Pub Date : 2025-01-23DOI: 10.1016/j.jbankfin.2025.107394
M. Fabricio Perez , Andriy Shkilko , Ning Tang , Paulan van Nes
We test the split signaling hypothesis by examining the reaction of sophisticated investors to stock split announcements. Return-based tests of signaling used in earlier studies produce conflicting results and have been criticized as unreliable. We overcome this issue by focusing on the long-term post-split behavior of short sellers, who are widely regarded as sophisticated investors. Upon controlling for alternative hypotheses and conventional short selling determinants, we find a substantial reduction in short interest in reaction to split announcements. Furthermore, consistent with signaling, the degree of the reduction is positively related to signal strength and to the splitter's level of information asymmetry. Overall, our results are consistent with the view that firms use stock splits to relay positive value-relevant signals.
{"title":"Stock split signalling: Evidence from short interest","authors":"M. Fabricio Perez , Andriy Shkilko , Ning Tang , Paulan van Nes","doi":"10.1016/j.jbankfin.2025.107394","DOIUrl":"10.1016/j.jbankfin.2025.107394","url":null,"abstract":"<div><div>We test the split signaling hypothesis by examining the reaction of sophisticated investors to stock split announcements. Return-based tests of signaling used in earlier studies produce conflicting results and have been criticized as unreliable. We overcome this issue by focusing on the long-term post-split behavior of short sellers, who are widely regarded as sophisticated investors. Upon controlling for alternative hypotheses and conventional short selling determinants, we find a substantial reduction in short interest in reaction to split announcements. Furthermore, consistent with signaling, the degree of the reduction is positively related to signal strength and to the splitter's level of information asymmetry. Overall, our results are consistent with the view that firms use stock splits to relay positive value-relevant signals.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107394"},"PeriodicalIF":3.6,"publicationDate":"2025-01-23","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143098265","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-17DOI: 10.1016/j.jbankfin.2025.107383
Helena Sarkodie , Kwabena Boasiako , Michael O’Connor Keefe , Justin Nguyen , Bernard Tawiah
Using state-level data from the United States covering the period 1980 to 2020, we explore the effect of right-to-work (RTW) laws on venture capital (VC) investment. Employing a difference-in-differences strategy, we find that the passage of right-to-work laws increases venture capital investment. The results are robust to omitted variable bias, reverse causality and unobservable local economic conditions. We find that the positive effect of RTW laws on VC investments remains significant in states that are highly unionized and technological.
{"title":"Right-to-work laws and venture capital investment","authors":"Helena Sarkodie , Kwabena Boasiako , Michael O’Connor Keefe , Justin Nguyen , Bernard Tawiah","doi":"10.1016/j.jbankfin.2025.107383","DOIUrl":"10.1016/j.jbankfin.2025.107383","url":null,"abstract":"<div><div>Using state-level data from the United States covering the period 1980 to 2020, we explore the effect of right-to-work (RTW) laws on venture capital (VC) investment. Employing a difference-in-differences strategy, we find that the passage of right-to-work laws increases venture capital investment. The results are robust to omitted variable bias, reverse causality and unobservable local economic conditions. We find that the positive effect of RTW laws on VC investments remains significant in states that are highly unionized and technological.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107383"},"PeriodicalIF":3.6,"publicationDate":"2025-01-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143148805","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-12DOI: 10.1016/j.jbankfin.2025.107391
Mario Daniele Amore , Samuele Murtinu , Valerio Pelucco
We show that families are an engine of venturing activities: almost 30 percent of corporate venture capital (CVC) deals in the US from 2000 to 2017 originated from family firms. Family firms, primarily those led by family CEOs, orchestrate CVC activities differently than non-family firms: they syndicate more often and with more reputable investors, join larger syndicates, and make more proximate deals (geography- and industry-wise). This approach to corporate venturing maps into performance results: family CVC-backed ventures exhibit a higher likelihood of successful exit. Collectively, our results shed light on the important, and largely unexplored, role of family firms in CVC.
