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Two Essays in Finance

Market Response to Catastrophic Losses on the Insurance Industry and Return on Investment of the University of Illinois to the State of Illinois Treasury

by Ward R. Kangas

Paperback e-Book PDF
Institution: University of Illinois at Urbana
Advisor(s): Stephen P. D'Arcy
Degree: Ph.D. Finance
Year: 1996
Volume: 144 pages
ISBN-10: 1581120044
ISBN-13: 9781581120042


Based on data on publicly traded insurance firms, the first essay examines questions about the effect of large catastrophic events on insurance firms. Rather than looking at a single event, thirty catastrophic events were aggregated into quintiles and the cumulative abnormal returns around these events were found to be significantly positive over a 25 day trading window. There is no significant evidence that post-catastrophic stock returns are correlated to the magnitude of the catastrophe.

The second essay analyzes the effect of a large land grant university, the University of Illinois, on the State Treasury of Illinois. If the State Treasury were acting as its own agent trying to maximize revenues, would it choose higher education as an investment versus other alternative investments. While it is true the State makes large expenditures for the operations of the University, it is also true that individuals receiving degrees on average receive higher incomes. Taxes or higher incomes offset