A network perspective of the stock market

Complex networks are constructed to study correlations between the closing prices for all US stocks that were traded over two periods of time (from July 2005 to August 2007; and from June 2007 to May 2009). The nodes are the stocks, and the connections are determined by cross correlations of the variations of the stock prices, price returns and trading volumes within a chosen period of time. Specifically, a winner-take-all approach is used to determine if two nodes are connected by an edge. So far, no previous work has attempted to construct a full network of US stock prices that gives full information about their interdependence. We report that all networks based on connecting stocks of highly correlated stock prices, price returns and trading volumes, display a scalefree degree distribution. The results from this work clearly suggest that the variation of stock prices are strongly influenced by a relatively small number of stocks. We propose a new approach for selecting stocks for inclusion in a stock index and compare it with existing indexes. From the composition of the highly connected stocks, it can be concluded that the market is heavily dominated by stocks in the financial sector.     

Regulatory Capital Charges for Too‐Connected‐to‐Fail Institutions: A Practical Proposal

The recent financial crisis has highlighted once more that interconnectedness in the financial system is a major source of systemic risk. I suggest a practical way to levy regulatory capital charges based on the degree of interconnectedness among financial institutions. Namely, the charges are based on the institution's incremental contribution to systemic risk based on a risk budgeting approach. The imposition of such capital charges could go a long way towards internalizing the negative externalities associated with too‐connected‐to‐fail institutions and providing managerial incentives to strengthen an institution's solvency position, and avoid too much homogeneity and excessive reliance on the same counterparties in the financial industry.     

The world price of home bias

Theoretical arguments suggest that as the degree of a country's home bias increases, the global risk sharing between domestic and foreign investors will reduce and thereby increase the country's cost of capital. Consistent with this prediction, we find international differences in the cost of capital to be strongly and positively related to varying degrees of home bias for 38 markets. This finding is robust to different cost of capital proxies, different control variables, alternative home-bias measures, international tradability of stocks, and alternative specifications. Therefore, the overall evidence implies that countries may enjoy a significantly lower cost of capital by reducing the extent of their home bias and hence, increasing global risk sharing.     

Impact of asset preferences on firm performance over its life cycle: Is agency theory or neo-classical theory more relevant?

This study extends Dickinson's (2011) firm life cycle classification approach by linking it with the asset preferences and firm performance. This study also resolves the contention between agency theory and neo-classical theory. Based on the data of S&P 500 firms from 2000 to 2019, our results show: First, the effect of current assets on basic earnings per share (BEPS), return on assets (ROA) and Tobin's Q ratio (TQR) decreases from the introduction to decline stage. Second, the influence of fixed assets on TQR increases from the introduction to the declining stage. Our findings suggest that both theories are relevant, and asset acquisition influences the productivity and performance of the firms.     

Effective teaching,student engagement and student satisfaction during the Covid-19 pandemic: Evidence from business students' qualitative survey evaluations

We investigate the influence of unanticipated prolonged disruption on effective teaching, student engagement and student satisfaction during campus lockdown due to COVID-19. Qualitative comments provided by undergraduate business students in the university end-of-semester survey were analysed using a variety of methods, including sentiment analysis. Our findings indicate that effective teaching through the characteristics of the instructor, can lead to enhanced student engagement and higher levels of student satisfaction in an emergency remote teaching environment. Our findings highlight the critical role of the instructor in providing cognitive and affective support to students, along with clear communication, during times of substantial change.     

A common thread linking the design of guarantee and nonescalating payments of public annuities

Motivated by recent experiences in economies adopting the defined-contribution pension system, we study public annuities in the presence of survival probability heterogeneity. It is found that the difference of annuitization-weighted and unweighted averages of survival probabilities is a useful measure of the severity of adverse selection. We then examine public annuities with a guarantee feature which bundles annuity income and bequeathable wealth components. We show that when the heterogeneity in survival probability is limited, the magnitude of guarantee proportion is irrelevant. On the other hand, an increase in the guarantee proportion mitigates adverse selection when the extent of heterogeneity is sufficiently large, because the share of annuity purchase by retirees with lower (resp., higher) survival probabilities is increased (resp., decreased). We also obtain a similar set of results for public annuities with nonescalating payments. The results have useful implications regarding the design of public annuities.     

Teaching student philanthropy—Possibilities for practice within the UK higher education sector

This practice paper reflects on lessons learnt from an undergraduate philanthropy module introduced across different programmes within the division for the Study of Law, Society, and Social Justice  at the University of Kent, United Kingdom. The module applies service-learning and experiential learning pedagogy to ensure students critically engage with community and societal issues; recognise themselves as philanthropists; and engage in a responsible decision-making process with their cohort. As one of the first UK Higher Education student philanthropy modules, lessons learnt provide important general reflections for student philanthropy modules internationally, alongside offering a potential ‘blueprint’ within the UK context. Aligning with others (such as McDougle's study) and drawing on critical reflections from students and partners, suggests that experiential learning pedagogy is most successful when carried out in a diverse and multidisciplinary learning space where students reflect on their own moral position alongside others to build consensus.     

The Economics of the Greenium: How Much is the World Willing to Pay to Save the Earth?

Environmental and Resource Economics - Sadly, not much. This paper provides a theoretical and empirical analysis of the greenium, the price premium the investor pays for green bonds over...     

Developing a children's rights approach to fundraising with children in primary schools and the ethics of cultivating philanthropic citizenship

Fundraising literature predominantly focuses on adult donors, with limited literature addressing younger donors, particularly children, and virtually no discussion on the normative ethics which inform fundraising with children. Addressing this gap, this article examines the ethical dilemmas posed by the mainstreaming of charity fundraising in primary schools. Regardless of high levels of participation, research with primary school pupils shows that children's engagement in fundraising activities is often passive, with little decision making afforded to children. First, we question the ethics of passively engaging children in the fundraising relationship. Second, we question the role of fundraising more broadly in helping to cultivate children's philanthropic citizenship, suggesting that current fundraising mechanisms in schools are counter-intuitive to fostering long-term philanthropic engagement. We argue that by critically engaging children in the process of giving, children develop a deeper understanding of the cause areas that matter to them, which cultivates a longer-term commitment to philanthropy. This is potentially a different goal than that of many organisations involving schools in fundraising, where the focus is on incentivising transactional fundraising efforts aiming to raise as much money as possible and thus raises particular ethical challenges which must be considered. In this paper we draw on previous research and established frameworks for understanding philanthropic behaviour to explore the ethical challenges of fundraising with children in schools and present a pathway towards a more child-led, children's rights approach to fundraising in primary schools.