http://hdl.handle.net/1974/815 Mon, 20 May 2013 06:44:34 GMT 2013-05-20T06:44:34Z http://hdl.handle.net/1974/8004 Title: Credit Risk, Fraud Risk, and Corporate Bond Spreads Authors: Zhang, QI Abstract: Exploring the main factors that determine bond spreads with respect to Treasury rates is one of the most critical issues in the corporate debt market. Credit risk has long been perceived as the most important determinant of bond spreads (Fisher, 1959). One of the most critical parameters in credit risk models is asset volatility, which includes idiosyncratic and systematic components. However, these models do not distinguish between them. Chapter 2 investigates the impact of idiosyncratic volatility on bond portfolio spreads between 2000 and 2010. While the prediction of traditional asset pricing models is that firm-specific risk should be diversified away at aggregate level, I find idiosyncratic volatility plays an incremental role in explaining bond portfolio spreads beyond the market factors. Recovery is an important measurement of credit risk additional to default probability. Chapter 3 focuses on the estimation of firm recovery after bankruptcy using the Leland and Toft (1996) model. Using a large sample of Chapter 11 filings from 1996 to 2007, I find that the recovery derived from the Leland and Toft model has strong explanatory power on the debt recovery observed in the market. Recent literature finds that all extant credit risk models significantly underestimate bond spreads, especially for investment grade bonds of short maturity. Chapter 4 identifies a heretofore ignored component, perceived accounting misstatement, by regressing bond spreads on the proxy of accounting misstatement propensity, while controlling for issuers’ default risk and bond illiquidity risk between January 1994 and June 2002. My thesis deepens the understanding of bond price discovery mechanisms and presents an important challenge for future research to incorporate the strong empirical relationship between idiosyncratic volatility and bond yields in asset pricing models. My thesis also sheds light on the accurate prediction of debt recovery, which is important to the valuation and hedging of risky debt and credit derivatives. Furthermore, my thesis assists in solving the credit spread puzzle by identifying a new risk factor. Overall, my thesis provides new insights into research on the corporate debt market and has important implications for academic scholars and market practitioners. Description: Thesis (Ph.D, Management) -- Queen's University, 2013-05-01 07:43:17.718 Wed, 01 May 2013 04:00:00 GMT http://hdl.handle.net/1974/8004 2013-05-01T04:00:00Z http://hdl.handle.net/1974/7990 Title: Exploring the Hidden Risks in Firm Operations and their Financial Impacts Authors: Wang, XIAOQIAO Abstract: In this thesis, we explore the hidden risks in a firm’s real operating process and the financial adjustments made as the risk changes. We investigate the risks associated with a firm’s vertical channel (chapter 2 and 3) and geographic location (chapter 4), and analyze what financial consequences these risks bring. We firstly show strong evidence that a firm’s cost of equity decreases as supplier immobility translates into a decrease in operating leverage and systematic risk. Next, we show that as the specificity of customers induces more cash flow instability, the firm’s idiosyncratic risk increases with customer specificity. As a result, firms with more specific customers choose more conservative dividend payout policies to adjust for the risk changes. In the third essay, we examine the information risk from firm’s geographic location. We find that this information risk affects a firm’s capital structure choice and that centrally located firms have lower leverage ratios than do remotely located ones. Description: Thesis (Ph.D, Management) -- Queen's University, 2013-04-29 22:12:43.675 Tue, 30 Apr 2013 04:00:00 GMT http://hdl.handle.net/1974/7990 2013-04-30T04:00:00Z http://hdl.handle.net/1974/7946 Title: Using Word-of-Mouth to Portray an Image of Being Knowledgeable Authors: Pyle, Martin Allan Abstract: Word-of-mouth (WOM) is a powerful phenomenon, with the potential to determine a brand’s success by influencing both purchase decisions and the consumers’ experiences. While the predominant view suggests that WOM behavior stems from satisfaction with the brand, self-presentation can also motivate people to share their experiences. This dissertation examines how the desire to convey a particular image, one of being knowledgeable about a product category, motivates and affects WOM behavior. The conceptual framework suggests that social circumstances influence when people feel the motivation to use WOM to convey an image of being knowledgeable about a product category. Relative assessments of the salient audience’s capabilities resulting in perceptions that the speaker possesses more or unique information will likely activate this self-presentation goal. This motivation leads speakers to follow a consistent and systematic pattern of changes to both the content and phrasing of their WOM messages. Specifically, speakers will mention more brands, include claims to establish their credentials, mention both the pros and cons of a brand, adopt objective language, and include more technical jargon in their messages. From the receivers’ perspective, the changes to the content and phrasing result in augmented perceptions of the speaker’s credibility, though the changes affect different dimensions of this construct (i.e., through knowledge perceptions and trustworthiness perceptions). The predicted changes also enhance receivers perceptions regarding the persuasiveness of the message. Empirical testing of the conceptual framework involves three studies, a survey and two scenario-based experiments. The conceptual framework and findings in this dissertation yield important implications for both theory and practice. Description: Thesis (Ph.D, Management) -- Queen's University, 2013-04-25 15:07:35.356 Fri, 26 Apr 2013 04:00:00 GMT http://hdl.handle.net/1974/7946 2013-04-26T04:00:00Z http://hdl.handle.net/1974/7886 Title: Examining Information Systems Control Alignment in Organizations Authors: Cram, William Alexander Abstract: This research examines a new concept called information systems (IS) control alignment, which refers to the degree that controls within an IS process such as systems development are similar to an ideal profile of controls. IS controls are used to influence the behaviour of employees, often via approaches such as formal policies or managerial oversight. Many companies continue to struggle with ineffective IS controls, as evidenced by underperforming systems development projects, ongoing security breaches, and inconsistent service from third-party providers. A qualitative case study approach is adopted, drawing on data collected via interviews and company documents. IS controls are found to most effectively achieve their objectives when they are grouped into mutually reinforcing profiles characterized by either agile attributes (e.g. evolution, innovation), traditional attributes (e.g. stability, prevention), or hybrid attributes that are employed based on unique organizational circumstances. Findings from this research will help organizations to better achieve their goals by identifying IS controls that complement, rather than conflict, with one another. By more closely examining the implications of IS control choice, organizations can better understand how to influence employee behaviour and oversee day-to-day operations, a topic that is increasingly on the minds of executives and shareholders in light of the rash of business failures in recent years. Findings will also contribute to the academy by conceptualizing and empirically evaluating the new concept of IS control alignment, as well as building theory regarding the relationships between IS processes, controls, and employee behaviour. Description: Thesis (Ph.D, Management) -- Queen's University, 2013-04-17 13:14:32.122 Fri, 19 Apr 2013 04:00:00 GMT http://hdl.handle.net/1974/7886 2013-04-19T04:00:00Z