{"id":{"repo_id":"uiuc","oai_identifier":"oai:www.ideals.illinois.edu:2142/20073"},"canonical_url":"https://search.dev.ndltd.org/etd/uiuc/oai:www.ideals.illinois.edu:2142/20073","repository":{"repo_id":"uiuc","name":"University of Illinois - Urbana-Champaign","base_url":"https://www.ideals.illinois.edu/oai-pmh"},"display":{"title":"Two essays in finance","abstract":"\"In the first essay, \"\"Do Firms Knowingly Sell Overvalued Equity?\"\", I develop a simple equilibrium model which shows that insider trading around seasoned equity offerings (SEO) depends on both the quality of issuing firms and insiders' exogenous consumption shocks, neither of which are known by outside investors in the model. The empirical evidence indicates that insider trading is not reliably related to the future long-term stock returns of issuing firms even though it is reliably related to their announcement period abnormal returns. Issuing firms underperform their benchmarks regardless of the prior insider trading pattern. This suggests that insiders who have purchased shares before issuing do not realize that the market has overcapitalized prior good news, and are not knowingly selling overvalued equity.\"","abstract_html":""In the first essay, ""Do Firms Knowingly Sell Overvalued Equity?"", I develop a simple equilibrium model which shows that insider trading around seasoned equity offerings (SEO) depends on both the quality of issuing firms and insiders' exogenous consumption shocks, neither of which are known by outside investors in the model. The empirical evidence indicates that insider trading is not reliably related to the future long-term stock returns of issuing firms even though it is reliably related to their announcement period abnormal returns. Issuing firms underperform their benchmarks regardless of the prior insider trading pattern. This suggests that insiders who have purchased shares before issuing do not realize that the market has overcapitalized prior good news, and are not knowingly selling overvalued equity."","abstract_has_math":false,"creators":["Lee, Inmoo"],"institution":"University of Illinois at Urbana-Champaign","degree_name":"Ph.D.","degree_level":"Dissertation","degree_discipline":"Finance","degree_department":null,"school":null,"contributors":["Ritter, Jay R."],"advisors":[],"committee_chairs":[],"committee_members":[],"year":2011,"date_issued":"2011-05-07T12:27:58Z","date_published":"2011-05-07T12:27:58Z","updated_at":"2026-07-22T22:25:15Z","subjects":["Economics, Finance","Business Administration, Banking"],"languages":["eng"],"rights":["Copyright 1995 Lee, Inmoo"],"rights_urls":[],"identifier_entries":[{"key":"dc:identifier","label":"Identifier","values":["AAI9543644","(UMI)AAI9543644"],"render_values":[{"text":"AAI9543644","href":null,"code":true},{"text":"(UMI)AAI9543644","href":null,"code":true}]}]},"links":{"outbound_url":"http://hdl.handle.net/2142/20073","outbound_label":"Handle","outbound_source":"dc:identifier"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor","label":"Contributor","values":["Ritter, Jay R."]},{"key":"dc:creator","label":"Author","values":["Lee, Inmoo"]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date","label":"Dc Date","values":["2011-05-07T12:27:58Z","10000-01-01","1995"]},{"key":"dc:type","label":"Dc Type","values":["text"]},{"key":"thesis:degree_discipline","label":"Discipline","values":["Finance"]},{"key":"thesis:degree_level","label":"Degree Level","values":["Dissertation"]},{"key":"thesis:degree_name","label":"Degree Name","values":["Ph.D."]},{"key":"thesis:institution_name","label":"Thesis Institution Name","values":["University of Illinois at Urbana-Champaign"]}]},{"id":"subjects_keywords","label":"Subjects and Keywords","entries":[{"key":"dc:subject","label":"Dc Subject","values":["Economics, Finance","Business Administration, Banking"]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:language","label":"Dc Language","values":["eng"]},{"key":"dc:rights","label":"Dc Rights","values":["Copyright 1995 Lee, Inmoo"]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier","label":"Identifier","values":["AAI9543644","(UMI)AAI9543644","http://hdl.handle.net/2142/20073"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description","label":"Description","values":["\"In the first essay, \"\"Do Firms Knowingly Sell Overvalued Equity?