Financial Markets, Institutions and Instruments最新文献

Does national cultural distance create higher synergistic gains in cross-border mergers and acquisitions (CBMAs)? Existing research on the role of cultural distance suggests that cultural disparities destroy shareholders’ wealth. Using an international sample of CBMAs over 19 years, we document that synergistic gains increase by 1.75 percentage points with one standard deviation increase in cultural distance. Drawing from the organizational learning theory, we suggest that learning diverse cultural practices in the post-acquisition stage is a source of higher synergy gains. The positive association between cultural distance and synergies is more pronounced if the acquirer pays in stock and already has takeover experience. This suggests that better awareness of the target country's culture and risk management through stock payment are boundary conditions for higher gains. Overall, our results lead to the counter-intuitive finding that CBMAs between firms from countries with dissimilar cultures are not always valued as destructive but depend on how merging firms learn the cultural practices of one another and manage integration challenges. We offer practical implications for regulators and policymakers about how the international takeover market can serve as a vehicle for learning new cultural practices and increasing combined firm value.

Recently, the Covid-19 uncertainties have raised interest in identifying factors that influence firms’ resilience. Existing Covid-19 research primarily focused on market reactions and lockdown impacts, overlooking the influence of ideological diversity of firms’ directors on resilience. To address this gap, we examine personal contributions to the US Republican or Democratic parties by 11,741 directors from 328 S&P 500 firms, revealing their political ideologies. Our findings highlight that firms with diverse boards experience milder stock return declines during the Covid-19 outbreak, indicating a positive link between ideological diversity and firm performance. This study presents evidence of the significant impact of ideological diversity in corporate boardrooms, showcasing how it affects firms’ resilience during times of extreme market uncertainty. Our findings emphasise the importance of revisiting the theories to explain the ideological diversity in shaping strategies to respond to uncertainty during unpredictable times. Based on social psychological theory alongside agency theory, the findings provide clear indications to practitioners that during future uncertainties, the ideological diversity of the board should be considered to optimise the board's potential to improve performance.

This study investigates the effect of competition networks among hedge fund managers on strategy distinctiveness and fund performance. Using a sample of 2711 US-based hedge funds from the Lipper TASS database between 1994 and 2018, we construct a hedge fund competition network (HFCN) based on alumni and employment ties derived from LinkedIn profiles. We find that greater centrality in the HFCN, indicating closer proximity to peer competitors, is associated with lower abnormal performance. This effect is partially mediated by a decline in strategy distinctiveness, measured by the Strategy Distinctiveness Index (SDI). Funds with stronger network ties tend to exhibit greater return similarity with peers, suggesting that social proximity encourages strategic conformity. The results are robust across performance metrics, style classifications, and subsamples and are particularly pronounced among managers with strong cognitive profiles.

Utilizing a micro-level hedge fund dataset, we propose a methodology for estimating hedge fund leverage. Initially, we perform a Principal Component Analysis on a set of 49 risk factors for dimension deduction purposes. After acquiring 10 Principal Components, we deploy the Least Absolute Shrinkage and Selection Operator regression (Lasso) per fund by seven 3-year monthly non-overlapping intervals in order to select which Principal Components affect each fund's return. As a last step, we execute a regression in the same manner as previously, with only the non-zero Principal Components. By aggregating $��\beta �s�$, we estimate an average sectorial leverage of 3.3 with an average $�R^2$ of 58.2%. Moreover, we observe an analogous degree of Deleveraging in 2007–2009 that includes the 2008 financial crisis as in 2019–2021 that includes the COVID-19 stress period.

This paper examines how supplier IPO events affect their key customers’ cost of debt. The evidence reveals that average loan spreads for customers increase by roughly 20% (23.7 basis points) following suppliers’ IPO events. This negative spillover effect is more pronounced when suppliers make significant relationship-specific investments (high switching cost), when suppliers face less concentrated customer bases, or when customers face more concentrated supplier bases. Our results show that customers receive less favourable trade terms and are forced to pay more for inputs after their suppliers go public, all of which increase customers’ operational costs, risk and subsequent borrowing costs. Furthermore, we document that customer loan contracts become significantly more restrictive after a supplier's IPO. Finally, we find that the observed negative spillover effect is also present in customers’ access to the public bond market.

