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Liquidity picking and fund performance J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-17 Feng Jiao, Sergei Sarkissian, David Schumacher
Using global mutual fund and American Depositary Receipt (ADR) data, we test if funds strategically trade cross-listed firms’ equity shares in the most liquid trading location. We find that especially funds that score high on traditional skill measures exhibit a liquidity-based trading venue preference. We identify an informed trading motive as the most likely driver for such behaviour rather than
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Robust difference-in-differences analysis when there is a term structure J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-17 Kjell G. Nyborg, Jiri Woschitz
For variables with a term structure, the standard difference-in-differences (DiD) model is predisposed toward misspecification, even under random assignment, because of heterogeneity over the maturity spectrum and imperfect matching between treated and control units. Estimated treatment effects that are false, biased, or hard to interpret become a concern. Neither unit fixed effects nor standard term-structure
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Steering a Ship in Illiquid Waters: Active Management of Passive Funds Rev. Financ. Stud. (IF 6.8) Pub Date : 2025-05-17 Naz Koont, Yiming Ma, Lubos Pastor, Yao Zeng
Exchange-traded funds (ETFs) are typically viewed as passive index trackers. In contrast, we show that corporate bond ETFs actively manage their portfolios, trading off index tracking against liquidity transformation. In our model, ETFs optimally choose creation and redemption baskets that include cash and only a subset of index assets, especially if those assets are illiquid. Our evidence supports
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Exorbitant privilege? Quantitative easing and the bond market subsidy of prospective fallen angels J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-15 Viral V. Acharya, Ryan Banerjee, Matteo Crosignani, Tim Eisert, Renée Spigt
We document capital misallocation in the U.S. investment-grade (IG) corporate bond market, driven by quantitative easing (QE). Prospective fallen angels — risky firms just above the IG cutoff — enjoyed subsidized bond financing in 2009–19. This effect is driven by Fed purchases of securities inducing long-duration IG-focused investors to rebalance their portfolios towards higher-yielding IG bonds.
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Modelling CSRBB under regulatory guidelines Finance Research Letters (IF 7.4) Pub Date : 2025-05-15 Maxime Segal, Kristján Rúnar Kristjánsson, Björn Hrannar Björnsson
The European Banking Authority (EBA) provides limited standardization for Credit Spread Risk in the Banking Book (CSRBB), delegating its assessment to individual financial institutions. This has led to significant variation in how CSRBB guidelines are interpreted and applied across the banking sector. This study investigates how to model plausible but unlikely credit spread shocks using Principal Component
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Would Order‐By‐Order Auctions Be Competitive? J. Financ. (IF 7.6) Pub Date : 2025-05-14 THOMAS ERNST, CHESTER SPATT, JIAN SUN
We model two methods of executing segregated retail orders: brokers' routing, whereby brokers allocate orders using the market maker's overall performance, and order‐by‐order auctions, where market makers bid on individual orders, a recent U.S. Securities and Exchange Commission proposal. Order‐by‐order auctions improve allocative efficiency, but face a winner's curse reducing retail investor welfare
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AMERICAN FINANCE ASSOCIATION J. Financ. (IF 7.6) Pub Date : 2025-05-14
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ISSUE INFORMATION J. Financ. (IF 7.6) Pub Date : 2025-05-14
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Entrepreneurial spillovers across coworkers J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-13 Melanie Wallskog
How do workplace social connections shape everyday entrepreneurship? Using comprehensive data on millions of American workers across the economy, I find three key patterns. First, entrepreneurial coworkers inspire and teach entrepreneurship: individuals are more likely to become entrepreneurs after working with coworkers who previously led young businesses. Second, these effects predominantly occur
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Fixed versus dynamic investment: Optimal contracting with competitive entrepreneurs Finance Research Letters (IF 7.4) Pub Date : 2025-05-13 Liyuan Wang, Chuan Ding, Zhiyu Wang, Siyuan Zeng
This study explores dynamic contracting in venture capital investment, where entrepreneurial compensation integrates absolute and relative performance. We identify a paradox in investment strategies based on startup efficiency: fixed capital suits efficient startups, while dynamic investment benefits inefficient ones. If the Venture Capitalist (VC) can switch strategies, starting with dynamic early-stage
