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The effect of SEC regulatory oversight on implied cost of equity Financial Review Pub Date : 2024-04-04 Alex Annan Abakah, Hyacinthe Yirlier Somé
We examine the effect of the U.S. Securities and Exchange Commission's (SEC) oversight on the cost of equity. We argue that companies near regulatory oversight by the SEC are subject to increased scrutiny. Such heightened scrutiny, which is associated with enhanced disclosure quality, ultimately leads to a reduction in the cost of equity. We find empirical evidence supporting this hypothesis. Importantly
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Managerial discretion and debt financing under information uncertainty Financial Review Pub Date : 2024-04-04 Yu‐Hong Liu, I‐Ming Jiang, Hung‐Chieh Huang
This study investigates how information uncertainty influences managers' decisions and compensation. It reveals varying financial choices under uncertainty levels. Initially, information uncertainty results in debtholders undervaluing debt in comparison to situations without such uncertainty. Consequently, they consistently estimate a default threshold that is lower than the threshold managers choose
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Stock market and the psychological health of investors Financial Review Pub Date : 2024-03-29 Chang Liu, Maoyong Fan
Utilizing a national individual‐level medical dataset and the home bias phenomenon in investment, our study shows a strong and robust link between declines in local stock returns and increased antidepressant consumption among investors. This effect intensifies in areas with higher per capita dividend income, suggesting a direct relationship between higher stock ownership and stronger responses. We
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Do firms led by founders take higher risk? Financial Review Pub Date : 2024-03-25 Edward Lawrence, Yuka Nishikawa, Arun Upadhyay
This study examines whether firms led by founder‐CEOs are significantly different from firms led by nonfounder‐CEOs in terms of the nature of their risk. Our results show that founder‐led firms are associated with higher operational but lower financial risk. We find that the differential nature of risk‐taking in founder‐CEO firms is driven by CEO's influence, their propensity of removal, and the probability
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Efficient Market Hypothesis on the blockchain: A social‐media‐based index for cryptocurrency efficiency Financial Review Pub Date : 2024-03-23 Efstathios Polyzos, Ghulame Rubbaniy, Mieszko Mazur
This paper proposes the use of social media as a proxy for financial information. Using an extended sample of 53,580,759 tweets and employing text analysis tools (Latent Dirichlet Allocation and Term Frequency–Inverse Document Frequency), we determine the information being exchanged on any given day. We train machine‐learning classifiers and forecast crypto price movements for more than 8000 cryptocurrencies
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Is rising student debt affecting retirement savings? Evidence from the survey of consumer finances Financial Review Pub Date : 2024-03-20 Birzhan Batkeyev, Mine Ertugrul, Karthik Krishnan, Pinshuo Wang
Using exogenous changes in the personal bankruptcy treatment of student loans as well as the level of student debt, we find that student debt has a negative effect on household retirement savings. This negative relation is present for younger and older individuals, and is larger for the latter group, indicating lower levels of retirement savings for precisely those who can least afford it. We also
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CEO overcaution and capital structure choices Financial Review Pub Date : 2024-03-13 Francesco Rocciolo, Andrea Gheno, Chris Brooks
This paper develops and empirically tests a new version of the trade-off theory of corporate capital structure choices that accounts for CEOs' biased beliefs, with a focus on overcaution. We characterize the bias as a distortion of expected rates of return on equity and debt that, for Overcautious CEOs, are overestimated compared to a rational CEO. The theory shows that if CEOs have higher bias in
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Institutional pressure and analyst behavior: Evidence from the financial sector Financial Review Pub Date : 2024-03-05 Chang Liu, Maoyong Fan, Manoj Athavale
This study examines the impact of employment background on the objectivity of profitability forecasts in the financial sector. We find that investment bank analysts provide relatively biased recommendations and less accurate forecasts than their counterparts at independent research firms (IRFs). The performance discrepancy is greater for bulge bracket banks and for firms involved in syndication with
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Discrimination announcements, employee opinion, and capital structure: Evidence from the EEOC Financial Review Pub Date : 2024-02-29 Spencer Barnes
This paper investigates the impact of discrimination publicity on employee opinion. The findings suggest that employees reduce their sentiments toward the firm and its leaders when discrimination becomes public via Equal Employment Opportunity Commission (EEOC) announcements. Following the stakeholder theory of capital structure, the effect clusters in firms with above‐average leverage. Additionally
