The effect of ownership concentration on management behavior in Belgian banks: A case study

Double Degree. A Work Project, presented as part of the requirements for the Award of a Master’s Degree in Finance from NOVA – School of Business and Economics and a Masters Degree in Management from Louvain School of Management

Mota-Engil new prospects of growth: Overcoming the financial crisis

The 2008 global financial crisis caused the collapse of business key sectors, declines in consumer wealth and a fall in economic activity resulting in a global recession. In some European countries, the 2008 crisis contributed to a sovereign-debt crisis which had a strong impact in Southern European countries. The construction sector was particularly affected, with budget cuts disturbing public investment and no financing available for private constructors. This report intends to explain how Mota-Engil, faced this situation of low growth, and which strategies were adopted by the management to overcome the difficult economic conjecture, mainly in its domestic market: Portugal. The report is organized as a case-study. The first part, the case narrative, is subdivided into 6 parts, and the second part is the teaching note. The teaching note is constituted by the four questions and their respective responses.

Do the psychological impacts of war cause poverty?: Evidence from Mozambique

This paper evaluates the extent to which war-related psychological distress causes poverty. The endogeneous nature of mental distress is addressed by using exposure to the civil war in Mozambique as an instrument. It is found that exposure to war has a significant and positive long-lasting impact on mental distress. Furthermore, the causal impact of war-related psychological distress on income and wealth is shown to be significant, negative, and nonnegligible. One standard deviation increase in mental distress decreases income by half a standard deviation. These findings are robust to alternative specifications, including the use of an alternative database on the incidence of PTSD in Mozambique.

Brazilian equity risk premium analysis: A macroeconomic approach

Double Degree Masters in Economics Program from Insper and NOVA School of Business and Economics

Zon-Optimus merger: Case study

The present Work Project was performed as a Case Study, analysing the merger between Zon, a leading Portuguese Pay TV operator and Optimus, the third largest mobile company in Portugal. The Case Study was developed with the purpose of understanding the value creation of the Zon-Optimus merger, being analysed the: (i) industry trends, (ii) parties’ contribution, (iii) pre-merger events, (iv) merger rationale, (v) deal structure and valuation, (vi) competition authority decision and (vii) competitive advantages and future strategy. Was also attached a Teaching Note where synergies, implied valuations, exchange ratios, shareholder agreements, swot analysis, among others, were duly analysed.

Cabelte restructuring by OxyCapital

This case study describes OxyCapital’s intervention in Cabelte’s operational and financial restructuring. Despite Cabelte’s strong debt burden, OxyCapital believed that the Group’s financial difficulties were temporary and that it had growth potential if the said restructuring would be implemented. Hence, while striving for an operational turnaround, OxyCapital managed to reach an agreement among not only the several banks but also the Group’s shareholder for the financial restructuring. The transaction included the acquisition of a majority stake on the Group’s share capital and of a significant part of Cabelte’s bank debt by OxyCapital’s Corporate Restructuring Fund.

O sigilo bancário e a fraude fiscal

Tax evasion and fraud threaten the economic and social objectives of modern tax systems, precluding the state funding for the satisfaction of collective needs and the fair distribution of wealth, being a violation of basic principles and values of our society. In tax law, to give tax administration the necessary powers to supervise and control the information provided by taxpayers and combat tax evasion and fraud, over the last years the grounds for a derogation of bank secrecy without judicial authorization have been extended, which raises some constitutional compatibility issues. Similarly, this tendency of making this legal regime more flexible and increasing automatic exchange of information has been followed by the European Union and the international community. Banking secrecy, as a professional secrecy, is an instrument to protect the right to privacy but also appears as an anti-abuse and repressive mechanism of evasive and fraudulent behaviors. Because of the conflict of interests will always be necessary to make a practical agreement between them, ensuring the legality and the due guarantees of the taxpayers but also an effective way to combat tax evasion and fraud. Bank secrecy cannot be one method to, behind the right to privacy, taxpayers practice illegal activities. But the practice of these irregular conducts also does not justify a total annihilation of the right to banking secrecy, uncovering all documents and bank information’s. Although considering the legislative changes, the administrative derogation of bank secrecy will always be what the tax administration does of it.

Drilling deeper: Understanding trade in Angola

The present study analyzes Angola’s trading partners from 2005 to 2015 in order to understand the main drivers of Exports and Imports growth. Departing from a gravity model, foreign GDP growth and real exchange rate fluctuations were interpreted as demand and supply disturbances on Exports. While nominal and real exports both increase with demand expansions, they react differently to supply shocks. Imports are growing at the same rate as Angola’s economy while exchange rate fluctuations capture the wealth effect of Oil price in the economy.

Carl Icahn pushes ebay to spin-off paypal

The following case-study describes the situation involving eBay, PayPal and Carl Icahn as of February 2014. Its structure is divided between the narrative and a teaching note. The case narrative describes all the events between the three parties until the 24th of February 2014, when the activist investor Carl Icahn sends a public shareholder letter strongly criticizing eBay’s board and corporate governance practices while proposing at the same time the spin-off of PayPal from eBay. The teaching note intends to analyse the possibility of spinning-off PayPal, while at the same time analysing the Corporate Governance issues in eBay’s board. The final conclusion in the teaching note is favourable towards the spin-off of PayPal.

