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Issue Information: European Financial Management 2/2024 European Financial Management (IF 2.295) Pub Date : 2024-03-04
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Spillover in higher-order moments across carbon and energy markets: A portfolio view European Financial Management (IF 2.295) Pub Date : 2024-02-08 Rizwan Ahmed, Elie Bouri, Seyedmehdi Hosseini, Syed J. Hussain Shahzad
Motivated by the occurrence of extreme events and nonnormality of returns, we examine the spillovers among the conditional volatility, skewness and (excess) kurtosis of European Union allowances (EUA), Brent oil, natural gas, coal, electricity and clean energy markets. The jointly estimated spillover index in the system of the three higher-order moments is notably high, exceeding the spillover index
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The influence of initial sponsor backing on post-IPO acquisition activity European Financial Management (IF 2.295) Pub Date : 2024-01-26 Mattheo Kaufmann, Sascha Kolaric, Lennart Walter
We investigate the impact of financial sponsor backing [venture capital (VC) or private equity (PE)] on post-initial public offerings (IPO) acquisition strategies of newly public companies. We find that PE-backed newly public firms undertake nearly three times more acquisitions than VC-backed ones and almost twice as many as non-backed firms, indicating that acquisitions are a primary growth strategy
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The impact of credit reforms on bank loans and firm leverage around the world European Financial Management (IF 2.295) Pub Date : 2024-01-22 Halit Gonenc, Floris Jansen, Mario Hernandez Tinoco, Milos Vulanovic
This study examines how credit reforms impact commercial bank loans and nonfinancial firms' debt. Using two international samples for commercial banks and nonfinancial firms from 2004 to 2019, we find that global information-sharing reforms encourage banks to increase corporate loans, thus improving firm debt financing, particularly in countries with weak creditor rights. Legal rights reforms significantly
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Option compensation, dynamic investment and capital structure European Financial Management (IF 2.295) Pub Date : 2024-01-20 Liu Gan, Xin Xia, Hai Zhang
We develop a dynamic trade-off model of managerial discretion to investigate how stock option compensation relates to managers' intertwined capital structure and dynamic investment decisions. Our model predicts that option grants provide managers with incentives to undertake both current and future investments, in sharp contrast to the effects of stock compensation. With an increase in option compensation
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Managing liquidity along the supply chain: Supplier-base concentration and corporate cash policy European Financial Management (IF 2.295) Pub Date : 2024-01-18 Lulu Di, Wei Jiang, Ju Mao, Yeqin Zeng
We find that customer firms with more concentrated supplier bases tend to hold higher levels of cash reserves. The positive relation between supplier-base concentration and cash holdings is more pronounced for firms with nonstate ownership, higher market competition, worse inventory efficiency, more relationship-specific investment, central positions in the production networks, and headquarters located
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Picking a thorny rose: Optimal trading with spread-based return predictability European Financial Management (IF 2.295) Pub Date : 2024-01-05 Linjun Feng, Ya Li, Jing Xu
Small stocks' time-varying spreads predict future return gap between small and large stocks. To optimally exploit such predictability, the investor captures current risk premium by purchasing at large spreads with substantially reduced turnover; uses an aim-in-front-of-the-target approach to trade-off between future risk premium and current transaction costs; and meets hedging demand at low costs.
