FINANCIAL REVIEW最新文献

Should measures of investment returns focus on representative or non-representative investors? Should we consider only the magnitude of accumulated portfolio value relative to investment, or should we highlight the series of withdrawals to fund real activities that an investment can sustain? Should we ignore the importance of the time ordering of returns (distinct from the overall level), or should we consider “return sequence risk”? I argue herein that we should be thinking more about these issues, and in particular should be less focused on arithmetic means of short horizon returns, as employed in Sharpe ratios, alphas, and portfolio comparisons. I discuss some candidate methods, and highlight the need for expanded econometric tools to allow inference regarding alternative measures of returns.

While the presence of deposit insurance from the FDIC is promoted in the banking sector, advertising the existence of similar protection provided via state guaranty funds in the insurance industry is prohibited. With respect to life insurance, such prohibition may stem from concerns over the potential for reduced market discipline in a market characterized by substantial price opacity and product complexity where market discipline already may be limited. We review the theoretical framework of market discipline in relation to insurance guaranty funds and empirically test for the existence of market discipline in the life insurance market. Based on two measures of firm risk, we find almost no evidence of a relationship between insurer risk and life insurance price (and limited evidence of market discipline based on life insurance quantity demanded). Our evidence suggests that market discipline is relatively weak in the life insurance industry, and further that guaranty funds lead to government-induced moral hazard, further weakening market discipline in life insurance. Our results help explain the existence of prohibitions against advertising the coverage provided by state insurance guaranty funds.

We examine how financial pressure influences rule enforcement by leveraging a novel setting: NFL officiating. Unlike traditional regulatory environments, NFL officiating decisions are immediate, transparent, and publicly scrutinized, providing a unique empirical lens to test whether a worsening financial climate shapes enforcement behavior. Analyzing 13,136 defensive penalties from 2015 to 2023, we find that postseason officiating disproportionately favors the Mahomes-era Kansas City Chiefs, coinciding with the team's emergence as a key driver of TV viewership/ratings and, thereby, revenue. Our study suggests that financial reliance on dominant entities can alter enforcement dynamics, a concern with implications far beyond sports governance.

We provide evidence that activist hedge funds significantly influence target firms’ debt choices. After hedge fund activism (HFA), the proportion of long-term debt significantly increases in target firms. This debt maturity increase is correlated to post-HFA governance reforms. Post HFA, target firms issue more bonds than loans; such preference for bonds explains the increase in targets’ debt maturity. Our findings indicate that target firms substitute their short-term creditor-driven governance with a governance mechanism influenced by activist hedge funds.

This study examines the impact of institutional quality and financial development on green-technology innovation across 57 countries from 2000 to 2021. Using robust econometric models, the results indicate that enhancing institutional quality generally supports green investment, while appropriately regulated financial development contributes only when supervisory capacity and macroeconomic conditions are adequate. However, these effects are not uniform across countries and depend strongly on their level of development. In low-income economies, neither institutional quality nor financial depth exerts a statistically discernible influence on innovation, suggesting that more basic capabilities remain the binding constraint. Upper-middle-income nations display mixed outcomes: institutional reforms can be helpful, yet deeper financial systems tend to dampen green innovation unless accompanied by sufficient economic growth; by contrast, in high-income countries financial depth regains a modest positive role, whereas only rule-of-law component of institutional quality continue to spur innovation. Furthermore, the study uncovers a nonlinear relationship, revealing that the influence of institutional quality and financial development on green technology innovation changes once an economic growth threshold relevant mainly to upper-middle-income economies is reached. These findings underscore the importance of tailoring policy strategies to a country's development stage to maximize the effectiveness of institutional and financial reforms.

This study examines the effect of social ties between senior executives and auditors on tax avoidance. The findings show that firms with senior executive–auditor social ties exhibit higher levels of tax avoidance. We also find that client importance has a positive moderating effect on this association. Furthermore, firms with executive–auditor social connections who aggressively conduct tax avoidance are likely to have lower firm value. Finally, the positive association is more salient among non-state-owned enterprises (non-SOEs). This study provides useful insights for regulators to support strategies to reduce tax avoidance.

In this article, we discuss how far Bitcoin has come since its formulation 16 years ago and explore promising areas for future research in finance. The future research topics fall into the following three broad areas: institutional and country adoption, criminality, and Bitcoin's relationship to stablecoins. After a brief discussion of the existing literature, we provide a list of open research questions for future research to explore.

This paper presents a theoretical model that analyses how stock returns are affected by the presence of regret-averse investors in the market. The model demonstrates how anticipation of regret leads to positive short-run and negative long-run correlations of stock returns. In addition, the model predicts a positive correlation between future trading volume and the dispersion of the realized stock returns.

This paper builds on credible signaling theory and proposes a novel approach to financial textual analysis by introducing lexical complexity (LC) as an informative signal of future venture performance. LC is measured by the sophistication, density, and diversity of vocabulary in a text and distinguishes itself from the widely used construct of readability. Analyzing 1202 ICO white papers from 2015 to 2021, we find that higher LC positively influences the amount raised during ICOs, above and beyond the effect of white paper readability. This effect is amplified for more readable white papers. We also investigate the underlying mechanisms behind these results, suggesting that LC enhances perceptions of innovation and quality, attracts greater attention from institutional investors, and reduces information asymmetry. Our findings contribute to the entrepreneurial finance literature by highlighting how managers’ linguistic choices, particularly the use of LC, can significantly improve disclosure quality and influence investor behavior.