 2018 by Editor Itay Goldstein. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

Public Oversight and Reporting Credibility: Evidence from the PCAOB Audit Inspection Regime

2019 ◽  
Vol 33 (10) ◽  
pp. 4532-4579 ◽  
Author(s):  
Brandon Gipper ◽  
Christian Leuz ◽  
Mark Maffett
Keyword(s):  
Financial Reporting ◽  
Capital Markets ◽  
Web Site ◽  
Fiscal Year ◽  
Oxford University ◽  
Market Responses ◽  
The Impact ◽  
Published Paper ◽  
Public Oversight ◽  
Oxford University Press

Abstract This paper studies the impact of public audit oversight on financial reporting credibility. We analyze changes in market responses to earnings news after public audit oversight is introduced, exploiting that the regime onset depends on fiscal year-ends, auditors, and the rollout of auditor inspections. We find that investors respond more strongly to earnings news following public audit oversight. Corroborating these findings, we find an increase in volume responses to 10-K filings after the new regime. Our results show that public audit oversight can enhance reporting credibility and that this credibility is priced in capital markets. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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