FINANCIAL REVIEW最新文献

We examine the causal effect of short-selling on a firm's annual report readability using regulation SHO, which relaxes short-sale constraints for a random sample of pilot stocks. Pilot firms produce significantly less readable annual reports than nonpilot firms during the experiment period. Our results are more pronounced for firms that receive less investor attention and those with poorer growth prospects. Furthermore, pilot firms increase the use of uncertainty words in annual reports during the experiment period. Our results suggest that firms produce less transparent financial disclosures that are more costly for investors to comprehend when short-sale constraints are less rigorous.

We examine the effect of negative news disclosures on acquisition decisions of firms. Using textual analysis of company press releases, we find that the percentage of negative news disclosed by a firm reduces its probability of acquisitions. However, for firms that do undertake acquisitions, the percentage of negative news disclosed is positively related to announcement-period abnormal returns. Consistent with theoretical predictions, this positive relationship is more pronounced for acquirers with low pay-performance sensitivity and those operating in concentrated industries. Overall, our results suggest that when managerial reputation concerns are high following negative news development, they make more prudent acquisition decisions.

When ownership by ETFs is high, the penalty to missing earnings expectation is smaller by 43%. The smaller penalty is not due to underreaction but is attributed to the long investment horizon of ETFs. Consequently, firms with high ETF ownership engage in earnings and expectation managements less frequently and are less likely to reduce discretionary spending to marginally meet or beat. Using Russell 1000/2000 index reconstitution as an identification, we corroborate the main results. Amid conflicting evidence for the effect of ETFs on market efficiency, our finding highlights their positive effect on corporate reporting.

We find a positive association between institutional ownership and social capital. The social norms in a region, while not imposed by businesses or laws, play a monitoring role that disciplines managers from self-serving behaviors. The resulting trustworthiness, through its mitigation of agency problems, drives the investment preferences of institutions. Our subsample analyses based on information asymmetry and financial performance support this inference. Further, the positive association is evident for transient investors and quasi-indexers but not for dedicated institutional investors. Overall, our study underscores the impact of informal governance on institutions' investment decisions.

As sustainability takes center stage in business strategies, firms lagging behind their peers on environmental initiatives are strongly motivated to bridge the gap. Analyzing the U.S. sectors primarily responsible for CO₂ emissions, we show that environmentally lagging firms increase the efforts to reduce emissions and adopt eco-friendly materials in the subsequent year. Interestingly, this phenomenon becomes significantly more pronounced among companies exposed to higher levels of consumer interest as measured by Google search volumes. Our finding suggests that lagging firms under greater public scrutiny recognize the need to address their sustainability deficiencies to maintain competitiveness and corporate reputation.

We find that insiders adopt dissimulation strategies to conceal their informational advantage and trade profitably when their firms’ stock prices reach 52-week highs and lows, exploiting the anchoring biases of uninformed investors. Insiders’ trading profitability depends on their firms’ future stock returns, operating efficiency, and investment sentiment, but not on earnings surprises. We document that male board members and insiders with long investment horizons are more likely to use dissimulation strategies. Overall, we provide evidence that insiders benefit from these price extremes, despite their status as publicly available, irrelevant, historical price levels that normally should not predict future stock returns.

This paper proposes the time-heterogeneous Student's t autoregressive model as an alternative to the various volatility forecast models documented in the literature. The empirical results indicate that: (i) the proposed model has better forecasting performance than other commonly used models, and (ii) the problem of reliable risk measurement arises primarily from the model risk associated with risk forecast models rather than the particular risk measure for computing risk. Based on the results, the paper makes recommendations to regulators and practitioners.

The continuously increasing bank sizes have received much attention from both policymakers and researchers. We present new estimates of returns to scale in cost, revenue, and profit for European banks over 2000–2020 based on nonparametric, local-linear methods. We find that most banks faced increasing returns to scale in cost and decreasing returns to scale in revenue and profit across years, across European countries, and across bank size quartiles. Our results suggest that restricting the size of banks may not bring too much loss of revenue and profit, but could prevent European banks from exploiting increasing returns to scale in cost.

There has been a secular decline in published research on corporate finance topics over the past decade or so. While this raises questions about the vitality of the field going forward, I argue that a number of recent developments represent important new directions for research in corporate finance. These developments have begun to have an impact on scholarly activity and I expect this to continue in the near future.

Exploiting an exogenous shock to short selling costs brought by the RegSHO, we find that short seller monitoring restrains real earnings management (REM). The effect is concentrated in firms facing a lower cost of REM than accruals management. Litigation risk and reduced CEO wealth gain from REM are two plausible channels through which short seller monitoring deters REM. Lastly, we find that short interests on stocks of treated firms increase after the announcement of the RegSHO relative to that on stocks of control firms, and the increase is concentrated in the subsample of treated firms with signs of REM.