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Retail ETF investing European Financial Management (IF 2.295) Pub Date : 2023-12-21 David Gempesaw, Joseph J. Henry, Han Xiao
Using marketable order flow data, we analyze key characteristics of aggregate retail exchange-traded fund (ETF) investing from 2010 to 2021, including allocations, holding period and investment performance. Retail traders allocate 12% more dollar volume to leveraged and inverse ETFs versus nonretail traders. Retail ETF trades distinctly increase with prior ETF returns, in contrast to contrarian stock
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When does CSR payoff? European Financial Management (IF 2.295) Pub Date : 2023-12-18 John A. Doukas, Rongyao Zhang
We investigate whether firms engaging in corporate social responsibility (CSR) can preserve firm value during normal and unprecedented exogenous adverse events. Our evidence shows, in regular times, a negative relation between CSR engagement and firm value, but under adverse economic conditions, CSR protects firm value by decreasing firm risks. We also find that firms with high managerial attributes
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The joint determination of the payment method and the bid premium in M&As: What is the role of firm opacity? European Financial Management (IF 2.295) Pub Date : 2023-12-15 Pierpaolo Battigalli, Carlo Chiarella, Stefano Gatti, Tommaso Orlando
This paper investigates how private information affects the joint determination of the payment method and the bid premium in M&As. The focus is on the uncertainty of the stand-alone valuations of the firms involved in the transaction induced by their opacity. First, we model M&A negotiations as a signalling game with two-sided private information and derive correlations between firm opacity and bid
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I will trade, just not today: Individual investor trading activity around birthdays European Financial Management (IF 2.295) Pub Date : 2023-12-11 Emanuele Bajo, Otto Randl, Giorgia Simion
In this paper we provide new evidence of investor inattention by showing that personal occurrences such as birthdays are able to drive attention away from the stock market. We document that individual investors significantly reduce their trading activity in the 3 days around their birthday. The reduction in the propensity to trade is larger for more active traders, in the event of a decade birthday
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Firm-level exposure to trade policy shocks: A multidimensional measurement approach European Financial Management (IF 2.295) Pub Date : 2023-11-27 Giovanni Bruno, Felix Goltz, Ben Luyten
We propose a firm-level measure of exposure to trade policy shifts that combines characteristics (tradability of goods, share of output exported and corporate risk disclosures) with information from stock returns. We show that the measure reliably captures out-of-sample differences in price responses and sentiment related to trade tensions, both in US and international data. Differences across firms
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Is it a boy or a girl? Newborn gender and household portfolio decisions European Financial Management (IF 2.295) Pub Date : 2023-11-22 Francesca Arnaboldi, Elena Beccalli, Francesca Gioia
This paper analyzes the role of newborn gender in household investment decisions. Parenting a new baby is associated with a reduction of the share of financial wealth held as cash and an increase in risky investments. The reallocation is however gender-heterogeneous: the increase in the share of both total and financial wealth allocated to risky assets when parenting girls is reduced for households
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Does ESG reputational risk affect the efficiency and speed of adjustment of corporate investment? European Financial Management (IF 2.295) Pub Date : 2023-11-22 Ioannis Chasiotis, Dimitrios Gounopoulos, Dimitrios Konstantios, Vasilios-Christos Naoum, Victoria Patsika
This study explores the relationship between environmental, social, and governance (ESG) reputational risk and investment efficiency. We provide evidence that ESG reputational risk relates to higher corporate suboptimal investment (underinvestment) and a lower speed of adjustment back to the optimal investment level. Our findings hold for parametric and nonparametric estimations of underinvestment
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Buy the dip? European Financial Management (IF 2.295) Pub Date : 2023-11-08 Stefano Bonini, Thomas Shohfi, Majeed Simaan
We study the fundamental properties of the “Buy the dip” (BTD) investment heuristic. Looking into cash holdings versus a stock market exchange-traded fund, we find that BTD does not necessarily maximize investors' real terminal wealth and is sensitive to market conditions at the beginning year of investment. While under certain conditions, BTD may improve risk-adjusted performance over a passive investment
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Firm ESG reputation risk and debt choice European Financial Management (IF 2.295) Pub Date : 2023-11-08 David P. Newton, Steven Ongena, Ru Xie, Binru Zhao
Using a novel sample covering 3783 US public firms from 2007 to 2020, we examine how negative media coverage of firm-level environmental, social, and governance (ESG) practices affects a firm's debt choice. We find that firms with higher ESG reputation risk rely more on public bond than bank loan. The social and governance components, in particular, matter. Moreover, firms that receive more negative