Three essays on the psychology of investment and financial markets

Préface My thesis consists of three essays where I consider equilibrium asset prices and investment strategies when the market is likely to experience crashes and possibly sharp windfalls. Although each part is written as an independent and self contained article, the papers share a common behavioral approach in representing investors preferences regarding to extremal returns. Investors utility is defined over their relative performance rather than over their final wealth position, a method first proposed by Markowitz (1952b) and by Kahneman and Tversky (1979), that I extend to incorporate preferences over extremal outcomes. With the failure of the traditional expected utility models in reproducing the observed stylized features of financial markets, the Prospect theory of Kahneman and Tversky (1979) offered the first significant alternative to the expected utility paradigm by considering that people focus on gains and losses rather than on final positions. Under this setting, Barberis, Huang, and Santos (2000) and McQueen and Vorkink (2004) were able to build a representative agent optimization model which solution reproduced some of the observed risk premium and excess volatility. The research in behavioral finance is relatively new and its potential still to explore. The three essays composing my thesis propose to use and extend this setting to study investors behavior and investment strategies in a market where crashes and sharp windfalls are likely to occur. In the first paper, the preferences of a representative agent, relative to time varying positive and negative extremal thresholds are modelled and estimated. A new utility function that conciliates between expected utility maximization and tail-related performance measures is proposed. The model estimation shows that the representative agent preferences reveals a significant level of crash aversion and lottery-pursuit. Assuming a single risky asset economy the proposed specification is able to reproduce some of the distributional features exhibited by financial return series. The second part proposes and illustrates a preference-based asset allocation model taking into account investors crash aversion. Using the skewed t distribution, optimal allocations are characterized as a resulting tradeoff between the distribution four moments. The specification highlights the preference for odd moments and the aversion for even moments. Qualitatively, optimal portfolios are analyzed in terms of firm characteristics and in a setting that reflects real-time asset allocation, a systematic over-performance is obtained compared to the aggregate stock market. Finally, in my third article, dynamic option-based investment strategies are derived and illustrated for investors presenting downside loss aversion. The problem is solved in closed form when the stock market exhibits stochastic volatility and jumps. The specification of downside loss averse utility functions allows corresponding terminal wealth profiles to be expressed as options on the stochastic discount factor contingent on the loss aversion level. Therefore dynamic strategies reduce to the replicating portfolio using exchange traded and well selected options, and the risky stock.

Cardiovascular response to beta-adrenergic blockade or activation in 23 inbred mouse strains.

We report the characterisation of 27 cardiovascular-related traits in 23 inbred mouse strains. Mice were phenotyped either in response to chronic administration of a single dose of the beta-adrenergic receptor blocker atenolol or under a low and a high dose of the beta-agonist isoproterenol and compared to baseline condition. The robustness of our data is supported by high trait heritabilities (typically H(2)>0.7) and significant correlations of trait values measured in baseline condition with independent multistrain datasets of the Mouse Phenome Database. We then focused on the drug-, dose-, and strain-specific responses to beta-stimulation and beta-blockade of a selection of traits including heart rate, systolic blood pressure, cardiac weight indices, ECG parameters and body weight. Because of the wealth of data accumulated, we applied integrative analyses such as comprehensive bi-clustering to investigate the structure of the response across the different phenotypes, strains and experimental conditions. Information extracted from these analyses is discussed in terms of novelty and biological implications. For example, we observe that traits related to ventricular weight in most strains respond only to the high dose of isoproterenol, while heart rate and atrial weight are already affected by the low dose. Finally, we observe little concordance between strain similarity based on the phenotypes and genotypic relatedness computed from genomic SNP profiles. This indicates that cardiovascular phenotypes are unlikely to segregate according to global phylogeny, but rather be governed by smaller, local differences in the genetic architecture of the various strains.

Ownership Effects on Unrelated Diversification: An Institutions' Perspective

Purpose To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure. Methodology/approach We draw on longitudinal data and use a panel analysis specification to test our hypotheses. Findings We find that unrelated diversification destroys value; pressure-sensitive Anglo-American owners in a firm’s equity reduce unrelated diversification, whereas pressure-resistant domestic owners increase unrelated diversification; the greater the firm’s free cash flow, the greater the negative effect of pressure-sensitive Anglo-American owners on unrelated diversification. Research limitations/implications We contribute to corporate governance and strategy research by bringing in owners’ institutional origin as a shaper of owner preferences in particular with regards to unrelated diversification. Future research may expand our investigation to more than one home institutional context, and theorize on institutional origin effects beyond the dichotomy between Anglo-American and non-Anglo-American (not oriented toward shareholder value maximization) owners. Practical implications Policy makers, financial analysts, owners, and managers may want to reflect about the implications of ownership structure, as well as promoting or joining corporations with particular ownership configurations. Social implications A shareholder value-destroying strategy, such as unrelated diversification has adverse consequences for society at large, in terms of opportunity costs, that is, resources could be allocated to value-creating activities instead. Promoting an ownership configuration that creates value should contribute to social welfare. Originality/value Owners may not be exclusively driven by shareholder value maximization, but can be influenced by normative beliefs (biases) stemming from the institutional context they originate from.