{"title":"Family firms in entrepreneurial finance: The case of corporate venture capital","authors":"Mario Daniele Amore , Samuele Murtinu , Valerio Pelucco","doi":"10.1016/j.jbankfin.2025.107391","DOIUrl":"10.1016/j.jbankfin.2025.107391","url":null,"abstract":"<div><div>We show that families are an engine of venturing activities: almost 30 percent of corporate venture capital (CVC) deals in the US from 2000 to 2017 originated from family firms. Family firms, primarily those led by family CEOs, orchestrate CVC activities differently than non-family firms: they syndicate more often and with more reputable investors, join larger syndicates, and make more proximate deals (geography- and industry-wise). This approach to corporate venturing maps into performance results: family CVC-backed ventures exhibit a higher likelihood of successful exit. Collectively, our results shed light on the important, and largely unexplored, role of family firms in CVC.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107391"},"PeriodicalIF":3.6,"publicationDate":"2025-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143148804","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-11DOI: 10.1016/j.jbankfin.2025.107392
Jie Li , Wenchao Li
We examine the impact of the global trend towards trade protectionism on household stock market participation, focusing on the 2018–19 US-China trade war as an exogenous trade shock. We leverage cross-city variation in exposure to the trade war by combining industry-specific increases in US tariffs with variation in industry composition across cities. Using nationally representative household finance survey data collected around the trade war years, and a difference-in-differences design, results show that the onset of the trade war decreases the likelihood of households participating in the stock market and reduces the proportion of stocks in their portfolios. Further evidence reveals that these effects stem from the trade war's influence on decreasing household income, increasing income volatility, fostering risk aversion, and promoting negative views or beliefs about the economy. Our findings suggest that reduced stock market participation is a pathway through which trade protectionism affects the financial system and the economy.
{"title":"Retreating from risks: Household stock market participation in a protectionist era","authors":"Jie Li , Wenchao Li","doi":"10.1016/j.jbankfin.2025.107392","DOIUrl":"10.1016/j.jbankfin.2025.107392","url":null,"abstract":"<div><div>We examine the impact of the global trend towards trade protectionism on household stock market participation, focusing on the 2018–19 US-China trade war as an exogenous trade shock. We leverage cross-city variation in exposure to the trade war by combining industry-specific increases in US tariffs with variation in industry composition across cities. Using nationally representative household finance survey data collected around the trade war years, and a difference-in-differences design, results show that the onset of the trade war decreases the likelihood of households participating in the stock market and reduces the proportion of stocks in their portfolios. Further evidence reveals that these effects stem from the trade war's influence on decreasing household income, increasing income volatility, fostering risk aversion, and promoting negative views or beliefs about the economy. Our findings suggest that reduced stock market participation is a pathway through which trade protectionism affects the financial system and the economy.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107392"},"PeriodicalIF":3.6,"publicationDate":"2025-01-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143097840","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-08DOI: 10.1016/j.jbankfin.2024.107377
Jeppe Bro , Jonas N. Eriksen
We study U.S. house price movements using a variance decomposition based on subjective expectations data from the University of Michigan’s Survey of Consumers. We find that households’ subjective cash flow (income) expectations account for the dominant share of the overall variation in house prices, whereas subjective discount rate (return) expectations are insignificant. This finding is robust across different samples and subgroups based on home ownership, census regions, income, and age. This contrasts previous evidence from VAR-based models for rational expectations. Households’ ex post forecast errors and ex ante expectational errors are predictable from housing market information and credit conditions.
{"title":"Subjective expectations and house prices","authors":"Jeppe Bro , Jonas N. Eriksen","doi":"10.1016/j.jbankfin.2024.107377","DOIUrl":"10.1016/j.jbankfin.2024.107377","url":null,"abstract":"<div><div>We study U.S. house price movements using a variance decomposition based on subjective expectations data from the University of Michigan’s Survey of Consumers. We find that households’ subjective cash flow (income) expectations account for the dominant share of the overall variation in house prices, whereas subjective discount rate (return) expectations are insignificant. This finding is robust across different samples and subgroups based on home ownership, census regions, income, and age. This contrasts previous evidence from VAR-based models for rational expectations. Households’ ex post forecast errors and ex ante expectational errors are predictable from housing market information and credit conditions.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107377"},"PeriodicalIF":3.6,"publicationDate":"2025-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143097843","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-08DOI: 10.1016/j.jbankfin.2024.107378
Tzu-Chang Forrest Cheng , Hsuan-Hua Huang , Tse-Chun Lin , Tzu-Ting Yang , Jian-Da Zhu
This paper utilizes receipt lotteries in Taiwan, along with comprehensive administrative data, to examine the effect of cash windfalls on stock market participation and portfolio diversification, which can help us understand whether wealth levels serve as the explanation for the limited participation and under-diversification puzzles in stock markets. The results indicate that each million TWD (approximately 33,000 USD) windfall gain from winning receipt lotteries increases the probability of stock market participation by 1.09 percentage points. This effect is primarily driven by individuals who were not participating in the stock market prior to winning. For existing participants, each million TWD windfall increases the total value of stocks by 142,552 TWD, attributed to both an increase in their number of shares and higher average prices of the stocks they hold. Additionally, we find that individuals do not significantly diversify their portfolios after winning the lottery, suggesting that wealth level is not the primary reason for under-diversification.
