This paper examines venture capital's (VC) role in the geographic clustering of high‐growth startups. We exploit a rule change that disproportionately impacted U.S. regions that historically lacked VC financing via a restriction of banks to invest in the asset class. A one‐standard‐deviation increase in VCs' exposure to the rule led to a 20% decline in fund size and a 10% decrease in the likelihood

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Auditors frequently outsource audit work to offshore Shared Service Centers (SSCs) to reduce costs and ease the workload burdens of audit team members. However, concerns persist about whether these benefits come at the expense of audit quality. Using proprietary audit engagement-level data, I evaluate whether greater SSC usage by Big 4 audit teams has an association with either, or both, audit quality

The reordering of transactions from “high‐to‐low” is a controversial bank practice thought to maximize fees paid by low‐income customers on overdrawn accounts. We exploit a series of class‐action lawsuits that mandated that some banks cease the practice. Using alternative credit bureau data, we find that after banks cease high‐to‐low reordering, low‐income individuals reduce payday borrowing, increase

Higher-order beliefs—beliefs about others’ beliefs—may be important for trading behavior and asset prices but have received little systematic empirical examination. Examining more than 20 years of evidence from the Robert Shiller Investor Confidence surveys, we find that investors’ higher-order beliefs provide substantial motivations for nonfundamental speculation–taking a stock market position that

The U.S. stock market’s return during the first month of a quarter correlates strongly with returns in future months, but the correlation is negative if the future month is the first month of a quarter, and positive if it isn’t. These correlations offset, consistent with the well-known near-zero unconditional autocorrelation, yet they are pervasive, present across industries and countries. The pattern

We adopt a financial‐materiality approach in studying the costs and benefits of measuring greenhouse gas (GHG) emissions on social welfare. Production by firms internally generates direct GHG emissions (Scope 1 emissions) whereas outsourcing to suppliers generates indirect emissions (Scope 3 emissions). Our analysis incorporates two frictions: (1) long‐term negative environmental externalities caused

We propose a new framework for pricing exchange options, modeling two underlying assets of no liquidity issues with Heston stochastic volatility models adjusted for regime-switching long-run variance levels to capture economic cycles. Market liquidity, a stochastic factor affecting asset prices, is incorporated, leading to a discount in asset values. We then apply a regime-switching Esscher transform

Financial benchmarks such as LIBOR underpin the pricing of trillions of dollars of contracts around the world. We evaluate the quality of benchmark prices using a state-space model to separate information from noise. Applying the method to LIBOR benchmarks and their replacements, we find that alternative reference rates (ARRs) are less noisy in four of the five currencies. However, the USD ARR is considerably

This study explores the influence of peer effects on corporate environmental, social, and governance (ESG) performance, focusing its overall construct, underlying mechanisms, and economic consequences. Using data from A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2011 to 2022, the analysis reveals significant industry-level peer effects, demonstrating that competitors play

We extend the analysis of the Treasury debt market determinants by empirically investigating the impact of climate change risk on the pricing of Treasury securities across 102 countries around the world. The study takes advantage of a new dataset of climate change proxies that spans over four decades. We distinguish between physical and transition risk, and investigate both short- and long-term securities

During wartime, investors seek safe havens for various assets, creating volatility in the financial markets. This study analyzes the safe-haven capacity of a group of assets during the Russia–Ukraine and Palestine–Israel conflicts. Using DCC−GARCH and event study, we find that assets with an upward correlation with the market before the conflict, which we define as a positive push, manifest safe-haven

We investigate the impact of Chief Executive Officer (CEO) age on stock price synchronicity, which measures the amount of market-wide information relative to firm-specific information reflected in stock prices. Based on a sample of US-listed firms from 1992 to 2020, we find that firms managed by older CEOs tend to exhibit lower stock price synchronicity. In terms of earnings management, an important

This study examines how ESG ratings influence investor behavior, emphasizing the variations across rating agencies. Using daily market reactions in returns and trading volumes of 1100 North American and European firms from 2017 to 2023, the analysis identifies variations in market reactions between ESG score changes from Bloomberg and MSCI. Notably, abnormal trading volumes without abnormal returns