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Sentiment and the cross-section of expected stock returns Financial Review Pub Date : 2024-02-15 Gady Jacoby, Chi Liao, Nanying Lin, Lei Lu
The asset pricing Literature suggests market sentiment is a state variable. This study shows that market sentiment is positively priced at the cross-section of stock returns, conditional on aggregate investors’ sentiment. We estimate individual stock sentiment beta and find that, following low-sentiment periods, stocks in the highest sentiment beta quintile generate a 0.74% higher monthly return than
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Corporate social responsibility and investor relationship management Financial Review Pub Date : 2024-01-25 Jie Jiao, Yanyang Wang, An Yan
Following the Fukushima Daiichi nuclear disaster, utilities firms increase their commitments to corporate social responsibility (CSR), emphasizing on addressing environmental concerns over non-environmental ones. The intensified focus on CSR is especially significant in utilities firms with substantial institutional ownerships. Concurrent to the increase in CSR, utilities firms also exhibit a decline
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The questions being asked: Academic research, the media, and regulators Financial Review Pub Date : 2024-01-24 Michelle Lowry
Academic research should strive to increase our understanding of the world we live in, and as such open the door for improvements in this world. With this goal in mind, this piece represents a call for academics to jointly consider their research agenda and the audience for this research. This audience might include people working in industry or policy makers. Closer connections between academia and
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Short selling and readability in financial disclosures: A controlled experiment Financial Review Pub Date : 2024-01-16 Minxing Sun, Weike Xu
We examine the causal effect of short-selling on a firm's annual report readability using regulation SHO, which relaxes short-sale constraints for a random sample of pilot stocks. Pilot firms produce significantly less readable annual reports than nonpilot firms during the experiment period. Our results are more pronounced for firms that receive less investor attention and those with poorer growth
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Does negative news disclosure induce better decision-making? Evidence from acquisitions Financial Review Pub Date : 2023-12-19 Chinmoy Ghosh, Cristian Pinto-Gutiérrez, Jaideep Shenoy
We examine the effect of negative news disclosures on acquisition decisions of firms. Using textual analysis of company press releases, we find that the percentage of negative news disclosed by a firm reduces its probability of acquisitions. However, for firms that do undertake acquisitions, the percentage of negative news disclosed is positively related to announcement-period abnormal returns. Consistent
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ETF and corporate reporting Financial Review Pub Date : 2023-12-13 In Ji Jang, Namho Kang
When ownership by ETFs is high, the penalty to missing earnings expectation is smaller by 43%. The smaller penalty is not due to underreaction but is attributed to the long investment horizon of ETFs. Consequently, firms with high ETF ownership engage in earnings and expectation managements less frequently and are less likely to reduce discretionary spending to marginally meet or beat. Using Russell
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Does informal governance matter to institutional investors? Evidence from social capital Financial Review Pub Date : 2023-11-27 Kershen Huang, Chenguang Shang
We find a positive association between institutional ownership and social capital. The social norms in a region, while not imposed by businesses or laws, play a monitoring role that disciplines managers from self-serving behaviors. The resulting trustworthiness, through its mitigation of agency problems, drives the investment preferences of institutions. Our subsample analyses based on information
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Corporate insiders’ exploitation of investors’ anchoring bias at the 52-week high and low Financial Review Pub Date : 2023-11-20 Meziane Lasfer, Xiaoke Ye
We find that insiders adopt dissimulation strategies to conceal their informational advantage and trade profitably when their firms’ stock prices reach 52-week highs and lows, exploiting the anchoring biases of uninformed investors. Insiders’ trading profitability depends on their firms’ future stock returns, operating efficiency, and investment sentiment, but not on earnings surprises. We document
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Under the spotlight: The peer standard in CSR and the role of public attention Financial Review Pub Date : 2023-11-20 Hirofumi Nishi, S. Drew Peabody
As sustainability takes center stage in business strategies, firms lagging behind their peers on environmental initiatives are strongly motivated to bridge the gap. Analyzing the U.S. sectors primarily responsible for CO2 emissions, we show that environmentally lagging firms increase the efforts to reduce emissions and adopt eco-friendly materials in the subsequent year. Interestingly, this phenomenon
