FINANCIAL REVIEW最新文献

This paper identifies a positive (negative) relationship between community resilience and household stock market participation (deposit flows). These relationships are less pronounced for higher-income and married households, indicating an income channel and a marriage channel, respectively. Furthermore, compared to white and Asian households, black households are more sensitive to the effects of community resilience on household investments and deposit flows. Overall, our findings suggest that improvements in people's preparedness for, resilience against, and recovery from potential hazardous events and natural disasters shift households' asset portfolio choices from safe savings to risky stock investments.

Examining the staggered adoption of universal demand (UD) laws as an exogenous shock to shareholder litigation risk, we show that firms have lower stock returns following that adoption in a difference-in-differences (DID) design and Fama and MacBeth (1973) regression. Sorting stocks into UD laws portfolios, we show that firms adopting UD laws earn lower risk-adjusted returns than those who do not. Further, the relation between UD laws and returns is more pronounced when firms face financial constraints, CEOs engage in high risk taking, or takeover protection is low.

This study examines corporate pension funds’ search for yield through investments in private equity (PE). Using pension asset allocation data from 10-K filings, we find that corporate pension funds significantly increase the PE share within their risky assets following underperformance relative to their expected return. This risk-taking behavior is more pronounced for sponsoring firms that were more financially constrained with poorly funded plans in the previous year. Furthermore, we discover that pension asset allocation to PE does not significantly increase pension returns but does lower pension return volatility and tracking error relative to the expected return.

We examine the role of social capital in influencing decisions pertaining to buyer–supplier relationships. We report that firms make larger relationship-specific investments when their supply chain partners are headquartered in states with high social capital. This result is more pronounced when supply chain partners have incentives to engage in opportunistic behavior. Furthermore, the duration of supply chain relationships is longer when the firm and its supply chain partner are both headquartered in high social capital states, and when the partner invests in relationship-specific assets. Collectively, the evidence suggests that social norms reflecting trustworthiness facilitate investment and stability along supply chains.

Neuropsychologists claim that exposure to a massive water scene triggers the feeling of Awe which causes more prosocial behavior. I find that coastal firms have significantly higher corporate social responsibility (CSR) scores than non-coastal firms. The difference-in-difference test shows that CSR engagement erodes when firms relocate away from coasts. These results are robust to the use of propensity score matching and entropy balancing to address selection bias, Oster's test to address omitted variable bias, and control for institutional ownership, social capital, religiosity, CEO and local political orientation, and natural disaster risk. Further analysis shows that CSR creates value only for coastal firms.

This study shows that, unlike the positive role played by other institutional investors documented in the literature, venture capital (VC) in pursuit of short-term gains through exit strategies reduces the stock price informativeness of portfolio companies, especially when VC is associated with a higher level of the ability (longer-term VC directors, large VC syndicate), incentive (private VC sponsors), and willingness (less reputable VCs) to manipulate information. Furthermore, internal and external monitoring helps mitigate the negative impact of VC on stock price informativeness. Finally, earnings management and reduced information disclosure mediate the relationship between VC involvement and stock price informativeness.

We examine whether the risk of losing proprietary information through the supply chain affects relationship-specific investment (RSI) decisions by supply chain partners. Using state courts' staggered adoption of the Inevitable Disclosure Doctrine (IDD) as a shock to the firm's ability to protect proprietary information, we find that customers increase RSI when their supplier is headquartered in a state that adopts IDD. The effect is more substantial for customers who face a higher risk of losing proprietary information and with suppliers that are difficult to substitute. IDD also plays a more prominent role in the absence of alternate mechanisms that reduce contracting frictions, such as shared directors, common ownership, or joint ventures. Our results are robust to using cross-citation measures of RSI and alternative estimations that mitigate potential biases arising from the staggered difference-in-difference approach. Our findings suggest that proprietary information protection enables firms to reduce contracting frictions arising in supply chain relations.

This study investigates how information uncertainty influences managers' decisions and compensation. It reveals varying financial choices under uncertainty levels. Initially, information uncertainty results in debtholders undervaluing debt in comparison to situations without such uncertainty. Consequently, they consistently estimate a default threshold that is lower than the threshold managers choose to maximize their value. Low uncertainty prompts overinvestment, heightening agency issues. Increased uncertainty leads debt holders to reduce the capital they are willing to lend to companies for investment. To invest early, funds must be injected or costs incurred. Information uncertainty can ease agency conflicts, shifting decisions from overinvestment to underinvestment. Managerial compensation matters: higher fixed salaries curb overinvestment, while increased reservation income exacerbates it.

We examine the effect of the U.S. Securities and Exchange Commission's (SEC) oversight on the cost of equity. We argue that companies near regulatory oversight by the SEC are subject to increased scrutiny. Such heightened scrutiny, which is associated with enhanced disclosure quality, ultimately leads to a reduction in the cost of equity. We find empirical evidence supporting this hypothesis. Importantly, the cost of equity declines significantly when firms relocate their headquarters close to SEC office. Our results suggest that SEC effective external monitoring lowers the cost of equity for firms with weak governance.

We examine whether managerial ability affects the relationship between corporate digital transformation and trade credit. To measure digital transformation, we perform a textual analysis of companies’ annual reports using a customized Chinese dictionary containing digital transformation keywords based on national policy documents and academic literature. Using 10,554 observations from 2509 A-shares listed companies in China, we show that corporate digital transformation has significantly impacted trade credit. Managerial ability enhances the relationship between digital transformation and received trade credit but does not change the impact between digital transformation and provided trade credit. A battery of robustness tests confirms the findings.