In this paper, we document diverse levels of managerial ability and firm performance in the cross section of acquiring firms. Acquirers with strong managerial ability realize higher announcement-period abnormal returns and experience better post-merger firm performance than their low-ability counterparts. Our results are robust to endogeneity concerns and show that the observed variation in acquirer

We show that corporate bond issuers benefit from utilizing existing underwriter relationships when rolling over bonds, but at the same time become exposed to underwriter distress. A strong relationship enables the underwriter to credibly certify the issuer resulting in lower direct issuance costs and lower underpricing. However, if the underwriter becomes distressed, this spills over to the issuer's

Failure to correct for pension risk leads to upward-biased discount rate estimates in firms with pension risk exposure. The result is a negative and economically significant relation between pension risk and corporate investment. The effect is confined to investment decisions that require discount rate estimates. Moreover, it is stronger if project value is more sensitive to such estimates. Because

We examine whether outside investors mimic insider trades by analyzing the daily transactions of foreign institutional investors (FII) in the Indian emerging market. We find that the value relevance of insiders' opportunistic buy trades is much higher in our context relative to that reported for developed markets. More importantly, we find that FII mimic opportunistic buy trades, which is more pronounced

From 2005 to 2015, the 25 largest global financial institutions paid combined more than $285 billion in legal penalties. We examine the reaction of banks' stocks, bonds, and credit default swaps to the announcements of monetary penalties. We observe a reduced default risk and lower financing costs, as well an increase in the stock market valuation, suggesting that banks benefit from settling lawsuits

This article surveys research on the effects of digitalization on access to finance. We focus the review on access through fintech. We review the growth of three main fintech technologies, fintech lending (incl. peer-to-peer lending), crowdfunding and initial coin offerings. We discuss existing evidence on how fintech affects access to finance for firms and investors and consider the regulatory challenges

We find the limited supply of female directors, rather than gender differences or boardroom biases, can create an informational disadvantage for some female independent directors, as measured by their open market trading profits. The information disparity is largely isolated to firms with abnormally low representation by female directors. Female independent directors who are located further away from

This study investigates the impact of bank relationships on bond spreads using data on Japanese bond-issuing firms. In doing so, it extends the existing literature, which found that bank relationships decrease bond spreads, consistent with the view that bond investors benefit from bank monitoring, but this is not the case for investment-grade bonds in the US. This study provides evidence that the influence

We show that social connections between a firm's executives and directors and brokerages that follow the firm decrease the firm's cost of equity. We use quasi-natural experiments to address endogeneity concerns and find that the uncovered effect of firm-brokerage social connections on cost of equity is likely causal. The effect is found to be more pronounced for firms with more soft information, opaque

We explore the link between firms' dollar bond borrowing and their FX-hedged funding opportunities, as reflected in a positive corporate basis (the relative cost of local to synthetic currency borrowing). We first document that firms substitute domestic for dollar borrowing when the corporate basis widens. Additionally, we find that when these funding opportunities appear, the currency substitution

We investigate what determines variation in the composition of the financial assets that constitute corporate cash reserves and how this variation relates to other key liquidity management practices. The degree to which a firm invests its cash reserves in less liquid, longer-maturity financial assets that earn a higher yield is explained by financial constraints, the ability to accurately forecast

This paper sheds light over the operations and internal structure of business angel groups (BAGs), a leading actor inside the informal venture capital industry, due to its capability to build cognitive resources and shared competencies that are eventually provided to funded ventures alongside equity capital. We develop a framework based on the role of business angels' decision-making style, human capital

We investigate the predictive power of corporate social culture, as measured by corporate social responsibility (CSR) intensity, on shareholder wealth when mergers and acquisitions (M&As) are carried out by managers with different traits. We find acquiring firms with talented managers are more inclined to engage in CSR activities to shape corporate social culture, thereby realizing larger short- and

Using the Sarbanes-Oxley Act of 2002 as a quasi-natural experiment to identify the impact of corporate governance reform on foreign exchange risk hedging, we find that the substantial improvements in governance standards increased derivatives hedging and reduced foreign exchange exposure. The results are robust whether we consider initial reform gap or actual implementation, focus on legally required

We document a novel pattern that campaign goal amounts set by entrepreneurs on Kickstarter exhibit clear clustering at round numbers. We propose that the round number heuristic, a tendency to adopt round numbers as cognitive shortcuts when facing complicated and uncertain situations, may explain the clustering pattern and predict campaign outcomes. Based on 162,863 campaigns between 2009 and 2017,

Reliable access to funding, as in Myers and Majluf (1984), is what really matters, but there are nontrivial indeterminacies in how such access is arranged and in the debt, cash-balance, and payout components of financial policy. These inferences are from a corporate “twins” comparison study of the financial policies of Henry Ford at Ford Motor Co. and Alfred P. Sloan, Jr. at General Motors Corp. The

