Pub Date : 2025-08-14DOI: 10.1016/j.jcorpfin.2025.102863
Jin Huang , Xiangyu Lin , Xiaomeng Shi , S. Sarah Zhang
We assess small banks' responses to announcements of state-level proposals of Privacy Protection Acts (PPAs). Employing a Difference-in-Differences framework, we uncover the proactive actions taken by U.S. small banks in anticipation of these proposals. Our findings reveal that the announcement of PPA proposals leads to a 35.46% increase in IT investment by U.S. small banks, primarily driven by market pressure, with regulatory pressure playing a more limited role. Particularly, evidence suggests that banks with greater competitive threats from their rivals are motivated to enhance their IT investments due to market pressures. However, our research also finds that this surge in IT investment does not immediately translate into benefits for small banks.
{"title":"Market pressure or regulatory pressure? U.S. small bank pre-emptive IT investment to data privacy regulation","authors":"Jin Huang , Xiangyu Lin , Xiaomeng Shi , S. Sarah Zhang","doi":"10.1016/j.jcorpfin.2025.102863","DOIUrl":"10.1016/j.jcorpfin.2025.102863","url":null,"abstract":"<div><div>We assess small banks' responses to announcements of state-level proposals of Privacy Protection Acts (PPAs). Employing a Difference-in-Differences framework, we uncover the proactive actions taken by U.S. small banks in anticipation of these proposals. Our findings reveal that the announcement of PPA proposals leads to a 35.46% increase in IT investment by U.S. small banks, primarily driven by market pressure, with regulatory pressure playing a more limited role. Particularly, evidence suggests that banks with greater competitive threats from their rivals are motivated to enhance their IT investments due to market pressures. However, our research also finds that this surge in IT investment does not immediately translate into benefits for small banks.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"95 ","pages":"Article 102863"},"PeriodicalIF":5.9,"publicationDate":"2025-08-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144887066","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-12DOI: 10.1016/j.jcorpfin.2025.102862
Abu Amin , Md Miran Hossain , Narae Lee , Samir Saadi
This study investigates the relationship between corporate political activities (CPA) and a firm's carbon emissions level. We test two competing hypotheses suggesting that political connections either incentivize firms toward stricter environmental standards through reputational pressures or enable higher emissions via regulatory leniency and compromised governance. Utilizing a large sample of U.S. firms, we find robust evidence that politically connected firms have significantly higher carbon emissions. Specifically, adding one politically connected independent director increases absolute emissions by approximately 20% and emission intensity by 16%. These results remain consistent after extensive robustness checks and addressing endogeneity through a stacked difference-in-differences design around director turnover events. We further identify regulatory leniency and weakened environmental governance as mechanisms driving these higher emissions. Cross-sectional analyses reveal that the CPA-emissions relationship is stronger in politically conservative states, financially constrained firms, competitive industries, and complex organizations, whereas institutional investors help mitigate this effect. Our findings highlight how corporate political strategies exacerbate environmental externalities, contributing to the understanding of the broader ecological and societal consequences of firms' nonmarket behaviors.
