We estimate the indirect costs of corporate bankruptcy associated with lost customers. In incentivized experiments, randomly informing consumers about a firm's Chapter 11 reorganization lowers their willingness to pay for the firm's products by 17% to 28%. Consumers worry that bankruptcy could reduce product quality or prevent future interactions with the bankrupt firm. On average, 38% of consumers are aware of major bankruptcies. Using our experiments to estimate a structural model, we show that these indirect costs of bankruptcy amount to 12% to 15% of a firm's value. We show that these costs are unlikely to arise before bankruptcy.
{"title":"Consumer Choice and Corporate Bankruptcy","authors":"SAMUEL ANTILL, MEGAN HUNTER","doi":"10.1111/jofi.70030","DOIUrl":"https://doi.org/10.1111/jofi.70030","url":null,"abstract":"We estimate the indirect costs of corporate bankruptcy associated with lost customers. In incentivized experiments, randomly informing consumers about a firm's Chapter 11 reorganization lowers their willingness to pay for the firm's products by 17% to 28%. Consumers worry that bankruptcy could reduce product quality or prevent future interactions with the bankrupt firm. On average, 38% of consumers are aware of major bankruptcies. Using our experiments to estimate a structural model, we show that these indirect costs of bankruptcy amount to 12% to 15% of a firm's value. We show that these costs are unlikely to arise before bankruptcy.","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"13 1","pages":""},"PeriodicalIF":8.0,"publicationDate":"2026-03-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147495287","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}
Homeowners insurance is central to managing the rising losses from climate‐related disasters. We show that insurance premiums are subject to starkly different regulations across states, creating persistent cross‐subsidies and price distortions. We employ states' regulatory rules in an instrumental variable estimation and a border discontinuity design to show insurers do not adjust rates in highly regulated states and compensate by raising rates in less regulated states. Rates and risks diverge in the long run, distorting cross‐state risk‐sharing and increasing insurer exits from highly regulated states. We argue these patterns stem from the interactions between rate regulation and insurers' financing constraints.
{"title":"Pricing of Climate Risk Insurance: Regulation and Cross‐Subsidies","authors":"SANGMIN S. OH, ISHITA SEN, ANA‐MARIA TENEKEDJIEVA","doi":"10.1111/jofi.70029","DOIUrl":"https://doi.org/10.1111/jofi.70029","url":null,"abstract":"Homeowners insurance is central to managing the rising losses from climate‐related disasters. We show that insurance premiums are subject to starkly different regulations across states, creating persistent cross‐subsidies and price distortions. We employ states' regulatory rules in an instrumental variable estimation and a border discontinuity design to show insurers do not adjust rates in highly regulated states and compensate by raising rates in less regulated states. Rates and risks diverge in the long run, distorting cross‐state risk‐sharing and increasing insurer exits from highly regulated states. We argue these patterns stem from the interactions between rate regulation and insurers' financing constraints.","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"3 1","pages":""},"PeriodicalIF":8.0,"publicationDate":"2026-03-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147464814","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}
{"title":"Report of the 2026 Annual Membership Meeting","authors":"","doi":"10.1111/jofi.70031","DOIUrl":"https://doi.org/10.1111/jofi.70031","url":null,"abstract":"Click on the article title to read more.","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"4 1","pages":""},"PeriodicalIF":8.0,"publicationDate":"2026-03-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"147448461","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 use large language models to analyze the content of 4,700 private meetings between a large active asset manager and its portfolio firms. The high‐level meetings convey mostly soft information about the firm, and little about industry or market. Fund manager meetings focus on business models and financial metrics, while governance specialist meetings focus on environmental, social, and governance risks; 0.4% of meetings discuss material nonpublic information. Trades by fund managers increase with meetings attended by senior management, rated as unusually good or bad, where the tone is significantly positive or negative, or assessed as creating consensus. Meeting‐informed portfolios can generate significant outperformance.
