Topics for Master Thesis

Research
Yulia Ilina
Asc. Prof.
Department of Finance and Accounting
Fields of Research
Corporate governance and corporate
finance
Financial markets and institutions
Corporate governance and corporate
finance
Corporate governance, financial
performance and companies disclosure
Board of directors and financial
performance
Companies organizational form
changes: impact of corporate
governance and financial performance
Corporate Governance
Corporate governance – economic,
legal and institutional framework in
which corporate control and cash flow
rights are distributed among
shareholders, managers, and other
stakeholders of the company
(for detailed discussion see
Eun C., Resnick B. International Financial
Management. McGraw Hill, 2007.
Chapter 4)
Corporate governance, financial performance and
companies disclosure (transparency)

Disclosure (transparency) – the

voluntary disclosure of information
about the company in exceed of what is
prescribed by the legislation
Corporate governance, financial performance and
companies disclosure (transparency)

Research ideas
 Exploring relationships between company’s
financial performance (and other corporate
determinants) and the level of corporate
disclosure (transparency).
 Identifying major determinants of the
corporate voluntary disclosure
Hypotheses:
1. The high level of disclosure (transparency
index) could positively affect the financial
performance.
2. The high level of corporate governance
mechanisms (high corporate governance
rating) could positively affect the level of
transparency of the company.
Corporate governance, financial
performance and disclosure
Existing research:
Parsa S., Chong G., and Isimoya E. 2007.
Disclosure of governance information by
small and medium-sized companies //
Corporate Governance 7 (5): 635-648.
(examines the extent of compliance with the
governance regulatory requirements by small
and medium-sized companies (SMEs) listed
on the alternative investment market (AIM)).
Corporate governance and disclosure:
existing research
Huafang X., Gianguo Y. 2007. Ownership structure, board
composition and corporate voluntary disclosure. Evidence from
listed companies in China. Managerial Auditing Journal 22 (6):
604-619
(the paper studies how corporate governance factors impact the
voluntary disclosure of Chinese companies)
Liu J., Eddie I. 2007. Determinants of disclosure of A-, B- and H-
share companies. Asian Review of Accounting 15 (1): 72-92
(examines the issues relating to corporate financial reporting of
Chinese listed companies under specified institutional settings,
associations are hypothesized and tested between the level of
corporate disclosure and the following corporate determinants:
company size, profitability, auditor, leverage, industry and
ownership structure).
Corporate governance and disclosure:
existing research
Бухвалов А.В., Ильина Ю.Б.,
Бандалюк О.В. Электронное
корпоративное управление: учет
интересов стей кхолдеров // Вестник
СПбГУ. Серия Менеджмент. Вып.1.
2007
(examines the specifics of companies
transparency in different national
models of corporate governance)
Corporate governance and board of
directors performance
Research idea:
The impact of board composition, board
structure, board performance on
company’s financial performance
Corporate governance and board of
directors performance: existing research
Dulewicz V., Herbert P. 2004. Does the Composition
and Practice of Boards of Directors Bear Any
Relationship to the Performance of Their Companies?
Corporate Governance: International Review 12 (3):
263-280.
Examples of hypotheses tested:
H1. Where the roles of Chairman and CEO are
separated (combined), company performance will be
higher.
H2. A higher proportion of outside directors (executive
directors) on the board leads to higher company
performance.
H3. Larger (smaller) boards companies will have
higher company performance.
Corporate governance and board of
directors performance: existing research
Weir C., Laing D. 2003. Ownership structure, board
composition and the market for corporate control in
the UK: an empirical analysis / Applied Economics
(35): 1747–1759
(analyses the board composition and ownership
structures of a sample of companies that have been
acquired and those of a matching control sample that
have not. There is significant governance differences
between acquired firms and the control sample.
Firms with the following characteristics were more
likely to be acquired: they had the same person
acting as CEO and Chair, a higher proportion of non-
executive directors, larger institutional
shareholdings and higher director shareholdings).
Corporate governance and board of
directors performance: existing research
Bǿren Ǿ., Strǿm R. 2006. Aligned,
informed, and decisive: characteristics of
value-creating boards/ Working Paper. BI
Norwegian School of Management.
(examines the relationship between the
board composition and companies
performance in Norway. Find that
performance improves when directors
own equity in the firm, have wide
information networks to other firms, and
when the board has low gender diversity,
no employee directors, and small size)
Companies organizational form changes: impact of
corporate governance and financial performance
 Research idea: to study the relationship between the
change of organizational form of business and
corporate governance and financial performance
factors
 Hypotheses:
 Hypothesis 1. Most Russian open and closed JSCs are
homogeneous regarding the issue of changing
organizational form of business.
 Hypothesis 2. Corporate governance and control
factors could affect the possibility of organizational
form change.
 Hypothesis 3. Company financial performance may
affect the decision on changing the organizational
form of business.
Companies organizational form changes: impact
of corporate governance and financial
performance
Березинец И.В., Ильина Ю.Б. 2008. Изменение
организационно-правовой формы россий ских
компаний : взаимосвязь с финансовыми
результатами деятельности. Вестник С.-
Петербургского университета. Сер.
Менеджмент (1): 31-52.
Companies organizational form changes: impact of
corporate governance and financial performance
Existing research
Damodaran A., John K., Liu C. 1997.
The Determinants of Organizational
Form Changes: Evidence and
Implications from Real Estate. Journal
of Financial Economics (45): 169−192.
Damodaran A., John K., Liu C. 2005.
What Motivates Managers? Evidence
from Organizational Form Changes.
Journal of Corporate Finance (12): 1−26.
Financial markets and institutions