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Funding constraints, financial crisis, and price discovery between the futures and spot markets European Financial Management (IF 2.295) Pub Date : 2023-11-03 Yi-Wen Chen, Junmao Chiu, Robin K. Chou, Chu-Bin Lin
We investigate the effect of funding constraints and the financial crisis on the pricing dynamics between the spot and futures markets. Tighter funding constraints and the presence of a financial crisis deter informed investors from utilizing their informational advantage in the futures market, reducing the leading role and information shares of futures prices. Funding constraints negatively affect
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Aggregate volatility risk and momentum returns European Financial Management (IF 2.295) Pub Date : 2023-11-03 Efdal Ulas Misirli
Momentum stocks are exposed to aggregate volatility risk. This paper estimates an exponential generalized autoregressive conditional heteroskedastic model of market volatility to introduce a new volatility risk factor. Winners have negative loadings on this factor, whereas losers have positive loadings. Because volatility risk carries a negative price of risk, the new factor explains 73% of momentum
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Non-CEO executives' intraorganizational competition incentives and corporate labour investment efficiency European Financial Management (IF 2.295) Pub Date : 2023-10-29 Zhe Li, Bo Wang
This study examines the impact of non-Chief Executive Officer (non-CEO) executives' intraorganizational promotion-based incentives, also known as tournament incentives, on corporate labour investment efficiency. We find that tournament incentives lead to inefficient labour investment, measured as the absolute deviation from optimal net hiring warranted by firm fundamentals. This positive relationship
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Arbitrage asymmetry, mispricing and the illiquidity premium European Financial Management (IF 2.295) Pub Date : 2023-10-13 Feifei Wang, Lingling Zheng
Illiquid assets require a return premium; illiquidity is also a limit-to-arbitrage. We find that Amihud's illiquidity premium is significantly higher among underpriced stocks than among overpriced stocks. Excluding the most mispriced stocks leads to a higher and more reliably estimated illiquidity premium. Amihud's illiquidity measure is positively correlated with overpricing, consistent with arbitrage
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Geographic income diversification of large European banks: Better or worse? European Financial Management (IF 2.295) Pub Date : 2023-10-09 Caner Gerek, Ahmet M. Tuncez
This study examines the impact of geographic income diversification of large European banks on performance and risk-taking by using unique data. By dividing the total operating income into three regions as the home country, the rest of Europe and the rest of the world, we find evidence that geographic income diversification reduces bank performance and increases risk-taking. Particularly, shifting
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Research unbundling and market liquidity: Evidence from MiFID II European Financial Management (IF 2.295) Pub Date : 2023-10-09 Anqi Fu, Tim Jenkinson, David Newton, Ru Xie
The second Markets in Financial Instruments Directive (MiFID II) mandated the unbundling of payments for research and trading. This research explores whether the impact of MiFID II differs between large and small firms in terms of analyst coverage and stock liquidity. Focusing on the UK stock markets we find a significant drop in analyst coverage on the Main Market, which leads to a deterioration in
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Engaged ETFs and firm performance European Financial Management (IF 2.295) Pub Date : 2023-09-26 Izidin El Kalak, Robert Hudson, Onur K. Tosun
Exchange Traded Funds (ETFs) have often tracked indices and charged low fees so their incentives to improve firm performance are questionable although little empirical work has investigated this issue. Theoretically, however, we expect firms to perform better when held by more engaged ETFs. We develop a new measure of engagement using a weighted-average concentration measure which captures the combined
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Extreme risk dependence between green bonds and financial markets European Financial Management (IF 2.295) Pub Date : 2023-09-16 Sitara Karim, Brian M. Lucey, Muhammad A. Naeem, Larisa Yarovaya
The current study investigates the extreme risk dependence between green bonds and financial markets by employing the dual approaches of time-varying optimal copula and extreme risk spillover analysis of dynamic conditional Value-at-Risk. We report significant symmetric (asymmetric) tail-dependent copulas in the upper (lower) tails characterizing independent regimes. Green bonds offer sufficient diversification
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Born after the Volcker Rule: Regulatory change, managerial remuneration and hedge fund performance European Financial Management (IF 2.295) Pub Date : 2023-09-06 Michael Bowe, Olga Kolokolova, Lijie Yu