The 2024 IPCC (Intergovernmental Panel on Climate Change) report highlights that financing is a major concern in achieving the net zero goal. This paper studies the impact of environmental regulations and policies adopted by countries in promoting green finance. Using a large sample of 42 countries, we show that environmental regulations and green finance policies significantly boost the size and issuance

Convertible bond is one of the important financing tools for companies and affect their stock market performance. We employ a Multi-period Difference-in-Differences (DID) approach to investigate the impact of convertible bond issuance on stock liquidity of listed small companies. Empirical evidence indicates that their liquidity is significantly enhanced following the issuance of convertible bonds

Based on data drawn from 45 countries covering the period 1981–2019, we explore whether and how future time reference in languages (FTR) influences the relationship between corporate innovation investments and firm value. We find a positive association between corporate investments in innovation and firm value, with this association being more pronounced for firms in weak-FTR countries. These findings

Blockchain innovations, particularly real estate tokens, have revolutionised the real estate market, enhancing efficiency, security, and transparency. However, the lurking threat of crypto hacker attacks on the digital real estate market demands immediate attention. We examine the impact of eight crypto hacker attacks on five types of real estate tokens. Our volatility spillover test results reveal

The prices of oil and gas significantly affect the world economy, and their fluctuations influence the financial and economic stability of many countries. This study considers the relationship among Brent crude oil, TTF natural gas price shocks, and the 31 European largest companies from the energy sector. We employ a connectedness framework of Diebold–Yilmaz to investigate the static and time-varying

We discover a novel flight-to-safety (FTS) effect from cryptocurrency markets to stock markets, triggered by a series of hacking attacks on cryptocurrency exchanges. This phenomenon is driven by heightened uncertainty, which increases investors’ risk awareness and prompts asset reallocation in favour of safer stock markets over riskier cryptocurrency markets. We conduct an extensive global examination

We propose a valuation integrating growth dynamics and exit multiples to resolve inconsistencies in traditional models that misalign present valuations with terminal values. Our approach ensures coherence between entry and exit values by combining intrinsic and relative methods, providing a consistent tool. Particularly for venture capital and private equity, our model clarifies the role of exit multiples

Biodiversity risk represents a pressing global challenge with far-reaching consequences for ecosystems, economic stability, and corporate sustainability. This study explores the link between firm scope—the breadth of related product markets a firm engages in—and biodiversity risk, leveraging a comprehensive dataset of U.S. publicly listed firms. Our findings reveal a significant positive relationship

This study examines the structural dynamics of the spread between the 10-year Treasury yield and the federal funds rate, a key indicator of U.S. financial conditions. Cross-quantilogram analysis reveals a nonlinear dependency across adjacent periods, with stronger connectedness observed in the tail distribution than in the middle. Additionally, the functional quantile autoregression model confirms

This study examines how textual disclosures in green bond prospectus affect the credit spread of green bonds. We use data on green bonds issued between September 2014 and December 2024 in the U.S., aligned or certified with the Climate Bonds Initiative (CBI). Results show that investors demand higher credit spread for prospectus with lower readability. The use of green terms in prospectus lowers credit

Economic policy uncertainty relates to the unpredictability in government policies that can impact economic decision-making. High policy uncertainty can lead to less investment, slower economic growth, and increased volatility in financial markets. In this study, Markov Chain Monte Carlo (MCMC) simulations and Bayesian Hierarchical Modeling (BHM) are employed to quantify policy prediction uncertainty

We investigate the effect of climate risk on two fundamental characteristics of earnings quality: faithful representation and relevance, of 184 European-listed companies over the period of 2010 to 2019. We find that climate risk has a negative impact on both the faithfulness and relevance of earnings, ultimately reducing overall earnings quality. Firms in countries with higher climate risk are more

To analyze the impact mechanisms of financial support, innovation awareness, and other related factors on farmers’ willingness to adopt green production technology, this study uses the Oprobit model to investigate data from 521 surveys in Henan, Guangdong, and Fujian provinces. Results indicate that (1) the more monetary support farmers receive, the stronger their willingness to adopt green production

The study reveals that US financial conditions consistently Granger-cause variations in Sino-US political tensions, with the reverse causality observed only when using the Chicago Fed’s National Financial Conditions Index, while no such impact is found with the newly introduced US - Fed Financial Conditions Impulse on Growth Index, highlighting the importance of using diverse financial indicators to