American Depository Receipts (ADRs)

Initial Public Offerings (IPO)
Mutual funds performance
American Depositary Receipts
ADR — negotiable instrument, issued
by US depositary bank, representing
shares of non-US company.
Issued to allow foreign company to list
its shares at the US stock market
American Depositary Receipts
Research ideas:
The impact of ADR’s issue (cross-
listing) on the company’s position at the
national stock market
American Depositary Receipts:
existing research
Benninga S., Helmantel, M,. and S. Oded. 2005.
The timing of initial public offerings. Journal
of Financial Economics 75:115-132.
Doidge, C., Karolyi, A., and R. Stulz. 2004. Why
are foreign firms listed in U.S. worth more?
Journal of Financial Economics 71:205-238.
Karolyi, A. 2004. The role of American
depository receipts in the development of
emerging equity markets. The Review of
Economics and Statistics 86(3): 670-690.
Initial Public Offering (IPO)
 Initial Public Offering – first-time
offering of shares by a specific firm to
the public.
Key success factor for an IPO - correctly
pricing the offering
 What’s going on with shares at the first
trading day after the IPO?
Increase in price

What does it mean for the company doing

IPO?

Looses money
“Money left on the table”
Number of shares issued times the change from the
offer price to the first day closing price
 IPO pricing and aftermarket
The initial return

Initial (first-day) return:

Was especially high for Internet firms during 1996-1999
(84% on average in 1998)
Example. On January 15, 1999, an IPO by an Internet stock called
Market Watch.com jumped from the initial offer price of $17 per share to
$130 per share within the first two hours of trading (665% return) and
then declined to $97.50 per share by the end of the day (declined to less
than $3 within a few years).
Russian companies IPOs

Stock Company First day return Year

exchange
NYSE Vimpelcom +41,4% 1996
MobileTeleSystems +4% 2000
Wimm Bill Dann +15,8% 2002
Mechel Steel -2% 2004
NASDAQ Golden Telecom -11,5% 1999
LSE AFK Systema +5,5% 2005
Evraz Holding -3,4% 2005
Novatek +13% 2005
Amtel-Fredershtein -1,3% 2005
AIM Highland Gold Mining +5% 2002
Peter Hambro Mining +6% 2002
Urals Energy +4,2% 2005
Rambler Media +12,9 2005
International Marketing & Sales +0,8% 2005
Group
Initial Public Offering (IPO)
Research ideas:
Factors affecting the IPO decision –
corporate governance, financial
performance
Factors affecting underpricing (first
day initial return)
Entrepreneurial IPOs
Initial Public Offering (IPO): existing
research
Filatotchev I. 2006. The effects of
executive characteristics and venture
capital involvement on board
composition and share ownership in
IPO firms. British Journal of
Management (17): 75-92.
(paper examines factors affecting board
selection and share ownership in initial
public offerings (IPOs).
Initial Public Offering (IPO): existing
research
Chanine S., Filatotchev I., Wright M. 2007.
Venture capitalists, business angels, and
performance of entrepreneurial IPOs in the
UK and France. Journal of Business, Finance
and Accounting 34 (3-4): 505-528.
(this paper analyses factors determining the
underpricing of entrepreneurial IPOs –
corporate governance and financial
performance)
Initial Public Offering (IPO): existing
research
Derrien F. 2005. IPO pricing in “hot”
market conditions: who leaves money
on the table? Journal of Finance. 60:487-
521
(the paper explores the impact of
investor sentiment, individual investors
and institutional investors demand for
IPO shares, affecting IPO pricing, initial
returns, long-run performance).
Mutual funds performance
Mutual fund – financial institution, that
issues shares and invests the proceeds in
assets portfolio.
Mutual funds: research ideas
Research ideas:
•Factors affecting the demand for investments in
mutual funds (return on investments, fund’s rating,
size etc.)
•Measuring fund’s performance - comparative
analysis for different countries
Mutual funds: existing research
Kothari S.P., Warner J.B. 2001. Evaluating mutual
fund performance. The Journal of Finance. 56 (5):
1985-2010.
(examine different performance measures)

Pollett J., Wilson M. 2008. How does size affect

mutual fund behavior? Journal of Finance. Vol.
63. Issue 6: 2941-2969.

(Authors found that although asset growth has

little effect on the behavior of the typical fund,
large funds and small-cap funds diversify their
portfolios in response to growth. Greater
diversification, especially for small-cap funds, is
associated with better performance).