Department Awards 2013 Best Doctoral Research Paper Prize

July 11, 2013

The faculty, staff and students of AEDE congratulate doctoral student James Goodenberger for winning the department’s 2013 award for best research paper. Additionally, the department congratulates doctoral student Imran Muhammad Chaudhry who received the honorable mention award. More information on each of their submissions is noted below.

The department also recognizes the paper review committee, which was comprised of AEDE faulty members Tim Haab, Alessandra Faggian, Abdoul Sam, Stan Thompson, Steve Vickner and Carl Zulauf.

Winner – 2013 Best Doctoral Research Paper Award

James Goodenberger – Evading Invasives: How Eurasian Water-Milfoil Effects the Development of Lakefront Properties

Abstract: Eurasian water-milfoil is an aquatic invasive plant that has moved rapidly through lakes across the United States. Along with being a hazard to local ecosystems, water-milfoil is a nuisance to those who use lakes for recreation, and its presence even lowers the value of lakefront properties. Though its effects can cause great disutility to lake users, no empirical studies have emerged that investigate the impacts that Eurasian water-milfoil, or any other invasive species, have on human behavior. This study investigates the effects of Eurasian water-milfoil on the probability that undeveloped lakefront properties are developed into single-family housing units. Using a comprehensive dataset from the Twin Cities, Minnesota region, a proportional hazards duration model of land conversion is estimated with a number of covariates. It is found that undeveloped parcels of land on lakes invaded by Eurasian water-milfoil are 28% less likely to be developed than their counterparts on non-invaded lakes. These results are just the beginning of a new line of research aimed at the interaction of invasive species and human behavior.

Honorable Mention – 2013 Best Doctoral Research Paper Award

Imran Muhammad Chaudhry – Growth in the Emerging Stock Market of Pakistan: Market Manipulation or Fundamentals? New Empirical Evidence from the Value Relevance of Accounting Information

Abstract: The Karachi Stock Exchange (KSE) has consistently outperformed better known emerging markets like Brazil, Russia, India and China over the past decade. However, some economists, notably Khawja and Mian (2003, 2005), claim that trade-based manipulation as opposed to fundamentals is the real cause behind this remarkable growth. Given that movements in stock prices are orchestrated by a group of colluding brokers, one would expect to observe a trivial (or weak) relationship between stock prices and firm specific information.

In order to uncover the relationship between stock prices and firm fundamentals, we measure the degree of association between accounting information and stock prices, commonly known as the value relevance of financial statements in the literature. Based on the estimates from our hand-collected dataset, comprising of 100 firms listed on the KSE from 1999-2011, we find a non-trivial relationship between stock returns and firm specific information. The results are robust to different model specifications and estimation techniques. Thus, the empirical results presented in this paper are contrary to the hypothesis that growth in the KSE is driven by colluding brokers and unrelated to fundamentals.

Even though the value relevance of information embedded in the financial statements has declined over time, it continues to be a statistically significant determinant of stock returns. We also find that controlling for losses results in a significant increase in the explanatory power of accounting information vis-à-vis stock returns and book value per share is an important determinant of stock prices for distressed firms, consistent with the broader value relevance literature. 

Photo credit: The Ohio State University

July 11, 2013