{"title":"Corporate political activities and firms' carbon emissions","authors":"Abu Amin , Md Miran Hossain , Narae Lee , Samir Saadi","doi":"10.1016/j.jcorpfin.2025.102862","DOIUrl":"10.1016/j.jcorpfin.2025.102862","url":null,"abstract":"<div><div>This study investigates the relationship between corporate political activities (CPA) and a firm's carbon emissions level. We test two competing hypotheses suggesting that political connections either incentivize firms toward stricter environmental standards through reputational pressures or enable higher emissions via regulatory leniency and compromised governance. Utilizing a large sample of U.S. firms, we find robust evidence that politically connected firms have significantly higher carbon emissions. Specifically, adding one politically connected independent director increases absolute emissions by approximately 20% and emission intensity by 16%. These results remain consistent after extensive robustness checks and addressing endogeneity through a stacked difference-in-differences design around director turnover events. We further identify regulatory leniency and weakened environmental governance as mechanisms driving these higher emissions. Cross-sectional analyses reveal that the CPA-emissions relationship is stronger in politically conservative states, financially constrained firms, competitive industries, and complex organizations, whereas institutional investors help mitigate this effect. Our findings highlight how corporate political strategies exacerbate environmental externalities, contributing to the understanding of the broader ecological and societal consequences of firms' nonmarket behaviors.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"95 ","pages":"Article 102862"},"PeriodicalIF":5.9,"publicationDate":"2025-08-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144889470","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-07DOI: 10.1016/j.jcorpfin.2025.102858
Patrick J. Dennis , James P. Weston
Dividends are clustered in increments of 5, such as 25, 50, and 75. Firms that gravitate towards these ‘prominent’ amounts have lower operating performance and lower annual five-factor alphas of 77 b.p. Consistent with agency frictions that lead to lazy decisions, clustering effects are stronger for entrenched firms, with more market power, and less shareholder activism. Dividend increases also cluster more than cuts, consistent with saliency bias. In a counterfactual exercise, we find no similar patterns in a sample of ADRs. Our results complement a number of recent studies showing the economic importance of simple decision heuristics.
{"title":"Lazy dividends","authors":"Patrick J. Dennis , James P. Weston","doi":"10.1016/j.jcorpfin.2025.102858","DOIUrl":"10.1016/j.jcorpfin.2025.102858","url":null,"abstract":"<div><div>Dividends are clustered in increments of 5, such as 25, 50, and 75. Firms that gravitate towards these ‘prominent’ amounts have lower operating performance and lower annual five-factor alphas of 77 b.p. Consistent with agency frictions that lead to lazy decisions, clustering effects are stronger for entrenched firms, with more market power, and less shareholder activism. Dividend increases also cluster more than cuts, consistent with saliency bias. In a counterfactual exercise, we find no similar patterns in a sample of ADRs. Our results complement a number of recent studies showing the economic importance of simple decision heuristics.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"95 ","pages":"Article 102858"},"PeriodicalIF":5.9,"publicationDate":"2025-08-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144866590","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-07DOI: 10.1016/j.jcorpfin.2025.102852
Vikas Agarwal , Alexander Cochardt , Vitaly Orlov
Using rich data on familial background of US mutual fund managers, this paper sheds light on the formation of risk preferences by investigating birth order effects. Consistent with sensation-seeking behavior, we find that managers who are born later in the sibling hierarchy take more risks but perform worse relative to lower-birth-order managers. Later-born managers take more extreme style bets, hold more lottery stocks, churn their portfolios more, and engage in more civil and regulatory violations. These birth-order effects are more pronounced when parental resources are limited and age spacing is lower between siblings, suggesting sibling rivalry as a potential mechanism.
{"title":"Birth order and fund manager’s trading behavior: Role of sibling rivalry","authors":"Vikas Agarwal , Alexander Cochardt , Vitaly Orlov","doi":"10.1016/j.jcorpfin.2025.102852","DOIUrl":"10.1016/j.jcorpfin.2025.102852","url":null,"abstract":"<div><div>Using rich data on familial background of US mutual fund managers, this paper sheds light on the formation of risk preferences by investigating birth order effects. Consistent with sensation-seeking behavior, we find that managers who are born later in the sibling hierarchy take more risks but perform worse relative to lower-birth-order managers. Later-born managers take more extreme style bets, hold more lottery stocks, churn their portfolios more, and engage in more civil and regulatory violations. These birth-order effects are more pronounced when parental resources are limited and age spacing is lower between siblings, suggesting sibling rivalry as a potential mechanism.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"95 ","pages":"Article 102852"},"PeriodicalIF":5.9,"publicationDate":"2025-08-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144860684","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-05DOI: 10.1016/j.jcorpfin.2025.102860
Amir Gholami, Ahmed Elnahas
Despite being thought of as a governance mechanism, CEO inside debt seems to distort firms' information environment. Our results indicate that CEO inside debt alters managerial orientation and incentives in a way that increases stock price crash risk. Our results are robust after addressing endogeneity using the instrumental variable (IV) approach, a difference-in-differences test based on the implementation of Internal Revenue Code Section 409 A Final Regulations, and Oster's omitted variable diagnostic test, and selection bias using the propensity score matching (PSM) and Entropy balancing (EB) approaches. The results are stronger for firms that are poorly governed, operate in less competitive industries, have lower institutional ownership, have higher information asymmetry, and pay less dividends. Further, the results are robust to controlling for CSR, local religiosity, tax avoidance, financial opacity, CEO power, and CEO as well as local political ideology.
