European Financial Management最新文献

This study examines the impact of natural disasters on venture capital (VC) investment decisions. Using 47 catastrophic natural disasters occurred in the United States from 1990 to 2019, our empirical analysis reveals a significant reduction in VC investments in disaster zones. Additionally, natural disasters negatively influence VC exit strategies, reducing the likelihood and extending the time to successful exits via IPOs. However, we find that green VCs are more likely to invest in disaster-affected areas, indicating potential resilience through green technological innovation. Our findings emphasize sustainability and disaster mitigation, and offer valuable insights for policymakers and investors amidst rising climate uncertainties.

Using a sample of US firms from 1975 to 2021, we show that brand capital improves investment efficiency, which is robust to various measures of brand capital and investment efficiency. To mitigate endogeneity concerns, we exploit the passage of the Federal Trademark Dilution Act as an exogenous shock to brand capital and find that it strengthens the positive effect of brand capital. Our cross-sectional analyses show that this positive relationship is more pronounced for firms with greater financial constraints and higher information asymmetry. These results suggest that brand capital reduces over- and under-investment through alleviating financial constraints and information asymmetry.

Environmental, Social and Governance activism entails a subtle form of corporate piracy. It manifests in opportunistic backdoor attempts to convert firms that were incorporated to advance shareholders' pecuniary interests into firms that sacrifice pecuniary benefits to advance a social/political agenda favoured by a subset of activist shareholders. These surreptitious property rights encroachments raise an important issue: How should governance architecture (laws and charters) be structured and enforced to deal with shareholder disagreements and the resource dissipation (losses) that results therefrom? I address this issue using basic contracting efficiency principles of property rights economics traceable to Coase and to Alchian and Demsetz.

This study uses Trump's withdrawal from the Paris Accord as an exogenous policy shock and investigates its impact on crowdfunding outcomes. We find that this major policy change negatively affects the funding success of renewable technology campaigns. Mechanism tests suggest that social trust and availability bias transmit the influence of climate policy shock on crowd backers' decisions. Further analyses indicate that Biden's consequential policy reversal recovers the investors' support towards renewable technology. Overall, the Trump administration's climate policy shock induces significant shifts in the consumption preferences of small investors and incurs negative externalities upon renewable technology in crowdfunding markets.

This study examines how unionization affects firms' financial reporting. Using a regression discontinuity design, we compare practices of firms narrowly winning and losing union certification elections. We find that winning firms depress earnings significantly more by inflating discretionary expenses, particularly research and development expenses, to strengthen their bargaining positions with workers. We further show that this manipulation aligns with managers' financial incentives, career motives, and entrenchment levels. The paper highlights managers' strategic use of real earnings management in worker negotiations and provides causal evidence on how the dynamic relationships among managers, shareholders, and workers shapes firms' financial reporting.

This paper revisits the effect of gender on portfolio performance, exploring the hypothesis that investors may derive fewer benefits from increased financial attention due to disparities in financial confidence. Using data from trading accounts of over 745,000 investors, we find that the difference in investment performance between men and women depends on the level of attention that they pay to their portfolios. Furthermore, our results indicate that the positive effects of investor attention are primarily attributable to young men, who appear to benefit the most from heightened attentiveness.

We study the role of inventory in corporate resilience to Covid-19 in 2020, which triggered exogenous shocks to consumer demand, commodity prices and supply chains. Unexpected drops in consumer demand and commodity prices increase the costs of inventory. Conversely, inventory holdings can buffer against supply disruptions. Empirically, US firms with higher inventory experienced more negative stock market responses early in the crisis due to falling consumer demand. However, since May 2020, inventory has become valuable as a hedge against supply disruptions, improving firm performance. During Covid-19, unlike other crises, inventory played a unique role as a hedge against supply disruptions.

Despite the huge growth in the number of influencers and their use by firms, there is a lack of analysis of how social media influencers affect the financial market performance of firms. Anecdotal evidence suggests mega influencers can impact the stock prices of firms via social media. We ask whether such an effect is generalizable to all mega influencers and other financial market characteristics of firms. Using a hand-collected data set of 16,156,419 mega influencer posts on Instagram, we find that mega influencers affect investors' attention, volatility and trading volume but not stock returns. It takes top influencers with extreme sentiment posts to affect returns and, even here, the effect is short-lived.