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Banks as regulated traders J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-12 Antonio Falato, Diana Iercosan, Filip Zikes
Banks use trading as a vehicle to take risk. Using high-frequency regulatory data, we estimate the sensitivity of weekly bank trading profits to aggregate equity, fixed-income, credit, currency, and commodity risk factors. Our estimates imply that U.S. banks had large trading exposures to equity market risk before the Volcker Rule, which they curtailed afterwards. Credit and currency risk exposures
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Executive retirement plan freezes and firm policies International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-12 Zacharias Petrou, Adamos Vlittis
When firms freeze their employees qualified defined benefit (DB) pension plans, they often re-evaluate and may similarly freeze their non-qualified supplemental executive retirement plans (SERPs). This study draws from agency theory to investigate the determinants and consequences of SERP freezes. We find that the decision to freeze SERPs is predominantly influenced by the power dynamics between top
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War discourse predicts stock market volatility: A century of evidence Finance Research Letters (IF 7.4) Pub Date : 2025-05-12 Zhiping Zhou, Kai Wang
This study investigates the impact of war-related risk on stock market volatility using a war discourse index. Drawing on a century of data, we show that the index significantly predicts U.S. stock market volatility up to 12 months ahead. This predictive power remains robust after accounting for macroeconomic conditions, market variables, and geopolitical risk. Furthermore, forecasts yield economically
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Who Holds Sovereign Debt and Why It Matters Rev. Financ. Stud. (IF 6.8) Pub Date : 2025-05-12 Xiang Fang, Bryan Hardy, Karen K Lewis
This paper studies whether investor composition affects the sovereign debt market. We construct a data set of sovereign debt holdings by foreign and domestic bank, nonbank private and official investors for 101 countries across three decades. Compared with other investors, private nonbank investors absorb a disproportionate share of the debt supply, and their demand for emerging market debt is most
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The nonlinear impact of firms' ESG disclosures on analysts' earnings forecast accuracy International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-11 Xuehui Zhang, Guoying Mu, Fei Han
The disclosure of environmental, social, and governance (ESG) information by firms can signal to the capital markets the potential sustainable development capabilities of the company and provide oversight to curb opportunistic management practices. However, the continuous disclosure of ESG information not only leads to excessive investment and increased operational risks but also contributes to information
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Pension fund flows, exchange rates, and covered interest rate parity J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-10 Felipe Aldunate, Zhi Da, Borja Larrain, Clemens Sialm
Frequent, yet uninformed, market timing recommendations by a financial advisory firm generate significant flows for Chilean pension funds. These flows induce substantial changes in the Chilean foreign exchange rate due to the funds’ high allocation to international securities. Local banks provide liquidity to pension funds in the spot market and their hedging transactions propagate the demand fluctuations
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A quantitative analysis of bank lending relationships J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-09 Kyle Dempsey, Miguel Faria-e-Castro
We study the aggregate consequences of dynamic lending relationships in a model of heterogeneous banks facing financial frictions. We estimate the model’s loan demand system on administrative loan-level data: the market power implied by the estimated strength and persistence of relationships yields a long run reduction in credit of 5.9%. Relationships amplify the negative real effects of credit supply
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Do intermediaries improve GSE lending? Evidence from proprietary GSE data J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-09 Joshua Bosshardt, Ali Kakhbod, Amir Kermani
We analyze the trade-offs of having intermediaries originate government-sponsored enterprise (GSE) mortgages using proprietary GSE data. We first find evidence of lenders pricing for observable and unobservable default risk independently of the GSEs. We then develop and estimate a model of competitive lending in which lenders have skin-in-the-game and conduct additional screening beyond the GSEs’ criteria
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Can cryptocurrency or gold rescue BRICS stocks amid the Russia-Ukraine conflict? International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-09 Wei Wang, Martin Enilov, Petar Stankov
