FINANCIAL REVIEW最新文献

This study examines the effect of unique strategies on corporate cash holdings. We find a U-shaped relationship between strategy uniqueness and cash holdings. When strategy uniqueness is low, the increase in uniqueness enhances a company's competitive advantage, leading to low demand for cash reserves. Conversely, when strategy uniqueness is high, the increase in uniqueness leads to higher information asymmetry, prompting firms to hold more cash to mitigate potential costs. The U-shaped relationship is stronger for financially constrained firms and those with optimistic managers. Overall, we present a manifestation of the uniqueness paradox in corporate cash-holding decisions, highlighting the pivotal role played by corporate unique strategies.

During the 2010s, the number of community banks in the United States declined by almost one-third. This paper provides evidence that the disappearance of community banks is related to the demand for economies of scale associated with technology investment. This paper documents that community banks with more technology investment are more likely to become acquisition targets. To address endogeneity concerns, this study employs an exact matching approach and an instrumental variable approach. Our study shows that the acquirer banks effectively attain economies of scale, demonstrated by enhanced operational efficiency. A rich battery of robustness checks confirms the results.

Doidge, Karolyi, and Stulz (2017) show that from 1999 to 2012, the US develops a listing gap relative to other countries, meaning that it has abnormally few publicly listed firms. In this paper, we update their evidence to 2023 and find that the listing gap increases, but at a low rate. By 2023, the US has about half as many listed firms per capita as other developed countries. We discuss some of the important questions raised by the existence and increase of the listing gap to which we hope researchers will find answers.

We examine the relationship between investors’ emotions and GameStop (GME) stock returns during the price bubble of January–February 2021. Analyzing eight basic emotions (anger, anticipation, disgust, fear, joy, sadness, surprise, and trust) from Plutchik's (1980) Wheel of Emotions, we use textual analysis of Reddit posts to find that fear strongly predicts intraday returns and volume order imbalance. The predictive relationship between emotion and returns shifts over time: joy is strongest before the bubble peaks, fear at the peak, and anger after the bubble bursts. These findings highlight the psychological factors influencing trading behavior during stock market bubbles.

This study examines the relationship between board gender diversity and debt maturity dispersion, which measures debt rollover risk. In a sample of 3275 US firms, we find that firms with greater gender diversity on the board have relatively more dispersed debt structures, particularly when a critical mass of three women directors is achieved. We show that the increased debt maturity dispersion associated with the presence of women directors is positively related to subsequent firm performance. We also find that the relationship between gender diversity and debt maturity increases at a diminishing rate with more than three women on the board

Contracting theories predict that CEO power plays an essential role in the pay-setting process. I provide causal empirical evidence of how changes in the bargaining power of CEOs affect the level of CEO compensation. Using the staggered rejections of previously adopted inevitable disclosure doctrine (IDD) by US state courts to capture an exogenous increase in CEOs’ bargaining power, I find that the IDD rejection results in higher levels of CEO compensation. The effect is strongest in firms whose CEO-board dynamics is significantly influenced by the IDD—firms whose CEOs face greatest job mobility shock and firms that can effectively use the IDD decision as a bargaining tool against their CEOs. The economic magnitudes are substantial in those subsamples of firms, ranging from 22% to 54% increase in compensation levels.

This study investigates the impact of “busy” independent directors on corporate financial leverage. Using a sample of 3321 Chinese listed firms from 2004 to 2019, we find that firms with busier boards tend to have higher leverage, with corporate tax avoidance acting as a mediating mechanism. Supporting the reputational incentive hypothesis, busy boards discourage aggressive tax avoidance strategies that would otherwise allow managers to accumulate excess cash reserves. Consequently, these firms become more reliant on external debt financing to meet potential investment needs. Our findings highlight the role of “busy” independent directors in mitigating agency conflicts and shaping financial strategies.

In this study, we rank each executive based on their job title and examine gender disparity among them. We find that female executives face a disadvantage in promotions within firms located in highly religious counties. This phenomenon is especially evident among lower-ranked executives, whose promotions are more significantly influenced by cultural factors. Furthermore, our results remain intact when we adopt alternative specifications (e.g., propensity score matching, instrumental variable). This study unveils a hidden pullback of religiosity in restraining firms from advancing female leaders and has a broad implication that cultural dynamics surrounding a community can be very influential on corporate strategies and decisions.

This paper applies a Skill Ratio under a False Discovery Rate (FDR) framework to bond mutual funds showing many bonds mutual fund managers are skilled primarily to the benefit of fund sponsors. Our Skill Ratio is the t-statistic of realized gross value added $��\left(��\mathrm{RV}�A_G��\right)�$ based on investible Morningstar benchmark-adjusted monthly returns times the natural logarithm of assets under management (AUM). We apply a new simulation process for FDR that mitigates small sample bias and mis-discovery on tails. For 571 actively managed domestic bond mutual fund managers between 1999 and 2016, 28.7% are skilled, including 36.3% of 226 corporate funds and 17.3% of 345 government funds.

The global financial crisis has raised new policy debates regarding the bank's size, especially among the largest banks. Using nonparametric, local-linear methods, we provide new estimates of scope economies in cost, revenue, and profit for European commercial banks during 2000–2020. Our findings reveal that a substantial proportion of banks demonstrated economies of scope (EOS) annually: approximately 45% in cost, at least 61% in revenue, and no less than 67% in profit. These findings indicate that EOS may partly account for the sustained growth and expansion of European banks during this period.