James C. Brau

Brigham Young University - Provo Main Campus | BYU · Department of Finance

This paper provides an economic model resulting in two distinct marketing strategies available to investment bankers. First, we hypothesize that an increased selling effort by brokers is used most effectively when the investment clientele is uninformed. Second, adjusting the offer price of the issue is hypothesized to be employed primarily in large...

We analyze the interaction between management and investors during Chinese IPO roadshows through Jaccard Similarity analysis of written Chinese logograms. We provide evidence that when agreement is high, investor optimism increases, leading to relatively large first-day underpricing. We further show that high agreement biases investors to systemati...

Using a sample of 1,429 seasoned equity offerings (SEOs) by real estate investment trusts (REITs), we use content analysis to test whether the soft information in a company's offering prospectus influences SEO underpricing. After controlling for relevant variables, we find that companies that use more positive (negative) words in their filings are...

Using a sample of more than 500 college students from a large, private university, this study seeks to analyze spending expectations of students, their realized habits, and the dispersion between the two. We first ask the students to project what they think their monthly budget will be throughout the semester. We then ask them to track their expens...

In this study, we identify factors associated with the choice to seek admission into a limited-enrollment undergraduate finance program. Using a sample of 796 students at a large university, we assess the impact of potential explanatory factors on the likelihood students will seek admission to a finance major. The data are gathered prior to the adm...

VOLUME 20 NUMBER 1 2020 investors' portfolio preferences. In 2007, investors who indicated high levels of risk tolerance were assigned equity-heavy portfolios , and many of them ended up walking away from both their advisors and their investments. These traditional risk questionnaires fail because they generalize nuanced risk tolerance into an aggr...

In this paper we answer the call of Sheppard (2012) and Brunner & Kim (2016) and present a model for teaching data analytics in an introductory information systems class using the Python programming language. The pedagogy follows an active-learning strategy in which students are assumed to have no statistical or Python programming training prior to...

The US hospital industry provides a unique context to examine the well-documented initial public offering (IPO) and seasoned equity offering (SEO) patterns of issuance cycles, underpricing and long-run underperformance. Hospitals have the financing alternative to be not-for-profit or even owned by local governments. As such, choosing to issue publi...

This article details a pre-PhD program that may be useful for any university interested in cultivating prospective finance PhD students. Relying on six years of an ongoing pre-PhD program, we provide a model and framework for how to think about offering a finance pre-PhD program to students. So far, our department program has averaged placing three...

In September of 2016, Clinton Ford was discussing with his friend Tyler Smith, an insurance agent, the importance of life insurance and saving for retirement. They were discussing various ways that Clinton could get the insurance he wanted as well as ways to save money for when he retires in 30 years at his planned retirement age of 65. His wife Em...

This paper examines the efficacy of learning sources associated with financial literacy in young adults. We survey nearly 1,500 college undergraduate students entering classes where financial principles are taught. The survey consists of a financial literacy quiz to determine the state of the participants' existing financial knowledge. Additionally...

In this study, we examine the Utah County housing market using a sample of over 70,000 single-family residential transactions from 2000 through 2016. To measure the strength of the Utah County residential market, we examine selling price, transaction volume, and number of days the house is on the market. We compare housing prices using two models:...

Sarah Barnett has decided to go back to school to earn an MBA. For several years she has run a graphic design business. Sarah has unexpectedly been accepted into the MBA program with a scholarship a year earlier than she planned. Classes begin in two weeks and the school she is attending does not allow first year MBAs to work outside of the school...

This resource updates the Brau and Woller (2004) annotated bibliography with 797 peer-reviewed articles that have been published between 2004 and 2017.

We provide an empirical analysis of 195 initial public offerings (IPOs) and 547 seasoned equity offerings (SEOs) of health care firms that issued between 2008 and October 2016. This period represents eight years after the US financial crisis of late 2007 and also includes all equity issuances since the passage of the Affordable Care Act of late 201...

In this article we first provide a review of the literature on the determinants of academic grades centered around 16 proposed factors. We extend an analysis which reviewed this literature over the years of 1930-1937 (Harris, 1940). Harris studies 328 previous articles and determines factors such as intelligence, high school grades, study habits, t...

Many educational institutions offer both online and traditional versions of the same course. A frequent concern of administrators, program directors, and instructors is whether students engage in platform arbitrage: choosing a particular platform (online vs. traditional) based solely on the prospects of receiving a higher course grade for a given l...

Using content analysis, we measure the impact of soft information, derived from words in initial public offering (IPO) registration documents, on IPO pricing efficiency. First, using 2,298 U.S. IPOs from 1996–2008, we find that an IPO document's strategic tone correlates positively with the stock's first-day return; more frequent usage of positive...