This study examines whether cryptocurrency markets offer more resilient safe haven properties than gold for stock markets in the BRICS economies from 28th April 2013 to 27th September 2024. Unlike traditional studies that primarily focus on Bitcoin or top-market cap cryptocurrencies, we introduce a novel Crypto index that includes 9468 active and defunct cryptocurrencies, providing a comprehensive
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From government subsidies to media attention: A study of corporate environmental protection investment strategies driven by these two factors International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-09 Yu Deng, Chenming Yu, Shengyang Zhong
The article selects the panel data of 4319 listed companies in A-share from 2010 to 2022, empirically examines the relationship between government subsidies and corporate environmental protection investment by using two-way fixed-effects model, explores the role of government subsidies on corporate environmental protection investment by using mediated-effects model and assumes that media attention
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Board gender diversity and accounting conservatism International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-09 Vijaya B. Marisetty, Athira Kommatt
In this study, we use mandatory gender quota rule for corporate boards introduced in the year 2015 in India as an identification strategy to explore the relationship between women on board and accounting conservatism. Our results based on the difference-in-differences regression model, using firms that appointed women for the first time after the law as the treatment group, support the conjecture that
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Predicting credit risk in SCF: A novel framework with explainable GraphSAGE based on network integration International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-08 Jing Li, Chi Xie, Gang-Jin Wang, Matteo Foglia
We integrate three enterprise networks, i.e., the stock return network, risk spillover network, and market transaction network to predict the credit risk in supply chain finance (SCF) by applying the explainable GraphSAGE model. We construct the aforementioned networks to comprehensively illustrate the relationships among enterprises, train the GraphSAGE model to classify the nodes in the graph structure
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Geopolitical risk and offshore corporate bond issuance in local currency Finance Research Letters (IF 7.4) Pub Date : 2025-05-08 Qi Zhang, Ling Wang, Xiaoxuan Sun, Ning Lin
This study investigates the impact of geopolitical risk on the currency denomination of offshore corporate bonds. By analyzing a sample of listed firms across 27 economies from 2010 to 2023, we find that elevated geopolitical risk is associated with reduced offshore corporate bond issuance in local currency. This association is weaker in bonds with shorter maturity or higher credit rating, in firms
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Market responses to ESG amid signs of ESG De-institutionalization: evidence from the 2024 economic shock and Trump’s election victory Finance Research Letters (IF 7.4) Pub Date : 2025-05-08 Haitian Wei, Chai-Aun Ooi, Rasidah Mohd-Rashid
Amid the recent ESG de-institutionalization by major financial institutions, this study investigates market responses to ESG factors during two major events that shake the U.S. stock market in 2024: (1) an economic shock and (2) a political shock tied to Trump’s election victory. Overall, the market reacts negatively to higher-ESG stocks during both events. However, the economic shock does not trigger
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Let’s have a party! - Temporal landmarks and firm behaviour: How corporate anniversaries influence managerial decisions Finance Research Letters (IF 7.4) Pub Date : 2025-05-07 Thomas Niederkofler, Camila Sitonio, Christian Lechner
This study examines how symbolic temporal landmarks, specifically corporate anniversaries, influence firm performance. Temporal landmarks simplify managerial decision-making by focusing attention and aligning strategic actions with stakeholder expectations. We investigate whether managers use anniversaries to enhance financial performance, potentially through earnings management (EM), while minimizing
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Stock returns and macroeconomic uncertainty International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-06 Leonardo Iania, P. Thao Nguyen, Kristien Smedts
This paper provides a comprehensive review of various measures of uncertainty and their asset pricing implications in the cross-section of U.S. stock returns. With a focus on survey-based uncertainty, we add to the list of uncertainty measures previously studied in the literature with novel measures of forecast disagreement sourced from three professional forecast datasets. Through portfolio analyses
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Chapter 11 bankruptcy outcomes and gubernatorial election cycles Finance Research Letters (IF 7.4) Pub Date : 2025-05-06 Wolfgang Breuer, Simon Haas, Andreas Knetsch
