How to Do Research in Finance By Cheng-few Lee Chair Professor and Director of the Graduate Institute of Finance, National Chiao Tung University Distinguished Professor of Finance, Rutgers University Editor, Review of Quantitative Finance and Accounting Editor, Review of Pacific Basin Financial Markets and Policies President, Foundation of Pacific Basin Financial Research and Development

I. Introduction A. Definition of Finance B. Classification of Finance

II. Classification of Finance Research A. Empirical Research B. Theoretical Research C. Interdisciplinary Research 1. Accounting 2. Economics 3. Statistics 4. Econometrics 5. Computation

III. How Does Strategic Competition Affect Firm Values? A Study of New Product Announcement By Sheng-Syan Chen, Kim Wai Ho, Kueh Hwa Ik,and Cheng-few Lee

A.The Determinants of the Wealth Effect of New Product Introductions 1. Strategic Competition 2. Investment Opportunities 3. Free Cash Flow 4. Debt Ratio 5. Firm Size 6. Technological Opportunities 7. Patent 8. Single- or Multiple- Product Announcements 9. Announcement Frequency 10. Interest Rates

B. Sample and Descriptive Statistics 1. Sample Design 2. Measuring Abnormal Stock Returns 3. Operationalizing a Firm ’ s Competitive Strategy 4. Control Variables 5. Sample Characteristics

C. Stock Price Response for the Announcing Firms and the CSM 1. Analysis of Subgroups Based on the CSM a. Table I. Sample Distribution, Summary Statistics, and Announcement-Period Abnormal Returns b. Table II. Average Industry Competitive Strategic Measure c. Table III. Average Announcement-Period Abnormal Returns of Announcers Stratified by the Competitive Strategy Measure

-- Continued Cross-Sectional Regression Analyses Table IV. Regressions of Announcement- Period Abnormal Returns

D. Stock Price Response for Industry Rivals and the CSM Table V. Industry Rivals’ Average Abnormal Returns over the Announcement Period E. Concluding Remarks