European Financial Management最新文献

Transaction cost model predicts opportunity costs should negatively affect money demand. Examining the effect of cost of carry (CC) on cash holdings at the firm-level, rather the average effect for entire population, we find that such a pervasive negative relation does not hold in times of low interest rate with about a 10% chance of observing positive effects. Firm size emerges as the primary driver of this heterogeneity, demonstrating a hump-shaped effect on the cash-CC link. Our findings suggest that policymakers should track the distributional impacts of opportunity cost of money demand over time to better evaluation of monetary policy.

We evaluate the role of short sale bans in muting the price response to negative earnings surprises for stocks cross-listed in foreign unbanned markets. We update the global timeline of short sale restrictions up to the COVID-19 crisis. Given low dispersion of beliefs, we observe that the effects of a stock's home market bans extend to unbanned markets, as manifested in lagged price responses, reduced short interest, and failures to deliver. In contrast, large profit opportunities created by high dispersion of beliefs trigger cross-border short selling (regulatory arbitrage) and a leading price response in foreign unbanned markets vis-à-vis the home market.

Using a sample of 24,321 firm-year observations from 25 countries over the 2006–2021 period, we show that operating flexibility increases carbon emissions. This increase is due to to the efficiency and instability channels. The relation is stronger for firms where expansion flexibility outweighs contraction flexibility, and for focused and financially unconstrained firms. Cross-country analyses indicate that the effect of flexibility on carbon emissions is more prominent in developed economies with superior institutional quality. In contrast to prior studies that highlight the beneficial consequences of operating flexibility, our findings expose its adverse effect on environmental performance.

We examine the impact of corporate governance on firm value by using a unique research approach ‘sector-wise analyses’ by employing a data set of listed firms in Taiwan. We investigate whether the unique dynamics of each industrial sector could differently affect internal corporate governance (CG) practice. In addition, we investigate the moderating effect of block ownership on the relationships between CG and firm value. Our results show that CG and firm value relationships significantly differ across industrial sectors and conclude that the CG model is not one-size-fits-all for industrial sectors—while observed a significant impact of block ownership as a moderating variable.

We examine how the ban on t+0 short selling affects the return predictability of short sellers in China. If the ban drives out mostly less informed short sellers, then the return predictive power should be enhanced. However, if the ban drives out more informed short sellers instead of less informed short sellers, then the return predictability should worsen. We find that in China, where the stock market is dominated by retail investors, and short-selling activities are not active, the ban is likely to drive out more informed short sellers, and thus, worsen the predictive power of short selling.

Using a sample of US banks, this paper investigates how corporate social responsibility (CSR) performance affects bank liquidity creation in financial crises. It shows that banks with better CSR performance reduce more liquidity creation in crises. This effect is stronger for banks with lower Z-scores or higher earnings volatility. In addition, the results are driven by bank CSR performance related to community, employee relations and diversity. These results are consistent with the notion that banks with good CSR performance reduce liquidity creation to avoid financial distress, which would hurt their employees and the communities they serve.

A significant negative relationship exists between the price of retail motor gasoline and the interest rate on mortgage loans. Prospective homeowners avoid purchasing a mortgage-financed home in areas where gasoline prices are rising to avoid endangering their future mortgage payments due to the greater cost of motor fuel consumption. The passage of government regulations and incentives aimed at increasing either the demand for or supply of alternative fuels, lowering the cost for gasoline customers to switch to alternative fuels, lessens the negative impact of gasoline prices on the cost of mortgage credit. Public transit mitigates the negative gasoline price impact.

Focusing on a sample of euro area commercial banks, we investigate the evolution of the asset-liability dependency over the years 2013–2021, characterized by the introduction of monetary, supervisory and institutional policy measures that shaped a business environment never experienced before. We find that large banks show a stronger asset-liability dependency than small banks, and that the linkages between the two sides of the balance sheet experience a general upward trend over time for both groups of intermediaries. We report evidence of the presence of two transmission channels of the unconventional monetary policy, namely, the direct pass-through and the portfolio rebalancing.

This study examines the impact of Brexit on investor reactions to Environmental, Social and Governance (ESG) events in UK companies. Post-Brexit, investors show reduced sensitivity to ESG incidents, suggesting relaxed corporate accountability for ESG disasters. We observe varied investor responses to different ESG events, with most having less financial influence after Brexit. This research informs regulators, stakeholders and policymakers in the post-Brexit era, emphasising the need for strong ESG regulations and communication in influencing investor behaviour. It contributes to understanding the relationship between regulatory changes, corporate reputation and investor reactions post-Brexit.