Pricing of Liquidity Risks in London Stock Exchange

This thesis aims to investigate pricing of liquidity risks in London Stock Exchange. Liquidity Adjusted Capital Asset Pricing Model i.e. LCAPM developed by Acharya and Pedersen (2005) is being applied to test the influence of various liquidity risks on stock returns in London Stock Exchange. The Liquidity Adjusted Capital Asset Pricing model provides a unified framework for the testing of liquidity risks. All the common stocks listed and delisted for the period of 2000 to 2014 are included in the data sample. The study has incorporated three different measures of liquidity – Percent Quoted Spread, Amihud (2002) and Turnover. The reason behind the application of three different liquidity measures is the multi-dimensional nature of liquidity. Firm fixed effects panel regression is applied for the estimation of LCAPM. However, the results are robust according to Fama-Macbeth regressions. The results of the study indicates that liquidity risks in the form of (i) level of liquidity, (ii) commonality in liquidity (iii) flight to liquidity, (iv) depressed wealth effect and market return as well as aggregate liquidity risk are priced at London Stock Exchange. However, the results are sensitive to the choice of liquidity measures.

Cloning of actin genes from a genomic library of the newt, Notophthalmus viridescens

The regenerating urodele limb is a useful model system in which to study, in vivo, the controls of cell proliferation and differentiation. Techniques are available which enable one to experimentally manipulate mitogenic influences upon the blastema, as well the morphogenesis of the regenerating 11mb. Although classical regeneration studies have generated a wealth of knowledge concerning tissue interactions, little 1s known about the process at the level of gene expression. The aim of this project was to clone potentially developmentally regulated genes from a newt genomic library for use in future studies of gene expression during limb regeneration. We decided to clone the cytoskeletal actin gene for the following reasons: 1. its expression reflects the proliferative and differentiatlve states of cells in other systems 2. the high copy number of cytoplasmic actin pseudogenes in other vertebrates and the high degree of evolutionary sequence conservation among actin genes increased the chance of cloning one of the newt cytoplasmic actin genes. 3. Preliminary experiments indicated that a newt actin could probably be identified using an available chick ~-actln gene for a molecular probe. Two independent recombinant phage clones, containing actin homologous inserts, were isolated from a newt genomic library by hybridization with the chick actin probe. Restriction mapping identified actin homologous sequences within the newt DNA inserts which were subcloned into the plasmid pTZ19R. The recombinant plasmids were transformed into the Escherichia coli strain, DHsa. Detailed restriction maps were produced of the 5.7Kb and 3.1Kb newt DNA inserts in the plasmids, designated pTNAl and pTNA2. The short «1.3 Kb) length of the actin homologous sequence in pTNA2 indicated that it was possibly a reverse transcript pseudogene. Problems associated with molecular cloning of DNA sequences from N. viridescens are discussed with respect to the large genome size and abundant highly repetitive DNA sequences.

Manpower development and nation-building : Singapore's experience

Manpower is a basic resource. It is the indispensable means of converting other resources to mankind '.s use and benefit. As a process· of increasing the knowledge, skills, and dexterity of the people of a society, manpower development is the most fundamental means of enabling a nation to acquire the capacities to bring about its desired future state of affairs -- a more mighty and wealthier nation. Singapore's brief nation-building history justifies the emphasis accorded to the importance of good quality human resources and manpower development in economic and socio-political developments. As a tiny island-state with a poor natural resource base, Singapore's long-term survival and development depend ultimately upon the quality and the creative energy of her people. In line with the nation-building goals and strategies of the Republic, as conditioned by her objective setting, Singapore's basic manpower development premise has been one of "quality and not quantity". While implementing the "stop-at-two" family planning and population control programs and the relevant immigration measures to guard against the prospect of a "population explosion", the Government has energetically fostered various educational programs, including vocational training schemes, adult education programs, the youth movement, and the national service scheme to improve the quality of Singaporeans. There is no denying that some of the manpower development measures taken by the Government have imposed sacrifice and hardship on the Singapore citizens. Nevertheless, they are the basic conditions for the island-Republic's long-term survival and development. It is essential iii to note that Singapore's continuing existence and phenomenal-success are largely attributable to the will, capacities and efforts of her leaders and people. In the final analysis, the wealth and the strength of a nation are based upon its ability to conserve, develop and utilize effectively the innate capacities of its people. This is true not only of Singapore but necessarily of other developing nations. It can be safely presumed that since most developing states' concerns about the quality of their human resources and the progress of their nation-building work are inextricably bound to those about the quantity of their population, the "quality and not quantity" motto of Singapore's manpower development programs can also be their guiding principle.