-
Unraveling the impact of female CEOs on corporate bond markets Financial Management (IF 3.391) Pub Date : 2024-03-08 Jasmine Yur‐Austin, Ran Zhao, Lu Zhu
Little is known about how executive gender shapes the inherent conflict of interest between shareholders and bondholders. Using a sample of almost 100,000 unique bond‐year observations, this study investigates how the appointment of female chief executive officers (CEOs) lowers the default outlook. Our evidence indicates that bond yield and bond volatility are significantly lower after a female takes
-
-
-
Does hedge fund managers’ industry experience matter for hedge fund activism? Financial Management (IF 3.391) Pub Date : 2024-01-28 Ivan E. Brick, Yuzi Chen, Jun-Koo Kang, Jin-Mo Kim
We study whether fund managers’ industry experience is an important source of value creation in hedge fund activism. We find that the targets of industry-expert fund managers realize higher activism announcement returns and better operating performance, particularly when fund managers’ industry expertise is more valuable for targets. These targets also engage in more focused acquisition and divestiture
-
Academic publishing behavior and pay across business fields Financial Management (IF 3.391) Pub Date : 2024-01-18 Jon A. Garfinkel, Mosab Hammoudeh, James Weston
Academic finance faculty earn a premium relative to other business school faculty. We show that the rewards to publishing outside of the top journals (JF, JFE, RFS) are significantly lower in finance relative to a broader set of journals in other business school fields. Revealed preferences from a journal submission survey suggest these incentives influence behavior. We estimate a lower unconditional
-
Financial debt contracting and managerial agency problems Financial Management (IF 3.391) Pub Date : 2024-01-15 Björn Imbierowicz, Daniel Streitz
This paper analyzes if lenders resolve managerial agency problems in loan contracts using sweep covenants. Sweeps require a (partial) prepayment when triggered and are included in many contracts. Exploiting exogenous reductions in analyst coverage due to brokerage house mergers and closures, we find that increased borrower opacity significantly increases sweep use. The effect is strongest for borrowers
-
Mutual fund performance and manager assets: The negative effect of outside holdings Financial Management (IF 3.391) Pub Date : 2024-01-09 Richard Evans, Javier Gil-Bazo, Marc Lipson
We explore the relation between fund performance and the assets managed by the fund's managers that are outside the fund. Controlling for fund size, we find a negative relation between performance and the size of fund managers’ outside holdings, the number of other funds managed by a fund's managers, and the number of distinct fund categories managed by a fund's managers. This effect is driven by holdings
-
Share repurchases on trial: Large-sample evidence on share price performance, executive compensation, and corporate investment Financial Management (IF 3.391) Pub Date : 2023-12-11
The corresponding author's name is Nicholas Guest, and their e-mail address is nguest@cornell.edu. Volume 52, Issue 1, 19–40, article first published online 02 February 2023 In the article, Figure 1, Figure 2, and Table 1 need to be updated. The correct figures and table should read as follows: FIGURE 1 Open in figure viewerPowerPoint Aggregate payouts. The top panel of this figure shows aggregate
-
What drives closed-end fund discounts? Evidence from COVID-19 Financial Management (IF 3.391) Pub Date : 2023-12-11 Liang Ma
This paper investigates the impact of the onset of the COVID-19 pandemic in the United States on closed-end fund (CEF) discounts. I show that CEF discounts increased after the onset of the COVID-19 pandemic in the United States, while individual investor sentiment declined. Furthermore, CEFs with higher retail ownership had a larger discount increase, which suggests that individual investor sentiment
-
Market power and systematic risk Financial Management (IF 3.391) Pub Date : 2023-11-13 Fabian Hollstein, Marcel Prokopczuk, Christoph Matthias Würsig
We examine the impact of product market competition on firms' systematic risk. Using a measure of total product market similarity, we document a strong negative relationship between market power and market betas. The effect more than triples in the most recent period of low competition. Anticompetitive mergers result in a significant reduction in market betas. Firms facing less competition seem to
-
Are sustainability-linked loans designed to effectively incentivize corporate sustainability? A framework for review Financial Management (IF 3.391) Pub Date : 2023-10-03 Alix Auzepy, Christina E. Bannier, Fabio Martin