{"title":"The dark side of CEO inside debt: Evidence from stock price crash risk","authors":"Amir Gholami, Ahmed Elnahas","doi":"10.1016/j.jcorpfin.2025.102860","DOIUrl":"10.1016/j.jcorpfin.2025.102860","url":null,"abstract":"<div><div>Despite being thought of as a governance mechanism, CEO inside debt seems to distort firms' information environment. Our results indicate that CEO inside debt alters managerial orientation and incentives in a way that increases stock price crash risk. Our results are robust after addressing endogeneity using the instrumental variable (IV) approach, a difference-in-differences test based on the implementation of Internal Revenue Code Section 409 A Final Regulations, and Oster's omitted variable diagnostic test, and selection bias using the propensity score matching (PSM) and Entropy balancing (EB) approaches. The results are stronger for firms that are poorly governed, operate in less competitive industries, have lower institutional ownership, have higher information asymmetry, and pay less dividends. Further, the results are robust to controlling for CSR, local religiosity, tax avoidance, financial opacity, CEO power, and CEO as well as local political ideology.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"94 ","pages":"Article 102860"},"PeriodicalIF":5.9,"publicationDate":"2025-08-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144780163","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-08-05DOI: 10.1016/j.jcorpfin.2025.102859
Congcong Wang , Chong Wang , Huaigang Long , Adam Zaremba
We examine how the issuance of green bonds affects the cost of bank loans. We find that an initial bond issuance reduces loan costs by 55 basis points (bps), with an even larger reduction of 66 bps for firms issuing green bonds for the first time. These effects are more pronounced among firms with greater information asymmetry and lower bond financing costs. We explore two potential mechanisms behind these results: a signaling channel, where bond issuance helps mitigate information asymmetry, and an alternative financing channel, where access to bond markets enhances a firm's bargaining power with banks. Overall, our findings reveal spillover effects from bond to bank financing, offering empirical insight into how direct financing influences the cost of indirect financing in the Chinese market.
{"title":"Does green bond issuance reduce the cost of bank loans? Evidence from China","authors":"Congcong Wang , Chong Wang , Huaigang Long , Adam Zaremba","doi":"10.1016/j.jcorpfin.2025.102859","DOIUrl":"10.1016/j.jcorpfin.2025.102859","url":null,"abstract":"<div><div>We examine how the issuance of green bonds affects the cost of bank loans. We find that an initial bond issuance reduces loan costs by 55 basis points (bps), with an even larger reduction of 66 bps for firms issuing green bonds for the first time. These effects are more pronounced among firms with greater information asymmetry and lower bond financing costs. We explore two potential mechanisms behind these results: a signaling channel, where bond issuance helps mitigate information asymmetry, and an alternative financing channel, where access to bond markets enhances a firm's bargaining power with banks. Overall, our findings reveal spillover effects from bond to bank financing, offering empirical insight into how direct financing influences the cost of indirect financing in the Chinese market.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"94 ","pages":"Article 102859"},"PeriodicalIF":5.9,"publicationDate":"2025-08-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144826703","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-24DOI: 10.1016/j.jcorpfin.2025.102853
Paolo Canofari , Marco Cucculelli , Alessandro Piergallini , Matteo Renghini
We employ firm-macro matched data on small and medium-size enterprises in the European Monetary Union to study the investment response to tight monetary policy shocks. We show that firms with higher leverage and longer debt maturity are more negatively responsive to monetary restrictions. Capital structure significantly interacts with monetary policy transmission: a leverage ratio one percentage point larger than average is associated with a semi-elasticity of investment to a nominal interest rate hike approximately 8 % higher two years following the monetary shock. Firm-level heterogeneity proves to be more pronounced in the presence of long-term—rather than short-term—indebtedness. We further argue that the investment response to monetary contractions is heterogeneous not only with respect to the firm-level financial structure but also in relation to the country-specific financial and productive conditions. Specifically, we show that the investment semi-elasticity to rate hikes significantly increases in countries characterized by higher frictions in accessing the credit market and in countries featured by either a larger share of small-size firms or a larger share of intangible assets.