This paper evaluates the effects of EU government bailout policies in the years 2008–2014 on bank performance using the difference-in-differences and propensity score methods. The findings reveal that bailed-out banks exhibited higher lending activities compared to non-aided banks, both in EU core and EU periphery regions. However, this increase in lending in the EU periphery was accompanied by a rise

We provide a spatial framework to study competition between banks and fintechs in the lending market and examine the impact on investment and welfare. Based on the key differences between banks and fintechs, we derive results consistent with the empirical evidence available. We find that fintechs with inferior monitoring efficiency can successfully enter because of their superior flexibility in pricing

High commissions in the U.S. residential real estate agency market pose a puzzle for economic theory because brokerage is not a concentrated industry. We model brokered markets as a game in which agents post prices for customers and then choose which other agents to work with. We show that there exists an equilibrium in which each agent conditions working with other agents on those agents' posted prices

In this paper, we examine how different variables impact the profitability-flows relationship in mutual funds across different countries around the world; we also determine whether fund investors prefer some variables against others when making investment decisions. We compare different performance measures throughout this work; we examine the relationship between flows and performance employing a

This paper investigates the impact of the ELITE program for SMEs on their ability to access external financing. Leveraging on unique dataset of Italian unlisted companies, we discovered that ELITE firms accessed funding more efficiently than matched controls, experiencing a rise in financial leverage, accompanied by a reduction in the cost of debt. When looking at debt structure, ELITE companies exhibit

This study evaluates the impact of corporate equity incentives on ESG performance using a difference-in-differences model with multiple time points, based on data from A-share listed companies spanning 2007–2022. The study finds that applying equity incentives improves enterprise ESG performance, primarily by improving corporate governance. Mechanism analyses show that equity incentives affect ESG

This paper introduces the Fuzzy Market Inefficiency Measure (FMIM), a novel approach for evaluating financial market efficiency by leveraging fuzzy set theory. FMIM addresses limitations in traditional metrics by modeling inefficiency as a triangular fuzzy number, capturing the inherent uncertainties and non-linear dynamics of financial markets. The methodology incorporates fuzzy regression with triangular

Substantial evidence suggests that regulatory agencies in the United States can be captured by the politicians who oversee them. We provide novel evidence of a federal agency in which capture is limited: the United States Patent and Trademark Office. Although patent applications from politically connected applicants are slightly more likely to be approved despite being of lower ex post quality, additional

We conduct an in-depth examination of excessive custom XBRL tag usage in 10-K filings among U.S. firms. We discuss why some firms are prone to creating custom tags in 10-K filings and assess whether such excessive usage is associated with heightened regulatory attention from the SEC. First, we find that firms with weak internal controls are more likely to create custom tags in 10-K filings. Next, we

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This paper examines the effect of international capital flows on economic growth fluctuations across 84 countries from 1980 to 2020. We find that international capital flows have a positive impact on economic growth fluctuations, a conclusion consistent across various measures of economic growth, including real output, potential output, output gap, and per capita output. Additionally, our analysis

Crude oil prices substantially impact the global economy, national security, and international politics. Accurate forecasting of crude oil prices and understanding the causality mechanism are crucial for policymakers, investors, and academia. Given the multitude of influence factors and oil prices’ complex nonlinearity, we propose a novel Gated Recurrent Unit-based non-linear Granger Causality (GRU-GC)

This study examines the effects of board gender diversity on firms’ investment in organization capital (OC), drawing on a comprehensive dataset of US public firms from 2000 to 2019. The main findings suggest that firms with greater board gender diversity tend to allocate more resources toward OC. Our results remain robust when employing an instrumental variable approach and propensity score matching

This article selects data from publicly listed companies between 2011 and 2022 as a sample to explore the impact of social governance levels and financial regulation on corporate investment efficiency. Empirical results show that social governance levels can enhance corporate investment efficiency; financial regulation can improve corporate investment efficiency; there is heterogeneity in the impact

Utilising panel data of 14 emerging economies from 1993 to 2022, we employ the Pooled Mean Group-Panel Autoregressive Distributed Lag (PMG-ARDL) model to analyse the effects of economic growth, regulatory quality, exchange rate stability, and geopolitical risks alongside the US-China Tension index on foreign direct investment (FDI) inflows. We find that robust economic growth and stable exchange rate