Substantial remunerative benefits accrue to managers of new hedge funds launched after the implementation of the Volcker Rule if their previous employer is a large US bank. After the rule, ex-bankers' funds charge higher management fees and receive more flows as compared with other new hedge funds established during the same period. This phenomenon is related to changes in investor perception of the
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Is bitcoin ESG-compliant? A sober look European Financial Management (IF 2.295) Pub Date : 2023-09-01 Juliane Proelss, Denis Schweizer, Stéphane Sévigny
Much of the media focus surrounding Bitcoin (BTC) has been on the ‘E’ (environmental) element of the ESG investing approach. Given the amount of electricity consumed by BTC mining, and the resulting large carbon emissions, BTC has faced substantial criticism of its overly negative environmental impact, which is critically reviewed in this article. This one-sided discussion, however, ignores the ‘S’
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CFO pay convexity, risk taking and corporate hedging European Financial Management (IF 2.295) Pub Date : 2023-08-24 Massimiliano Barbi, Valentina Febo, Irene Massimiliani
We study how a CFO's risk-taking incentives affect corporate hedging by utilising hand-collected data from 2009 to 2019 on corporate hedging and managerial compensation for a sample of US oil and gas firms. The relative convexity of CFO equity compensation negatively affects the likelihood and extent of hedging. When the CFO and CEO have diverging risk-taking incentives, the relative convexity of the
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Cost-effectiveness, fairness and adverse selection in mutual aid European Financial Management (IF 2.295) Pub Date : 2023-08-19 Ze Chen, Runhuan Feng, Li Wei, Jiaqi Zhao
Online mutual aid (MA) is a novel form of ex-post risk sharing empowered by InsurTech to provide critical illness coverage without involving an insurer. In this paper, we first provide a rigorous examination of the underpinning theory and analyze MA model's cost-effectiveness. In addition, we theoretically investigate the condition for MA's actuarial fairness among all participants. Our numerical illustration
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Green SPACs European Financial Management (IF 2.295) Pub Date : 2023-08-16 Nebojsa Dimic, John W. Goodell, Vanja Piljak, Milos Vulanovic
We examine the structural characteristics of special purpose acquisition companies (SPACs) focused on green causes. We explain their ecosystem, primary determinants of initial public offering (IPO) size, and speed of going public, and we calculate their returns around merger announcements and subsequent acquisition. Green SPAC size depends on CEO characteristics, choice of exchange and specialisation
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Coordinated monitoring and mergers and acquisitions European Financial Management (IF 2.295) Pub Date : 2023-08-08 Ettore Croci, Mieszko Mazur, Galla Salganik-Shoshan
This paper shows that coordinated monitoring by institutional investors affects how firms behave in the M&A market. We employ the spatial dimension of geographic links between major institutions as a proxy for interaction and information exchange—a process that determines the effectiveness of investor monitoring over firm management. Using data over the last 30 years, we show that the returns to acquiring
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Determinants and effects of trade credit financing: Evidence from the maritime shipping industry European Financial Management (IF 2.295) Pub Date : 2023-07-29 Elisavet Mantzari, Anna Merika, Christos Sigalas
This paper investigates the factors and effects of trade credit, as an alternative source of capital, by employing a generalized method of moments instrumenting for endogeneity based on a panel data set of public maritime shipping companies and compatible companies in other industries. Our study shows that the magnitude of trade credit is affected by profitability, financial leverage, company size
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ESG disclosure, CEO power and incentives and corporate risk-taking European Financial Management (IF 2.295) Pub Date : 2023-07-28 Faek Menla Ali, Yuanyuan Wu, Xiaoxiang Zhang
This paper investigates the impact of environmental, social and governance (ESG) disclosure on corporate risk-taking and how this impact is further affected by chief executive officer (CEO) power and incentives within US companies. We find that ESG disclosure decreases corporate risk-taking based on both accounting-based and market-based returns. Further, we find that ESG disclosure is more effective
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Multiple large shareholders, blockholder trading and stock price crash risk European Financial Management (IF 2.295) Pub Date : 2023-07-26 Jiao Ji, Hanwen Sun, Haofeng Xu
We show that in a setting with a strong concern for controlling shareholder entrenchment, firms with multiple large shareholders (MLS) are more likely to experience stock price crashes. As a result, when anticipating future revelations of bad news concerning corporate misconduct on information disclosure, large shareholders can exploit their information advantage and initiate their sales ex ante as
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Institutional investors and corporate environmental costs: The roles of investment horizon and investor origin European Financial Management (IF 2.295) Pub Date : 2023-07-19 Wolfgang Drobetz, Sadok El Ghoul, Zhengwei Fu, Omrane Guedhami
