Tag Archives: corporate

Call Me Maybe? Bondholder Relationships and Corporate Call Policy  

By | November 28, 2023

Corporate bonds are a significant source of funding for US firms. In fact, between 2000 and 2022, US firms issued almost six times more in non-convertible bonds than they did in equity. A common feature in these bonds allows issuers to repurchase them before their due date at a set price – this is known… Read More »

Corporate Directors Learn from Environmental Shareholder Engagements

By | September 8, 2022

Institutional investors are increasingly worried about their portfolios’ exposure to environmental risks. For example, heat waves cause a decrease in worker productivity, resulting in lower revenues and operating income, and the regulation of externalities, such as carbon pricing, affects the value of polluting firms. A global survey indicates institutional investors believe environmental risks have financial… Read More »

When ESG Fails to Deliver: Evidence from the Russian Invasion of Ukraine 

By | August 25, 2022

Are highly rated Environmental, Social, and Governance (“ESG”) firms more transparent about their risk exposures stemming from their activities abroad? Does investing in more highly rated ESG firms, i.e., those that are alleged to be more socially responsible, imply contributing to more socially responsible actions abroad? And does investing in such firms insulate one from… Read More »

Good Peers, Good Apples? Peer Effects in Portfolio Quality 

By | August 22, 2022

Do friends provide good financial advice that helps inexperienced investors earn a higher return in the market? Or do friends provide bad advice that leads to excessive investments in individual stocks and asset bubbles? In a new study, we provide evidence that new investors copy the portfolios of their friends and that the advice was,… Read More »

The Effect of Financial Reporting on Strategic Investments: Evidence from Purchase Obligations 

By | August 11, 2022

Firms make investments to increase their future profits because they help reduce production costs, increase capacity, or upgrade their products or services. However, firms do not always make investments to improve production efficiency or customer demand. They often make investments to strategically influence competitors’ behavior. Due to their costly-to-reverse and time-bound nature, investments signal credible… Read More »

Can Increased Competition Among Audit Firms Harm Audit Quality? 

By | July 28, 2022

Understanding how audit market competition affects audit quality is of significant interest to academics, practitioners, and regulators, with important capital market and policy implications. Regulators around the world have expressed concerns that companies have too few choices in the audit market and believe that the lack of choice is resulting in low competition. As a… Read More »

Acquirer Mispricing and Payment Choices 

By | July 22, 2022

Are bidders in mergers and acquisitions (M&A) able to exploit their overvaluation by using overpriced shares as acquisition currency? The question has been debated within the financial economics literature since Shleifer and Vishny (2003) and Rhodes-Kropf and Viswanathan (2004) put forth theories suggesting that misvaluation drives the payment method in M&A deals. These seminal papers… Read More »

How To Resolve A Dispute Involving A DAO

By | July 21, 2022

Since early May 2022, a Decentralized Autonomous Organization (DAO) known as “bZx DAO” has been facing a lawsuit in California. The plaintiffs hold the defendants liable for their losses following a hack of the protocol that was managed by the DAO. This case is reminiscent of the first DAO known as “The DAO”, which was… Read More »

Do Stock Prices Reflect Firm Fundamentals? An Empirical Analysis of a Large Global Sample 

By | July 21, 2022

There is a heated academic debate about the degree to which market prices of financial assets reflect underlying fundamental values, well summarized by this paper. There are two main schools of thought on the topic: behavioural finance and efficient-market theory. According to the first school of thought, market prices are the result of the interactions… Read More »

The End of the Crypto-Diversification Myth 

By | July 19, 2022

In the first half of 2022, Bitcoin lost over half its value, and the correlation with the stock market jumped to over 60%. These patterns are both remarkable and hard to explain. Why do monetary policy, the economy, or wars matter for the value of cryptocurrencies? Why do cryptocurrencies behave like tech stocks?  From an… Read More »