Category Archives: Economics

Diversification and Diversity: The Relationship Between Gender and Fund Performance 

By | July 8, 2022

For an industry built around “diversification,” we still have plenty of work to do to apply the concept to our investment teams. We know that if you restrict a portfolio, you can’t always maximize performance, so isn’t it reasonable to consider that the same might hold for talent diversity and team performance?  The composition of… Read More »

Accountability of the Australian Securities and Investments Commission and the Establishment of the Financial Regulator Assessment Authority – An Evaluation 

By | July 7, 2022

The Australian Securities and Investments Commission (ASIC) is Australia’s corporate, financial services, and consumer credit regulator. A general description of ASIC is that it is responsible for corporate regulation, the regulation of financial markets and clearing and settlement facilities, the regulation of providers of financial services, and market integrity and consumer protection functions in connection… Read More »

How Might Central Bank Digital Currency Affect Banks?  

By | July 5, 2022

Central banks around the world either have issued or are considering the issuance of a central bank digital currency (CBDC). While most modern transactions take place digitally, a CBDC differs from existing digital money such as bank deposits because a CBDC is a direct liability of the central bank, rather than of a commercial bank.… Read More »

Goodwill Capital, Relationship-specific Capital, and Corporate Sanctions: An Empirical Study of the Russian Invasion of Ukraine 

By | June 30, 2022

 Whether environmental, social, and governance (ESG) policies enhance shareholder value has been the subject of debate for decades. There are three views on ESG investments. The first view argues that ESG activities enhance shareholder value because they are productive investments in “reputation” or “goodwill” capital (hereafter as “goodwill capital” view). ESG activities reduce transaction costs… Read More »

What Is Driving Western Firms to Leave Russia? 

By | June 28, 2022

In February 2022, Russia started a full-scale invasion of Ukraine, an event that would shake the global order. The war has already resulted in severe damages to Ukraine – thousands of killed civilians, more than 14 million of people displaced, and over $100 billion in infrastructure damage alone. Yet, the consequences of the war are… Read More »

De-Facto Financial Regulation in the Form of Corporate Criminal Liability for ESG is Coming 

By | June 23, 2022

Traditional financial regulation would take the form of legislation passed by Congress and then interpreted by agencies. We are not in that world anymore. Given Congressional paralysis, de-facto financial regulation is being pushed by the setting of agency agendas and being communicated to the business community through announcements of priorities and prosecutions.  For example, despite… Read More »

Are All ESG Funds Created Equal? Only Some Funds Are Committed 

By | June 22, 2022

“The major problem that I have is that even if they’re [ESG funds] marketed correctly, they actually have no demonstrable impact.”1  Tariq Fancy, the former head of BlackRock’s sustainable investing  Flows into ESG mutual funds have increased markedly over recent years, raising the question of whether these capital flows lead to improved ESG policies in… Read More »

Corruption and Innovation in China 

By | June 15, 2022

In the past four decades, China has been demonstrated miraculous growth records as well as rampant corruption, which presents a paradox for scholars: Is corruption is conducive to Chinese economic development? Some argue that corruption is “grease” in the economy and helps firms bypass inefficient regulation and red tape, while others believe that corruption exacerbates… Read More »

Changes in Risk Factor Disclosures and the Variance Risk Premium 

By | June 14, 2022

Since 2005, the Securities and Exchange Commission (SEC) mandates that all publicly-traded firms inform investors about material risks that may impact future performance. These are referred to as risk factor disclosures, which are discussed within Item 1A of 10-K filings. These risk disclosures have been criticized as lengthy and boilerplate (IRRC 2016; SEC 2016); it… Read More »

Regulator’s Use of Corporate Monitors to Remediate Financial Misconduct 

By | June 8, 2022

Regulators such as the Securities and Exchange Commission (SEC) and Department of Justice (DOJ) are allowed to seek any remedy that is necessary to protect investors following violations of securities law. One remedy increasingly being used is the requirement that violating firms hire a corporate monitor at their own expense, who is charged with supervising… Read More »