Using data from the Shanghai Stock Exchange, Shenzhen Stock Exchange, Interbank Dealers Association, and National Development and Reform Commission spanning 2014–2022 as well as the difference-in-difference technique, this study examines the transmission effect of real estate risk events on municipal bond spreads. Findings reveal that municipal investment bond spreads in risk-sensitive areas increase

We develop a tractable dynamic contracting framework to study bank bail-in regimes. In the presence of a repeated monitoring problem, the optimal bank capital structure combines standard debt, which induces liquidation and provides strong incentives, and bail-in debt, which restores solvency but provides weaker incentives. Given fire sales, an optimal policy response entails joint regulation: a bail-in

The signing of the Multilateral Memorandum of Understanding (MMoU) has strengthened the US Securities and Exchange Commission's (SEC's) cross-border enforcement program over US-listed foreign firms through better cooperation with foreign securities regulators. Using the MMoU as a natural experiment, we examine the effect of enhanced SEC regulatory oversight on investment efficiency of US-listed foreign

We investigate the impact of anonymity and privacy-preservation on cryptocurrency use. We find that privacy coins, which deploy advanced privacy-preserving technologies to enhance trader anonymity, experience a relative increase in usage compared to non-privacy coins following regulatory interventions aimed at countering illegal activities in cryptocurrency trading and use. However, the adoption of

Constructing social networks of venture capital (VC) firms using social ties of VC partners in 36 countries, we find that VC firms that are central in the networks tend to lead VC investment syndicates, and this relation is more pronounced in countries with weaker institutional environments and investor protection. We show evidence that central VC firms achieve superior performance as they obtain better

Fluctuations in investor demand significantly affect firms’ valuation and access to capital. To quantify their real effects, we develop a dynamic investment model, incorporating both the demand and supply sides of capital. Strong investor demand relaxes financial constraints and facilitates equity issuance and investment, while weak demand encourages opportunistic share repurchases, crowding out investment

We analyze how a profit‐maximizing proxy advisor designs vote recommendations and research reports. The advisor benefits from producing informative, unbiased reports, but only partially informative recommendations, biased against the a priori likely alternative. Such recommendations induce close votes, increasing controversy and thereby the relevance and value of proxy advice. Our results suggest shifting

We focus on the impact of stakeholders' pressure on the levels of ESG transparency exhibited by companies operating under different regulatory frameworks – specifically, within voluntary or mandatory disclosure regimes – between 2012 and 2020. Our analysis encompasses European and US listed companies, each having taken distinct paths toward sustainability reporting. Europe underwent the transition

This research investigates the time-varying connectedness between ESG, global environment, green economy, clean energy and energy innovation. Employing the novel DCC-GARCH R2 decomposed connectedness technique, findings show that dynamic total connectedness varies over time. The green economy and energy innovation are identified as the primary transmitters of volatility shocks, while ESG and clean

Using data from 2011 to 2023, this study explores the impact of enterprises’ fintech development on digital business models (DBMs). This study reveals that fintech improves business models by addressing financing constraints and eliminating information asymmetry. These insights contribute to understanding fintech's micro-level behaviors and offer practical guidance for enterprises seeking to navigate

While there is widespread agreement that liquidity plays a crucial role in financial contagion, the analysis of liquidity spillovers between individual stocks remains underexplored. This study examines liquidity spillover effects among individual stocks within a multilayer network framework. Using data from S&P 500 constituent stocks between 2006 and 2021, we construct annual multilayer liquidity spillover

This study provides evidence on the role of the quality of political signals in predicting six major cryptocurrency asset classes. Including communications from the U.S. presidential election in 2024, we find that political news affects cryptocurrency returns in the short-term (from ∼2 to ∼4 months). For most cryptoassets, text sentiment measures demonstrate superior predictive performance compared

This registered report investigates self‐directed retail investors' information choices and trading decisions on an integrated trading platform that provides timely and convenient access to accounting information. The analyses reveal that these investors access a mosaic of information, with a high proportion not firm‐specific. In accessing accounting disclosures, retail investors are more interested