{"title":"Windfall gains and stock market participation: Evidence from shopping receipt lottery","authors":"Tzu-Chang Forrest Cheng , Hsuan-Hua Huang , Tse-Chun Lin , Tzu-Ting Yang , Jian-Da Zhu","doi":"10.1016/j.jbankfin.2024.107378","DOIUrl":"10.1016/j.jbankfin.2024.107378","url":null,"abstract":"<div><div>This paper utilizes receipt lotteries in Taiwan, along with comprehensive administrative data, to examine the effect of cash windfalls on stock market participation and portfolio diversification, which can help us understand whether wealth levels serve as the explanation for the limited participation and under-diversification puzzles in stock markets. The results indicate that each million TWD (approximately 33,000 USD) windfall gain from winning receipt lotteries increases the probability of stock market participation by 1.09 percentage points. This effect is primarily driven by individuals who were not participating in the stock market prior to winning. For existing participants, each million TWD windfall increases the total value of stocks by 142,552 TWD, attributed to both an increase in their number of shares and higher average prices of the stocks they hold. Additionally, we find that individuals do not significantly diversify their portfolios after winning the lottery, suggesting that wealth level is not the primary reason for under-diversification.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107378"},"PeriodicalIF":3.6,"publicationDate":"2025-01-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143148798","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-07DOI: 10.1016/j.jbankfin.2025.107390
Xuchao Li , Xiang Shao , Guangjun Shen , Jingxian Zou
Can bank competition help to attenuate the prevalence of zombie firms? Motivated by a stylized model, this paper studies the effect of bank competition on the formation of zombie firms in two stages: the formation of distressed firms and distressed firms obtaining zombie lending. Using China's 2009 bank entry deregulation as a quasi-natural experiment, the paper finds that bank competition lowers the probability of the formation of distressed firms, while it increases the probability of distressed firms obtaining zombie lending. Overall, bank competition decreases the formation of zombie firms. In addition, the findings show that a higher ex ante proportion of bad loans and higher probability of bad loan recovery lead to a higher probability of distressed firms receiving zombie lending. Both factors encourage banks to sustain lending to distressed firms to keep them alive and to gamble that those firms may recover in the future.
{"title":"Bank competition and formation of zombie firms: Evidence from banking deregulation in China","authors":"Xuchao Li , Xiang Shao , Guangjun Shen , Jingxian Zou","doi":"10.1016/j.jbankfin.2025.107390","DOIUrl":"10.1016/j.jbankfin.2025.107390","url":null,"abstract":"<div><div>Can bank competition help to attenuate the prevalence of zombie firms? Motivated by a stylized model, this paper studies the effect of bank competition on the formation of zombie firms in two stages: the formation of distressed firms and distressed firms obtaining zombie lending. Using China's 2009 bank entry deregulation as a quasi-natural experiment, the paper finds that bank competition lowers the probability of the formation of distressed firms, while it increases the probability of distressed firms obtaining zombie lending. Overall, bank competition decreases the formation of zombie firms. In addition, the findings show that a higher ex ante proportion of bad loans and higher probability of bad loan recovery lead to a higher probability of distressed firms receiving zombie lending. Both factors encourage banks to sustain lending to distressed firms to keep them alive and to gamble that those firms may recover in the future.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107390"},"PeriodicalIF":3.6,"publicationDate":"2025-01-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143148799","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-06DOI: 10.1016/j.jbankfin.2024.107375
Ali Bayat , Marc Goergen
This study investigates how CEO political ideology affects payout policy. Studying the CEOs of S&P 500 firms during 1997–2019 and measuring CEO political ideology by CEO political donations, we find that conservative CEOs are more likely to pay dividends and to make share repurchases, while also paying higher dividends. We find that conservative CEOs finance the higher dividends and share repurchases by utilizing the cash holdings and reducing capital and R&D expenditures. Nevertheless, CEO political ideology does not explain dividend cuts. This suggests that firms led by conservative CEOs exhibit levels of dividend flexibility comparable to those of firms led by other CEOs. Finally, we find that CEO conservatism has no effect on firm performance, firm value, R&D expenditure, and capital expenditure.
