Despite its wide use, the Hill estimator and its plot remain to be difficult to use in Extreme Value Theory (EVT) due to substantial sampling variations in extreme sample quantiles. In this paper, we propose a new plot we call the eigenvalue plot which can be seen as a generalization of the Hill plot. The theory behind the plot is based on a heavy-tailed parametric distribution class called the scaled Log phase-type (LogPH) distributions, a generalization of the ordinary LogPH distribution class which was previously used to model insurance claims data. We show that its tail property and moment condition are well aligned with EVT. Based on our findings, we construct the eigenvalue plot from fitting a shifted PH distribution to the excess log data with a minimal phase size. Through various numerical examples we illustrate and compare our method against the Hill plot.

These remarks provide some perspective on my six decades of research, teaching, and participation in the AAA. A recurring theme is that my career took several unexpected turns and that my research often had unexpected outcomes. Several areas of research are discussed, including the prediction of financial distress, the information content of earnings announcements, the information content of prices, accounting and market measures of risk, discretion in financial reporting, conservatism, and value relevance of financial statements. Included is a brief summary of some of what I have learned from six decades of teaching. I review some of the major benefits of AAA participation.

This paper analyzes the causes and consequences of founding family engagement in firm ownership and management. We hypothesize that families manage their firms because they are able to make contributions that non-family managers cannot provide. However, roadblocks arising from within the family, from markets, and from surrounding institutions challenge family ownership. We propose a new framework for organizing these assets and roadblocks, called the family business map; this framework is useful for categorizing the papers presented in this Special Issue. We support the predictions of the framework with evidence from Chinese family firm succession, and conclude that family firm organization is an adaptation to environmental opportunities and constraints. We end the paper with suggestions for future research.

We examine two inconclusive issues in the IPO (initial public offering) underpricing literature. It is unclear whether private firms or state-owned enterprises (SOEs) underprice their IPOs more and how the institutional environment affects IPO underpricing. Using a much larger China IPO sample of SOEs, we conclude that SOEs underprice their IPOs more than private firms. Specifically, SOEs controlled by the central government (CSOEs) underprice their IPOs 27 percentage points more than private firms, whereas SOEs controlled by local governments (LSOEs) underprice theirs 7 percentage points more than those of private firms. Using the National Economic Research Institute Index of Marketization (NERIIM) to measure the institutional environment, we find that one index score improvement in institutional environment is associated with a two percentage-point reduction in IPO underpricing. Importantly, a better institutional environment reduces IPO underpricing most effectively for private firms, followed by LSOEs, and the least for CSOEs.

This paper uses a unique and rich administrative data set to analyze the impact of the introduction of a new grading policy on graduations rates at Benedict College, a Historically Black College in Columbia, South Carolina. According to the new grading policy, grades for underclassmen are determined in part by performance on tests and in part by measures of “effort” such as attendance and class participation. This paper finds that while graduates graduate at a faster rate under the policy, there is no significant difference between graduation rates before and after the policy was implemented.

We investigate competition between traditional stock exchanges and new dark trading venues using an important difference in regulatory treatment. Securities and Exchange Commission required minimum pricing increments constrain some stock spreads, causing large limit order queues. Dark pools allow some traders to bypass existing limit order queues with minimal price improvement. Using a regression discontinuity design, we find that spread constraints significantly weaken exchanges׳ competitiveness. As more orders migrate to dark pools, the probability of subsequent order execution there increases, raising liquidity. The ability to circumvent time priority of displayed limit orders is one cause of the rapid rise in US equity market fragmentation.

We ask whether past macro-economic and bank-specific shocks experienced and survived by a bank affect its current capitalization and risk-taking. Using Call Report data from 1984 to 2010, we find that a bank's experience shapes its capital structure and risk appetite. Banks that have survived periods of undercapitalization tend to implement higher equity ratios and take less risk in the periods following such crises, as measured by net charge-offs, non-performing loans, or earnings volatility 10-25 years later. However, observing high rates of failure among other banks stirs banks in the opposite direction. The evidence is suggestive of institutional memory affecting banks' capital and risk-taking.

Based on data collected from 616 experienced financial officers who use U.S. GAAP or IFRS and are domiciled in the U.S., Europe, or Asia, we examine how reporting standards (U.S. GAAP versus IFRS) and domicile (U.S. versus non-U.S.) affect earnings management (real versus accrual). U.S. firms using U.S. GAAP rely more heavily on real methods than non-U.S. firms that use either IFRS or U.S. GAAP and U.S. firms using IFRS. U.S. firms using U.S. GAAP operate in an environment that encourages real over accruals methods; specifically, U.S. GAAP facilitates detection of earnings management, and enforcement is more effective in the U.S. Further, the likelihood and amount of earnings management do not differ across conditions, suggesting that firms using less accruals earnings management tend to fully compensate by increasing real methods. So stronger reporting environments do not necessarily reduce total earnings management, but instead encourage substitution of real for accruals methods.