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Is corporate finance research in decline?1 Financial Review Pub Date : 2023-10-23 David J. Denis
There has been a secular decline in published research on corporate finance topics over the past decade or so. While this raises questions about the vitality of the field going forward, I argue that a number of recent developments represent important new directions for research in corporate finance. These developments have begun to have an impact on scholarly activity and I expect this to continue
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Good risk measures, bad statistical assumptions, ugly risk forecasts Financial Review Pub Date : 2023-10-23 Michael Michaelides, Niraj Poudyal
This paper proposes the time-heterogeneous Student's t autoregressive model as an alternative to the various volatility forecast models documented in the literature. The empirical results indicate that: (i) the proposed model has better forecasting performance than other commonly used models, and (ii) the problem of reliable risk measurement arises primarily from the model risk associated with risk
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Returns to scale in cost, revenue, and profit for European banks: New results from nonparametric local linear methods Financial Review Pub Date : 2023-10-23 Ji Wu, Shirong Zhao
The continuously increasing bank sizes have received much attention from both policymakers and researchers. We present new estimates of returns to scale in cost, revenue, and profit for European banks over 2000–2020 based on nonparametric, local-linear methods. We find that most banks faced increasing returns to scale in cost and decreasing returns to scale in revenue and profit across years, across
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Short seller monitoring and real earnings management Financial Review Pub Date : 2023-10-16 Tianyu Cai, Lixiong Guo, Yongxian Tan
Exploiting an exogenous shock to short selling costs brought by the RegSHO, we find that short seller monitoring restrains real earnings management (REM). The effect is concentrated in firms facing a lower cost of REM than accruals management. Litigation risk and reduced CEO wealth gain from REM are two plausible channels through which short seller monitoring deters REM. Lastly, we find that short
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Determinants of commodity market liquidity Financial Review Pub Date : 2023-09-30 Pankaj K. Jain, Ayla Kayhan, Esen Onur
Using positions data for 18 commodity futures during 2001–2020, we examine systematic and idiosyncratic determinants of Amihud price impact and microstructure noise proxying for permanent and transitory components of commodity futures liquidity. Idiosyncratic factors have the largest economic impact: while excess hedging demand increases PI and noise, active position-taking (by market-makers) in excess
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Share repurchases and managerial reference points Financial Review Pub Date : 2023-08-28 Nicholas Clarke, Dylan Norris, Andrew Schrowang
This study examines the relationship between managerial reference points and corporate payout policy. We find that share repurchase activity increases as a firm's current stock price declines in relation to the price at which it previously repurchased shares. To facilitate a behavioral interpretation of this relation, we show that it weakens around stock splits, is asymmetric over gains and losses
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Board cultural diversity and firm performance under competitive pressures Financial Review Pub Date : 2023-08-25 Olga Dodd, Bart Frijns, Robin Kaiji Gong, Shushu Liao
We examine the impact of board cultural diversity, based on directors' ancestry, on firm performance conditional on product market competition. We argue that culturally diverse boards foster critical thinking and offer creative solutions that help firms thrive in competitive environments. We document that culturally diverse boards are associated with superior performance for firms operating in highly
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Where does ex-dividend trading occur: An examination of trading venues around dividends Financial Review Pub Date : 2023-08-01 Justin Cox, Kathleen P. Fuller, Robert Van Ness
We examine the fragmentation of trading around the ex-dividend date. We argue that the taker-maker and dark trading venues provide potential dividend capture traders a more favorable platform than the maker-taker venue(s) given the price improvement, lower queues, and lower net transaction costs. Our evidence indicates that taker-maker (dark) venue market share decreases (increases) on cum-dividend
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The determinants of limit order cancellations Financial Review Pub Date : 2023-08-01 Petter Dahlström, Björn Hagströmer, Lars L. Nordén
Almost all limit orders are canceled. We examine two economic channels that can motivate cancellations: reductions in the expected profit at execution, and reductions in the probability of execution. An order-level analysis shows that changes in depth at the best bid and offer prices, as well as changes in the order queue position, influence cancellation in a way consistent with the former channel
