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
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