{"title":"Boom-Bust Cycles: Leveraging, Complex Securities, and Asset Prices","authors":"Lucas Bernard, W. Semmler","doi":"10.2139/ssrn.1485145","DOIUrl":"https://doi.org/10.2139/ssrn.1485145","url":null,"abstract":"Recent history suggests that many boom–bust cycles are naturally driven by linkages between the credit market and asset prices. Additionally, new structured securities have been developed, e.g., MBS, CDOs, and CDS, which have acted as instruments of risk transfer. We show that there is a certain non-robustness in the pricing of these instruments and we create a model in which both their role in the recent financial market meltdown, and in which the mechanism by which they exacerbate leverage cycles, is explicit. We first discuss the extent to which complex securities can amplify boom–bust cycles. Then, we propose a model in which distinct financial market boom–bust cycles emerge naturally. We demonstrate the interaction of leveraging and asset pricing in a dynamical model and spell out some implications for monetary policy.","PeriodicalId":403916,"journal":{"name":"CGN: Finance (Topic)","volume":"134 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-11-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"123213376","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Suntrust Acquisition of National Commerce","authors":"G. Allayannis, A. Shapiro","doi":"10.2139/ssrn.1418904","DOIUrl":"https://doi.org/10.2139/ssrn.1418904","url":null,"abstract":"This case presents an interesting acquisition opportunity that SunTrust considered in 2004: National Commerce Financial, a large commercial bank, based in Memphis, Tennessee, with a strong footprint in North and South Carolina. The case shows how capital ratios are often a key component in the bank-merger process, and it allows for the evaluation of whether Phil Humann (SunTrust’s CEO) could justify a multi-billion-dollar acquisition that had the potential to deplete capital, even if the deal were accretive to earnings.","PeriodicalId":403916,"journal":{"name":"CGN: Finance (Topic)","volume":"66 7 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-06-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126163795","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"The Earnings Game","authors":"Marc Hodak","doi":"10.2139/SSRN.1332583","DOIUrl":"https://doi.org/10.2139/SSRN.1332583","url":null,"abstract":"The Earnings Game refers to the dance between corporate officers and the investment community in the evaluation and communications of corporate financial performance.Investors continually evaluate the prospects of businesses they own or wish to own. Earnings announcements provide critical data points in those evaluations because they reflect concrete figures provided by the companies themselves according to standards that reasonably enable comparisons of company performance to its past and peers.Knowing the importance of earnings data to the investment community causes corporate managers to be very cautious about its disclosure. Managers generally want to show growing earnings, and to minimize uncertainty about future earnings, and they manage their businesses and their reporting accordingly. Often, part of this management involves reacting to analyst earnings projections by affirming or confronting investor expectations. The investment community, naturally, understands management's motivation and must account for management credibility at the same time they evaluate company-provided information. Management, in turn, must nurture their credibility with the investment community with each release.The following case engages participants to understand the motivations and reactions of both sides of this dance. It places participants in various roles with certain incentives and constraints, and allows all participants to interact in a manner consistent with their respective motivations. While this case necessarily simplifies the relationship between corporate management and investment analysts, it evokes both the relevant behaviors and their emotional content in the management and evaluation of companies with respect to their earnings.","PeriodicalId":403916,"journal":{"name":"CGN: Finance (Topic)","volume":"84 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2009-01-25","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132519799","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Just Capital","authors":"Pedro Matos, M. M. Frank, Aaron Fernstrom","doi":"10.2139/ssrn.3331358","DOIUrl":"https://doi.org/10.2139/ssrn.3331358","url":null,"abstract":"The case examines the development and launch of an exchange-traded fund (ETF) based on JUST Capital's socially responsible corporate ranking methodologies. The case provides a market overview of Environment, Social, and Corporate Governance (ESG) and socially responsible investing (SRI), what has driven growth in those areas worldwide, and several best-practice investment approaches. Following the overview, the case describes the founding and development of JUST Capital, explores JUST Capital's ranking methodologies, and presents the decision point faced by the CEO: requisite selection of one of three strategies in order for JUST Capital to generate \"self-sustaining\" revenue. Excerpt UVA-F-1844 Rev. Aug. 6, 2019 JUST Capital The truth is we need a more just marketplace if we are going to solve major social, environmental [and] health challenges. We believe in capitalism, and we think that businesses can and should be a force for good. —Martin Whittaker, CEO, JUST Capital In December 2017, the cover of Forbes magazine announced a list of “America's Top Corporate Citizens” (Exhibit 1). This list of companies, referred to as “the JUST 100,” was created by JUST Capital, a tax-exempt organization founded with the mission of building a more just marketplace. The JUST 100 was a list of public companies said to reflect the corporate attributes that Americans considered most just. . . .","PeriodicalId":403916,"journal":{"name":"CGN: Finance (Topic)","volume":"26 12","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"1900-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"133621160","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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