Open banking is fast becoming a global phenomenon, promising to transform financial services by enabling the safe, swift sharing of personal data. The idea of open banking originated in Europe, and is gaining traction in the US, but Australia is well ahead of these countries and is now rolling out data sharing across other sectors… Read More »
A growing literature investigates how investors’ gambling behavior affects their investment decisions and asset returns. This literature shows that investors with a taste for gambling concentrate their trading in stocks with lottery-like payoffs, such as stocks with high volatility. In addition, prior studies show that in sports betting, such as racetrack gambling, bettors consistently over… Read More »
Our study investigates the Morellec and Zhdanov (2008) prediction that firms strategically underleverage to win future takeover contests. Since firms undergo arduous and long planning processes well in advance of publicly announcing an acquisition bid, they also pre-plan their financial structure. Recent survey evidence by Aktas et al. (2021) suggests that almost half of all… Read More »
The result of corporate debt renegotiations between debtors and creditors is of great importance for aggregate productivity and employment, as it defines the distressed companies that can survive. From a policy perspective, it is desirable to have in place a bankruptcy system that facilitates renegotiations and allows companies—which create value for workers, costumers, and creditors—to… Read More »
Attention to and interest in environmental and social (ES) issues increased exponentially in the past decade by concerned citizens worldwide, governments, regulators, individual investors, and intermediaries such as mutual funds. The number of ES funds more than doubled over the past few years, and the amount invested through them grew even more. These ES funds typically favor investments… Read More »
The vast majority of mergers and acquisitions (M&As) in recent years employ fairness opinions (FOs). FOs are provided by an outside advisor (typically an investment bank) and reflect the advisor’s opinion that the terms of the transaction are “fair” to the shareholders from a financial perspective. To justify their opinion, the advisor performs valuation analyses… Read More »
On August 2, the Board of Governors of the IMF approved the creation of approximately $650 billion of Special Drawing Rights (SDRs)—the IMF-created reserve currency—to boost global liquidity and support the ongoing pandemic response in emerging markets. This was the largest increase the U.S. treasury secretary could approve without the issuance being subject to an approving vote in the U.S.… Read More »
Almost all countries around the world have historically allowed businesses to write off interest expenses against taxable income. Critics argue that the tax-favored status of debt has created a corporate debt pileup, thereby exacerbating economic downturns. This argument, which gained more attention after the 2008 global financial crisis, implicitly assumes that the tax incentives have… Read More »
Financing investment in future growth is an important motivation for firms to go public. Newly public firms fund investments mainly through public equity, and facilitate growth by building new capacity through capital expenditure(capex) and innovation, as well as by acquiring the assets of other firms. There is a longstanding policy debate on whether lowering the disclosure burden on public firms through regulation can facilitate such… Read More »
By the end of 2020, more than 240 special-purpose acquisition companies (SPACs) listed in the U.S. (on NASDAQ or the NYSE), raising a record $83 billion, according to SPAC Research. SPACs have already surged past last year’s record in the first quarter of 2021, raising $98.1 billion. These numbers are eye-catching. In 2007, the average… Read More »
