FINANCIAL REVIEW最新文献

Theory predicts that certification by prestigious financial intermediaries signals investment quality. We provide a direct empirical test of certification by financial and legal advisors using data on large-scale projects. We find that advisor effects are complementary: financial advisors allow firms to obtain longer loan maturities, while legal advisors (only if prestigious) help firms obtain greater leverage and lower loan spreads. We also document heterogeneity in observables: advisor effects vary across projects based on observable factors. Our results are consistent with firms hiring advisors to help them negotiate better loan agreements by conveying an absence of conflicts of interest.

We analyze a regulatory change in the Japanese IPO market that created an abrupt shift from hybrid price-discriminatory auctions to bookbuilding. We find that bookbuilding leads to higher underpricing than hybrid price-discriminatory auctions. Furthermore, we find evidence that price accuracy tends to be higher for auctions than for bookbuilding. The results hold under a variety of OLS specifications and with regression discontinuity designs exploiting the abrupt change of the regulation.

In this study, we use board reforms across countries as a natural experiment to examine the effect of governance on firm leverage. We find that board reforms are associated with a statistically significant 1-percentage-point increase in leverage overall and a 5-percentage-point increase on average for firms that had to make large board changes. These results are robust to a variety of specifications and to controls for potential confounding events. The increase in leverage is also larger for firms in weak shareholder rights countries, suggesting that other shareholder rights can substitute in part for board reforms.

We use an international sample to test theories predicting an association between operating and financial leverage with stock returns and the value premium. We find evidence that operating and financial leverage are related to stock returns and the value premium across the sampled countries. Results hold after considering the trade-off between financial and operating leverage and are stronger in North American and European subsamples. Consistent with theory, we find that a country's labor share is positively associated with the value premium. Overall, we present evidence suggesting the value premium reflects compensation for exposure to systematic operating and financing risk.

This paper studies the long-term effect of hedge fund activism on distressed firms by tracing the post-emergence performance of firms that successfully resolved distress. We find that the firms restructured with hedge funds' intervention, compared to their counterparts that emerged without such intervention, are more likely to lose their public status, enjoy higher financial stability, and invest more. Notably, the gap in financial strength lasts at least 3 years after emergence. These findings suggest that the efficiency gains brought by hedge fund activism during the restructuring process tend to positively impact the restructured firms' financial soundness in the post-intervention period.

Twenty years ago, we circulated our first “Rookie's Guide” to the academic labor market for finance Ph.D. students. Labor market logistics are easier now due to technological change, but the basic informational frictions that made it difficult for rookies to learn the ropes still exist, as do the fundamental market frictions that make bilateral matching between labor demand (hiring schools) and labor supply (the rookies) awkward and challenging. We recapitulate basic advice from previous guides, provide modern updates for the intense interview process, and discuss what to do after you accept an offer and during your first year of employment.

We provide evidence that casino openings can have spillover effects on an individual's portfolio risk-taking. Using investor-level brokerage data and the initial legalization and opening of commercial casinos in the United States as a quasi-natural experiment, we find that, after a casino opens in close geographical proximity to investors, those with a high propensity to gamble (PTG) increase their idiosyncratic portfolio risk by 12.88% relative to those unlikely to gamble. This effect lasts for approximately 3 months and does not affect systematic portfolio risk. These results suggest that increased access to gambling can temporarily increase portfolio risk-taking for those with a PTG.

We hypothesize that societal trust alleviates moral hazard concerns that undermine credit rating agencies’ perceived value of corporate social responsibility (CSR). We test our hypothesis using a large global sample and find a more salient relationship between CSR and credit rating only in countries with high societal trust. Our findings reconcile the mixed empirical worldwide evidence on this relationship. Additional tests provide further evidence that it is societal trust, not other country-level factors, that drives our results.

We test the hypothesis that less transparent financial disclosures are an undesirable firm attribute that increase the amount of information and unemployment risk that employees bear, resulting in a wage premium. Using establishment-level wage data from the U.S. Census Bureau, we document that firms with less transparent disclosures pay their employees more, especially when employees bear greater information acquisition costs, have more influence in the wage-setting process, and own more stock. Our results hold after utilizing instrumental variables and exploiting two quasi-natural experiments. Overall, our results suggest that disclosure choices can generate externalities on an important group of stakeholders.

We investigate whether social capital influences tournament incentives and income differences between the chief executive officer (CEO) and median worker. We find that firms headquartered in US counties with stronger norms of cooperation or social capital have lower tournament and income differences. Firm value is higher when compensation is consistent with local norms. The results hold for alternative measures of social capital, instrumental variables, and quasi-experiments related to the legalization of marijuana and firm headquarter relocation. These findings suggest that local social norms influence income differences and firm performance.