The wealth effects of commercial bank securities issuances announcement

Banks are often excluded in corporate finance research mainly because of the regulatory concerns. Compares to non-bank firms, banks are heavily regulated due to its special economic role of money and the uncertainty. Heavy regulation on banks could reduce the information asymmetry between the managers and investor by limiting the behaviour of banks at the time of the Seasoned Equity Offering (SEO), and by increasing the incentive for banks to avoid excessive risk-taking. Therefore, the market may be less likely to assume that bank issued securities signal information that the bank is overvalued compared to their non-bank counterparts. The objective of this thesis is therefore to examine commercial banks issued securities announcement effect. Three interrelated research questions are addressed in this thesis: 1) What is the difference in convertible bond announcement effect between banks and non-banks firm? 2) What is the difference in SEO announcement effect between banks and non-banks? 3) How do the stringency levels of bank regulation impact on the announcement effects of bank issued SEO? By using the U.S. convertible bond and SEO data from 1982 to 2012, I find that the bank issued a convertible bond and SEO announcement experience higher cumulative abnormal return than non-bank. This is consistent with the view that bank regulation reveals positive information about banks. Since banks are heavily regulated, the market is less likely to assume that the issuance of the convertible bond and SEO by banks signals information that is overvalued. These results are robust after controlling for a number of firm-, issue-, and market-specific characteristics. These results are robust by considering the different categories of non-bank industries by undertaking tests in relation to the differences in the CARS upon convertible bond/ SEO across industries, as well as the unbalanced sample between banks and non-banks by using the matched sample analysis. However, the relation between the stringency level of bank regulation and bank issued securities announcement effect may be nonlinear. As hypothesised, I find that bank regulation has an inverted U-shaped relation with the announcement effect of bank SEO by using the SEO data across 21 countries from 2001 to 2012. Under a less bank regulation environment, the market reacts more positively to the bank SEO announcement for an increase in the level of bank regulation. However, the bank SEO announcement effects become more negative if the bank regulation becomes too stringent. This inverted U-shaped relationship is robust after I use the exogenous cross-country, cross-year variation in the timing of the Basel II adoption as the instrument to assess the causal impact of bank regulation on SEO announcement effects. However, the stringency of regulation does not have a significant impact on the announcement effects of involuntary bank equity issuance.

A national coastal erosion risk assessment for Scotland

The geography of Scotland, with a highly undulating hinterland, long and indented coastline, together with a large number of islands, means that much social and economic activity is largely located at the coast. The importance of the coast is further highlighted by the large number of ecosystem services derived from the coast. The threat posed by climate change, particularly current and future sea level rise, is of considerable concern and the associated coastal erosion and coastal flooding has the potential to have a substantial effect on the socioeconomic activity of the whole country. Currently, the knowledge base of coastal erosion is poor, which serves to hinder the current and future management of the coast. This research reported here aimed to establish four key aspects of coastal erosion within Scotland: the physical susceptibility of the coast to erosion; the assets exposed to coastal erosion; the vulnerability of communities to coastal erosion; and the coastal erosion risk to those communities. Coastal erosion susceptibility was modelled here within a GIS, using data for ground elevation, rockhead elevation, wave exposure and proximity to the open coast. Combining these data produced the Underlying Physical Susceptibility Model (UPSM), in the form of a 50 m2 raster of national coverage. The Coastal Erosion Susceptibility Model (CESM) was produced with the addition of sediment supply and coastal defence data, which then moderates the outputs of the UPSM. Asset data for dwellings, key assets, transport infrastructure, historic assets, and natural assets were used along with the UPSM and CESM to assess their degree of exposure to coastal erosion. A Coastal Erosion Vulnerability Model (CEVM) was produced using Experian Mosaic Scotland (a geodemographic classification which identifies 44 different social groups within Scotland) to classify populations based upon 11 vulnerability variables. Dwellings were assigned a CESM and CEVM score in order to establish their coastal erosion risk. This research demonstrated that the issue of coastal erosion will impact on a relatively low number of properties compared to those impacted by flooding (both coastal and fluvial) as many dwellings are already protected by coastal defences. There is therefore, a considerable future liability, and great pressure for coastal defences to be maintained and upgraded in their current form. The use of the CEVM is a novel inclusion within a coastal erosion assessment for Scotland. Use of the CEVM established that coastal erosion risk is not distributed equally amongst the Scottish coastal population and highlighted that risk can be reduced by either reducing exposure or reducing vulnerability. Thus far in Scotland, reducing exposure has been the primary management approach, which has a number of implications with regards social justice. This research identified the existing data gaps that should be addressed by future research in order to further improve coastal management in Scotland. Future research should focus on assessing historical coastal change rates on a national scale, improve modelling of national scale wave exposure, enhance the information held about current coastal defences and, determine the direct and indirect economic cost associated with the loss of different asset types. It is also necessary to clarify the social justice implications of using adaptation approaches to manage coastal erosion as well as establishing a method to communicate the susceptibility, exposure, vulnerability and risk aspects whilst minimising the potential negative impacts (e.g. property blight) of releasing such information.