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Finance Seminars

The Discipline of Finance seminar organiser is Elvis Jarnecic.

Seminars will typically be held 11:30am - 12:30pm on Fridays in Room 214/215 of the Economics and Business Building.

Upcoming Seminars

5th Jun 2015 - 11:30 am

Venue: Rm 214/215 Economics & Business Bldg H69

Speaker: A/Prof Sandy Klasa, Department of Finance, University of Arizona

Title: Protection of Trade Secrets and Capital Structure decisions

Abstract: We investigate whether a firm’s capital structure decisions are affected by the risk that its product market rivals could gain access to its "trade secrets." Our tests exploit the staggered recognition of the Inevitable Disclosure Doctrine (IDD) by U.S. state courts as an exogenous event that increases the protection of a firm’s trade secrets by preventing the firm’s workers who have knowledge of its trade secrets from working for a rival firm. We find that firms rebalance their capital structures and increase financial leverage after courts in their state of location recognize the IDD, especially firms in more competitive industries, with more workers who know trade secrets, or that face a greater ex-ante risk of losing key employees to rivals. Also, firms’ borrowing costs decrease after the recognition of the IDD, implying that credit markets price the risk that a firm’s rivals could obtain its trade secrets. Finally, firms experience gains in market share and in their value following the recognition of the IDD in their state. Overall, our results imply that the risk of losing intellectual property to rivals is an important competitive threat that leads firms to choose more conservative capital structures.

*joint work with Hernan Ortiz-Molina, Matthew Serfling and Shweta Srinivasan</

12th Jun 2015 - 11:30 am

Venue: Rm 214/215 Economics & Business Bldg H69

Speaker: A/Prof Andra Ghent, Department of Finance Arizona State University

Title: Competition and Credit Ratings after the fall

Abstract: We analyze the entry of new credit rating agencies into structured finance products and its effects on rating levels. Our setting is unique as we study a period in which the incumbents' reputation was extremely poor and the benefit of more fee income from inflating ratings was low. We find entrants cater to issuers by issuing higher ratings than incumbents. The entrant ratings are much higher in interest-only (IO) tranches. Ratings by incumbents become more generous as the entrants increase their market share in a product type. We also exploit a feature of structured finance that identifies undisclosed rating shopping.

*joint work with Sean Flynn (Arizona State Unviersity).