Finance faculty make waves with innovative research

Research by faculty members in the Trulaske College of Business is providing new insights into big topics in finance.

April 14, 2023

Faculty in the Trulaske College of Business Finance Department are conducting research that sheds light on some of the most pressing issues in the world of finance.

Assistant Professor Sima Jannati is exploring the impact of rest on financial decision-making of equity analysts.

“In the financial industry, equity analysts have a reputation for working a lot of hours, an average of 100 a week,” Jannati said. “If our study shows a meaningful impact on the quality of the decisions being made after a short-term break from their work, that could have policy implications regarding whether the traditional 40-hour work week is truly optimal.”

Jannati explores how the improvement in analyst forecast accuracy around holidays appears to be driven by an increase in sleep. Her findings highlight the importance of taking breaks, particularly for those in high-pressure jobs where good decision-making is essential.

Assistant Finance Professor Matteo Binfarè recently researched the link between human capital and endowment investing, finding that higher asset allocations to alternative assets are linked to higher levels of human capital in the endowment's investment process.

The study showed that university endowments with more expertise in alternative assets have higher allocations to these assets, and that having a chief investment officer is positively linked to private equity and venture capital allocations.

Binfarè’s research suggests that investors with access to these assets may benefit from forming governing bodies and creating staff capabilities with specialized expertise.

Another study by Adam Yore, an associate finance professor and the Stephen Furbacher Professor of Organizational Change, analyzes the impact of exchange membership on public non-listed real estate investment trusts (PNLRs) and their corporate governance.

Yore's work found that PNLRs with stronger governance and professional management are more likely to directly list. The study revealed that firms directly listing on an exchange are better governed and of higher quality than their counterparts.

Since exchange listing improves the quality of corporate governance, Yore's research can encourage more companies to list on an exchange, helping improve the quality of the public market and provide investors with greater confidence in the companies they invest in.

Finally, Assistant Professor and Thomas H. Weaver Faculty Scholar Jing Wang is researching the consequences of the rise of nonbanks on the service quality in the residential mortgage market. She discovered that as nonbanks increase their market share in a local residential mortgage market, the quality of mortgage services improves.

Wang focuses on mortgage-related complaints filed with the Consumer Financial Protection Bureau (CFPB) as a percentage of all outstanding mortgages, known as the complaint ratio, to measure service quality.

"Measuring financial service quality can be tricky because it's subjective,” Wang said. “We took advantage of the CFPB website, which allows people to file complaints if they're having issues with financial institutions.”

The findings suggest that future policies and regulations of nonbanks should consider the effect of market shares on service quality. Wang's research is the first to focus on the service quality of mortgages to understand the consequences of nonbanks' expansion on consumer welfare.

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