At a large private university, 835 undergraduate students completed a 110-question survey pertaining to an introduction to marketing class. The explanatory factors included are chosen to cover those studied in past literature as well as new pedagogical innovation variables. To test the determinants of student achievement we perform univariate and m...

This study of real estate investment trusts (REITs) analyzes three possible explanations for the stock price reaction to a repurchase announcement and the subsequent repurchase behavior of managers under each hypothesis. Two of the hypotheses, the signaling hypothesis and the exchange option hypothesis, are established in the existing literature; t...

We address the role microfinance institutions (MFIs) play in funding entrepreneurial ventures and present a distinction between the types of entrepreneurs that seek MFI and traditional venture funding. We argue that microfinance can serve successfully as seed financing for microentrepreneurs in underdeveloped economies around the world. By comparin...

We address the role that social entrepreneurial investment organizations play in funding entrepreneurial ventures and present a distinction between the types of entrepreneurs that seek microfinance and traditional venture funding. We argue that social enterprises can serve successfully as seed financing for “necessity entrepreneurs” in under-develo...

Purpose – The purpose of this paper is to examine the effect of regulatory reform on the asset allocation and capitalization of Chinese banks from 2002 to 2007, a period following China's entry into the World Trade Organization (WTO). Design/methodology/approach – The evidence rejects a hypothesis that the four categories of banks operating in Chi...

The purpose of this paper is to provide a direct test of the small-firm uniqueness hypothesis advanced by Ang (1991). We do this by using the SB-IPO program of the SEC as our instrument to define a small firm. Having identified small firms, we test the three IPO anomalies to see if small firms differ from large firms along these dimensions. We find...

Purpose The purpose of this paper is to test the fundamental purpose of the 1992 Small Business Incentive Act (SBIA) to reduce the regulatory burden for small firms to raise public equity capital. Design/methodology/approach Our research compares initial public offerings (IPOs) that filed with the newer SB‐2 program to benchmark firms that filed u...

Microinsurance institutions and instruments have developed rapidly over the last decade, with policies covering tens of millions at the base of the economic pyramid. Ranging from simple policies providing life or health insurance to complex policies covering catastrophic risks for small landholders, it is a market with proven potential that demands...

Using content analysis we measure the impact of soft information, derived from words in IPO registration documents, on IPO pricing efficiency. First, using 2,298 U.S. IPOs from 1996 to 2008, we find that an IPO document’s strategic tone correlates positively with the stock’s first-day return; more frequent usage of positive and/or less frequent usa...

Over the recent decade there was a wave of REITs going private, from an average of about three per year to 40 between 2005 and 2007. Standard corporate finance theory posits that firms go private when there is no longer a positive tradeoff between the expected benefits and the costs of being public, and it provides empirical evidence that going pri...

We investigate two non-traditional harvest strategies for selling a privately-held company. Dual-track private firms file for an IPO while also courting acquirers. These firms withdraw the IPO to be taken over. Dual-track public firms complete an IPO and are taken over shortly thereafter. Examining 679 takeovers from 1995–2004, we find private dual...

Why entrepreneurs choose to conduct an IPO has received relatively little attention when compared to other IPO topics such as initial underpricing and the long-run performance of IPOs. In this chapter, I summarize, analyze, and expand the current discussion on why firms go public. I begin by discussing the theoretical underpinnings and testable hyp...

We analyze a sample of 4,795 IPOs that went public between 1985 and 2003 to determine the impact of acquisition activity on long-run stock performance. After controlling for relevant factors, we find that IPOs that acquire within a year of going public significantly underperform for three-year holding periods following the first year, whereas non-a...

Initial public offering (IPO) firms typically hire auditors, underwriters, and attorneys to assist in the IPO process. Many firms that take the IPO route are also backed by venture capitalists. In the extant literature, these four specialists (auditors, underwriters, attorneys, and venture capitalists) are termed third-party certifiers. In this stu...

Purpose The purpose of this paper is to investigate microlending outcomes among Latin American non‐governmental organizations (NGOs), specifically microfinance institutions (MFIs). While there is a growing movement of non‐profit ventures channeling small loans to the poor worldwide, assessments of their impacts are lacking. Thus, field interviews w...

This article reviews the extant literature regarding the three new issues phenomena: hot issue markets, first-day underpricing, and poor long-run performance as they apply to the heath care industry. Given the "creeping corporatization" of the heath care industry and the unique influence of nonmarket forces on it, we examine whether the three IPO p...