We find that Chapter 11 bankruptcy cases are more likely to result in emergence if decided shortly before a gubernatorial election, where the incumbent seeks re-election. However, firms emerging from bankruptcy during this period have a lower chance of long-term survival. This suggests that governors promote the survival of bankrupt firms, even those without a sustainable business model, to enhance
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Research on the impact of investor research on SPO sponsoring and underwriting fees Finance Research Letters (IF 7.4) Pub Date : 2025-05-06 Xiaohui Zhang, yuanyuan Tan
This paper examines the impact of investor investigation activities on the refinancing sponsorship and underwriting expenses of listed companies, utilizing data from the Science and Technology Innovation Board (STIB) and Growth Enterprise Market (GEM) spanning the period from 2018 to 2023. Our findings reveal that investor research negatively affects the refinancing sponsorship and underwriting costs
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Competition policy and corporate governance: A quasi-natural experiment based on the implementation of the Anti-Monopoly Law Finance Research Letters (IF 7.4) Pub Date : 2025-05-06 Shuo Wang, Deming Huang
This study utilizes the implementation of the Anti-Monopoly Law (AML) as a quasi-natural experiment and examines its impact on corporate governance using a sample of A-share listed companies from 2004 to 2022. Using a DID model, the analysis demonstrates that the implementation of the AML significantly improves corporate governance. Mechanism analysis indicates that this effect is primarily achieved
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Financial ambiguity and the flow of public information Finance Research Letters (IF 7.4) Pub Date : 2025-05-06 Mahmoud Ayoub, Mahmoud Qadan
We compute the daily ambiguity of the S&P 500 using high-frequency (one-minute) data from 1998 to 2022. Ambiguity is defined as the variability in return distributions throughout the trading day. The findings reveal that ambiguity fluctuates across weekdays with a clear tendency to peak on Mondays, drops significantly on Wednesdays and Thursdays, and rises slightly on Fridays, forming a smile-like
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Decoding risk sentiment in 10-K filings: Predictability for U.S. stock indices Finance Research Letters (IF 7.4) Pub Date : 2025-05-06 Nicolás Magner, Pablo A. Henríquez, Aliro Sanhueza
This study demonstrates that the tone of the risk factors section in the 10-K reports of U.S. public companies predicts returns on major U.S. stock indices. We created five tone indicators using text mining, the Loughran-McDonald dictionary, and AI-calibrated alternatives (GPT-3.5-turbo-0125, GPT-4, GPT-4o, and GPT-4o-mini). These indicators showed significant predictive power for weekly returns, with
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Redeploying dirty assets: The impact of environmental J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-05 Jason Chen
This paper investigates how firms’ pollution incentives are influenced by their ability to divest polluted assets. My empirical setting is a major reform that exempts purchasers from liability for past contamination. Using a difference-in-differences framework, I find that the reform reduces toxic emissions, lowers bankruptcy risk, and increases firm value. Cross-sectional tests show that the decline
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Receiving investors in the block market for corporate bonds J. Financ. Econ. (IF 10.4) Pub Date : 2025-05-05 Stacey Jacobsen, Kumar Venkataraman
We study block trades in the corporate bond market, where dealers buy or sell blocks from initiating customers and offset their positions with receiving investors. Our findings indicate that while receivers benefit from trading cost savings, they primarily bear adverse selection costs and experience worse outcomes when informed trading is prevalent. Mandatory trade reporting improves receiver outcomes
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Does fostering inclusion in the workplace enhance corporate financial performance? Finance Research Letters (IF 7.4) Pub Date : 2025-05-05 Muhammad Ullah, Qazi Ghulam Mustafa Qureshi, Hameed Ullah
This paper investigates the impact of workplace inclusion—defined as the procedures organizations implement to integrate everyone in the workplace—on corporate financial performance, examining for the first time its effect on market valuation alongside profitability. We construct a composite, policy-based inclusion measure based on five observable components: flexible working hours, daycare services
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Is a picture really worth a thousand words? Investigating the impact of investor sentiment on sustainable stocks Finance Research Letters (IF 7.4) Pub Date : 2025-05-05 Khaled Mokni, Hela Nammouri, Chedia Dhaoui, Sami Ben Jabeur