This paper analyzes sustainability-linked loans (SLLs), a new category of debt instrument that incorporates environmental, social, and governance (ESG) considerations. Using a large sample of loans issued between 2017 and 2022, we assess the design of SLLs by evaluating their key performance indicators (KPIs) using a comprehensive quality score. Our findings suggest that SLLs only partially rely on
-
Diagnostics for asset pricing models Financial Management (IF 3.391) Pub Date : 2023-09-13 Ai He, Guofu Zhou
The validity of asset pricing models implies white-noise pricing errors (PEs). However, we find that the PEs of six well-known factor models all exhibit a significant reversal pattern and are predictable by their lagged values up to 12 months. Moreover, the predictability of the PEs can produce substantial economic profits. Similar conclusions hold for recently developed machine learning models too
-
Overselling corporate social responsibility Financial Management (IF 3.391) Pub Date : 2023-08-30 Najah Attig, Wenyao Hu, Mohammad M. Rahaman, Ashraf Al Zaman
We show that firms hype up their corporate social responsibility (CSR) narratives during the turn-of-the-year earnings conference calls to project an overly responsible public image of their firms. This previously unexplored phenomenon does not appear to be related to past, current, and future CSR engagements and cannot be explained by observed time-varying firm attributes and unobserved time-invariant
-
Joint dynamics of stock returns and cash flows: A time-varying present-value framework Financial Management (IF 3.391) Pub Date : 2023-08-28 Deshui Yu, Yayi Yan
This paper proposes a novel time-varying present-value model to analyze the joint dynamics of stock returns and cash flows periodically. We use a nonparametric time-varying vector autoregressive model to examine the economic implications of the time-varying present-value model. By conducting several nonparametric tests, we reject the stability of multivariate forecasting models and the null that stock
-
What happens in Vegas stays in Vegas? Firsthand experience and EDGAR search activity in Las Vegas casino hotels Financial Management (IF 3.391) Pub Date : 2023-08-28 Ryan Flugum, Choonsik Lee, Matthew E. Souther
What role does investors’ firsthand experience have in stock selection, and does this firsthand experience lead to better investment outcomes? Using a unique data set containing the stock research activities of patrons of Las Vegas casino hotels, we find evidence that investors’ firsthand experience motivates interest in Vegas-related travel industry stocks. Additionally, their interest in these stocks
-
ESG news spillovers across the value chain Financial Management (IF 3.391) Pub Date : 2023-07-17 Vu Le Tran, Guillaume Coqueret
We document the impact of ESG shocks on the stock returns of suppliers and clients of affected firms. Our empirical analysis of US stocks, along with their global clients and suppliers, reveals that ESG shocks are integrated into prices intradaily and that the cross-effect between shocks and ESG levels is statistically significant. The indirect diffusion of ESG shocks to customers' and suppliers' returns
-
Estimating contagion mechanism in global equity market with time-zone effect Financial Management (IF 3.391) Pub Date : 2023-07-03 Boyao Wu, Difang Huang, Muzi Chen
This paper proposes a time-zone vector autoregressive (VAR) model to investigate comovements in the global financial market. Analyzing daily data from 36 national equity markets, we explore the subprime and European debt crises using static analysis and the COVID-19 crisis through a rolling window method. Our study of comovements using VAR coefficients reveals a resonance effect in the global system
-
Climate change and corporate cash holdings: Global evidence Financial Management (IF 3.391) Pub Date : 2023-04-26 Siamak Javadi, Abdullah-Al Masum, Mohsen Aram, Ramesh P. Rao
Using data from 41 countries, we provide novel empirical evidence that firms’ cash holdings are positively associated with their climate change exposure. This evidence is robust to different model specifications and survives a battery of tests to ease concerns related to spurious correlation and omitted variable bias. Using the release of the Stern Review as an exogenous shock to climate change awareness
-
Tick size and price efficiency: Further evidence from the Tick Size Pilot Program Financial Management (IF 3.391) Pub Date : 2023-03-27 Kee H. Chung, Chairat Chuwonganant