This paper studies the causal effect of a reduction in firm opacity on asset liquidity and corporate expenditures. We employ the discontinuous requirement of financial reporting introduced by the Sarbanes-Oxley Act, Section 404, as a measure of the change in the firm's information environment. Using a regression discontinuity design, we show that firms that comply with Section 404 exhibit higher stock

We study the impact of CEO early-life disaster experience on stock price crash risk. Using a longitudinal sample of U.S. firms, we document that firms led by CEOs with early-life disaster experience have higher stock price crash risk. Our findings are consistent with CEOs who experienced early-life disasters being more risk tolerant, and thus more willing to accept the risks associated with bad news

We examine the impact of social networks between independent directors and the CEO on firm risk. Employing the deaths and retirements of socially connected independent directors and the passage of the 2002 Sarbanes-Oxley Act for two identifications, we find that board-CEO social networks have a positive impact on firm risk. Specifically, CEOs who are socially connected to their independent directors

A common assumption is that entrepreneurs retain more control of their venture when opting for crowdinvesting rather than venture capital. In this article, we investigate the relevance of cash-flow, control, and exit rights awarded to crowd investors in Germany, where more flexible contracts are offered than in many other jurisdictions. In Germany, many of the rights used in venture capital investment

This paper investigates whether firms that communicate information on social media have a lower cost of equity capital. Using a hand-collected dataset comprising the full universe of all firms listed on the NYSE, AMEX and NASDAQ since the inception of Twitter, I show that firms that use Twitter have a lower cost of equity capital. Furthermore, firms that face the greatest information asymmetries; namely

This paper analyzes the relationship between online social networks and inter-firm investment similarity. Using mutual friendships of senior officers on Sina Weibo as proxies for online social connections, we find that companies, whose senior officers share online connections, exhibit more similar levels of capital investments. In addition, the baseline result is robust in subsamples of senior officers'

This paper examines the monitoring role of investors in the behavioral spillover between firms with shared auditors. Our context involves firms receiving U.S. Securities and Exchange Commission comment letters on issues relating to the recognition of revenue, gains, or losses (RRGL) in their 10-K filings and subsequently engaging in a higher degree of accounting conservatism. Investors of firms who

We examine the role of CEO social capital as an important driver of the widespread practice of real earnings management (REM). Using the number of social connections to outside executives and directors to measure CEO social capital, we first find that well-connected CEOs associate with higher levels and volatilities of REM. The positive relation between REM and CEO network size is stronger when the

This paper suggests the topic of corporate agility as a fruitful area for corporate governance research. Corporate agility, which refers to a firm's ability to adapt to changes in its environment, is likely to be a critical, yet understudied, determinant of firm performance and survival. This paper proposes an inverse relation between the centralization of decision-making in firms and agility. It also

This study investigates whether a CEO's personal political ideology, as captured by his or her political contributions, is associated with a firm's credit ratings. Republican CEOs, we find, are associated with higher credit ratings, especially when their firms are headquartered in conservative areas. In addition, the link between political ideology and credit rating is more pronounced in firms that

We find that individualistic countries regulate insider trading activities more intensely. The result is robust to controlling for alternative culture variables, additional controls, and instrumental variable analysis. We also document that individualism's effect is magnified in democratic countries. In addition, we study the economic and financial consequences of individualism, insider trading regulation

Greater partisan alignment among lawmakers enhances their ability to respond rapidly to adverse shocks, but it also undermines the quality of checks and balances and encourages excessive governmental intervention in local areas aligned with the ruling party. We investigate how this form of local policy risk affects IPO underpricing. One standard-deviation increase in political alignment between local

We examine the extent to which directors with supply chain experience (DSCs) on corporate boards create informational advantages that improve strategies and outcomes related to mergers and acquisitions (M&A). Our results suggest that DSCs play a dual role by motivating value-enhancing acquisitions while simultaneously deterring value-destroying ones. The nature and extent of these effects depend on

Variance risk premia (VRP) based on equity and credit market information for the same firm differ substantially in magnitude. VRP is strongly dependent on firm characteristics. Higher-leveraged and larger firms have lower VRP. The smirk in the plot of VRP vs. leverage is higher for low-levered firms than for high-levered firms. This smirk is more pronounced in the credit market than in the equity market

This paper examines the impact of takeover law enforcement on corporate acquisitions. We use the European Takeover Directive as a natural experiment, which harmonizes takeover law across countries, while leaving its enforcement to the discretion of individual countries. We exploit this heterogeneity in enforcement quality across countries in a difference-in-differences-in-differences model, while employing

Lenders in Prosper, one of the largest lending markets in the U.S., reduce their activity when playing multistate Powerball or Mega Millions lottery jackpot becomes attractive. This finding suggests that the desire for sensation seeking is an underlying motivation for participating in peer-to-peer crowdfunding markets; the thrill of winning a large lottery jackpot fulfills some lenders' desire for