This paper examines whether opportunistic or routine insiders in US markets engage in informed trading and earn higher short-term returns during the COVID-19 pandemic. Our findings indicate that trades by opportunistic insiders are indeed informative, yielding higher returns compared to those of routine insiders during the pandemic. Interestingly, we also observe that opportunistic directors earn higher returns than CEOs. Additionally, opportunistic insiders trading in the Nasdaq market achieve higher returns compared to those in the NYSE, and opportunistic insiders in the financial sector outperform those in the non-financial sector. Our results remain robust across various model specifications, alternative measures and considerations for endogeneity. Overall, our findings suggest that opportunistic insiders possess a significant informational advantage, enabling them to engage in informed trading during the pandemic.

Firms might adopt capital structure policies which are far away from their optimal targets, this is known in the literature as extreme financing policies. Unlike previous empirical studies, our research sheds new light on the impact of financial flexibility (changes in credit ratings and over/underinvestment) on the duration of these policies. Using a large sample of US firms for the period from 1985 to 2017, we employ a novel empirical approach of multilevel survival model estimators for different subsamples of conservative and aggressive debt policy users. The results show that, on average, the duration of extreme financing policies renders the degree of urgency to shift towards firms' optimal leverage. Accordingly, firms adopting extreme financial policies are less keen to adjust quickly to their target debt ratios and such speed of adjustment varies between conservative and aggressive debt users. Our results provide interesting empirical implications for firms adopting conservative or aggressive debt policies.

Wealth inequality around the world is high and rising. In this paper, we argue that wealth inequality in the United States has been exacerbated by an environment favourable to the ultra-wealthy. Three distinctive changes in the economic and political landscape have fostered the increase in inequality. First, campaign finance law abruptly changed after the Citizens United Supreme Court decision. This decision gave the ultra-wealthy an outsized influence on American politics. Second, an increase in competition for executive talent drove CEO salaries to new heights. Demand increased for executives with general leadership skills as corporations grew larger, increasing competition in the market for executive talent. Third, because tax policy in the United States is subject to lobbying influences, those at the top of the wealth distribution are favoured, leading to further concentration in wealth. Our empirical results are consistent with the view that these changes resulted in an increase in disparity, shifting wealth from the 99% to the 1%.

Extant studies on political connections document both benefits and costs for firms. In this study, we investigate whether politically connected firms pay higher taxes than their non-connected counterparts and thus facilitate politicians to receive political benefits. Using the presidential election in Indonesia as an exogenous event, and analysing a sample of Indonesian listed firms over the period 2007–2016, we show that politicians extract resources from firms to realise their political objectives, for example, increasing tax revenues and gaining votes. We also find that politicians pursue more rent-seeking among firms with transactional political connections. In return for over-payment of corporate taxes, these connected firms enjoy lower cost of borrowing and higher firm value after the election year. These results are robust to the use of different regression techniques (i.e., pooled ordinary least square and probit) and tests (i.e., endogeneity, parallel trend assumption and placebo), and support the grabbing hand hypothesis of political connections. Our study contributes to the scarce literature showing that politically connected firms help politicians by providing higher tax revenues and experience a lower cost of debt and higher firm value in exchange for providing this favour to politicians.

Using insights from the social network theory which posits that individuals with high network centrality have influence and power within their social networks, we argue that CEO network centrality increases the CEO bargaining power in audit fee negotiations. We find that audit fees are lower in firms managed by CEOs with high network centrality. We also find that high-centrality CEOs do not negotiate audit fees at the expense of lower-quality audit services. We further document the influence high-centrality CEOs have on the audit decisions of their social peers within the network. For example, we show that less central (i.e., peripheral) CEOs are likely to hire auditors that do work for firms with CEOs enjoying high levels of network centrality. Together our findings suggest that high network centrality reflects a bargaining power CEOs can use to lower their audit fees.