Journal of Financial Research最新文献

We present evidence that corporate connections to the media are associated with a greater likelihood of a seasoned equity offering (SEO), more negative announcement returns, and poorer long-term performance. The effect of media connections on announcement returns is more pronounced for firms with higher information asymmetry, greater financial constraints, and lower advertising expenditures. Media connections are positively associated with media coverage and sentiment before the SEO announcements. Our findings are consistent with the notion that SEO issuers use their connections with media firms to actively manage media coverage and successfully offer new equity.

We compare the responses of publicly held versus privately held community banks to the June 2016 issuance of the current expected credit loss (CECL) standard, which altered the way US banks provision for loan losses. We find that following issuance but before implementation, the relation between earnings and provisions strengthened among privately held banks but not among publicly held banks. This is consistent with US Securities and Exchange Commission regulation and market monitoring placing greater constraints on publicly held banks relative to privately held banks, preventing publicly held banks from moving toward the CECL standard early.

We find that stocks with names earlier in an alphabetic ordering exhibit greater idiosyncratic volatility. Stocks whose names are in the first 5% of an alphabetic ordering have 4.5% higher idiosyncratic volatility relative to other stocks. To address potential concerns about early-alphabet firms being different, we study name changes. Idiosyncratic volatility is 7% higher when a name change causes a stock to move into the first 5%. We attribute these results to noise traders being more active in early-alphabet stocks because of heuristic-based investing. In support of this explanation, we find that the effect is strongest during periods of high investor sentiment and among stocks with high turnover. Our results provide evidence that noise traders contribute to the idiosyncratic volatility of stocks.

Investing in exchange-traded funds (ETFs) rather than investing directly in the underlying securities surely prompts questions for mutual funds. Why? Examination suggests the answer is to reduce overall portfolio volatility. Actively managed open-end equity funds (OEFs) that invest in ETFs tend to take short positions in securities and to short ETFs more than other securities. Investigation of the overlap in portfolio composition between OEFs and the ETFs they hold as well as their investing positions in hedging and nonhedging ETFs separately points to the main motivation for such ETF investment—hedging.

We examine investment by different types of institutional investors in firms with strong labor unions. We find that hedge funds own a lower percentage of shares in these firms than in other firms. In contrast, passive institutional investors and institutional investors as a group own a higher percentage. Our tests suggest that the relation between unionization and hedge fund ownership is causal: When union power changes in a firm, hedge fund ownership changes in the opposite direction. Instead, passive investor holdings in unionized firms seem to be driven by other firm characteristics.

In this article, we investigate the effect of chief executive officer (CEO)–board connections on the cost of equity capital in an international setting. We find that CEO–board connections have a significant negative effect on the cost of equity. Our results are robust to alternative variable measurements, model specifications, and potential endogeneity adjustments. Examining the channel, we show that social ties reduce information asymmetry issues. We further show that firm-level operational complexities and investment intensity, as well as country-level developmental attributes and culture, moderate the association between CEO–board connections and the cost of equity capital.