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Repeated innovations and excessive spin-offs Financial Review Pub Date : 2023-07-10 Pierre Mella-Barral, Hamid Sabourian
Firms can voluntarily create independent firms to implement their technologically distant innovations and capture their value through capital markets. We argue that when firms repeatedly compete to make innovations, there is inefficient external implementation of innovations and “excessive” creation of such firms. This inefficiency is most exacerbated in the early stages of an industry, when the number
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Bank competition and the design of syndicated loans Financial Review Pub Date : 2023-07-06 Chongyang Chen, Robert Kieschnick
We study the effect of bank competition on the design of syndicate loans. We find that competition in the lead lender's market plays a significant role in determining the terms of the syndicate loans. Specifically, higher concentration leads to higher yield spreads, larger issues, shorter maturities, greater contract intensity, and more collateral requirements, but with a greater likelihood of performance
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The price impact of analyst revisions and the state of the economy: Evidence around the world Financial Review Pub Date : 2023-07-04 Chen Su
This paper examines the price impact of analyst revisions in distinct economic states around the world. We find stronger average 2-day cumulative abnormal returns in bad times, though this pattern is mainly observed in developed countries. In addition, trading strategies following analyst revisions, with holding periods from 1 to 6 months, are generally more profitable in good times with lower macroeconomic
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The papers I can't write Financial Review Pub Date : 2023-07-04 Paul Schultz
In this future directions in finance article, I discuss several topics that I believe are promising areas for research. The topics fall into three areas: the microstructure of fixed income markets, equity market microstructure, and short selling. Both theoretical and empirical work is needed in these areas.
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Does corporate diversification retrench the effects of firm-level political risk? Financial Review Pub Date : 2023-06-12 M. Kabir Hassan, M. Sydul Karim, Tarun Mukherjee
This study investigates the effects of firm-level political risk on corporate investments. We find that diversified firms are better able than focused firms in mitigating the impact of idiosyncratic political risk on investments. Diversified firms accomplish this feat via efficient use of the internal capital market that allows segments to alleviate political risk adversity. The effect is working through
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Exploring the performance of US international bond mutual funds Financial Review Pub Date : 2023-06-03 Jonathan Fletcher, Elizabeth Littlejohn, Andrew Marshall
We use a Bayesian regime switching approach to examine the performance enhancement of adding US international bond funds to a domestic bond universe pre and post the Global Financial Crisis (GFC) during January 1999 and May 2022. We find that the international bond funds provide large significant performance enhancement pre the GFC, with an increase in Certainty Equivalent Return (CER) performance
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An empirical evaluation of dynamic approaches for estimating firms’ expected cost of equity capital Financial Review Pub Date : 2023-06-03 Jan A. Kempkes, Francesco Suprano, Andreas Wömpener
We develop and empirically validate dynamic approaches of implied cost of equity capital (ICC), facilitating the estimation of firms’ expected cost of equity capital at any required estimation date. Using on average 246,090 monthly observations, we empirically validate conflicting approaches for dynamic ICC estimation by analyzing the inferred market risk premia and assessing correlations with common
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Interstate migration-based social networks and M&A decisions Financial Review Pub Date : 2023-05-28 Suin Lee, Christos Pantzalis, Jung Chul Park
Acquisition decisions and outcomes are found to be associated with the availability of interstate migration-based social networks. The likelihood of bidders pursuing targets headquartered in migration sending states increases with these social networks’ size, in particular when (a) targets are in the same industry, (b) migration networks span distant states, and (c) targets are small. We also find
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Finance research: What are the new frontiers? Financial Review Pub Date : 2023-05-16 Anjan V. Thakor
This paper provides a prospective look at the most exciting open research questions for future finance research in three important areas: (1) banking stability; (2) the intersection of medicine, healthcare, and finance; and (3) organizational higher purpose. In each case, a brief discussion of the existing literature is followed by a list of open research questions for future research to explore.