We examine 135 Mexican closed-end fund IPOs and 370 Mexican non-fund IPOs that issued between 1994 and 2003 along with 217 contemporaneous US fund IPOs and document three primary results. First, we find that Mexican IPOs in the aggregate experience no significant underpricing, unlike their US IPO counterparts. Both Mexican and US IPOs experience si...

Buttimer, Hyland, and Sanders (" REITs, IPO Waves, and Long-Run Performance, " Real Estate Economics, 33(1), 51 (2005)) find that general real estate investment trusts (REIT) initial public offering (IPO) waves are best explained by the capital demands hypothesis. We examine the capital demand hypothesis, the information asymmetry hypothesis, and t...

Perhaps the greatest source of unique advantage is an organization's work-force. Unfortunately, while many managers talk about the importance or their people, they often fail to cultivate a organizational spirit that leverages their people's creativ-ity, insight and passion. A senior executive at a Fortune 500 company commented on this reality, say...

We revisit and extend the topic of secondary share sales and revisions in IPOs. First we test to determine if secondary share sales constitute a negative signal that is captured in aftermarket performance. We find secondary share sales in general are not correlated with poorer initial or long-run performance, but selling by officers and directors i...

Purpose The purpose of this paper is to understand how information technology (IT) is used to enhance supply chain performance. Design/methodology/approach A large‐scale survey and semi‐structured interviews were used to collect industry data. Findings Two distinct dimensions to information sharing – connectivity and willingness – are identified...

This study of real estate investment trusts (REITs) analyzes three possible explanations for the stock price reaction to a repurchase announcement and the subsequent repurchase behavior of managers under each hypothesis. Two of the hypotheses, the signaling hypothesis and the exchange option hypothesis, are established in the existing literature; t...

We examine four issues pertaining to initial public offerings (IPOs) using a survey of 438 chief financial officers (CFOs). First, why do firms go public? Second, is CFO sentiment stationary across bear and bull markets? Third, what concerns CFOs about going public? Fourth, do CFO perceptions correlate with returns? Results support funding for grow...

Many privately held companies aspire to go public through an initial public offering. But the IPO process is time-consuming, expensive, and fraught with uncertainty. With the aim of shedding light on the process and reducing at least some of the uncertainty, the authors asked several hundred CFOs to share their experiences and perceptions with rega...

We survey 336 chief financial officers (CFOs) to compare practice to theory in the areas of initial public offering (IPO) motivation, timing, underwriter selection, underpricing, signaling, and the decision to remain private. We find the primary motivation for going public is to facilitate acquisitions. CFOs base IPO timing on overall market condit...

We survey 336 chief financial officers (CFOs) to compare practice to theory in the areas of initial public offering (IPO) motivation, timing, underwriter selection, underpricing, signaling, and the decision to remain private. We find the primary motivation for going public is to facilitate acquisitions. CFOs base IPO timing on overall market condit...

This paper explores the effect of stock repurchase announcements on equity returns for publicly traded real estate investment trusts (REITs). In addition to providing analysis of the corporate decision to repurchase shares, the study of share repurchases in the context of REITs provides a novel opportunity to disentangle the impact of competing the...

This case is designed for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation. Some of the information in the case has been modified to protect confidentialities and to enrich the learning experience. The FranklinCovey Company is not responsible for the accuracy of any information conta...

We survey 336 chief financial officers (CFOs) to compare practice to theory in the areas of initial public offering (IPO) motivation, timing, underwriter selection, underpricing, signaling, and the decision to remain private. We find the primary motivation for going public is to facilitate acquisitions. CFOs base IPO timing on overall market condit...

Lockups are agreements made by insiders of stock-issuing firms to abstain from selling shares for a specified period of time after the issue. Brav and Gompers (2003) suggest that lockups are a bonding solution to a moral hazard problem and not a signaling solution to an adverse selection problem. We challenge this conclusion theoretically and empir...

Meeting the challenges of a modern era, including corporate scandal, gov-ernment gridlock, and societal turmoil, requires a high level of effective leadership. In such an environment, the teacher–leader plays a critical role in cultivating the knowl-edge worker and learning organization. After all, the teacher–leader leverages the human resource by...

Jonathan Galvant is the President of Amazon Rainforest Properties. The company owns over one million acres of rainforest land in the Amazon Basin of Brazil. Jonathan is considering an environmentally friendly logging operation in an effort to employ local workers and prevent as much slash-and-burn farming as possible. He has obtained data on the co...

Using cross-channel mail survey, we analyze two dimensions to information sharing within supply chain networks (n=254, senior-level supply chain managers). The first dimension--connectivity or technology--has been heavily investigated and found to have significant impact on firm profitability. The second dimension--willingness or human behavior--ha...