This paper examines whether larger tick sizes improve or hinder price efficiency for small-capitalization stocks using data from implementing and terminating the Tick Size Pilot Program (TSPP). We show that the TSPP led to increases in various liquidity measures, and its termination restored them to their pre-TSPP levels. We also find evidence that the TSPP led to trader migration from the pilot to
-
The consequences of non-trading institutional investors Financial Management (IF 3.391) Pub Date : 2023-03-16 Mohammad (Vahid) Irani, Hugh Hoikwang Kim
We document that institutional investors do not trade a single share, on average, in one of five stocks in their portfolio for an extended period. Investors with high inaction are likely to underperform in the future. Our results show a similar underperformance for stocks with a high non-trading level of institutional investors. We investigate several behavioral biases as potential drivers of the non-trades
-
Biodiversity finance: A call for research into financing nature Financial Management (IF 3.391) Pub Date : 2023-02-13 G. Andrew Karolyi, John Tobin-de la Puente
Biodiversity conservation will supersede climate change risk mitigation and adaptation as the next grand challenge for sustainable finance. Closing the financing gap between what is currently spent and what is needed to be spent over the next 10 years to mobilize private investment to maintain ecosystem integrity and biodiversity, and the services they provide, is estimated to exceed hundreds of billions
-
Share repurchases on trial: Large-sample evidence on share price performance, executive compensation, and corporate investment Financial Management (IF 3.391) Pub Date : 2023-01-23 Nicholas Guest, S. P. Kothari, Parth Venkat
Using a large sample of US stocks covering more than three decades, we empirically examine common criticisms of and rationales for stock repurchases. Repurchases account for a tiny fraction of the trading volume in a typical stock, making their price impact too small to generate short-term price manipulation. Price appreciation following repurchases is modest and does not reverse on average, suggesting
-
Climate risk perceptions and demand for flood insurance Financial Management (IF 3.391) Pub Date : 2023-01-18 Dimuthu Ratnadiwakara, Buvaneshwaran Venugopal
The demand for flood insurance is low when the frequency and severity of flood disasters are increasing due to climate change. We show that beliefs about climate change influence homeowners' choice and level of flood insurance coverage. The demand for voluntary flood insurance coverage for homes and contents is higher in areas with more people who are worried about global warming. Property-level analysis
-
Macroeconomic fundamentals and cryptocurrency prices: A common trend approach Financial Management (IF 3.391) Pub Date : 2022-12-27 Xiaoquan Jiang, Iván M. Rodríguez, Qianying Zhang
Based on asset pricing theory, we posit and find that equity markets and cryptocurrency markets share a common fundamental. Our cointegration tests show that the most important asset pricing primitive, consumption, can serve as the common fundamental. We further show that additional macroeconomic factors, as well as uncertainty and sentiment, all play a role in explaining the deviation from fundamentals
-
The end of ESG Financial Management (IF 3.391) Pub Date : 2022-12-21 Alex Edmans
ESG is both extremely important and nothing special. It's extremely important because it's critical to long-term value, and so any academic or practitioner should take it seriously, not just those with “ESG” in their research interests or job title. Thus, ESG doesn't need a specialized term, as that implies it's niche—considering long-term factors isn't ESG investing; it's investing. It's nothing special
-
Do investors affect financial analysts’ behavior? Evidence from short sellers Financial Management (IF 3.391) Pub Date : 2022-10-27 Yun Ke, Kin Lo, Jinfei Sheng, Jenny Li Zhang
We examine how short sellers affect financial analysts’ forecast behavior using a natural experiment that relaxes short-sale constraints. We find that increased ease of short selling improves analyst earnings forecast quality by reducing forecast bias and increasing forecast accuracy. The improvements can be explained by both the disciplining pressure from short sellers and increased price efficiency
-
Are founding families less willing to bear risk? Evidence from the currency exposure and internationalization strategy of family firms Financial Management (IF 3.391) Pub Date : 2022-10-27 Ronald C. Anderson, Mikael C. Bergbrant, Delroy M. Hunter, David M. Reeb
Although theory predicts that family firms should be less willing to bear risk than nonfamily firms, prior empirical papers have not found support for this prediction. In this paper, we focus on conditional currency risk because founding families can relatively easily influence their firms’ currency exposure. We find that family firms have relatively lower conditional currency exposure. This result