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For corporate finance to truly advance we need more genuinely testable models Financial Review Pub Date : 2023-05-15 Matthew Spiegel
Corporate finance has turned into a field where researchers produce what seem like a constant flow of disconnected papers. Theories are never confirmed or refuted. At best, empirical papers confirm models without a realistic alternative to refute. The problem is that today's models are either static or have firms that never interact directly with other firms. Most industries are oligopolies. For firms
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Shareholder litigation and short selling ahead of private equity placements Financial Review Pub Date : 2023-05-15 Onur Bayar, Yini Liu, Juan Mao
We examine the impact of shareholder litigation on short selling ahead of private investments in public equity (PIPEs). We find that PIPE issuers that incurred securities class action lawsuits prior to the PIPE are shorted more heavily ahead of the PIPE issue. The case status at the PIPE date, the severity of the lawsuit, and the timing of the private placement after the litigation event also affect
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A shot in the arm: The effect of COVID-19 vaccine news on financial and commodity markets Financial Review Pub Date : 2023-05-04 Oleg Kucher, Alexander Kurov, Marketa Halova Wolfe
We analyze the impact of COVID-19 vaccine announcements by leading vaccine companies on the financial and commodity markets from January to December 2020. We show that the vaccine announcements had varied and economically significant impacts on asset prices. The announcements moved interest rates, stock markets in the U.S. and numerous other countries as well as commodities used in transportation and
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Technological innovation and stock returns: Innovative skill versus innovative luck Financial Review Pub Date : 2023-04-25 Ben Angelo, Mitchell Johnston
Prior studies conclude that investors undervalue innovative ability. These studies do not fully capture the prominent role that industry and market trends play in contextualizing innovations. We disaggregate the value generated by innovative skill from the value generated by industry and market trends and find that innovative skill is positively associated with profitability. Further, our results are
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Political geography and the value relevance of real options Financial Review Pub Date : 2023-04-17 Shaddy Douidar, Christos Pantzalis, Jung Chul Park
Corporate political geography influences the value of real options because proximity to political power can trigger greater exposure to uncertainty and/or more growth opportunities. Our empirical tests reveal that although areas closely aligned with the president experience a boost in real options’ value relevance, this effect is significant only among the majority of firms that are neither politically
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Dual holding and bank risk Financial Review Pub Date : 2023-04-05 Stefano Bonini, Ali Taatian
Using the 2007–2009 financial crisis as a quasi-natural experiment, we show that banks with investors holding simultaneously both equity and bonds (dual-holders) exhibit lower risk and superior performance. Dual-holders' influence is higher in more opaque banks, indicating that the mechanism of transmission is through a decrease in information asymmetry and a reduction in debtholder–shareholder conflict
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Uncertainty and corporate investments in response to the Fed's dual shocks Financial Review Pub Date : 2023-04-04 Samer Adra, Elie Menassa
The Federal Reserve's impact on corporate investments varies with the type of monetary shock. From a conventional standpoint, contractionary monetary shocks trigger a rise in financing costs that significantly reduce investment. Such effects are predicted by the widely investigated monetary policy channels. However, we highlight informational circumstances under which monetary contraction reduces uncertainty
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Understanding the transmission of crash risk between cryptocurrency and equity markets Financial Review Pub Date : 2023-03-02 Peng-Fei Dai, John W. Goodell, Luu Duc Toan Huynh, Zhifeng Liu, Shaen Corbet
