Sabermetrics, credit rating agencies, think tanks, and investor attitudes are the topics that the 2013 undergrad honors students chose to research for their theses. Each year a small number of undergraduate honors students complete a formal thesis under the supervision of a faculty advisor. Students investigate current issues in business using different disciplinary approaches.
In the first semester, faculty guide the class through seven sessions that introduce students to contemporary academic research. Students read and critique articles selected from the academic literature and design a number of potential research studies to investigate questions raised by this literature. In the second semester, students pursue a research project with the objective of generating a paper that is a unique contribution to the academic literature.
This year, four insightful theses were produced by eight students. Take a look – it’s well worth the read!
A Study of Sabermetrics in Major League Baseball: The Impact of Moneyball on Free Agent Salaries
Authors: Jason Chang & Joshua Zenilman
Using contract and player statistic data for Major League Baseball free agents, this paper estimates the relative effects of player attributes on player salaries over different periods of time. Moneyball is the analytical, evidence-based approach to baseball, utilizing various statistics as an indicator of player performance. Estimating a hedonic pricing model, our results show a lasting impact of Moneyball in shifting the emphasis on player valuation from observable traits to more advanced statistical analysis.
Read full thesis here
Are Ratings Agencies Influential? The Effect of Rating Agencies on CDS Spreads
Authors: Zehui He and Avery Pearce
In light of the global financial crisis in 2007 and the ongoing scrutiny of credit rating agencies, we look at their value to the public today using credit default swap (CDS) spreads as a proxy for risk. CDS spreads are traded over the counter and reflect the ability of a corporation to fulfill its debt obligations. By observing the spread change around the date of a rating change by Moodys’ Rating Agency, we looked to see whether there is a significant change in the spread. Furthermore, we divide our observations of ratings changes between pre financial crisis (before 2007) and post financial crisis (after 2007) to see if there is a difference in the influence of rating agencies before and after the financial crisis. Our results show that after 2007, rating agencies seemed to have more influence on the CDS market than before 2007. We thank Professor Mark Leary for guiding us through the thesis process.
Read full thesis here
The Expanding Field of Think Tank Organizations: A Comparative Study of the U.S., China, and Korea
Authors: Tom Kwon and Jennifer Wei
Think tanks, or policy research organizations that engage in scholarly and interdisciplinary research, have come to play an increasingly prominent role in shaping the economic, social, and political decisions of governments and various organizations in current society. They often engage in research activities and advocate or suggest future courses of actions that governments or corporations should take. Yet, there has been a lack of empirical research on the characteristics and roles of these organizations. Our paper tries to bridge this gap by analyzing a number of think tanks across cultures: in the United States, Republic of Korea, and the People’s Republic of China. In this paper, we explore the key differences between Asian and Western think tanks with regards to their establishment dates, affiliations, board interlocks, and mission statements. We hope this paper can provide valuable insight into the nuanced differences, as well as the surprising similarities, between think tanks of the United States versus those in Asia.
Read full thesis here
Investors’ Attitudes Toward Complexity in Financial Markets
Authors: Lilyana Mikova and Johan Olofsson
Do investors prefer simpler securities over more complex securities? Given the role that complex products played during the financial crisis, the authors wished to study if, all other factors are equal, investors’ opted for simpler securities. To test this research question the authors devised a discrete choice experiment and surveyed undergraduate and graduate students of Washington University. Utilizing Maximum Likelihood Estimators and the Latent Class Logit Model the authors were able to conclude that some investors prefer simpler securities, controlling for factors such as return, risk, accessibility of information, and liquidity. While a subset of investors preferred these simpler securities, all investors received more utility from higher returning securities than they received from more simplistic ones. In addition, the other, smaller subset of investors did not prefer any particular type of security and were solely focused on return. These conclusions indicate that investment professionals may be able to segment investors into two distinct groups, one that care about both complexity and return, and the other which cares solely about return. This research contributes to the existing academic literature studying investors’ attitudes towards complexity and provides a unique example of the diverse functionality of the Latent Class Logit Model.
Read full thesis here
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