European Financial Management最新文献

We investigate whether features of the tournament structure determine the cross-sectional variation in the pay premiums of tournament winners and whether the level of rewards for tournament winners is related to future firm performance. Using a unique data set of 116 internal Chief Executive Officer (CEO) succession events in US bank holding companies, we find that the winner's pay premium level is positively associated with the steepness of the tournament structure before CEO succession. Higher pay premiums reflect the new CEO's managerial ability as perceived by shareholders and are also associated with greater improvements in bank performance following CEO succession.

Using unique data from Ant Group, we examine how social interactions influence trading behaviour and whether posting enhances investment returns. We show that posting significantly boosts fund trading, including subscriptions and redemptions. We also demonstrate that posting-driven trading facilitates social learning for investors. First, posting positively impacts investment returns. Second, while trading initially negatively affects returns, the impact is temporary and diminishes over time, suggesting that short-term losses reflect learning costs. Finally, the negative effect of posting-driven trading on returns is short-lived, with long-term returns improving as investors incorporate effective price signals gained through social learning.

This paper investigates the effects of prudential regulation on the takeover market, focusing on the 2016 European Solvency II directive. This directive introduced costly requirements in the form of advanced accounting, risk management, and governance standards for insurance companies. We document an increase in insurer-targeted acquisition activity following the implementation of the directive. Consistent with the idea that heightened compliance costs incentivize insurers to expand their size, we also observe a higher likelihood of midsized and small insurers becoming acquisition targets. Overall, our analyses indicate that costly prudential regulatory requirements affect market concentration by increasing takeover activity in regulated industries.

Facial traits constitute a significant source of information in social interactions, yet little is known about whether they affect borrowing costs. This study examines how CEO attractiveness influences loan costs. Our analysis reveals that firms with more attractive CEOs secure lower loan spreads. To address endogeneity, a difference-in-differences approach centred on CEO turnovers confirms robustness. Further analysis shows a significant positive association between CEO attractiveness and operating cash flow, supporting the notion that visually appealing CEOs enhance firm profitability and improve lenders' perceptions of creditworthiness. These findings underscore CEO appearance as an important intangible asset in shaping firm credit terms.

We investigate firms' strategic reactions to environmental regulation enforcing China's New Environmental Protection Law (NEPL). We find that in the short term, polluting firms conduct more earnings management and the effect is stronger for firms under performance pressure. In the long term, environmental regulation facilitates environmental information disclosure, which is strengthened by better external governance. We also find that NEPL enforcement has an immediate negative effect on firm value but decreases firms' long-horizon price crash risk. Our study highlights the combined effects of environmental regulation on firm decisions and outcomes in different horizons.