Sunil Jagwani did his independent research with Dr. Michael Seeborg looking at Venture Capital in The United States.
ABSTRACT: Venture capital has proven to be of great importance in the formation and development of new products, companies and markets. Hitherto, very little research has been devoted to finding ways to encourage this relatively nascent industry. This paper provides a structural framework to understand the workings of the venture capital market. It looks at certain exogenous factors to determine their influence on the supply and demand of venture capital. Based on the findings, it makes suggestions to predict and boost venture capital activity using these factors.
Particular attention has been paid to the capital gains tax. Theoretically, the tax can affect both the entrepreneurs and venture capitalists. The paper develops an empirical model to estimate the differential in the disincentive resulting from capital gains taxation between these two groups.
Kristopher Kaneta did his honors research work with Dr. Carolyn Stumph on The Integration of Capital Markets: An Examination of Macroeconomic Shocks and Their Effects on National Stock Market Comovements.
ABSTRACT: Traditionally, international investors seek to determine whether international capital markets are integrated or segmented. That is, do similar assets yield similar risk-adjusted returns, or significantly different returns given certain informational and capital flow barriers? With this in mind, this research chooses to focus on the rapidly developing financial markets of Southeast Asia and determine the degree to which international stock market movements may be correlated with each other. Through panel data and OLS regression analysis, the research will show an increasing correlation between these capital markets over time, and the significant impact certain macroeconomic variables may have on capital markets. Included in the analysis are the effects of capital flow barriers, economic development, exchange rate regimes, and discount rate differentials.
Peter Karlis did his honors research work with Dr. Carolyn Stumph examining Informational Asymmetries and The Demand for IPOs: An Explanation of Underpricing.
ABSTRACT: There exist large informational asymmetries in the stock market, particularly in the primary market where initial public offerings are made. This paper examines the large initial gains observed in a previous study and explains them using game theory. The process of bringing an IPO to the market involves the issuing firm, the investment bank and the investors. This paper will discuss the strategic relationships that exist between these entities and why each either accepts a smaller gain or demands a risk premium based on the level of uncertainty they face. Accompanying the economic theories discussing these relationships are case studies displaying examples of underpricing in the process of bringing an initial public offering to the market.
Elizabeth Kowalski did her honors research work with Dr. Ilaria Ossella-Durbal examining the Determinants of Economic Growth in East Asia.
ABSTRACT: Economic growth in East Asia over the past 20 years has reached unparalleled rates. Many countries and numerous economists have unsuccessfully tried to determine what factors contributed to this growth in an attempt to mimic it in other developing countries. On one hand, theory suggests that private markets along with increased human capital and physical capital can account for most of the growth in East Asia. However, others argue that government intervention and distortion are the driving force for growth. Somewhere in the middle lies the market friendly theory which suggests that government policy has been structured in the best way to encourage such goals as privatization and strong labor markets. Using OLS regression analysis and panel data, this paper will look at the effects of outward orientation, government intervention and macroeconomic stability on economic growth in East Asia. By examining only a few key variables, we can determine which ones have the greatest impact on growth. It is anticipated that a combination of many factors and a view most closely related to the market friendly theory has led to the economic success in East Asia.
Jason Lewis did his honors research with Dr. Michael Seeborg, analyzing the Factors that Determine Foreign Direct Investment in Lesser Developed Countries.
ABSTRACT: Net private capital flows to developing countries have dramatically increased in the past 15 years with much of the investment coming in the form of long-term, foreign direct investment. Because of the unique characteristics of this type of growth-enhanced investment, developing countries desire to attract and retain foreign direct investment (FDI). As a result, the lesser-developed country (LDC) has an incentive to strengthen areas and aspects of the economy or government that are heavily scrutinized by the firm when considering a possible long-term investment.
This study intends to measure the magnitude and the direction of suspected determinants that heavily influence a firm's decision to invest in FDI in a LDC. By utilizing the World Bank's World Development Data from 1997 in an OLS regression model, this study demonstrates the nature of key determinants of FDI, thus providing LDCs with the necessary information to make policy changes in order to maximize FDI.
Esteban Lizano did his independent research with Dr. Margaret Chapman and Dr. Carolyn Stumph analyzing the case of Microsoft Versus Netscape: A Case Study of Games Businesses Play.
ABSTRACT: Game theory is a formalized way of analyzing interactions between rational players in hopes of "solving" the game, or finding a solution that optimizes outcomes for both players given each others strategies. This framework is used to analyze the interactions and strategies of the two main providers of Internet browsing software, i.e. Microsoft (Internet Explorer) and Netscape (Netscape Navigator). Since both of these firms price their products close to zero, and given that marginal costs approach zero, they are using competitive short run pricing. Focusing on pricing to study strategic behavior ignores that both firms must price to cover sunk cost over the long run and that revenue proceeding from sale of the product is not the essential element in the players' strategies. This game will therefore be constructed and solved as a dynamic repeated game, using market share and research and development expenditure as the principal strategic variables to study the behavior of both firms from 1993 to the present.
Robin Meers did her honors research work with Dr. Robert Leekley on A Test of The Environmental Kuznets Curve for Local and Global Pollutants.
ABSTRACT: It is suggested that there is an inverted-U relationship between the level of pollution and the income of a country. That is, as the income of a country increases, there is first an initial increase in pollution and then a decrease as the desired level of environmental quality increases. This is known as the Environmental Kuznets Curve and its validity is debated among environmental economists.
The purpose of this paper is to test the hypothesis of the Environmental Kuznets Curve using OLS regression analysis. It examines the local pollutants particulate matter and sulfur dioxide and the global pollutant carbon dioxide. It is anticipated that the local pollutants follow the theoretically predicted U more closely than the global pollutants.
David Rasho did his independent research with Dr. Margaret Chapman on the Austrian Economic Theory of Inflation and The Business Cycle.
ABSTRACT: This paper intends to show that the extension of bank credit, while promoting economic growth in the short run, will eventually cause a recession or depression. Theories on inflation and business cycles proposed by Austrian economists, as well as an original extension of this theory, provide the foundation for this argument. Austrian economists maintain that bank credit holds the interest rate below its natural level, sending distorted market signals to entrepreneurs. Acting on these signals, businesses increase production and investment because more projects are now profitable. But because existing factors of production have not expanded, the economy cannot support this growth. Competition for scarce labor and capital will tighten these markets and cause their prices to rise. This unforeseen expense will force many projects to fail and an economic decline ensues as bankruptcies and abandonment wipe away these malinvesments. To end the business cycle and make possible continued growth, the extension of bank credit must be eliminated. Only the accumulation of capital, caused by undistorted market signals, can lead to lower interest rates and sustainable economic growth.
Nathan Taulbee did his honors research work with Dr. Carolyn Stumph on the Economic Influences on the Stock Market.
ABSTRACT: This paper examines the relationship between a number of economic factors and the stock market. Using financial and economic theory, this paper assesses how some economic factors impact the S&P 500 as well as the stock prices of various industries. Specifically, how do unemployment rates, real GDP, and the Fisher effect (the one-for-one relation between nominal interest rates and expected inflation) impact the overall market as well as cyclical, defensive, interest-sensitive, and growth stocks? Generalized difference regressions will serve as the methodology to assess these relationships. Conclusions from this study will assist investors in their portfolio decision-making.