{"title":"Tightening monetary policy and investment dynamics in the European Monetary Union: Firm- and country-level heterogeneity","authors":"Paolo Canofari , Marco Cucculelli , Alessandro Piergallini , Matteo Renghini","doi":"10.1016/j.jcorpfin.2025.102853","DOIUrl":"10.1016/j.jcorpfin.2025.102853","url":null,"abstract":"<div><div>We employ firm-macro matched data on small and medium-size enterprises in the European Monetary Union to study the investment response to tight monetary policy shocks. We show that firms with higher leverage and longer debt maturity are more negatively responsive to monetary restrictions. Capital structure significantly interacts with monetary policy transmission: a leverage ratio one percentage point larger than average is associated with a semi-elasticity of investment to a nominal interest rate hike approximately 8 % higher two years following the monetary shock. Firm-level heterogeneity proves to be more pronounced in the presence of long-term—rather than short-term—indebtedness. We further argue that the investment response to monetary contractions is heterogeneous not only with respect to the firm-level financial structure but also in relation to the country-specific financial and productive conditions. Specifically, we show that the investment semi-elasticity to rate hikes significantly increases in countries characterized by higher frictions in accessing the credit market and in countries featured by either a larger share of small-size firms or a larger share of intangible assets.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"94 ","pages":"Article 102853"},"PeriodicalIF":5.9,"publicationDate":"2025-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144723824","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
We examine how sovereign rating downgrades affect firms' environmental, social, and governance (ESG) policies, leveraging the sovereign “ceiling” rule as a quasi-natural experiment that generates exogenous variation in corporate credit ratings. Under this rule, firms originally rated at or above the sovereign rating (bound firms) face a higher likelihood of downgrade following a sovereign downgrade. Using a difference-in-differences (DiD) setting, we find that bound firms experience a decline in ESG performance following a sovereign downgrade. This decline occurs only after the downgrade, not before, validating the parallel trends assumption. Our analysis further indicates that this effect is not driven by financing frictions and is concentrated in countries with a shareholder-centric orientation, and among firms with low institutional ownership from countries with strong social norms. Additional evidence suggests that affected firms experience an increase in ESG-related incidents, damaging their reputation post-downgrade. Overall, our findings underscore the crucial role of sovereign risk in shaping corporate sustainability practices.
{"title":"Backing away from ESG? The effect of sovereign rating downgrades on corporate sustainability","authors":"Periklis Boumparis , Chris Florackis , Omrane Guedhami , Sushil Sainani","doi":"10.1016/j.jcorpfin.2025.102856","DOIUrl":"10.1016/j.jcorpfin.2025.102856","url":null,"abstract":"<div><div>We examine how sovereign rating downgrades affect firms' environmental, social, and governance (ESG) policies, leveraging the sovereign “ceiling” rule as a quasi-natural experiment that generates exogenous variation in corporate credit ratings. Under this rule, firms originally rated at or above the sovereign rating (bound firms) face a higher likelihood of downgrade following a sovereign downgrade. Using a difference-in-differences (DiD) setting, we find that bound firms experience a decline in ESG performance following a sovereign downgrade. This decline occurs only after the downgrade, not before, validating the parallel trends assumption. Our analysis further indicates that this effect is not driven by financing frictions and is concentrated in countries with a shareholder-centric orientation, and among firms with low institutional ownership from countries with strong social norms. Additional evidence suggests that affected firms experience an increase in ESG-related incidents, damaging their reputation post-downgrade. Overall, our findings underscore the crucial role of sovereign risk in shaping corporate sustainability practices.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"94 ","pages":"Article 102856"},"PeriodicalIF":5.9,"publicationDate":"2025-07-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144780162","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-23DOI: 10.1016/j.jcorpfin.2025.102857
Md Showaib Sarker , Ahmed Elnahas
We examine the impact of CEOs' cultural heritage on corporate social responsibility. CEOs originating from countries with high Power Distance have high CSR scores, while those originating from Individualistic and Indulgent cultures have low CSR scores. This effect lasts up to three generations before it disappears due to acculturation. These results are robust to using propensity score matching, entropy balancing, Difference-in-Differences (DiD) estimation around CEO turnover, and a subsample of founder CEOs to address endogeneity and selection bias. Our findings shed light on the formation process of managers' intrinsic motives for prosocial behavior and hence improve our understanding of insider-initiate corporate philanthropy.
