Economics

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http://hdl.handle.net/10066/327

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Browsing Economics by Author "Arredondo-Chavez, Alberto"

Now showing 1 - 8 of 8
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    An Analysis of Business Combinations within the Automobile Manufacturing Industry: The Effects of Mergers, Acquisitions, and Alliances on Firm Performance and Value
    (2023) Smith, Ashton G.; Arredondo-Chavez, Alberto
    This paper analyzes business combinations among automobile manufacturers from 1979 to the present, a subset of the automotive industry that provides consumers with personal transportation. It is designed to assess the effects of mergers, acquisitions, and alliances (termed “events”) between and among automobile manufacturers on company performance and value. To do so, this paper will calculate the effect of these events on (i) the affected companies’ performance, as measured by earnings before interest, taxes, depreciation, and amortization (“EBITDA”), and (ii) the value of the affected companies’ publicly-issued stock outstanding held by the general public (the “public float”). Because events typically cause changes in the number of employees who work for the affected companies, the analysis also considers the effect on performance per worker by dividing company EBITDA by the number of employees. Similarly, events typically cause changes in the public float, so measuring the effect on company value also needs to account for this change. Understanding the relationship between events and company performance and events and company value will help determine whether business combinations in the automobile industry have been effective or ineffective, both in aggregate and concerning a particular company’s merger, acquisition, or alliance. The results of this analysis show a strong statistically significant negative effect of business combinations on valuations for automobile manufacturers. However, the results of such business combinations on performance are inconclusive. Further research will be needed to fully understand the factors that contribute to the conditions for a successful business combination.
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    An Examination of AI-powered Exchange Traded Fund Returns and Their Exposure to ESG
    (2024) Millie, Samuel; Arredondo-Chavez, Alberto
    This thesis analyzes whether AI-powered exchange-traded funds invest in ESG-responsible companies at a higher rate than traditionally managed ETFs. Subsequently, the paper also examines if these same AI-powered funds generate higher excess returns than traditionally managed ETFs. This paper uses performance and ESG score data from Refinitiv. The results do not provide statistically significant evidence suggesting AI-powered funds outperform or possess higher ESG scores than traditional funds. However, the paper produces significant results analyzing the effect of different ESG scores on indexed performance, alpha, and the Sharpe and Treynor ratios for non-AI-powered funds. The findings reveal differing conclusions on the effect that ESG metrics have on the performance of non-AI-powered funds.
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    Analyzing The Effectiveness of Investment Fund Strategies: Do Hedge and Mutual Funds Generate Excess Returns?
    (2022) Brinster, Blake; Arredondo-Chavez, Alberto
    The effectiveness of investment funds, and specifically the strategies with which they invest, has become increasingly more important due to its implications on households' savings and on current economic theory. To explore this question, I compare performance of hedge funds and mutual funds primarily investing in the equity market, each of which invests with a specific type of strategy. I find that although some strategies, such as investing in information technology, healthcare, or consumer discretionary, generate positive returns, that nearly all strategies underperform the equity market over various time horizons.
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    Demographics as a Predictor of United States Equity Prices
    (2021) Tamkin, Eva; Arredondo-Chavez, Alberto
    In this paper, I find that the long-run, secular moves of the MY ratio, the ratio of middle-aged to young, is related to the long-run, secular moves of the S&P 500 from 1950 to 2020. I focus my research on the United States, but also find compelling evidence of the MY ratio's global importance through the case of Japan. Utilizing a vector error correction model (VECM), I project the ability of economic variables and the MY ratio to accurately predict S&P 500 growth. I then create forecasts of the S&P 500 and Nikkei 225 growth rates until 2050 using only medium-variant predictions of the MY ratio.
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    Exposure Doesn't Pay the Bills: Artistic Production on Streaming Platforms Under Algorithmically-Induced Audience Uncertainty
    (2022) Graybill, Aaron; Arredondo-Chavez, Alberto
    Content streaming platformslike YouTube and TikTok play an important part in the lives of many. This paper contributes to existing literature by exploring the optimal quality-quantity tradeoff of a content creator on a streaming platform. This paper creates a model of how a creator's revenue evolves when audience size is determined by an unpredictable algorithm. Solving this model using dynamic programming predicts the emergence of a three-phase quality strategy. Small creators who are unlikely to be discovered choose high quality, budding creators choose low quality to quickly grow a following, and established creators return to high quality. This paper contributes to the growing streaming literature by focusing on what drives the content creator's decisions over time under audience uncertainty.
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    Financial Access and Foreign Direct Investment Impact on the Relation between Economic Growth and Inequality
    (2024) Cordero, Monica Mena; Arredondo-Chavez, Alberto
    The relation between inequality and economic growth is unclear as previous studies present varied results. Even with the inclusion of variables for financial access and foreign direct investment (FDI), the relation between the two remains undecided. However, by separating economies by the level of GDP per capita, one can see a more defined relation between the two. Economic growth disproportionately increases inequality in economies with lower levels of GDP per capita, but when interacted with financial access the combined effect decreases inequality for both shorter and longer periods of time. In contrast, the opposite is observed when economic growth is combined with FDI. Financial access plays a prominent role in decreasing inequality especially as economies grow.
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    The effect of housing costs on fertility in the US
    (2023) Jin, Daren; Arredondo-Chavez, Alberto
    The world has seen a significant expansion of the real estate market since early 2000s, and in the meantime a sustained decrease in fertility. Freedman (1995) reports that the overall fertility of 24 Asian countries (accounted for 3.1 billion populations) declined overall by 39% from 1965 to 1990, which represents a 62% decline towards the population replacement level of 2.1 children per woman. Some existing literatures have identified a correlation between the housing prices and fertility rates in other countries and regions. It would be plausible to explore if such correlation can be found in the US. Given US has different characteristics than other countries, there would likely be different outcomes. This paper examines whether housing costs, particularly house prices and rents, have a causal relationship with fertility rates in the US at a national level, and the significance of that effect. The effect of housing prices is estimated using linear regression with fixed effects. Results from the fixed effect model did not show a strong enough correlation between rent and number of children and between house value and number of children. In order to come to a more robust conclusion, this study adopted lag and growth rate models. Comparing to the fixed effect model, these results did not show strong correlation as well. However, we are able to identify that education attainment and household income are closely correlated fertility outcomes at a statistically significant level.
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    U.S INDUSTRIES REACTION TO THE SPREAD OF COVID-19: A CASE STUDY
    (2021) Nyandoche, Lyncy; Arredondo-Chavez, Alberto
    With the onset on the COVID-19 crisis in 2020, governments, health departments and businesses around the world scrambled to save their people and economies. Understanding the short- and long-term impact of COVID-19 on the economy is important for taking the appropriate measures to restore the country to normalcy. Several papers were written at the height to of the pandemic to predict the medium term impact of the pandemic on the economy and analyze the effectiveness of some of the measures taken by the governments and fiduciary institutions. This paper aims to add to this literature by using the event study methodology to study the impact of the virus on the stock market. This study examines the abnormal returns experienced by different industries in the S&P 1500 categorized by firms of different sizes (market capitalization). Results show that there were both negative and positive abnormal returns by firms of different market capitalization depending on the industry; particularly, the information sector was positively impacted while the manufacturing sector was negatively impacted but quickly recovered as more concrete plans from the government emerged.