-
Inter-industry FDI spillovers from foreign banks: Evidence in transition economies Financial Management (IF 3.391) Pub Date : 2022-10-17 Shusen Qi, Kent Ngan-Cheung Hui, Steven Ongena
Using a sample of nonfinancial domestic firms in transition economies from Eastern Europe and Central Asia, we examine whether and how inter-industry spillover from foreign direct investment in the banking sector occurs. Our findings show that the innovation pursued by domestic firms benefits from foreign bank penetration. However, these positive inter-industry spillovers surprisingly do not seem to
-
Is it time for popcorn? Daily box office earnings and aggregate stock returns Financial Management (IF 3.391) Pub Date : 2022-09-08 Seda Oz, Steve Fortin
We quantitatively measure the interactions between daily consumption and the stock market. We find that daily consumption, proxied by the cyclical component of theatrical box office earnings, can significantly and positively predict stock returns for up to 5 days. We also demonstrate a trading strategy using our consumption measures that yield nontrivial excess returns with little risk. These findings
-
Asset pricing with a financial sector Financial Management (IF 3.391) Pub Date : 2022-08-08 Kai Li, Chenjie Xu
In this paper, we study the quantitative asset pricing implications of a financial intermediary that faces a leverage constraint. We use a recursive method to construct the global solution that accounts for occasionally binding constraints. Quantitatively, our model generates a high and countercyclical equity premium, a low and smooth risk-free interest rate, and a procyclical and persistent price–dividend
-
Is sustainability rating material to the market? Financial Management (IF 3.391) Pub Date : 2022-07-21 Claire Economidou, Dimitrios Gounopoulos, Dimitrios Konstantios, Emmanuel Tsiritakis
This study examines whether information about a firm's engagement in environmental, social, and governance (ESG) practices is material to market participants. Evidence from a sample of 1856 initial public offerings (IPOs) by U.S. companies for the 2007–2018 period robustly documents that firms for which there is available ESG performance information prior to going public exhibit higher underpricing
-
Does trade clustering reduce trading costs? Evidence from periodicity in algorithmic trading Financial Management (IF 3.391) Pub Date : 2022-05-28 Dmitriy Muravyev, Joerg Picard
We study how trading activity affects liquidity and volatility by introducing two periodicities in trading activity. First, trades and quote updates are much more frequent within the first 100 ms of a second than during its remainder. Second, trading activity often spikes at intervals of exactly one second. For these two periodicities, higher trade and quote intensities lead to higher volatility, but
-
Are the flows of exchange-traded funds informative? Financial Management (IF 3.391) Pub Date : 2022-04-12 Liao Xu, Xiangkang Yin, Jing Zhao
This paper provides novel evidence of information asymmetry in exchange-traded fund (ETF) markets. By decomposing daily ETF flows, we find that the unexpected flow component, orthogonal to the components driven by market making and arbitraging, wields substantial power in predicting next day's ETF returns. Informed traders are able to exploit their information advantage to realize an annualized open-to-close
-
Diving into dark pools Financial Management (IF 3.391) Pub Date : 2022-03-28 Sabrina Buti, Barbara Rindi, Ingrid M. Werner
We study 2009 and 2020 dark trading for U.S. stocks. Dark trading is lower when volume is low, volatility high, and in periods of markets stress. Dark pools are more active for large caps, while internalization is more common for small caps. Traders use dark pools to jump the queue for large caps in 2009, and to avoid crossing the spread for small caps in both years. Internalization is higher when
-
The dark side of IPOs: Examining where and who trades in the IPO secondary market Financial Management (IF 3.391) Pub Date : 2022-03-11 Justin Cox, Bonnie Van Ness, Robert Van Ness
We analyze the impact of trading dynamics, including fragmentation of markets, undisplayed (dark), and algorithmic trading, on liquidity formation in initial public offerings (IPOs). We find that these various trading dynamics evolve throughout the IPO secondary market and are dependent on the IPO's initial offering-day underpricing. Higher levels of fragmentation in displayed (lit) markets and algorithmic
-