This paper examines the impact of the recently developed investor sentiment index (Photo Pessimism) derived from a large sample of news photos on sustainable stock returns. Based on the quantile causality analysis, we demonstrate that Photo and Text Pessimism significantly influence S&P 500 ESG stock market returns, particularly at medium quantile levels. The findings also suggest that the Photo sentiment
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Business closures in uncertain times: Theory and evidence Finance Research Letters (IF 7.4) Pub Date : 2025-05-05 Amit Ghosh, Constant L. Yayi
This letter theoretically and empirically examines the impact of economic policy uncertainty (EPU) on business closures, using panel data from 26 countries over the period 2006–2022. We find that a one-unit increase in the EPU index significantly raises business closures by approximately 0.7 %–0.9 % per 1000 adults. Furthermore, we identify credit supply, household consumption, and stock market capitalization
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The impact of regulatory design change on financial reporting outcomes: Evidence from a Quasi-natural experiment Finance Research Letters (IF 7.4) Pub Date : 2025-05-05 Jae Hwan Ahn, Jung Seung Han, Hoyong Choi
We investigate the impact of the financial supervisory architecture on financial reporting outcomes by exploiting a quasi-natural experiment in Korea. In 2008, Korea consolidated financial policy-making and supervisory functions into a single entity. Employing a difference-in-differences approach with cross-country data, we provide novel evidence indicating that the financial reporting quality of Korean
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Divergence from Benford’s law fails to measure financial statement accuracy Int. J. Account. Inf. Syst. (IF 4.1) Pub Date : 2025-05-05 Manuel Cano-Rodríguez, Manuel Núñez-Nickel, Ana Licerán-Gutiérrez
The Financial Statement Divergence (FSD) score, a metric of the deviation of figures from Benford’s Distribution, has become increasingly popular in assessing financial information quality at the firm-year level. We test the validity of this metric by analyzing (1) if error-free financial statements conform to Benford and (2) if the FSD score increases with the presence of accounting errors or manipulations
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Chasing ESG performance: How methodologies shape outcomes International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-03 Matteo Benuzzi, Karoline Bax, Sandra Paterlini, Emanuele Taufer
ESG metrics play a crucial role in sustainable finance but face growing criticism for their inability to accurately capture actual sustainability improvements. This study investigates how methodological choices can introduce distortions in ESG scores, with a primary focus on Refinitiv ESG data, while offering insights applicable to other providers as well. We show that data aggregation and score normalization
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Do pre-market notifications and stock volatility trigger circuit breakers? Evidence from Turkish post-IPO stocks Finance Research Letters (IF 7.4) Pub Date : 2025-05-03 Orçun Kaya, Çiydem Çatak
Understanding how the arrival of pre-market information triggers intraday circuit breakers in post-IPO stocks is central to analyzing market behavior in emerging markets, where information asymmetry and heightened volatility are common. Using data on newly listed stocks from the Turkish stock exchange, this paper examines the drivers of circuit breaker activations in the first year following IPOs.
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Suppliers’ response to corporate site visits at customers firms The British Accounting Review (IF 5.5) Pub Date : 2025-05-03 Yingwen Guo, Jingjing Li, Bing-Xuan Lin, Weiyin Zhang
We examine the relationship between corporate site visits by institutional investors and the provision of trade credit to these firms by their suppliers and find a positive relationship between the frequency of site visits and the level of supplier trade credit. This relationship is more pronounced among firms with less transparent information environments and greater financial constraints. The findings
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How AI is shaping accounting and finance The British Accounting Review (IF 5.5) Pub Date : 2025-05-03 Yi Cao, Wei Zhang
The special issue on Artificial Intelligence (AI) in Accounting and Finance explores how AI technologies are transforming the fields of accounting and finance, examining both their practical applications and the associated challenges. The papers included in this issue demonstrate how AI can improve efficiency, enhance decision-making processes, and increase transparency across various domains, including
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Physical vs. Transition climate risks: Asymmetric effects on stock return predictability International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-02 Mingtao Zhou, Yong Ma
