Three Essays in Finance, Real Estate, and Insurance

Download or read book Three Essays in Finance, Real Estate, and Insurance written by Evgeny Radetskiy and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: There are three essays that comprise this dissertation. In the first essay we investigate how a country's enforcement of insider trading laws affects learning among stock market participants. We measure learning as the speed with which analyst forecast errors decline as the firm matures. We show that analyst forecast errors decline faster with progression in the firm's age (more learning), when insider trading laws are enforced. We find that learning improves and M/B ratios stabilize faster with the enforcement of insider trading laws. These learning effects are more pronounced among countries with stronger regulatory infrastructure. Also, we demonstrate that firms with higher analyst forecast errors and slower rates of learning before the 2008 financial crisis have a significantly higher probability of stock crash. In the second essay, we temporally examine the existence of price premiums for a sample of single family homes in gated residential communities relative to values in comporable non-gated communities in Shelby County, Tennessee. Controling for idiosyncratic attributes, we find that homes in gated communities carry significant price premiums relative to similar homes in non-gated communities. Price premiums are highest for medium size gated communities. Premiums were also evident in higher priced gated communities before 2008 but vanished after the financial crisis. We conclude that price premiums result from net gated community benefits. The third essay develops a risk management proposal for a two-tiered private-public national health insurance plan. Under this plan, private insurers underwrite basic plans and perform most administrative functions. A second-tier, public national health reinsurance plan allows truncated annual losses for private insurers. When private insurers' annual per person claims exceed a pre-specified level, additional claims are undeerwritten by a single payer, public national health reinsurance system. We develop an actuarial approach that considers possible contemporaneous correlation between paid claim frequency and severity and first-order serial correlation. Given a first-tier loss cutoff of $15,000, we demonstrate that premiums are reduced by approximately 60% when compared to current private insurer pure premiums. We suggest that a two-tiered health care system may better provide all citizens health insurance that is more affordable for employers and individuals.