Decentralized finance (‘DeFi’) through smart contract technology has been touted as a major use case for blockchain technology ever since the launch of the Ethereum blockchain. One area within DeFi that received particular interest from an early stage is secured lending. Yet, in both Commonwealth and UCC jurisdictions, doubts exist over how such assets function… Read More »
Poison pills are one of the most powerful ways of deterring hostile takeovers. Their goal is to make a hostile takeover so unattractive and expensive that the potential acquirer is deterred from pursuing the acquisition. When a hostile takeover threat arises, e.g., because a hostile acquirer’s ownership in the firm exceeded 20%, the poison pill… Read More »
Sustainable finance is a burgeoning sector, and the jury is still out on whether this is just a bubble, inflated by greenwashing practices, or a genuine step towards better ESG (environmental, social, and governance) conditions – or a combination of the two. Whatever the answer, sustainable finance is likely to remain high on the agenda… Read More »
Do firms engage in political competition in environmental lobbying when they have opposing environmental stances? If yes, is there any deadweight loss of corporate value and social resources due to such political competition? Our recent working paper theoretically and empirically explores how firms can compete to capture an environmental policy through lobbying. Corporate lobbying is… Read More »
Accounting treatments of leases have been a controversial issue for decades. To address concerns about operating leases pervasively reported off the balance sheet under the legacy standard, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02, Leases (codified as ASC 842), which requires firms to recognize operating leases on the balance sheet.… Read More »
Sustainable investing has increased substantially over the past several decades. While ESG investing has grown at unprecedented rates, ESG-oriented funds have recently faced increased scrutiny for marketing sustainability-focused investing strategies but not “following through” on ESG investing promises (e.g., Kim and Yoon 2022; Raghunandan and Rajgopal 2022; SEC 2022). However, selecting and monitoring portfolio firms’… Read More »
The 2007-2009 Global Financial Crisis (GFC) represents a massive risk management failure on the part of both private-sector financial firms and their regulators. The financial system itself became over-leveraged due to the growth of products like credit default swaps in the early 2000s, and lending practices became lax due to the growth of securitization in… Read More »
Since 2007, a novel debt type, green bonds, has emerged as a popular instrument to raise and direct capital toward projects that curb climate change risk. Corporations, government agencies, supranational entities, and municipalities issue these bonds mainly in the US, China, and Europe. Annual green bond issuance has experienced exponential growth from $37.1 in 2014… Read More »
The history of lending discrimination is well-documented in the United States, and the federal government employs a variety of legal mechanisms to fight its effects and promote lending equity. One such tool is the Community Reinvestment Act (CRA) which Congress passed in 1977. The CRA was designed to encourage banks to lend in the geographic… Read More »
Can ChatGPT with Explainable AI interpret explain black box models to non-financial professionals? If the answer is yes, the following question arises: Is it necessary to maintain our protective financial regulatory regime if these robo-advisors can effectively translate complicated financial knowledge to the public? Under the current regulatory framework, only accredited investors, defined as those… Read More »