This paper examines the predictive role of two dominant climate risk categories – physical and transition risks – in forecasting U.S. equity market risk premiums. The results reveal a pronounced asymmetry: physical climate risk significantly and negatively predicts stock returns both in-sample and out-of-sample, whereas transition climate risk demonstrates insignificant forecasting ability. This superior
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ESG-integration investment strategy for TDFs with a multi-objective dynamic programming International Review of Financial Analysis (IF 7.5) Pub Date : 2025-05-02 Wenling liu, Zhi-Long Dong, Fengmin Xu, Kui Jing
ESG (Environmental, social, and governance) has become increasingly crucial in the investment of pension funds. This paper develops a multi-objective dynamic model to analyze the ESG-integration investment strategy of Target Date Funds (TDFs). The model optimizes three objectives: expected return, variance, and ESG score, incorporating human capital in the budget constraint and considering inflation-linked
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Bankruptcy reform and audit fees: Evidence from quasi-natural experiment in India Finance Research Letters (IF 7.4) Pub Date : 2025-05-02 Soumyabrata Basu, Praveen Bhagawan, Jyoti Prasad Mukhopadhyay
Considering the enactment of the Insolvency and Bankruptcy Code (IBC) in India, we causally assess its impact on Indian firms’ audit fees. Using the difference-in-differences (DiD) technique, we find that financially distressed firms pay lesser audit fees than financially non-distressed firms in India post-bankruptcy reforms. The robustness of our findings is ensured using matching combined with DiD
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Weathering the storm: How climate risks shape bank credit risk in European banks Finance Research Letters (IF 7.4) Pub Date : 2025-05-02 Adriano Bellinvia, Valeria Venturelli, Paola Brighi, Carmelo Algeri
This paper investigates the impact of climate risk on banks' credit risk. Using a sample of 102 banks across 21 countries in the European Economic Area (EEA) from Q3 2019 to Q2 2023, we develop a novel approach to quantifying climate risk based on banks' loan exposures to industries and countries. Our findings indicate that climate transition risk (CTR), climate physical risk (CPR), and total climate
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Local economic uncertainty, bank efficiency, and financial risk Finance Research Letters (IF 7.4) Pub Date : 2025-05-02 Ahmed W. Alam, Qilong Yu, Shuxin Bai, Hasanul Banna
We investigate the interrelationship between state-level economic policy uncertainty (SEPU), bank efficiency, and banks’ financial risk. Using a sample of US banks from 2011 to 2021, we show that banks with higher operational efficiency can mitigate the increased financial risk stemming from high SEPU. This association remains unchanged while considering the national-level economic policy uncertainty
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Impact of digital economy on upgrading of industrial structure: From the financial development perspective☆ Finance Research Letters (IF 7.4) Pub Date : 2025-05-02 Lu Zhao, Tianqi Zhu, Junya Chen, Lijuan Zhao
This study quantitatively explores the relationships among the digital economy (DE), financial development, and industrial structure upgrading (ISU). Findings suggest that (1) the DE positively affects ISU; (2) financial development has a significantly positive spillover effect on ISU; and (3) under financial development regulation, the DE and ISU have an “inverted U-shaped” nonlinear relationship
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The role of AI in credit risk assessment: Evidence from OECD and BRICS via system GMM and random forest Finance Research Letters (IF 7.4) Pub Date : 2025-05-02 Doğuş Emin, Ayşegül Aytaç Emin
This study investigates the impact of artificial intelligence (AI) adoption on credit risk assessment in OECD and BRICS economies by employing both System Generalized Method of Moments (GMM) and Random Forest models. As a first step, a composite AI Adoption Index is constructed to capture the technological maturity of financial institutions with indicators including banking technology spending, the
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CEO spin and the stock price crash Finance Research Letters (IF 7.4) Pub Date : 2025-05-02 Bin Liu, Xuemei Zhou
This study develops a model elucidating the mechanism by which CEO exaggeration triggers stock price collapses. CEOs leverage private information to attract investment through premarket boasting. Two investor archetypes interpret this information differently: Type I investors, possessing superior analytical capabilities, accurately discern true value; Type II investors, who rely on CEO pronouncements
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How does cultural diversity influence corporate AI development? Finance Research Letters (IF 7.4) Pub Date : 2025-05-01 Rong Liu, Wenying Luo, Ruiqian Su
