Prem Mathew

Faculty

Prem Mathew

Associate Dean

Finance

541-737-6030

prem.mathew@bus.oregonstate.edu

Faculty

Prem Mathew

Overview

Background

Publications

Overview

Credentials

B.S. in Economics, University of Pennsylvania, 1991

Background

Experience

Assistant Professor of Finance, ��, 2004 - present

Associate Professor of Finance, University of Saskatchewan, 1999 - 2004 (tenured in 2004)

Professional Affiliations

Chartered Financial Analyst (CFA), awarded in 2001

Honors & Awards

Excellence in Scholarship Award, 2005, College of Business, ��

Students of Finance Teaching Award, 2005, College of Business, ��

Most Effective Professor, Nominee, 2003-04, College of Commerce, University of Saskatchewan

Most Approachable Professor, Nominee, 2003-04, College of Commerce, University of Saskatchewan

Most Effective Professor, Recipient, 2002-03, College of Commerce, University of Saskatchewan

Most Approachable Professor, Recipient, 2002-03, College of Commerce, University of Saskatchewan

Most Effective Professor, Nominee, 2001-02, College of Commerce, University of Saskatchewan

Most Approachable Professor, Recipient, 2001-02, College of Commerce, University of Saskatchewan

Graduate Student Teaching Award, Recipient, 1997, University of Missouri

Publications

Academic Journal

Finance

“Board members' influence on resource investments to start-ups and IPO outcomes: Does prior affiliation matter?”

Using data that contains career paths of start-up board members, we examine how their prior affiliations with various types of venture capital (VC) firms promote financial and human resource investments from the affiliated VC firm. We find that the likelihood of affiliation-based resource investments such as financing and board member engagement depends on the type of VC firms (e.g., bank-affiliated, corporate). Meanwhile, we find little evidence that affiliation-based resource investments lead to lower IPO costs and better post-IPO performances (i.e., return on assets, buy-and-hold abnormal returns, and failure rate). While prior affiliation could improve the inflow of resources, it might worsen screening and monitoring activities.

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Academic Journal

Finance

“Does Director Affiliation Lead to Analyst Bias?”

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Academic Journal

Finance

“When-issued trading in the Indian IPO market”

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Academic Journal

Finance

“The efficiency of international information flow: Evidence from the ETF and CEF Prices”

While similar in their trading and organization, closed-end funds (CEFs) and exchange-traded funds (ETFs) differ in their liquidity and ease of arbitrage. We compare their price transmission dynamics using a sample of funds that invest in foreign securities and are most likely to show the deficiencies in the manner in which they process information. Our analysis shows that ETF returns are more closely related to their portfolio returns than CEF returns. However, both fund types underreact to portfolio returns but overreact to domestic stock market returns. A simple trading strategy using these results is profitable with roundtrip trading costs less than 1.38% for CEFs and 0.71% for ETFs.

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Academic Journal

Finance

“The Value of Stability Ratings to the Canadian Income Trust Market”

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Academic Journal

Finance

“Are Foreign Issuers Complying with Regulation Fair Disclosure?”

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Academic Journal

Finance

“An Examination of the Differential Impact of Regulation FD on Analysts' Forecast Accuracy”

Regulation fair disclosure (FD) requires companies to publicly disseminate information, effectively preventing the selective pre-earnings announcement guidance to analysts common in the past. We investigate the effects of Regulation FD's reducing information disparity across analysts on their forecast accuracy. Proxies for private information, including brokerage size and analyst company-specific experience, lose their explanatory power for analysts' relative accuracy after Regulation FD. Analyst forecast accuracy declines overall, but analysts that are relatively less accurate (more accurate) before Regulation FD improve (deteriorate) after implementation. Our findings are consistent with selective guidance partially explaining variation in the forecasting accuracy of analysts before Regulation FD.

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Academic Journal

Finance

“A NAV a Day Keeps the Inefficiency Away? Fund Trading Strategies using Daily Values”

Previous research documents the value of closed-end fund trading rules based on the size of the
weekly discount. The growing number of closed-end funds that provide daily net asset value data
provides an opportunity to test the profitability of short-term fund trading strategies. We find that
short-term trading strategies that purchase fund shares after large negative discount changes are
profitable, on average, even when transaction costs are incorporated. However, strategies that short
sell fund shares after large positive discount changes do not produce an average profit. The limited
amount of trading in closed-end funds may make it difficult to achieve short-term profits from discount
fluctuations. © 2005 Academy of Financial Services. All rights reserved.

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Academic Journal

Finance

“The Effects of Market Inefficiencies on Trading Strategies for Country Funds”

Economists disagree about how sensitive country fund prices are to U.S. market returns. We provide additional evidence on this issue through an examination of daily fund discounts. Fund shares provide significant average returns in the three days following large positive and negative discount changes. This finding suggests that large short-term changes in the relation between price and underlying value are not quickly mitigated in the market for country fund shares. Following large negative discount changes, the returns on fund shares and NAVs are of greater magnitude when the S&P 500 Index declines by more than 1%. This is consistent with negative changes in U.S. market sentiment affecting both country fund prices and NAVs in the short-term. Simple trading strategies that take advantage of large discount changes around big changes in the U.S. market appear generally profitable even after adjusting for transaction costs. The limited liquidity in country fund shares suggests that it may be difficult to implement such strategies.

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Academic Journal

Finance

“Grandstanding and Venture Capital Firms in Newly Established IPO Markets”

The grandstanding theory posits that young venture capital firms (VCs) will seek to build their reputations by taking ventures public early. In this study, we examine this theory in the Japanese IPO market. With the introduction of MOTHERS and NASDAQ Japan in 1999 and 2000, respectively, with the explicit intent of catering to smaller and younger companies, we are able to examine the influence of these new markets on grandstanding and the IPO process. We find that young lead VC-backed ventures go public at a younger age than mature lead VC-backed ventures and that young lead VC-backed ventures are more underpriced. However, we do not find that young lead VCs have relatively lower equity stakes at IPO. This latter finding is most likely a result of the introduction of the new markets.

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Academic Journal

Finance

“When-Issued Shares, Small Trades and the Variance of Returns around Stock Splits”

The increases in volatility after stock splits have long puzzled researchers. The usual suspects of discreteness and bid-ask spread do not provide a complete explanation. We provide new clues to solve this mystery by examining the trading of when-issued shares that are available before the split. When-issued trading permits noise traders to compete with a more homogenous set of traders, decreasing the volatility of the stock before the split. Following the split, these noise traders reunite in one market and volatility increases. Thus, the higher volatility after the ex date of a stock split is a function of the introduction of when-issued trading, the new lower price level after the split date, and the increased activity of small-volume traders around a stock split.

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Academic Journal

Finance

“A Re-examination of Information Flow in Financial Markets: The Impact of Reg FD and Decimalization”

We investigate the impact of Regulation FD on information flow in the equities market. Our analysis indicates that information flow around earnings announcements, proxied by abnormal return volatility around those announcements, of U.S. stocks increased in the first effective quarter of Regulation FD (the fourth quarter of 2000). The information flow of ADRs, which are exempt from Regulation FD, does not change. This supports the inference that Regulation FD, not general market conditions, caused the increase in volatility, but Regulation FD did not have a persistent impact on information flow. A multivariate regression analysis shows that our results are robust to controls that include decimalization, which was implemented concurrently with Regulation FD and has reduced return volatility. Our comparison of return volatilities across firm size indicates that small firms temporarily had larger return volatilities, thus Regulation FD only temporarily had a differential impact on the information environment of small firms.

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