We evidence that cryptocurrencies have a higher probability of crashes than equity indices, although such crashes are of shorter duration. Commonality of crash risk between cryptocurrency and equity markets occur in approximately 80% of the periods examined. Further, recently evolved cryptocurrency uncertainty indices are more relevant for predicting co-crash behavior than economic policy uncertainty
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Are polluters shunned? A study on the institutional ownership and returns of polluter stocks Financial Review Pub Date : 2023-03-01 Mihir Tirodkar, Henk Berkman
We hypothesise that societal norms cause institutional investors to discriminate against polluters. Consistent with this hypothesis, we document relatively lower institutional ownership for the most polluting firms in the United States. Institutional discrimination against polluters increases over 1987–2018, in line with increasing environmental awareness. Institutions are primarily averse to investments
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Are mergers and acquisitions beneficial to consumers? Evidence from the property-liability insurance industry Financial Review Pub Date : 2023-02-23 Jeungbo Shim
We examine price changes associated with mergers and acquisitions (M&As) in the U.S. property-liability insurance industry. We classify M&As into intrastate M&As, where the acquirer and the target previously operated in the same local market, and interstate M&As, where the acquirer and the target operated in different local markets. We show that insurance prices of acquiring firms decrease following
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Investor attention and the use of leverage Financial Review Pub Date : 2023-02-13 Denis Davydov, Jarkko Peltomäki
We investigate the effects of using different sources of investment leverage, that is, securities with embedded leverage and traditional margin accounts, on the portfolio performance of retail investors, recognizing that these effects may be conditional on investor attention. We find that investors who trade on margin underperform those who do not have margin accounts; we also find that investors trading
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Unveil the veil of limited liability: Evidence from firm investment Financial Review Pub Date : 2023-02-02 Jiaqi Qin, Yan Sun
We investigate the effect of limited liability on firm investment. We find firms that intend to borrow but have higher risk have a greater probability of changing to limited liability. With propensity score matching, difference-in-differences analysis, and switching regressions with an endogenous switching model, we find that, after the liability regime change, firm investment aggressiveness decreases
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COVID-19 intensity across U.S. states and the liquidity of U.S. equity markets Financial Review Pub Date : 2023-01-31 Ahmed Baig, Jason Berkowitz, Ronald Jared DeLisle, Todd Griffith
We study the effects of COVID-19 intensity on equity market liquidity across U.S. states. We exploit cross-sectional variation in cases and deaths to investigate any association with the deterioration of stock liquidity of firms whose headquarters or operations are in the corresponding state(s). Our motivation stems from several underlying economic channels such as order processing costs, inventory
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Trading under uncertainty about other market participants Financial Review Pub Date : 2023-01-18 Dimitris Papadimitriou
I present an asymmetric information model of financial markets in which there is uncertainty and learning not only about fundamentals but also about the proportion of informed-to-noise traders in the market. Extreme news leads to an increase in both types of uncertainty, while it decreases price informativeness. Uncertainty about the market composition constitutes a type of liquidity risk and is associated
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Effect of high-frequency trading on mutual fund performance Financial Review Pub Date : 2022-12-07 Nan Qin, Vijay Singal
We find that high-frequency trading (HFT) in stocks held by mutual funds negatively affects fund performance: when sorted by HFT intensity of holdings, funds in the top quintile underperform funds in the bottom quintile by 2.64% per year. The negative relation can be at least partially explained by the illiquidity premium induced by high-frequency traders’ preference for more liquid stocks. This reason
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Does skilled labor risk matter to suppliers? Evidence from trade credit Financial Review Pub Date : 2022-12-04 Joye Khoo, Adrian (Wai Kong) Cheung