Using an international data set that quantifies corporate environmental costs, we analyze the influence of institutional investor ownership, particularly investment horizon and investor origin, on the monetized environmental impact generated by their investee firms. Institutional investor ownership is negatively related to corporate environmental costs. This effect is driven by long-term foreign institutional
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Survival and value: The conglomerate case European Financial Management (IF 2.295) Pub Date : 2023-07-13 Michela Altieri, Giovanna Nicodano
This paper investigates the relationship between default probability and value when there is a selection bias due to missing controls for firm heterogeneous likelihood to survive in the sample. Our model delivers the following implications for the conglomerate case: (a) the sample conglomerate value increases in their default probability, (b) the sample conglomerate discount falls together with their
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Build, buy or partner? The relative performance of an acquisitive strategy European Financial Management (IF 2.295) Pub Date : 2023-07-10 Olubunmi Faleye
We conceptualize mergers as one of several strategies for creating value and study merger performance by evaluating the performance of firms employing an acquisitive strategy. Relative to other firms, acquisitive firms are valued lower, exhibit lower employee and total factor productivity, and innovate less. These effects are concentrated among firms whose workforce is vulnerable to acquisition-related
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Does innovation drive mergers and acquisitions in the financial sector? European Financial Management (IF 2.295) Pub Date : 2023-07-04 Tram H. Dang
Does innovation drive mergers and acquisitions in the financial sector? This issue is challenging because classical measures of innovation are unavailable in the financial sector. Thus, we introduce an innovation measure that can be used for financial firms. Considering US financial deals, we highlight the impact of a financial firm's innovative activities on the likelihood of becoming an acquirer
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Crisis risk and risk management European Financial Management (IF 2.295) Pub Date : 2023-06-28 René M. Stulz
We assess the state of knowledge about crisis risk and its implications for risk management. Data that became available after the global financial crisis show that some types of crises are predictable when accounting for interactions between risks. However, other types of crises do not seem predictable. There is no evidence that the frequency of economic and financial crises is increasing. While data
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The performance of socially responsible investments: A meta-analysis European Financial Management (IF 2.295) Pub Date : 2023-06-17 Lars Hornuf, Gül Yüksel
In this article, we use a meta-analysis to examine the performance of socially responsible investing (SRI). We find that, on average, SRI neither outperforms nor underperforms the market portfolio. However, in line with modern portfolio theory, we find that global SRI portfolios outperform regional subportfolios. Moreover, high-quality publications, publications in finance journals and authors who
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Catering and cash savings European Financial Management (IF 2.295) Pub Date : 2023-06-09 Hsuan-Chi Chen, Robin K. Chou, Chien-Lin Lu
We examine the catering of managers to investors' preference for cash holdings. We find that cash is positively related to the cash-holding premium as represented by the difference in the market-to-book ratios between cash-rich and noncash-rich firms. This positive effect can be attributed to different sources such as internal and external financing, and firms may switch their sources for holding cash
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Tracing environmental sustainability footprints in cross-border M&A activity European Financial Management (IF 2.295) Pub Date : 2023-06-01 Muhammad F. Ahmad, Saqib Aziz, Yannick Michiels, Duc Khuong Nguyen
This study documents the first large-scale empirical evidence on the effects of differences in countries' environmental sustainability (ES) on cross-border merger and acquisition (M&A) activity. Using 34,088 cross-border mergers across 44 countries, we find that greater ES differences between acquirer and target countries stimulate the intensity of cross-border mergers. The acquirer firms experience
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On the (almost) stochastic dominance of cryptocurrency factor portfolios and implications for cryptocurrency asset pricing European Financial Management (IF 2.295) Pub Date : 2023-06-01 Weihao Han, David Newton, Emmanouil Platanakis, Charles Sutcliffe, Xiaoxia Ye
Cryptocurrency returns are highly nonnormal, casting doubt on the standard performance metrics. We apply almost stochastic dominance, which does not require any assumption about the return distribution or degree of risk aversion. From 29 long–short cryptocurrency factor portfolios, we find eight that dominate our four benchmarks. Their returns cannot be fully explained by the three-factor coin model
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Costs and benefits of trading with stock dealers: The case of systematic internalizers European Financial Management (IF 2.295) Pub Date : 2023-05-30 Fatemeh Aramian, Lars L. Nordén