\"\", I develop a simple equilibrium model which shows that insider trading around seasoned equity offerings (SEO) depends on both the quality of issuing firms and insiders' exogenous consumption shocks, neither of which are known by outside investors in the model. The empirical evidence indicates that insider trading is not reliably related to the future long-term stock returns of issuing firms even though it is reliably related to their announcement period abnormal returns. Issuing firms underperform their benchmarks regardless of the prior insider trading pattern. This suggests that insiders who have purchased shares before issuing do not realize that the market has overcapitalized prior good news, and are not knowingly selling overvalued equity.\"","\"The second essay, \"\"Deposit Insurance with Changing Volatility: An Application of Exotic Options\"\", develops a model to incorporate the bank managers' incentives to change the bank's volatility into the pricing of deposit insurance. It is assumed that the volatility of the bank's assets changes or can be changed when the assets first hit a certain level. The results show that the shareholders' equity and the deposit insurance premium can be represented as combinations of generalized versions of particular barrier options known as down-and-out and down-and-in options. Numerical examples are used to illustrate the properties of the model.\"","Made available in DSpace on 2011-05-07T12:27:58Z (GMT). No. of bitstreams: 2 license.txt: 4922 bytes, checksum: 910b249b4beec47e7ab768910c8f966f (MD5) 9543644.pdf: 3444599 bytes, checksum: 34cce7beeebf984f2706563fb07f66f6 (MD5) Previous issue date: 1995","Item marked as restricted to the 'UIUC Users [automated]' Group (id=2) by Howard Ding (hding2@illinois.edu) on 2011-05-07T14:41:22Z Item is restricted indefinitely.","Restriction data tranferred 2014-07-01T11:17:53-05:00 Original Data Group with Access UIUC Users [automated] Release Date: none Reason: ETDs are only available to UIUC Users without author permission","ETDs are only available to UIUC Users without author permission","U of I Only"]},{"key":"dc:title","label":"Title","values":["Two essays in finance"]}]}],"canonical_facts":{"dc:contributor":["Ritter, Jay R."],"dc:creator":["Lee, Inmoo"],"dc:date":["2011-05-07T12:27:58Z","10000-01-01","1995"],"dc:description":["\"In the first essay, \"\"Do Firms Knowingly Sell Overvalued Equity?\"\", I develop a simple equilibrium model which shows that insider trading around seasoned equity offerings (SEO) depends on both the quality of issuing firms and insiders' exogenous consumption shocks, neither of which are known by outside investors in the model. The empirical evidence indicates that insider trading is not reliably related to the future long-term stock returns of issuing firms even though it is reliably related to their announcement period abnormal returns. Issuing firms underperform their benchmarks regardless of the prior insider trading pattern. This suggests that insiders who have purchased shares before issuing do not realize that the market has overcapitalized prior good news, and are not knowingly selling overvalued equity.\"","\"The second essay, \"\"Deposit Insurance with Changing Volatility: An Application of Exotic Options\"\", develops a model to incorporate the bank managers' incentives to change the bank's volatility into the pricing of deposit insurance. It is assumed that the volatility of the bank's assets changes or can be changed when the assets first hit a certain level. The results show that the shareholders' equity and the deposit insurance premium can be represented as combinations of generalized versions of particular barrier options known as down-and-out and down-and-in options. Numerical examples are used to illustrate the properties of the model.\"","Made available in DSpace on 2011-05-07T12:27:58Z (GMT). No. of bitstreams: 2 license.txt: 4922 bytes, checksum: 910b249b4beec47e7ab768910c8f966f (MD5) 9543644.pdf: 3444599 bytes, checksum: 34cce7beeebf984f2706563fb07f66f6 (MD5) Previous issue date: 1995","Item marked as restricted to the 'UIUC Users [automated]' Group (id=2) by Howard Ding (hding2@illinois.edu) on 2011-05-07T14:41:22Z Item is restricted indefinitely.","Restriction data tranferred 2014-07-01T11:17:53-05:00 Original Data Group with Access UIUC Users [automated] Release Date: none Reason: ETDs are only available to UIUC Users without author permission","ETDs are only available to UIUC Users without author permission","U of I Only"],"dc:identifier":["AAI9543644","(UMI)AAI9543644","http://hdl.handle.net/2142/20073"],"dc:language":["eng"],"dc:rights":["Copyright 1995 Lee, Inmoo"],"dc:subject":["Economics, Finance","Business Administration, Banking"],"dc:title":["Two essays in finance"],"dc:type":["text"],"thesis:degree_discipline":["Finance"],"thesis:degree_level":["Dissertation"],"thesis:degree_name":["Ph.D."],"thesis:institution_name":["University of Illinois at Urbana-Champaign"]},"updated_at":"2026-07-22T22:25:15Z"}