Bank bailouts, bail-ins, or no regulatory intervention? A dynamic model and empirical tests of optimal regulation and implications for future crises Financial Management (IF 3.391) Pub Date : 2022-02-25 Allen N. Berger, Charles P. Himmelberg, Raluca A. Roman, Sergey Tsyplakov
We model dynamic bank capital structure under three optimally-designed regulatory regimes for dealing with potential default—bailout, in which the government provides capital; bail-in, which the private-sector provides needed funds; and no regulatory intervention, allowing the institutions to fail. Only under the optimally-designed bail-in regime do banks recapitalize during times of distress. Their
-
Negative returns on addition to the S&P 500 index and positive returns on deletion? New evidence on the attractiveness of S&P 500 versus S&P 400 indexes Financial Management (IF 3.391) Pub Date : 2022-02-24 Anand M. Vijh, Jiawei (Brooke) Wang
In recent years, the majority of additions to and deletions from the S&P 500 index have been stocks that were previously or subsequently included in the S&P 400 index. The announcement returns of these changes have been the opposite of what has been documented for all S&P 500 additions and deletions in an extensive literature. During 2016–2020, such “upward additions” to the S&P 500 index resulted
-
What prevents women from reaching the top? Financial Management (IF 3.391) Pub Date : 2022-02-16 Matti Keloharju, Samuli Knüpfer, Joacim Tåg
We use rich data on all business, economics, and engineering graduates in Sweden to study the lack of women among chief executive officers (CEOs). A comprehensive battery of graduates’ characteristics explains 40% of the gender gaps in CEO appointments and 60% among graduates with children. The explanatory power mostly comes from absences and unemployment, which are about twice as likely for women
-
Individual investors' dispersion in beliefs and stock returns Financial Management (IF 3.391) Pub Date : 2022-01-31 Junjun Ma, Xindan Li, Lei Lu, Weixing Wu, Xiong Xiong
We construct a measure of dispersion in beliefs among individual investors. We find that dispersion in beliefs negatively predicts future cross-sectional stock returns, and it is positively related to trading volume and stock volatility. We also find that illiquidity does not affect the significance of dispersion in beliefs in predicting future stock return, and that the negative disagreement-return
-
The purpose of a finance professor Financial Management (IF 3.391) Pub Date : 2022-01-22 Alex Edmans
The academic finance profession has the potential to be uniquely purposeful due to four characteristics – the freedom to take risks and work on what we're passionate about, the loyalty to our profession rather than just our institution, the collaborative nature of the creation and dissemination of knowledge, and the magnitude of our potential impact. However, what the profession currently values, and
-
Bank lending networks and the propagation of natural disasters Financial Management (IF 3.391) Pub Date : 2022-01-21 Ivan T. Ivanov, Marco Macchiavelli, João A. C. Santos
We study how syndicated lending networks propagate natural disasters. Natural disasters lead to an increase in corporate credit demand in affected regions. Banks meet the increase in credit demand in part by reducing credit to distant regions, unaffected by disasters. Capital constraints play a key role in this effect as lower-capital banks propagate disasters to unaffected regions to a greater extent
-
Innovative firms’ cash holdings, tax policies, and institutional environments Financial Management (IF 3.391) Pub Date : 2021-12-06 Fengfei Li, Tse-Chun Lin
Based on 21,653 innovative firms from 61 non-U.S. economies, we find a positive relationship between a firm's innovativeness and cash holdings. This relationship is stronger after the implementation of patent boxes that provide preferential tax treatment for patent income. Moreover, innovative multinationals facing higher repatriation taxes accumulate higher total cash holdings. The positive innovativeness–cash
-
Stock returns and inflation shocks in weaker economic times Financial Management (IF 3.391) Pub Date : 2021-11-20 Robert A. Connolly, Chris Stivers, Licheng Sun
We show that the concurrent relation between quarterly stock returns and inflation shocks is economically and robustly significant only over weaker economic (WE) times, strongly negative prior to the late 1990s, and strongly positive afterwards. Conversely, in the stronger economic times over our 1981 to 2017 sample, this stock-inflation relation is relatively much smaller and usually marginally negative
-
