The future of fintech

This article describes the growing field of financial technology (fintech) and the different financial paradigms and technologies that support it. Fintech is primarily a disintermediation force where disruptive technologies are the drivers. This framework discusses 10 primary areas in fintech comprising a taxonomy, which categorizes research in the field and also proposes a pedagogical structure. Pitfalls of fintech are also analyzed. Overall, the great strides made in computing technology, mathematics, statistics, psychology, econometrics, linguistics, cryptography, big data, and computer interfaces have combined to create an explosion of fintechs.     

The U.S. Share of Trading Volume in Cross‐Listings: Evidence from Canadian Stocks

I analyze the firm‐specific determinants of the U.S. share of trading volume for 126 U.S.‐listed Canadian firms. I find that the U.S. share of volume is directly related to the mass of informed and liquidity traders in the United States relative to Canada, as proxied by relative analyst following, relative duration of listing, and the U.S. share of sales. Evidence also supports the market liquidity argument that the market with lower spreads and greater depths has greater volume. Finally, the U.S. share is directly related to the relative sensitivity of the stock's value to information in the United States.     

Options on portfolios with higher-order moments

We develop a simple calibration approach to generate return distributions for multivariate asset distributions and use this technique to price options on portfolios given the first four co-moments of the joint distribution of returns. The technique is fast and captures the impact of covariance, and the co-skewness and co-kurtosis tensors on the value of these options. Given the technique works for a portfolio, the same is also applicable to options on individual securities as a special simpler case.     

Do Country Specific Bankruptcy Codes Determine Long‐term Financial Performance? The Case of Metallgesellschaft AG and Columbia Gas System

In this paper, we examine the impact of financial distress, the bankruptcy code, and related procedures on the long-term performance of two companies engaged in similar businesses across two countries. Both the companies were driven into bankruptcy as a result of unanticipated changes in energy prices. Though the resolution of bankruptcy of the US firm took a longer time, the post-reorganization performance of the firm has been excellent. In contrast, the post-reorganization performance of the German firm, which emerged out of bankruptcy in 2 weeks, has been poor. These results are consistent with the view that one of the important determinants of post-bankruptcy performance of a firm is more likely to be the underlying economic fundamentals rather than the country specific bankruptcy code through which the firm reorganizes.     

Cross-Border Listings and Price Discovery: Evidence from U.S.-Listed Canadian Stocks

We examine the contribution of cross-listings to price discovery for a sample of Canadian stocks listed on both the Toronto Stock Exchange (TSE) and a U.S. exchange. We find that prices on the TSE and U.S. exchange are cointegrated and mutually adjusting. The U.S. share of price discovery ranges from 0.2 percent to 98.2 percent, with an average of 38.1 percent. The U.S. share is directly related to the U.S. share of trading and to the ratio of proportions of informative trades on the U.S. exchange and the TSE, and inversely related to the ratio of bid-ask spreads.     

The design of coordination and control mechanisms for managing joint venture–parent relationships

Joint ventures (JVs), defined as independent organizations formed by the pooling of resources and sharing of equity by two or more firms, are being formed at an increasingly rapid pace. While much empirical research has examined the conditions which favor the formation of JVs, less attention has been paid to the equally important issues of control and implementation which are the focus of interest in this study. We identify two factors which are expected to influence the design of control mechanisms, i.e., (1) the strategic interdependence between the JV and each parent and (2) the environmental uncertainty faced by the JV. Our empirical examination confirms the importance of the degree of strategic interdependence and the moderating role of environmental uncertainty in explaining the design of control mechanisms. © 1998 John Wiley & Sons, Ltd.