{"title":"The Benefits of Access: Evidence from Private Meetings with Portfolio Firms","authors":"MARCO BECHT, JULIAN FRANKS, HANNES F. WAGNER","doi":"10.1111/jofi.13495","DOIUrl":"https://doi.org/10.1111/jofi.13495","url":null,"abstract":"We use large language models to analyze the content of 4,700 private meetings between a large active asset manager and its portfolio firms. The high‐level meetings convey mostly soft information about the firm, and little about industry or market. Fund manager meetings focus on business models and financial metrics, while governance specialist meetings focus on environmental, social, and governance risks; 0.4% of meetings discuss material nonpublic information. Trades by fund managers increase with meetings attended by senior management, rated as unusually good or bad, where the tone is significantly positive or negative, or assessed as creating consensus. Meeting‐informed portfolios can generate significant outperformance.","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"10 1","pages":""},"PeriodicalIF":8.0,"publicationDate":"2026-02-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146777283","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}
An investor receives utility bursts from realizing gains and losses at the individual stock level and dynamically allocates his mental budget between risky and risk-free assets at the trading account level. Using savings, he reduces his stockholdings and is more willing to realize losses. Using leverage, he increases his stockholdings beyond his mental budget and is more reluctant to realize losses. While leverage strengthens the disposition effect, introducing leverage constraints mitigates it. Our model predicts that investors with stocks in deep losses sell them either immediately or after stocks rebound a little.
{"title":"Dynamic Trading with Realization Utility","authors":"MIN DAI, CONG QIN, NENG WANG","doi":"10.1111/jofi.13472","DOIUrl":"10.1111/jofi.13472","url":null,"abstract":"<div>\u0000 \u0000 <p>An investor receives utility bursts from realizing gains and losses at the individual stock level and dynamically allocates his mental budget between risky and risk-free assets at the trading account level. Using savings, he reduces his stockholdings and is more willing to realize losses. Using leverage, he increases his stockholdings beyond his mental budget and is more reluctant to realize losses. While leverage strengthens the disposition effect, introducing leverage constraints mitigates it. Our model predicts that investors with stocks in deep losses sell them either immediately or after stocks rebound a little.</p></div>","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"81 1","pages":"189-238"},"PeriodicalIF":9.5,"publicationDate":"2026-02-18","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146215703","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}
Green finance—including environmental, social, and governance investing and sustainable finance regulations—is widespread, but can it substitute for carbon pricing in fighting climate change? In a unified model, I show that (i) when carbon prices reflect the social cost of carbon, green finance should not be used; (ii) when carbon prices are too low, green finance can implement the social optimum if each firm's cost of capital can be set to its sustainable discount rate , which increases with the ratio of carbon emissions to firm value. I provide calibrations, analyze stranded assets, and present implementations through subsidies or preferential financing for green firms.
{"title":"Carbon Pricing versus Green Finance","authors":"LASSE HEJE PEDERSEN","doi":"10.1111/jofi.70022","DOIUrl":"https://doi.org/10.1111/jofi.70022","url":null,"abstract":"Green finance—including environmental, social, and governance investing and sustainable finance regulations—is widespread, but can it substitute for carbon pricing in fighting climate change? In a unified model, I show that (i) when carbon prices reflect the social cost of carbon, green finance should not be used; (ii) when carbon prices are too low, green finance can implement the social optimum if each firm's cost of capital can be set to its <jats:italic>sustainable discount rate</jats:italic> , which increases with the ratio of carbon emissions to firm value. I provide calibrations, analyze stranded assets, and present implementations through subsidies or preferential financing for green firms.","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"314 1","pages":""},"PeriodicalIF":8.0,"publicationDate":"2026-02-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146146026","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}
JOHN D. KEPLER, CHARLES G. MCCLURE, CHRISTOPHER R. STEWART
Antitrust laws mandate review of mergers and acquisitions (M&As) that exceed an asset size threshold based on accounting standards that exclude most intangible capital. We show that this exclusion leads to thousands of intangible-intensive M&As being nonreportable. Acquirers in nonreportable deals achieve higher equity values and price markups, especially when consolidating product markets. Furthermore, nonreportable pharmaceutical deals are three times more likely to involve overlapping drug projects, which are subsequently 40% more likely to be terminated. Our results suggest that the growth of intangible assets may exacerbate market power through nonreportable consolidation of the sectors most concerning for consumers.