Dynamics of managerial power and CEO compensation in the course of corporate distress: Evidence from 1992 to 2019 Financial Management (IF 3.391) Pub Date : 2021-11-11 Sheng Guo, Qiang Kang, Oscar A. Mitnik
We study the dynamics of two governance constructs, managerial influence over the board of directors and chief executive officer (CEO) compensation, in firms undergoing distress during 1992–2019. Data show a clear trend that governance improves over time, which confounds the inference about the effects of distress on governance. Controlling for the secular changes with a bias-corrected matching estimator
-
Should hedge funds deviate from the benchmark? Financial Management (IF 3.391) Pub Date : 2021-11-01 Ekaterini Panopoulou, Nikolaos Voukelatos
We examine the relationship between deviating from the benchmark and subsequent performance for hedge funds. We propose a simple new measure of benchmark deviations, termed the dispersion contribution index, which is based on a fund's return-distance from the mean return of same-style funds. We find that funds which deviate the most from their benchmark tend to underperform relative to their less distinctive
-
The role of credit default swaps in determining corporate payout policy Financial Management (IF 3.391) Pub Date : 2021-10-14 Hwang Hee Lee, Frederick Dongchuhl Oh
We examine how the introduction of credit default swap (CDS) trading on the debt of individual firms affects corporate payout policy. We find that firms increase payouts to shareholders after the introduction of CDS trading on their debt. This suggests that CDS-referenced firms are more likely to be affected by decreased creditor monitoring than by tougher CDS-insured creditors when determining total
-
Industry centrality: Weak ties, industry attributes, and managerial contracting Financial Management (IF 3.391) Pub Date : 2021-10-05 Rasha Ashraf, Nishant Dass, Vikram Nanda
Centrality in the network of interindustry trade relationships provides novel insights into an industry's economic attributes and managerial incentive contracts prevalent in the industry. More “central” industries trade with a large number of industries, implying numerous but relatively weaker interindustry ties. Weakness of interindustry ties suggests that relationship-specific investment (RSI) will
-
Investor learning and mutual fund flows Financial Management (IF 3.391) Pub Date : 2021-10-03 Jennifer Huang, Kelsey D. Wei, Hong Yan
This paper investigates how volatility of performance affects the sensitivity of mutual fund flows to past performance, and examines how investor learning may contribute to this effect. We illustrate theoretically that when sophisticated investors learn from past fund performance to form their posterior expectations of managerial ability, the flow-performance sensitivity should be weaker for funds
-
Does perception of social issues affect portfolio choices? Evidence from the #MeToo movement Financial Management (IF 3.391) Pub Date : 2021-10-01 Douglas O. Cook, Shikong (Scott) Luo
Did the #MeToo movement, inspired by a Twitter post in late 2017 following the Weinstein scandal, influence the asset allocation decision process of mutual fund managers intending to show support for women empowerment? We find evidence to support the influence of such attention. We utilize the breakout of the #MeToo movement as an exogenous shock to the perception of gender equity issues. Using a
-
Oil price shocks and stock market anomalies Financial Management (IF 3.391) Pub Date : 2021-09-04 Zhaobo Zhu, Licheng Sun, Jun Tu, Qiang Ji
This paper provides a novel perspective to the nexus of oil prices and stock markets by examining the impact of oil price shocks on stock market anomalies. After decomposing oil price shocks into three types , we find that aggregate demand shocks have the strongest influence on stock market anomalies. In contrast, oil supply shocks and oil-specific demand shocks have little impact. Similar results
-
Does dividend policy affect sales growth in product markets? Evidence from the 2003 dividend tax cut Financial Management (IF 3.391) Pub Date : 2021-08-28 Atsushi Chino, Joon Ho Kim
We examine the effect of firms’ dividend policy on product market outcomes. Exploiting the 2003 dividend tax cut as the exogenous increase in demand for dividends from tax-sensitive shareholders, we show that firms that raised dividends in response to the tax cut recorded lower sales growth in product markets after the tax cut. These firms experienced a reduction in financial flexibility, which led
-
How much for a haircut? Illiquidity, secondary markets, and the value of private equity Financial Management (IF 3.391) Pub Date : 2021-07-28 Nicolas P. B. Bollen, Berk A. Sensoy