{"title":"CEO political ideology and payout policy","authors":"Ali Bayat , Marc Goergen","doi":"10.1016/j.jbankfin.2024.107375","DOIUrl":"10.1016/j.jbankfin.2024.107375","url":null,"abstract":"<div><div>This study investigates how CEO political ideology affects payout policy. Studying the CEOs of S&P 500 firms during 1997–2019 and measuring CEO political ideology by CEO political donations, we find that conservative CEOs are more likely to pay dividends and to make share repurchases, while also paying higher dividends. We find that conservative CEOs finance the higher dividends and share repurchases by utilizing the cash holdings and reducing capital and R&D expenditures. Nevertheless, CEO political ideology does not explain dividend cuts. This suggests that firms led by conservative CEOs exhibit levels of dividend flexibility comparable to those of firms led by other CEOs. Finally, we find that CEO conservatism has no effect on firm performance, firm value, R&D expenditure, and capital expenditure.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107375"},"PeriodicalIF":3.6,"publicationDate":"2025-01-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143148801","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"OA","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-04DOI: 10.1016/j.jbankfin.2025.107380
Dong Beom Choi , Seongjun Jeong
We examine the relationship between banks’ corporate social responsibility (CSR) scores, measured at the peak of the boom, and their lending behaviors during the Great Recession. High-CSR banks, expected to better support local borrowers during critical periods, instead reduced small business lending more sharply than their low-CSR counterparts. This paradox arises from CSR scores’ emphasis on visible but less material attributes, such as employee benefits, which are easier to measure during booms but deplete financial slack necessary for sustained lending under stress. Our findings highlight a misalignment between CSR metrics and material social impacts, underscoring the need for more reliable performance measures to implement stakeholderism effectively.
{"title":"CSR scores versus actual impacts: Banks’ main street lending during the great recession","authors":"Dong Beom Choi , Seongjun Jeong","doi":"10.1016/j.jbankfin.2025.107380","DOIUrl":"10.1016/j.jbankfin.2025.107380","url":null,"abstract":"<div><div>We examine the relationship between banks’ corporate social responsibility (CSR) scores, measured at the peak of the boom, and their lending behaviors during the Great Recession. High-CSR banks, expected to better support local borrowers during critical periods, instead reduced small business lending more sharply than their low-CSR counterparts. This paradox arises from CSR scores’ emphasis on visible but less material attributes, such as employee benefits, which are easier to measure during booms but deplete financial slack necessary for sustained lending under stress. Our findings highlight a misalignment between CSR metrics and material social impacts, underscoring the need for more reliable performance measures to implement stakeholderism effectively.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107380"},"PeriodicalIF":3.6,"publicationDate":"2025-01-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143148803","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2025-01-03DOI: 10.1016/j.jbankfin.2025.107381
Jiajun Lu , Linying Lv , Yizhong Wang , Yueteng Zhu
This paper introduces the “financing purposes (FP) channel”, a new channel through which uncertainty affects the effectiveness of monetary policy. Using U.S. bank-firm-loan-level data from 1990 to 2019, we examine how firms adjust FP in response to monetary policy shocks and how this response varies with the level of macroeconomic uncertainty. We find that firms demand more bank loans for investment-related purposes during monetary expansion, but this tendency diminishes notably when uncertainty spikes. A counterfactual analysis suggests that heightened uncertainty explains almost half of the decline in the share of productive loans during the Great Recession. Our results are not driven by banks’ credit supply and are more pronounced for more financially constrained firms and those with a higher degree of investment irreversibility, aligning with the real options theory and financial frictions channel. We also show that FP positively predicts real activities such as investment and employment growth, indicating that high uncertainty weakens the monetary policy transmission via the financing purposes channel.
{"title":"The real effect of monetary policy under uncertainty: Evidence from the change in corporate financing purposes","authors":"Jiajun Lu , Linying Lv , Yizhong Wang , Yueteng Zhu","doi":"10.1016/j.jbankfin.2025.107381","DOIUrl":"10.1016/j.jbankfin.2025.107381","url":null,"abstract":"<div><div>This paper introduces the “financing purposes (FP) channel”, a new channel through which uncertainty affects the effectiveness of monetary policy. Using U.S. bank-firm-loan-level data from 1990 to 2019, we examine how firms adjust FP in response to monetary policy shocks and how this response varies with the level of macroeconomic uncertainty. We find that firms demand more bank loans for investment-related purposes during monetary expansion, but this tendency diminishes notably when uncertainty spikes. A counterfactual analysis suggests that heightened uncertainty explains almost half of the decline in the share of productive loans during the Great Recession. Our results are not driven by banks’ credit supply and are more pronounced for more financially constrained firms and those with a higher degree of investment irreversibility, aligning with the real options theory and financial frictions channel. We also show that FP positively predicts real activities such as investment and employment growth, indicating that high uncertainty weakens the monetary policy transmission via the financing purposes channel.</div></div>","PeriodicalId":48460,"journal":{"name":"Journal of Banking & Finance","volume":"172 ","pages":"Article 107381"},"PeriodicalIF":3.6,"publicationDate":"2025-01-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143148802","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
扫码关注我们
求助内容：
应助结果提醒方式：
京公网安备 11010802042870号