Joy Begley

 
Prospective Graduate Students / Postdocs

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Associate Professor

Research Classification

Finance and Accounting

Research Interests

Empirical financial accounting
Defined benefit and defined contribution pensions
Use of accounting information to control agency problems
Equity Valuation

Relevant Degree Programs

 

Research Methodology

Empirical analysis

Graduate Student Supervision

Doctoral Student Supervision (Jan 2008 - May 2019)
Effects of real estate cycles on valuation of U.S. real estate investment trusts (REITs) (2013)

This study investigates the relation between accounting depreciation bias and equity valuation in a unique industry setting, Real Estate Investment Trusts (REITs). REITs report funds from operations (FFO), an industry standardized pro forma performance measure that is computed by excluding the depreciation expense of real properties from GAAP net income. Researchers have examined short-period samples and found inconclusive results on the relative ability of FFO and GAAP net income to explain the market value of equity. This dissertation attempts to explain their results by finding that depreciation expense, the largest reconciling item between FFO and net income, has different biases over the phases of real estate business cycles. This study uses modeling techniques to develop an industry-specific valuation model for REITs. In this model, the difference between the valuation coefficients on FFO and depreciation expense captures accounting depreciation bias and varies over the phases of real estate cycles. This model presents a theoretical link between accounting depreciation bias and the relative ability of FFO versus net income to explain the market value of equity. Using the REIT valuation model, this study empirically examines the impact of real estate cycles on accounting depreciation bias and on the relative ability of FFO and net income to explain the market value of equity. This study finds that FFO explains stock prices better than net income does in a market boom and that there is no significant difference in explanatory power between FFO versus net income in a market bust. Further results indicate that the valuation coefficients on FFO and depreciation expense have opposite sensitivities to a state variable that summarizes information on the real estate cycle phase during a year. These results partially reconcile the mixed results of prior studies across different time periods.

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Valuation in the pharmaceutical industry (2009)

Valuation models are used extensively in Finance and Accounting to investigate various empirical questions. Conventional valuation models express firm value as a function of discounted dividends, discounted abnormal earnings, discounted cash flows, or price multiples. One limitation from using these models is that they don’t capture unique industry valuation characteristics. However, modeling techniques can be used to modify a conventional model in order to reflect specific business processes. In the first chapter of this thesis I use modeling techniques to develop an industry-specific valuation model for pharmaceutical firms. This allows me to explore how investments in research and development, advertising, and production facilities create value for firms in this industry. In particular, the techniques used in this paper allow me to estimate and explore the economic rents generated by these investments. My valuation model is based on the cash inflows and outflows of a typical pharmaceutical firm. In the second chapter of this thesis I test whether the model is improved by adding a system of accounting accruals. I also compare the performance of my valuation model to a model with summary accounting measures to assess the importance of data disaggregation. The value of advertising investments is likely to have changed in the period investigated in this thesis because on August 8, 1997 the Food and Drug Administration announced that it would relax the rules on direct-to-consumer advertising of prescription drugs. The last chapter of this thesis is an event study of this regulatory change. I investigate the effect of the announcement on share price as well as the firm characteristics associated with the price reactions. Each chapter in this thesis answers a different question with respect to valuation in the pharmaceutical industry.

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Disclosure Quality in Capital Markets from the Perspective of Analysis (2008)

No abstract available.

 
 

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