This study explores the impact of cultural diversity on corporate artificial intelligence (AI) development and its underlying mechanisms. Empirical analysis demonstrates that cultural diversity significantly enhances AI development within firms, primarily by fostering innovation. Heterogeneity analysis further reveals that this positive effect is more pronounced in firms with lower financial constraints
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Active style drift and mutual fund performance Finance Research Letters (IF 7.4) Pub Date : 2025-05-01 Jungcheol Shin, Daehwan Kim
We empirically investigate the effect of active style drift (i.e., changes in style resulting from managers’ deliberate rebalancing) on mutual fund performance. Our measure of active style drift is based on monthly holdings data, which enables us to capture short-term changes in style. We examine all active equity mutual funds registered in Korea between 2009 and 2023 and find that intermediate-term
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Global volatility and firm-level capital flows J. Financ. Econ. (IF 10.4) Pub Date : 2025-04-30 Marcin Kacperczyk, Jaromir Nosal, Tianyu Wang
We study the impact of global volatility on the equity portfolio flows of institutional investors worldwide. Aggregate equity allocations of institutional investors decrease during periods of high volatility, both in developed and, even more strongly, in emerging markets. Our granular portfolio-level data allows us to uncover disaggregated investor responses that are an order of magnitude larger than
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Climate change and the rise of shadow banking: A global analysis International Review of Financial Analysis (IF 7.5) Pub Date : 2025-04-30 Solomon Y. Deku, Diego Morris
Climate change is a growing challenge for global economic stability, with significant implications for financial sector development. This study examines the relationship between climate vulnerability and the growth and structure of financial systems across a global sample of 29 countries. Using panel data, we find a positive relationship between climate risks and the overall size of financial systems
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Impact of market power on capital investment and labor-augmenting innovations Finance Research Letters (IF 7.4) Pub Date : 2025-04-30 Xinle Liu, Pengfei Luo, Yong Zhang
We develop a two-stage model of capital investment and labor-augmenting innovations, considering the implications of market power on investment decisions (investment size and timing) and welfare. Capital size decreases with market power, while labor-augmenting technological investment scale increases. An inverted U-shaped relationship exists between investment thresholds and market power, resulting
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Negative interest rates and shadow banking The British Accounting Review (IF 5.5) Pub Date : 2025-04-30 Zixuan Dai, Lei Xu, Chandrasekhar Krishnamurti, Zenghua Lu
We examine the effects of negative interest rate policy (NIRP) on the scale of shadow banking. Utilising a Triple Differences (TD) model and a cross-country dataset of 676 non-bank financial intermediaries from 28 OECD countries over the period 2011–2017, we observe a reduction in the size of shadow banking entities. Moreover, the impact of NIRP is heterogeneous based on country- and entity-specific
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Analysing art as a safe-haven asset in times of crisis International Review of Financial Analysis (IF 7.5) Pub Date : 2025-04-29 Dimitrios Dimitriou, Alexandros Tsioutsios, Shaen Corbet
This study investigates the hedging and safe-haven properties of art investments relative to traditional financial assets, employing a Time-Varying Parameter Vector Autoregression (TVP-VAR) approach across major art market sub-indices during several periods of financial crises, including the collapse of the dot-com bubble, the Global Financial Crisis, and the COVID-19 pandemic. Art indices are found
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Does exposure to biodiversity risk drive firms’ digital transformation? Finance Research Letters (IF 7.4) Pub Date : 2025-04-29 Libo Yin, Xiaoye Zhu, Jingtian Li
This paper investigates whether biodiversity risk drives firms’ digital transformation. We find that such risk positively influences digital efforts, especially among firms facing higher natural disaster exposure, policy uncertainty, and risk perception. The effect operates through disrupted supply chains, sustainability constraints, and incentives for green innovation, positioning digital transformation
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Information content and sentiment: the role of environmental disclosure in stock price crash risk International Review of Financial Analysis (IF 7.5) Pub Date : 2025-04-28 Wen Long, Ruiqi Ma, Man Guo
Environmental disclosure is a topic of global importance. When negative environmental news emerges and is eventually revealed, it can influence investor decisions and lead to significant stock price movements, potentially resulting in stock price crashes. Therefore, using a sample of A-share listed companies on the Shanghai and Shenzhen Stock Exchanges from 2017 to 2022, we construct an environmental