{"title":"Competition Enforcement and Accounting for Intangible Capital","authors":"JOHN D. KEPLER, CHARLES G. MCCLURE, CHRISTOPHER R. STEWART","doi":"10.1111/jofi.70028","DOIUrl":"https://doi.org/10.1111/jofi.70028","url":null,"abstract":"Antitrust laws mandate review of mergers and acquisitions (M&As) that exceed an asset size threshold based on accounting standards that exclude most intangible capital. We show that this exclusion leads to thousands of intangible-intensive M&As being nonreportable. Acquirers in nonreportable deals achieve higher equity values and price markups, especially when consolidating product markets. Furthermore, nonreportable pharmaceutical deals are three times more likely to involve overlapping drug projects, which are subsequently 40% more likely to be terminated. Our results suggest that the growth of intangible assets may exacerbate market power through nonreportable consolidation of the sectors most concerning for consumers.","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"17 1","pages":""},"PeriodicalIF":8.0,"publicationDate":"2026-02-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146129247","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}
Conventional wisdom holds that lowering a home country's interest rate relative to another's will depreciate the domestic currency. We document that, at business‐cycle frequencies, U.S. forward guidance monetary policy easings had the opposite effect during the Great Recession. We attribute this effect to calendar‐based forward guidance that signaled economic weakness, resulting in a “flight‐to‐safety” effect and lower expected U.S. inflation. We also document cross‐currency heterogeneity: a surprise U.S. rate cut induced a larger appreciation of the dollar against currencies that typically depreciate more when the world economy is contracting. We build a model that can reconcile these findings.
{"title":"The Dollar during the Great Recession: The Information Channel of U.S. Monetary Policy and the “Flight to Safety”","authors":"VANIA STAVRAKEVA, JENNY TANG","doi":"10.1111/jofi.70025","DOIUrl":"https://doi.org/10.1111/jofi.70025","url":null,"abstract":"Conventional wisdom holds that lowering a home country's interest rate relative to another's will depreciate the domestic currency. We document that, at business‐cycle frequencies, U.S. forward guidance monetary policy easings had the opposite effect during the Great Recession. We attribute this effect to calendar‐based forward guidance that signaled economic weakness, resulting in a “flight‐to‐safety” effect and lower expected U.S. inflation. We also document cross‐currency heterogeneity: a surprise U.S. rate cut induced a larger appreciation of the dollar against currencies that typically depreciate more when the world economy is contracting. We build a model that can reconcile these findings.","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"38 1","pages":""},"PeriodicalIF":8.0,"publicationDate":"2026-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146056050","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 study the role of asset revaluation in the monetary transmission mechanism. We build an analytical heterogeneous-agents model with two main ingredients: (i) rare disasters and (ii) heterogeneous beliefs. The model captures time-varying risk premia and precautionary savings in a setting that nests the textbook New Keynesian model. The model generates large movements in asset prices after a monetary shock but these movements can be neutral on real variables. Real effects depend on the redistribution among agents with heterogeneous precautionary motives. In quantitative analysis, we find that this channel can account for a large fraction of the transmission to aggregate consumption.
{"title":"Monetary Policy and Wealth Effects: The Role of Risk and Heterogeneity","authors":"NICOLAS CARAMP, DEJANIR H. SILVA","doi":"10.1111/jofi.70021","DOIUrl":"https://doi.org/10.1111/jofi.70021","url":null,"abstract":"We study the role of asset revaluation in the monetary transmission mechanism. We build an analytical heterogeneous-agents model with two main ingredients: (i) rare disasters and (ii) heterogeneous beliefs. The model captures time-varying risk premia and precautionary savings in a setting that nests the textbook New Keynesian model. The model generates large movements in asset prices after a monetary shock but these movements can be neutral on real variables. Real effects depend on the redistribution among agents with heterogeneous precautionary motives. In quantitative analysis, we find that this channel can account for a large fraction of the transmission to aggregate consumption.","PeriodicalId":15753,"journal":{"name":"Journal of Finance","volume":"41 1","pages":""},"PeriodicalIF":8.0,"publicationDate":"2026-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146048677","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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