Limited partners (LPs) of private equity funds commit to invest with extreme levels of illiquidity and significant uncertainty regarding the timing of capital flows, often exacerbated by the LPs’ spending requirements and portfolio rebalancing needs. Secondary markets have emerged that alleviate some of the associated cost. This paper develops a valuation model incorporating these institutional features
-
Presidential power and stock returns Financial Management (IF 3.391) Pub Date : 2021-07-20 Youngsoo Kim, Jung Chul Park
Recent studies highlight the positive effect of political connections on firm performance and stock returns. This paper shows that the positive effect of political connections on stock returns becomes substantially weaker in the weak presidency period, defined as the last 2 years before presidential party change or period of low job approval ratings. We consider two hypotheses—political interconnectedness
-
Industry tournament incentives and corporate hedging policies Financial Management (IF 3.391) Pub Date : 2021-07-14 Gunratan Lonare, Ahmet Nart, Ahmet M. Tuncez
This paper examines how a tournament among CEOs to progress within the CEO labor market influences their corporate hedging policies. We employ a textual analysis of 10-Ks to generate corporate hedging proxies, finding that the likelihood and intensity of hedging grow as the CEO labor market tournament prizes increase. We also explore the mitigating impact of corporate hedging on the adverse effects
-
A hidden hand in corporate lobbying Financial Management (IF 3.391) Pub Date : 2021-07-07 Anqi Jiao
I investigate the role of institutional investors in firms’ lobbying activities. Firms with greater lobbying institutional ownership lobby more. Using a novel dataset with lobbying information on congressional bills, I show that institutional investors support portfolio firms by lobbying together on same bills. Bills lobbied by institutional investors are more likely to become laws and the passage
-
Trademark and IPO underpricing Financial Management (IF 3.391) Pub Date : 2021-06-25 Bin Yang, Tao Yuan
Although trademarks are mentioned in many firms’ initial public offering (IPO) prospectuses, their influences on the IPO valuation process are underexplored. This paper studies the relationship between a firm's pre-IPO trademarks and its IPO underpricing. Using 4457 US IPOs during the period 1980–2018, we find that firms with a larger number of trademarks prior to the IPO date experience significantly
-
The influence of learning and bargaining on CEO–chair duality: Evidence from firms that pass the baton Financial Management (IF 3.391) Pub Date : 2021-06-24 Narayanan Jayaraman, Vikram Nanda, Harley E. Ryan
Some firms combine CEO and board chair positions after observing CEO performance. We propose that this approach, known as “passing the baton” (PTB), enables the board to learn about the ability and suitability of the CEO before awarding additional title of board chair. Consistent with learning, idiosyncratic stock-return volatility declines following the CEO–chair combination. The market responds positively
-
Ultimate ownership and bank competition Financial Management (IF 3.391) Pub Date : 2021-06-15 José Azar, Sahil Raina, Martin Schmalz
We document substantial time-series and cross-sectional variation in branch-level deposit account interest rates, maintenance fees, and fee thresholds, and examine whether variation in bank concentration helps explain variation in these prices. Herfindahl–Hirschman Index (HHI) alone is not correlated with any of the outcome variables. A “generalized HHI” (GHHI) capturing both common ownership (the
-
Director diversity and inclusion: At the table but in the game? Financial Management (IF 3.391) Pub Date : 2021-06-03 Nemmara K. Chidambaran, Yun Liu, Nagpurnanand Prabhala
The issue of the presence of diverse directors on boards has attracted considerable attention among policymakers, practitioners, and academics. There is relatively less attention to the inclusion of diverse directors, or their onward trajectory after appointment. We study two outcomes related to inclusion—the retention of directors and their promotion to board leadership positions. Although gender
-
Powerful independent directors Financial Management (IF 3.391) Pub Date : 2021-05-25 Kathy Fogel, Liping Ma, Randall Morck
Shareholder valuations are economically and statistically positively correlated with independent director power, gauged by a composite of social network power centrality measures. Powerful independent directors’ sudden deaths reduce shareholder value significantly; other independent directors’ deaths do not, consistent with powerful independent directors increasing firm valuations. Further tests associate