European Financial Management最新文献

This paper examines lending dynamics for firms aiming for a “just transition”. Analyzing 37,426 firm-year observations from DealScan and Refinitiv's environmental, social and governance (ESG) transition data (2002–2021), we find that lenders offer lower interest rates to firms with prior relationships and strong ESG commitments, particularly environmental ones. While environmental factors receive favourable treatment, economic and governance transitions are less prioritized. Lenders tend to form more dispersed syndicates when supporting firms focused on ESG transitions, especially environmental ones. This research highlights the uneven focus within ESG transitions and emphasizes the underexamined area of governance, providing insights into lending relationships.

Using data from Robinhood, this study investigates retail investors' movement towards/from securities with different environmental, social and governance scores during the COVID-19 pandemic. Although the number of retail investors holding securities with low environmental scores declined, the number holding high-score securities remained steady. We also find heterogeneity in investors' reactions to different subcategory scores. The equal-weighted buy-and-hold portfolio of high-score securities did not outperform that of low-score securities in either volatility or return, suggesting neither financial return nor risk drove retail investors' preference for high environmental score securities. Thus, such ‘voting’ by investment choice is independent of pecuniary indicators.

We construct a novel firm-level measure of robot exposure using the International Federation of Robotics (IFR) data set and new robot patent data. We find that the use of robots leads to higher leverage and lower cash holdings. Using an instrumental variable based on the comparative advantage of robots in specific tasks, we find that the effect is likely to be causal and driven by the reduced operating leverage. The effect is stronger when firms are hit by negative shocks including minimum wage hikes and foreign competition. Firms with more robots pay out more and use fewer corporate hedging contracts.

Using 118,292 US bank-month observations, we examine the effects of short-term changes in bank's financial distress on stock price crash risk. There is a significant positive association between short-term changes in distress on stock price crash risk. The results remain consistent across alternative measures of distress and crash risk. We confirm robustness by employing additional tests for reverse causality and propensity score matching. We find opacity, proxied by discretionary loan-loss provisions to be a potential channel through which increase in distress affects future crash risk. Our study underscores the critical association between increasing financial distress, loan-loss reporting, and crash risk.

We find that directors with a financial regulatory background are associated with lower earnings quality. The influence of financial regulatory directors (FRDs) is more substantial for firms with higher proprietary costs and FRDs with greater expertise and experience. FRD firms do not have a greater likelihood of financial misconduct or meeting or beating analysts' forecasts. The stock market reacts more positively to FRD appointments than to the appointments of other directors. Our findings suggest that FRDs certify firm discipline, with lower earnings quality reflecting strategic choices rather than opportunistic manipulation, highlighting the impact of postemployment restrictions in financial regulatory agencies.