Although the word finance is in the term microfinance, and the core elements of microfinance are those of the finance discipline, microfinance has yet to break into the mainstream or entrepreneurial finance literature. The purpose of this article is to introduce the finance academic community to the discipline of microfinance and microfinance insti...

Researchers have completed a few studies to determine if performance differences exist between venture capital-backed firms and nonventure-backed firms.This research attempts to extend this research through further exploration of the following three areas:1) small businesses that performed an initial public offering (IPO) from 1990-96; 2) manufactu...

Initial public offering (IPO) lockup agreements prevent insider sale of shares for specified periods of time (often 180 days). This study investigates share price reactions at and around the time the lockup agreements expire. Results indicate statistically significant negative abnormal returns in the event window surrounding the expiration date. Th...

Annotated Bibliography from "Microfinance Institutions: A Comprehensive Review of the Existing Literature," by Jim Brau and Gary Woller, Journal of Entrepreneurial Finance and Business Ventures, Vol. 9, Issue 1, 2004, pp. 1-26. Please cite the Brau and Woller (2004) article if you use this resource in your research.

We study a known negative signal, the sale of insider shares in an IPO and find that insiders adopt two concealment strategies consistent with wealth-maximizing behavior. First, insiders underreport the number of personally owned shares in the prominent original prospectus and use an obscure amendment to communicate the true higher level of shares...

We examine factors that influence the choice between an initial public offering (IPO) and a takeover by a public acquirer. Our results show that the industry concentration, high-tech industry affiliation, current cost of debt, relative "hotness" of the IPO market, firm size, and insider ownership percentage are all positively related to the probabi...

Carlson Egg Farms is a privately held chicken farm specializing in the production, cleaning, grading, packing, and distribution of shell eggs. Carlson has just received an unsolicited offer from Pioneer Egg Corporation to acquire the firm for $10.4 million. Allan B. Carlson, President and CEO of the company, has asked his son William to estimate th...

Ang, Cole, and Lin (2000) provide evidence that supports the theoretical work of Jensen and Meckling (1976) on agency costs. As a further examination, I conduct a test to determine the economic significance of owner–manager agency conflicts. Using the same data source and empirical framework as Ang, Cole, and Lin (2000), I test to determine if bank...

We demonstrate that firms that are more transparent pay less, in all components of issuance costs, to go public. We employ a sample of 334 previous leveraged buyouts and a characteristic-matched control sample to test the hypothesis that greater firm transparency before the issue decreases the flotation costs of the initial public offering. These f...

We empirically examine a sample of over 350 entrepreneurial firms that successfully receive an SBA guar­ anteed loan. The first portion of the paper contains descriptive statistics that lend anecdotal evidence con­ cerning the organization type of borrowers, the incidence of collateral, the reasons for choosing the financial institution in which th...

In this article we extend the existing IPO literature to the case of micro-IPOs by analyzing a sample of Small Corporate Offering Registration (SCOR) documents from the U.S. state of Washington. Through theory, we identified variables that should impact the probability of success or failure in a SCOR offering and then empirically tested them. Empir...

In this article we extend the existing IPO literature to the case of micro-IPOs by analyzing a sample of Small Corporate Offering Registration (SCOR) documents from the U.S. state of Washington. Through theory, we identified variables that should impact the probability of success or failure in a SCOR offering and then empirically tested them. Empir...

This article concentrates on internet resources that are available to those interested in entrepreneurial and small firm finance. Specifically, I present web pages that focus on general entrepreneurial issues and different avenues for acquiring capital. The three main areas o f external financing that I include are venture capital, going public, an...

Article I wrote as a senior at West Point about the LDS branch there.

Using a sample of 5,345 IPOs that went public between 1985 and 2003, we examine the acquisition activity of newly-public firms. We find that: First, within one year of going public, over 30% of our sample IPO firms become acquirers whereas only 1% become targets. Second, acquiring IPOs are associated with more debt, higher sales, less prestigious u...

We analyze a sample of 4,795 IPOs that went public between 1985 and 2003 to determine the impact of acquisition activity on long-run stock performance. Our findings show that newly- public firms are active participants in the takeover market, primarily as acquirers, not targets. After controlling for relevant factors, we find that IPOs that acquire...

The purpose of this paper is two-fold. First, we develop a theory of small firm uniqueness. Instead of using an exogenous definition of firm size typical of the extant literature, we allow firms to choose whether they are a "small firm" through the instrument of the SEC's SB-2 program. Second, we test empirical hypotheses that follow from the theor...