Failure to attract and retain skilled labor exposes firms to skilled labor risk. This paper examines whether and how skilled labor risk affects trade credit offered by suppliers. The empirical analyses show that firms with greater exposure to skilled labor risk are associated with a reduction in trade credit granted by suppliers. It is consistent with the view that the risk arising from the departures
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Trade secrets protection and stock price crash risk Financial Review Pub Date : 2022-11-23 Dan Hu, Eunju Lee, Bingxin Li
This paper provides evidence that the trade secrets protection increases stock price crash risk. Using a quasi-experimental setting with the Uniform Trade Secrets Act (UTSA), we find that firms headquartered in states adopting the UTSA tend to have higher stock price crash risk. The results are robust to controlling for other trade secrets laws and the choice of crash risk measures, and they are more
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The impact of exchange listing on corporate governance: Evidence from direct listings Financial Review Pub Date : 2022-11-15 Dan W. French, Thibaut G. Morillon, Adam S. Yore, Andrew E. Kern
We use prior direct listings by public nonlisted REITs (PNLRs) to explore the impact of exchange membership on corporate governance. We study companies with public, but nonlisted shares in a unique setting where the influence of listing is distinct from the confounding effect of capital raising. Evidence suggests younger, more profitable companies with stronger governance and professional management
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The effect of investor service costs on mutual fund performance Financial Review Pub Date : 2022-11-13 George J. Jiang, Tong Yao, Gulnara R. Zaynutdinova
We examine the effect of investor service costs on mutual fund performance. Benchmarking passive funds against ETFs managed by the same fund company with the same investment objectives, we show that passive funds on average underperform ETFs by 42 bps in annualized net returns, of which about 90% can be attributed to investor service costs. Further benchmarking active funds against passive funds, we
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Monetary policy, ownership structure, and risk-taking at financial intermediaries Financial Review Pub Date : 2022-11-07 Giorgio Caselli, Catarina Figueira
This paper examines how ownership structure interacts with monetary policy in shaping financial intermediaries' appetite for risk. By constructing a large panel of banks across Western Europe, we provide evidence that differences in bank ownership influence the transmission of monetary policy via the risk-taking channel. While shareholder banks actively adjust the riskiness of their portfolios to changes
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“I just like the stock”: The role of Reddit sentiment in the GameStop share rally Financial Review Pub Date : 2022-10-26 Suwan (Cheng) Long, Brian Lucey, Ying Xie, Larisa Yarovaya
This paper investigates the role played by the social media platform Reddit in the events around the GameStop (GME) share rally in early 2021. In particular, we analyze the impact of discussions on the r/WallStreetBets subreddit on the price dynamics of the American online retailer GameStop. We customize a sentiment analysis dictionary for Reddit platform users based on the Valence Aware Dictionary
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Who uses robo-advising and how? Financial Review Pub Date : 2022-10-25 Vishaal Baulkaran, Pawan Jain
Using propriety data from a large Indian robo-advisory firm, we show that users of robo-advisory services are relatively young, predominantly male, married, small investors, and professionals. We show that the majority of small retail investors utilize a systematic investment plan (SIP). Additionally, we document that there are differences in demographic characteristics, occupation, and geographic
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Financial development and the effect of cross-border bank flows on house prices Financial Review Pub Date : 2022-10-10 Néstor Romero, Sungjun Cho, Stuart Hyde
We analyze the role of financial development as a buffer to diminish the effect of cross-border bank flows shocks on house prices across 38 countries. In less financially developed countries, the observed response is markedly positive. As development increases, the response is tempered and becomes less important. Cross-border bank flows shocks are important in explaining the historical dynamics of