«EDUCATION Business Administration – Finance concentration, University of Missouri, 2006. Ph.D. M.B.A. Business Administration, Kent State ...»
K. STEPHEN HAGGARD
Finance and General Business Department E-mail: SHaggard@MissouriState.edu
Missouri State University Phone: (417) 836-5567
901 S. National Ave.
Springfield, MO 65897
Business Administration – Finance concentration, University of Missouri, 2006.
M.B.A. Business Administration, Kent State University, 2001.
B.S. Mechanical Engineering, University of Arkansas, 1994.
Passed Level I of the CFA Program.
ACADEMIC EMPLOYMENTAssociate Professor, 2012 to present, Missouri State University.
Assistant Professor, 2007 to 2012, Missouri State University.
Assistant Professor, 2006 to 2007, University of Southern Mississippi.
Graduate Instructor, 2003 to 2006, University of Missouri.
Research Assistant, 2002 to 2005, University of Missouri.
“Asset Write-downs and Information Asymmetry: Do Big Baths Muddy the Waters or Clear the Air?” with John S. Howe and Andrew A. Lynch.
We examine the information environments of firms following large, non-recurring charges (“baths”). We test competing hypotheses about the consequences of a bath—a bath either improves the information environment (the transparency hypothesis) or degrades it (the opacity hypothesis). Difference-in-differences analysis suggests that after a bath: 1) earnings become smoother, 2) firm-level information asymmetry decreases, and 3) stock returns become more responsive to unexpected earnings. We interpret these findings as supportive of the transparency hypothesis. We also document that the relative improvement in the information environment is greater for baths that are not voluntary, consistent with managerial obfuscation prior to the bath. Accepted at the Journal of Accounting & Economics.
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PUBLISHED PAPERS (CONTINUED)“An empirical investigation of short-term performance of U.S. bound Chinese IPOs,” with Yaoyi Xi and Brian Walkup.
Firms from emerging markets, including China, increasingly seek to raise capital outside of their home markets. We examine the short-term performance of U.S.-bound Chinese IPOs and find that these IPOs have significantly lower underpricing than a matched sample of U.S. counterparts. We also find that the magnitude of IPO underpricing for U.S.-bound Chinese firms is positively related to revisions in offer price. Forthcoming at Financial Review.
“Insurer Opacity and Ownership Structure,” with Stan Adamson and David Eckles.
This paper investigates the difference in opacity of insurers based on their ownership structure. The literature has shown that financial institutions are more opaque than non-financial firms and that insurers tend to be among the most opaque of all industry classes (Morgan, 2002). Further research has shown that publicly traded property casualty companies are relatively opaque, confirming Morgan’s findings (Park, 2008 and 2010). Our study incorporates the theories of ownership structure in the context of agency theory with the opacity studies cited above to determine if there is a difference in opacity attributable to forms of ownership, specifically mutual insurers versus stock insurers.
We find that mutual insurers are more opaque than stock insurers, all else equal. Journal of Insurance Issues, Vol. 37, No. 2, pp. 93-134, Fall 2014.
“Are Hedge Funds Guilty of Manipulative Short-selling?” with (Grace) Qing Hao and Ying Jenny Zhang.
This paper is the first, to our knowledge, to examine hedge fund participation and daily short-selling around traditional stock private investment in public equity (PIPE) issuances. Previous studies focus on structured PIPE deals, which do not represent the majority of the PIPE market at present. The daily short selling data used in this study allows for detailed investigation of market behavior not afforded by monthly short interest data used in previous studies. Our evidence suggests that most hedge funds that invest in traditional stock PIPEs do not engage in manipulative shortselling around these deals. Managerial Finance, Vol. 38, No. 11, pp. 1048-1066, November 2012.
“Are Banks Opaque?” with John S. Howe.
We use the Jin and Myers (2006) model to examine the relative opacity of banks. Our results show that banks have less firm-specific information in their equity returns than industrial matching firms, consistent with banks being more opaque than industrial firms. We also provide new evidence on the opacity of specific bank assets. We find that higher proportions of agricultural and consumer loans are related to lower levels of bank opacity. Our results are robust to inclusion of various controls, consideration of differential fundamental cash flow risk between banks and industrial firms, and the stock exchange on which shares trade. International Review of Accounting, Banking, and Finance, Vol.
4, No. 1, pp. 51-72, Winter 2012.
“Subperiod Robustness Checks: Testing for Effect Mean Stationarity,” with H. Douglas Witte.
The purpose of this paper is to suggest a superior method for assessing mean stationarity of asset pricing effects. We suggest the use of an F-test to examine mean stationarity of asset pricing effects across subperiods. We demonstrate the superiority of this test through examination of the Halloween Effect using simulated data and the Morgan Stanley Capital International (MSCI) data for 18 developed economies. We find that the suggested F-test provides results superior to a simple examination of the magnitude and statistical significance of estimated regression coefficients across subperiods when attempting to determine mean stationarity. This paper sheds light on an analytical oversight in the asset pricing anomalies literature and suggests an appropriate test to address this oversight. Managerial Finance, Vol. 38, No. 5, pp. 530-542, May 2012.
“Culture’s Impact on Freedom and Peace: Empirical Evidence,” with Dana L. Haggard.
This study provides insight into the proportion of the variation across countries in the desirable outcomes of freedom and peace that can be accounted for using a set of national characteristics which are difficult, if not impossible, to change. The majority of prior studies in this area have utilized bivariate (correlational) analysis. While these studies have made important contributions to the field, they have not been able to disentangle the effects of other important national characteristics from the effect of culture on freedom and peace. Through our multivariate framework, we are able to shed light on the relative importance of these national characteristics in explaining the variation in freedom and peace across countries. International Journal of Organization Theory and Behavior, Vol. 14, No. 3, pp. 354-382, Fall 2011.
