Financial Management最新文献

Relying on data from 165 million bank cards in China, we find that people use less cash for transactions after the outbreak of COVID-19. The effect is more pronounced in cities with a larger elderly population, lower education levels, more advanced digital infrastructure, and greater COVID-19 exposure. Cash usage remains low even after COVID-19 is no longer a public concern. Further analysis suggests that policies promoting noncash payment methods only partially explain this trend. Overall, our study suggests that COVID-19 has a long-term impact on household payment habits.

We investigate the impact of underwriter geographic proximity on bond financing costs and default risk using Chinese corporate and enterprise bonds issued between 2009 and 2019. Our study reveals that bonds underwritten by geographically proximate underwriters incur lower financing costs and exhibit reduced default risk. However, this effect is attenuated when underwriters possess a strong reputation or when firms exhibit high transparency, suggesting a substitutive role of these factors in bond pricing. To address endogeneity concerns, we leverage the introduction of high-speed rail (HSR) as an exogenous shock to perform differences-in-difference analysis, and employ instrumental variable and propensity score matching methods. We find that the establishment of HSR networks significantly weakens local underwriters' information advantages, reducing their unique ability to lower bond financing costs. Our results remain robust in various subsamples that exclude first-tier cities and local government connections.

We introduce the idiosyncratic volatility spread as a novel measure of the stock-level investor sophistication. Our study reveals a negative relation between investor sophistication and stock returns, particularly for stocks with more binding short-sale constraints. Importantly, this negative relation cannot be attributed to variables that affect the idiosyncratic volatility–return relation. Our findings hold across different factor models and estimation methods, demonstrating the robustness of the results. Furthermore, we observe that this relation is more pronounced during periods characterized by high investor sentiment, high market uncertainty, and economic contractions. Further tests suggest that investor sophistication introduces heterogeneity in beliefs among investors due to their varying model selection, demonstrating that investor sophistication is not driven solely by disagreement.

The commercial real estate market provides a unique environment to evaluate the movement of transaction price to intrinsic value. Given the latent nature of intrinsic value, empirical assessment has been difficult. Long-term use of both judgment (appraisal)- and transaction-based values in real estate to provide tradable price and return benchmark allows testing of the intrinsic value to price relation. Based on NCREIF property return data from 1984 to 2019, we show that the transaction-based index (TBI) and the appraisal-based index (NPI) are cointegrated, and the error correction term forecasts TBI returns but not NPI returns. These results indicate that when short-run deviation occurs, it is the TBI not the NPI that eventually converges back to the equilibrium state of the TBI–NPI system. Further tests reveal that the common trend of the TBI–NPI cointegrated system is associated with the income stream from commercial properties (a fundamental variable).

Taking the staggered implementation of state climate adaptation plans (SCAPs) as a quasi-natural experiment, we find that firms headquartered in states that finalize SCAPs increase their financial leverage significantly more in the postadoption period relative to firms located in states without SCAPs. This result is driven by firms facing greater physical climate risk and by firms with more sensitivity to climate policy uncertainty. Further, we show that the leverage increase is value-enhancing and that SCAPs reduce corporate business risk. The results highlight the net benefits of state climate action and the role of local governments in the interplay between business risk and firm decision, with implications both for the business world and policymakers.