Risk management

In December 2009, the Securities Exchange Commission (SEC) approved enhanced proxy disclosure rules requiring companies to disclose the board’s leadership
structure and the board’s role in risk oversight. Apart from general business risks, boards
are increasingly interested in Information Technology (IT) risks as it affects all aspects of
the organization (PricewaterhouseCoopers [PwC], 2013). Since the effectiveness of IT
risk management depends on senior managers’ actions, this dissertation attempts to
answer the question of whether the maturity of IT risk management practices (the extent
to which management performs particular activities to identify, assess, monitor and
respond to IT-related risks) in organizations depends on the Chief Information Office
(CIO) reporting structure and the board’s leadership structure.

I examine how managerial reputation affects the quality of non-GAAP earnings
disclosures and how the market reacts to non-GAAP earnings disclosures associated with
managerial reputation. Although there was an initial dip in the frequency of non-GAAP
earnings disclosures after SOX and Regulation G, the frequency of non-GAAP earnings
disclosures has increased in recent years (Brown, Christensen, Elliott and Mergenthaler
2012). Motivated by the efficient contracting theory and managerial reputation
incentives, I investigate whether reputable managers are associated with higher quality
non-GAAP earnings disclosures. I also investigate whether the market is more responsive
to non-GAAP earnings disclosed by reputable managers. Using empirical models
modified from prior research, I find that reputable managers are less likely to disclose
non-GAAP earnings, which is consistent with the efficient contracting explanation. I also
find that reputable managers exclude more recurring items that are related to future
operating earnings when they disclose non-GAAP earnings, which is consistent with the rent extraction explanation in prior research. Finally, I find that managerial reputation has
an incremental effect on the market reaction and that the market is more responsive to
non-GAAP earnings disclosed by reputable managers if the unexpected earnings are
positive. The study contributes to both non-GAAP earnings disclosures literature and
managerial reputation incentives literature. It also has implications for investors,
managers, and regulators.

This study explores the connections of public procurement official
perceptions of public-private partnerships and their contracting decisions for
public infrastructure projects. Detailed discussion of previous scholarship and its
focus on policymaking and project evaluation of public-private partnerships
leaves a gap in the public policy process – implementation. Procurement officials
are presented in the role of policy implementers rather than agents in a principalagent
approach. This attempts to address a shortcoming of the description that
these officials do nothing more than purchase. Arguments are put forth that these
officials are given additional levels of discretion when faced with contracting
decisions. Specifically, procurement officials observe that public-private
partnerships provide sets of project consequences. A survey instrument is designed to explore the differences in perceptions
that procurement officials have with respect to public-private partnerships and
traditional contracting out. Survey failures result in findings only being able to
attempt a more general view of public-private partnerships. Results allow
perceptions to be placed in a decision-making model based on a project phase
approach that develops on the assumption that tasks contracted to private
vendors produce project consequences. Furthermore, analysis of significant
consequence perceptions indicate that those perceptions do not provide a
rationale for a procurement official’s decision-making on whether to contract
using a public-private partnership for public infrastructure projects. Independent
sample t-tests, controlled correlations, multiple ANOVA and linear regression
analyses show that perceptions of consequences, the perceptions of differences
of those consequences across project phases, relationships of consequences to
perceptions of efficiency and effectiveness proxies and a bounded rationalitybased
model of decision-making for procurement officials are all inconclusive.
Discussion focuses on the development of consequences and phases as
defining and clarifying public-private partnerships. Further discussions are
presented for procurement officials with respect to their decision-making and
possible role as policy implementers. Conclusions fail to uncover any inferential
results. The research finds its primary contribution in the conceptual discourse of
public procurement official roles and public-private partnership definitions.

By analyzing the information provided by analyst recommendations in the
banking industry, I find that analyst recommendations trigger an immediate impact on
the value of banks (Essay 1), they profitably guide the investment decisions of investors
for periods of up to three months (Essay 2), and they also have an immediate impact on
the values of rival banks (Essay 3). In addition, I find that analysts’ ability to provide
new information depends on the information environment of the bank. The degree of
information asymmetry, the degree of complexity, the risk of the bank, the risk of the
time period, as well as regulatory reforms that affect these characteristics, have a
significant impact on the analyst’s ability to provide new information to the investors.
Specifically, I find that analyst recommendations are more informative when
banks suffer from a high degree of information asymmetry. In addition, regulatory reforms that reduced the information asymmetry of the banking industry also diminished
the analyst’s ability to provide new information. Similarly, I find that analyst
recommendations have a greater impact on the values of the rated and the rival banks
when these banks operate in a risky environment. This result is robust to several
measures of bank risk, period risk, and regulatory events that affected the risk of the
banking industry. However, the results of Essay 2 show that positive recommendations
that occur during riskier periods or after regulatory events that increased the risk of the
banking industry result in lower value for the investors over the following 1-month or 3-
month periods. Lastly, I find that as banks become more complex, analyst
recommendations have a smaller immediate impact on the value of the bank, deliver a
smaller investment value for the investors, and also have a smaller immediate impact on the value of the rival banks.

The dissertation consists of three research works about special topics of financial intermediation. The main goal of the first study is to determine the effect of some corporate governance-related variables on bank initial public offerings (IPOs). The testable hypotheses involve three dependent variables: abnormal offer price, initial return or underpricing, and long-term performance. The proposed independent variables have no explanatory power on the cross-sectional variation of the abnormal offer price. The proportion of outside directors, the size of the bank, directors and officers' (D&O) equity based compensation plans, and the age of the bank, all have a positive relationship with the level of underpricing. The variables, nominating committee independence, directors' knowledge and experience, and directors' reputation, have the hypothesized positive relationship with the sample's long-run performance. The main goal of the second research work is the analysis of a sample of self-underwritten IPOs. The analysis includes the IPOs' underpricing; long-term performance; lockup and quiet period; risk; volume; and failure and acquisitions. The main result of this study is that here are no significant differences on the level of underpricing between self-underwritten IPOs and conventional IPOs underwritten by independent underwriters. The only significant result about the long-run performance of self-underwritten IPOs is on the subsample of nonpenny stocks, where the larger the firm the lower the long-run performance. The third research work focuses on going private transactions of financial institutions. This study includes the analysis of the cross-sectional differences of the cumulative abnormal returns (CARs) that result from the public announcement of a going private transaction proposal. Similarly, this study tests the long-run performance and the risk change of those firms that stay public after the withdrawal of a going private transaction. The main results suggest that public announcement of a going-private transaction produces positive CARs of about 15 percent. The public announcement of the withdrawal of a going-private transaction generates negative CARs between -4 percent and -5 percent. The total risk of the sample with respect to the matching group experiences a positive and significant increase after the public announcement of a going-private transaction proposal.

Increasing sea levels have the potential to place important portions of the infrastructure we rely on every day at risk. The transportation infrastructure relies on roads, airports, and seaports to move people, services, and goods around in an ever connected global economy. Any disturbances of the transportation modes have reverberating effects throughout the entire economic spectrum. The effects include delays, alterations of routes, and possible changes in the origin and destinations of services and goods. The purpose of this project is to develop an improved methodology for a sea level rise scenario vulnerability assessment model. This new model uses the groundwater elevation as a limiting factor for soil storage capacity in determining previously underestimated areas of vulnerability. The hope is that early identification of vulnerability will allow planners and government officials an opportunity to identify and either remediate or create alternative solutions for vulnerable land areas before high consequence impacts are felt.