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PUBLISHED PAPERS (CONTINUED)“The Halloween Effect: Trick or Treat?” with H. Douglas Witte.
Research documents higher stock returns in November through April than for the rest of the year. This anomaly is known as the “Halloween effect” and results in the following trading rule: Sell stocks in early May, invest in T-bills, and re-invest in stocks on Halloween. In contrast to recent studies, we show that the Halloween effect is robust to consideration of outliers and the “January effect.” Additionally, we show that investing in a “Halloween portfolio” provides risk-adjusted returns in excess of buy and hold equity returns even after consideration of transaction costs.
International Review of Financial Analysis, Vol. 19, No. 5, pp. 379-387, December 2010.
“Governance, Law, Religion and Culture,” with Dana L. Haggard.
We propose a model in which culture plays a dominate role, along with religion and legal origin, in determining the quality of governance in a country. We examine four dimensions of culture and four measurements of governance quality across 71 countries. Our empirical results demonstrate the dominant role played by culture, over and above religion and legal origin, in explaining governance quality. As culture is persistent and unlikely to be easily changed, efforts to improve governance quality might be doomed to failure in nations with cultural values that are hostile to good governance. International Journal of Organization Theory and Behavior, Vol. 13, No. 4, pp. 569-596, December 2010.
“Traditional Sources of Capital Dried Up? A Guide to Private Investment in Public Equity (PIPE) for New Issuers,” with Ying Jenny Zhang.
Recent economic conditions have created difficulties in raising capital for smaller, riskier firms. In this paper, we provide a guide to an alternative source of capital, private investment in public equity (PIPE). We give an overview of the size and growth of the PIPE market, identify the industries where PIPE is most popular, and provide information on the cost of such issuances by industry and deal type. The goal of this paper is to provide information regarding PIPE to financial consultants and corporate treasurers interested in alternative sources of capital funding. Journal of Financial and Economic Practice, Vol. 10, No. 2, pp. 12-27, Fall 2010.
“Foreign Issuers in the U.S. PIPE Market,” with Ying Jenny Zhang.
We document that the use of private investment in public equity (PIPE) by foreign firms listed on U.S. exchanges is growing even faster than its use by U.S. firms. On average, foreign firm PIPE stock deals represent a similar proportion of the firm’s market capitalization to U.S. firm PIPEs, but suffer less of a share price discount than U.S. firm PIPE issuances, a relation that is robust to consideration of exchange, deal size, share turnover and return volatility. We document that hedge funds are only small investors in foreign firm PIPEs issued in the U.S., which tend to be purchased by pensions, government funds and corporations. PIPE, in combination with the reverse merger method of going public, provides a cost-effective means for foreign firms to raise capital in the U.S. capital market. Journal of Multinational Financial Management, Vol. 20, No. 2-3, pp. 144-157, July 2010.
“A Study of the Moderating Effects of Firm Age at Internationalization on Firm Survival and Short-term Growth,” with Jon C. Carr, Keith M. Hmieleski, and Shaker A. Zahra.
Using a longitudinal sample, we test firms’ survival and growth outcomes associated with the decision to internationalize. We find that young firms experience lower survival rates subsequent to foreign market entry, but enjoy significantly higher short-term growth conditional upon survival. Overall, the findings suggest that the timing of internationalization should be based on firms’ strategic orientation toward maintaining survival versus achieving growth. Strategic Entrepreneurship Journal, Vol. 4, No. 2, pp. 183-192, June 2010.
“PIPEs Around the World,” with Ying Jenny Zhang and Tao Ma.
Public investment in private equity (PIPE) is a financing form growing in popularity in the U.S., recently surpassing seasoned equity offerings in number and value. Research to date is highly focused on the U.S., with little attention paid to international markets. We use newly available data to examine PIPE deals in Hong Kong, Australia, Canada and the U.K. We document similarities and differences relative to the U.S. market. PIPE firms tend to be small, high-growth firms with poor accounting and stock performance prior to PIPE issuance. However, these stylized facts do not hold uniformly across the exchanges we study. We also document a lack of significant market reaction to the announcement of PIPE deals on these exchanges. Journal of Private Equity, Vol. 12, No. 4, pp. 57-68, Fall 2009.
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PUBLISHED PAPERS (CONTINUED)“Using Interaction to Teach the Basics of Financial Intermediation.” This paper presents a game that uses student interaction to breathe life into the “dry” and “boring” definitions of surplus spending units (SSUs) and deficit spending units (DSUs), as well as the basic concepts of financial intermediation including denomination divisibility, maturity flexibility, liquidity, and credit risk diversification. This material is usually presented in a lecture format, which is less than ideal for students with short attention spans. Use of this game increases comprehension and improves retention of these concepts better than a pure lecture presentation.
Journal of Applied Research in Business Instruction, Vol. 7, No. 3, pp. 1-6, 2009.
“Another Look at the Robustness of Stock Market Calendar and Weather Anomalies to Announcements of Macroeconomic News,” with H. Douglas Witte.
Given the impact of macroeconomic news announcements on daily stock returns, Gerlach (2007) performs a univariate analysis of calendar and weather anomalies on days with no such announcements. He finds little evidence for anomalous returns in this subset of the data. He concludes that calendar and weather anomalies are generated by an expost sorting of returns into subsets with disproportionate numbers of extreme announcement day returns. We find little evidence to support this contention. Our multivariate analysis of the full dataset (both announcement and nonannouncement days) indicates five of six tested return anomalies remain significant after controlling for macroeconomic announcements. Review of Business Research, Vol. 9, No. 1, pp. 178-187, January 2009.
“Does Voluntary Disclosure Improve Stock Price Informativeness?” with Xiumin Martin and Raynolde Pereira.