Systematic internalizers are single-dealer platforms run by investment firms that trade out of their own inventories by internalizing the trades off exchanges. We analyze the determinants of dealers' market shares and trading costs. We find that dealer trades have lower price impacts than exchange trades, consistent with uninformed traders seeking out dealers. Due to their ability to avoid trading
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Do boutique investment banks have the Midas touch? Evidence from M&As European Financial Management (IF 2.295) Pub Date : 2023-05-20 George Alexandridis, Nikolaos Antypas, Vicky Y. Lee
We study whether the meteoric rise of boutique advisors in mergers and acquisitions (M&As) is justified by their buy-side performance. We find that acquiring firms represented by boutique advisors generate superior short- and long-run abnormal returns over those employing full-service advisors. This effect is mainly prominent in private deals, interindustry mergers, and deals involving inexperienced
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Social networks and managerial rent-seeking: Evidence from executive trading profitability European Financial Management (IF 2.295) Pub Date : 2023-05-18 Xiaohua Fang, Xi Rao, Wenjun Zhang
This study examines whether board social networks are associated with executive trading profitability. Using a sample of US public firms with a history of executive trading from years 2000 to 2015, we find robust evidence that the profitability of executive trading is significantly lower in firms with higher levels of board social networks. The evidence is consistent with our view that board social
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Equity market and the transmission channels of monetary policy: Before and after the zero lower bound European Financial Management (IF 2.295) Pub Date : 2023-05-17 Amadeu DaSilva, Mira Farka
We examine the effectiveness of the interest rate channel and the credit channel of monetary policy before and after the zero lower bound (ZLB), using intraday stock returns. We construct a number of industry-specific and firm-specific indicators to capture the sensitivity of firms' demand to interest rates (interest rate channel) and firms' financial constraints (credit channel). We find that the
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Investor sentiment and the risk–return relation: A two-in-one approach European Financial Management (IF 2.295) Pub Date : 2023-05-13 Darren Duxbury, Wenzhao Wang
Traditional finance theory posits a positive risk–return relation, but empirical evidence is inconclusive. Retail investor sentiment has long been viewed as a distorting factor, while more recently institutional investor sentiment is thought to play a role. We examine the separate and joint impacts of retail and institutional investor sentiments on the risk-return relation. We find, at both market
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Corporate culture and IPOs European Financial Management (IF 2.295) Pub Date : 2023-05-06 Douglas J. Cumming, Antonio Meles, Gabriele Sampagnaro, Vincenzo Verdoliva
This study documents corporate culture at the time of initial public offering (IPO) and the relationship between corporate culture at the time of IPO and firm financial performance. Based on a sample of 1157 US firms that went public between 1996 and 2011 and performance information through 2016, the data provide strong evidence that regional culture, industry characteristics, and pre-IPO financing
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Work-from-home and the risk of securities misconduct European Financial Management (IF 2.295) Pub Date : 2023-05-06 Douglas Cumming, Chris Firth, John Gathergood, Neil Stewart
In the wake of the global pandemic, a challenge for CEOs and boards is to set a stakeholder-acceptable organizational balance between remote and traditional office working. However, the risks of work-from-home are not yet fully understood. We describe competing theories that predict the effect on misconduct of a corporate shift to work-from-home. Using internal bank data on securities traders we exploit
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Lending quality and contracts enforcement reforms European Financial Management (IF 2.295) Pub Date : 2023-04-15 Vincenzo D'Apice, Franco Fiordelisi, Giovanni W. Puopolo
We investigate the causal relationship between the efficiency of country's judicial system and the quality of bank lending, using the contracts enforcement reforms implemented in four European countries as a quasi-natural experiment. We find that strengthening contracts enforcement determines large, significant and persistent reductions in banks' nonperforming loans. Our results have important policy
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Gender, workplace preferences and firm performance: Looking through the glass door European Financial Management (IF 2.295) Pub Date : 2023-04-01 Jie Chen, Chenxing Jing, Kevin Keasey, Ivan Lim, Bin Xu
Using Glassdoor data we show that women are less satisfied at work than men and that female employees care more about work-life balance. Further analysis shows that this gender difference in workplace preference vanishes at the manager level, suggesting that women who care less about work-life balance self-select into career paths that ultimately lead to management positions. Exploring the performance
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Institutional shareholder services' proxy voting guidelines and ROE management European Financial Management (IF 2.295) Pub Date : 2023-03-28 Souhei Ishida, Takuma Kochiyama
