European Financial Management最新文献

We predict how the effect of CEO optimism on firm value varies across firms and model how industry competition impacts the relation between CEO optimism and firm value. Estimating optimism from option-exercise behaviour, we find that CEO optimism increases firm value by about 17% on average. Consistent with theoretical predictions, CEO optimism is more value-enhancing in firms that are riskier, engage in greater innovation and investment, have more internal resources and operate in industries that are more competitive or have a larger fraction of optimistic CEOs. Various endogeneity checks support a causal impact of CEO optimism on firm value.

This paper studies the role of directors with prior experience of working in the charity sector (here labelled ‘charity directors’) in determining the corporate social responsibility (CSR) activity of firms on whose boards they sit. We predict that these charity directors shape the ethical climate of their boards and influence their CSR policies. The findings on firms across 50 countries show that the presence of such directors on a board is positively associated with the firm's environmental and social (E&S) performance. Such charity directors exert more influence following disasters that exogenously increase societal demand for CSR, suggesting a causal interpretation of their role. We further show that charity directors play a more active role in those countries where societal norms stress the importance of E&S issues. This does not seem to be a manifestation of organizational slack, as the link between charity directors and CSR is stronger in the presence of good corporate governance. Furthermore, the death of a charity director leads to a negative market reaction, suggesting that their efforts are in line with shareholder interests.

We measure sea-level rise (SLR) risk using two indicators: SLR Impact (whether a census tract would be inundated under a 1-ft SLR) and SLR Exposure (percentage of land inundated under a 1-ft SLR). SLR-impacted areas see 0.36%–1% lower mortgage approval rates, with a 10% increase in SLR Exposure reducing approvals by 14 basis points. These patterns reflect future SLR risk expectations rather than past flood or hurricane events. We also find higher denial rates in regions with stronger climate risk beliefs and greater SLR risk. Additionally, SLR-related mortgage denials disproportionately affect minority groups.

We document that early institutional investors in cryptocurrencies exhibit innovation and adaptability in financial markets, despite the asset class's inherent ambiguity and risk. Investing in crypto assets signals a managerial willingness to undertake reputational and career risks. We compare the performance of institutions that engage in crypto investments with that of their non-crypto-investing peers. Our results indicate that institutional crypto investors outperform their peers by about 2.8% per year. Using propensity score matching, we find that early crypto investors outperform both followers and non-holders as crypto investments become increasingly prevalent in markets.

This paper utilizes detailed data from a Northern European private equity fund-of-funds to examine the determinants of co-investments. Unlike prior studies, we differentiate between two distinct types of co-investors: sidecar co-investors and direct co-investors. This distinction matters. Both types are more likely to participate in larger deals, but the effect is notably stronger for sidecar co-investments. Furthermore, if the internal funds available to a general partner (GP) are less than the initial capital used for the acquisition, a GP is more inclined to seek sidecar co-investors, while lower uncalled capital reduces the likelihood of co-investment offers.