{"title":"CEO cultural heritage and corporate social responsibility","authors":"Md Showaib Sarker , Ahmed Elnahas","doi":"10.1016/j.jcorpfin.2025.102857","DOIUrl":"10.1016/j.jcorpfin.2025.102857","url":null,"abstract":"<div><div>We examine the impact of CEOs' cultural heritage on corporate social responsibility. CEOs originating from countries with high Power Distance have high CSR scores, while those originating from Individualistic and Indulgent cultures have low CSR scores. This effect lasts up to three generations before it disappears due to acculturation. These results are robust to using propensity score matching, entropy balancing, Difference-in-Differences (DiD) estimation around CEO turnover, and a subsample of founder CEOs to address endogeneity and selection bias. Our findings shed light on the formation process of managers' intrinsic motives for prosocial behavior and hence improve our understanding of insider-initiate corporate philanthropy.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"94 ","pages":"Article 102857"},"PeriodicalIF":7.2,"publicationDate":"2025-07-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144714295","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-07-23DOI: 10.1016/j.jcorpfin.2025.102851
B. Espen Eckbo , Bernt Arne Ødegaard
The market reaction to nonroutine trades by executives and directors is conventionally viewed as increasing in the market’s assessment of insider informativeness about firm value. Using the market reaction as our instrument, we test the proposition that female directors appointed after Norway’s pioneering board gender-balancing quota law exhibit a degree of informativeness similar to that of male directors. Consistent with this proposition, we first show that the average market reaction to female director purchases jumps from a prequota value of zero to a level similar to that of male directors. Second, the market reaction is increasing in the board’s director network connectivity (but not in director busyness). Third, regardless of gender, the positive post-quota market reaction to insider purchases does not translate into holding-period adjusted abnormal performance. Fourth, insider purchase activity by both male and female directors increases significantly during the year following the 2008 financial crisis (when boards were already gender-balanced). This gender-neutral increase in insider purchases caused by the exogenous market-wide stock price drop further suggests that female directors are as informed as their male counterparts about firm value.
{"title":"Director informativeness following board gender balancing: Evidence from insider trading","authors":"B. Espen Eckbo , Bernt Arne Ødegaard","doi":"10.1016/j.jcorpfin.2025.102851","DOIUrl":"10.1016/j.jcorpfin.2025.102851","url":null,"abstract":"<div><div>The market reaction to nonroutine trades by executives and directors is conventionally viewed as increasing in the market’s assessment of insider informativeness about firm value. Using the market reaction as our instrument, we test the proposition that female directors appointed after Norway’s pioneering board gender-balancing quota law exhibit a degree of informativeness similar to that of male directors. Consistent with this proposition, we first show that the average market reaction to female director purchases jumps from a prequota value of zero to a level similar to that of male directors. Second, the market reaction is increasing in the board’s director network connectivity (but not in director busyness). Third, regardless of gender, the positive post-quota market reaction to insider purchases does not translate into holding-period adjusted abnormal performance. Fourth, insider purchase activity by both male and female directors increases significantly during the year following the 2008 financial crisis (when boards were already gender-balanced). This gender-neutral increase in insider purchases caused by the exogenous market-wide stock price drop further suggests that female directors are as informed as their male counterparts about firm value.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"94 ","pages":"Article 102851"},"PeriodicalIF":5.9,"publicationDate":"2025-07-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"144756910","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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