We examine the impact of the Institutional Shareholder Services (ISS) proxy voting guidelines on managers' opportunistic reporting behaviours. In February 2015, the ISS introduced a new advisory policy based on firms' return on equity (ROE) and started to issue negative recommendations for top executive election in firms whose past average and most recent ROE are lower than 5%. We find that managers
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National culture and green bond issuance around the world European Financial Management (IF 2.295) Pub Date : 2023-03-28 Charilaos Mertzanis, Imen Tebourbi
We analyze the impact of Hofstede's culture dimensions on green bond issuance in 84 countries during 1991–2021, using novel International Monetary Fund data. We control for environmental, macroeconomic and institutional factors. Our results show that countries that score higher on individualism, masculinity and indulgence are associated with lower green bond issuance, whilst countries that score high
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The influence of cultural tightness–looseness, religiosity, and the institutional environment on tax evasion behaviour: A cross-country study European Financial Management (IF 2.295) Pub Date : 2023-03-25 Hakim Ben Othman, Khaled Hussainey, Nejia Moumen
We examine whether the strength of norms and tolerance for deviations play a role in explaining cross-country differences in tax evasion (TEVA). We also investigate the effects of religiosity, legal enforcement, voice and accountability, and the stability of political systems on TEVA across 48 countries over the period 1997–2018. Results show that the higher the voice and accountability and the lower
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Mergers and acquisitions research in finance and accounting: Past, present, and future European Financial Management (IF 2.295) Pub Date : 2023-02-13 Douglas Cumming, Varun Jindal, Satish Kumar, Nitesh Pandey
This study presents an analysis of publication patterns and major themes in research on mergers and acquisitions in finance and accounting. We find that takeovers as mechanisms of governance, drivers of mergers, mechanisms of mergers, bank mergers, cross-border mergers, shareholder wealth effects of mergers and related events, and the role of financial experts and ownership structure form major themes
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Insider trading in multinational firms European Financial Management (IF 2.295) Pub Date : 2023-01-25 Dallin M. Alldredge, D. Brian Blank
We explore insider trading at multinational firms and find multinational firm insiders make larger trades followed by larger abnormal returns relative to those at domestic firms. Multinational firm insiders profitably purchase underpriced, value stocks with low past returns. They trade more profitably, not only because of market pricing opportunities, but also because of the advantageous timing of
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CEO marital status and corporate cash holdings European Financial Management (IF 2.295) Pub Date : 2023-01-12 Ahmed Elnahas, Md. Noman Hossain, Siamak Javadi
We examine the effect of CEO marital status on corporate cash holdings. Consistent with the classical agency framework, we find that firms with single CEOs hold more cash compared to otherwise similar firms with married CEOs and that the excess cash held by single CEOs is significantly discounted by shareholders. Our findings survive a battery of tests to ease endogeneity and selection bias, confirming
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Option-implied information and quality of patents European Financial Management (IF 2.295) Pub Date : 2023-01-06 Wei-Hsien Li, Jiahang Liang, Zih-Ying Lin
This research explores how option-implied information predicts quality of patents. Using several measures of option-implied information, we find that only the option to stock volume (O/S) ratio positively and significantly predicts quality of patents around patent grant announcements. The findings are not entirely driven by information from the stock market and the probability of informed trading.
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Ordeal by innocence in the big-data era: Intended data breach disclosure, unintended real activities manipulation European Financial Management (IF 2.295) Pub Date : 2023-01-04 Jinyu Liu, Xiaoran Ni
We demonstrate an unintended consequence of mandatory disclosure of data breaches: the distortion of firms' real business activities. Employing the staggered adoption of data breach disclosure laws across various US states, we show that mandatory disclosure exacerbates CEOs' real earnings manipulation through production and operation management, which is more pronounced for firms of which the outbreak
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Machine learning methods in finance: Recent applications and prospects European Financial Management (IF 2.295) Pub Date : 2022-12-17 Daniel Hoang, Kevin Wiegratz
We study how researchers can apply machine learning (ML) methods in finance. We first establish that the two major categories of ML (supervised and unsupervised learning) address fundamentally different problems than traditional econometric approaches. Then, we review the current state of research on ML in finance and identify three archetypes of applications: (i) the construction of superior and novel