Pub Date : 2026-02-05DOI: 10.1016/j.jfineco.2026.104249
Francesco Sannino
{"title":"Committing to trade: A theory of intermediation","authors":"Francesco Sannino","doi":"10.1016/j.jfineco.2026.104249","DOIUrl":"https://doi.org/10.1016/j.jfineco.2026.104249","url":null,"abstract":"","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"89 1","pages":""},"PeriodicalIF":8.9,"publicationDate":"2026-02-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146134344","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-03DOI: 10.1016/j.jfineco.2026.104240
John W. Barry, Bruce I. Carlin, Alan D. Crane, John R. Graham
{"title":"Hurdle rate buffers and bargaining power in asset acquisition","authors":"John W. Barry, Bruce I. Carlin, Alan D. Crane, John R. Graham","doi":"10.1016/j.jfineco.2026.104240","DOIUrl":"https://doi.org/10.1016/j.jfineco.2026.104240","url":null,"abstract":"","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"1 1","pages":"104240"},"PeriodicalIF":8.9,"publicationDate":"2026-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146111046","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-03DOI: 10.1016/j.jfineco.2025.104225
Manuel Ammann, Alexander Cochardt, Lauren Cohen, Stephan Heller
{"title":"Hidden alpha","authors":"Manuel Ammann, Alexander Cochardt, Lauren Cohen, Stephan Heller","doi":"10.1016/j.jfineco.2025.104225","DOIUrl":"https://doi.org/10.1016/j.jfineco.2025.104225","url":null,"abstract":"","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"31 1","pages":""},"PeriodicalIF":8.9,"publicationDate":"2026-02-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146109864","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-02-01DOI: 10.1016/j.jfineco.2026.104250
Amit Goyal, Sunil Wahal, M. Deniz Yavuz
{"title":"Picking partners: Manager selection in private markets","authors":"Amit Goyal, Sunil Wahal, M. Deniz Yavuz","doi":"10.1016/j.jfineco.2026.104250","DOIUrl":"https://doi.org/10.1016/j.jfineco.2026.104250","url":null,"abstract":"","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"35 1","pages":""},"PeriodicalIF":8.9,"publicationDate":"2026-02-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146109866","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-31DOI: 10.1016/j.jfineco.2026.104239
Jason Allen , Kyra Carmichael , Robert Clark , Shaoteng Li , Nicolas Vincent
In many countries, the cost of housing has greatly outpaced income growth, leading to an affordability crisis. Leveraging Canadian loan-level data, we document an increasing reliance of first-time home-buyers on financial help from their parents through mortgage co-signing. We show that parental support can effectively relax the borrowing constraints of their adult children, and allow them to enter the housing market early. However, we also identify a novel channel through which parental support could increase borrower vulnerabilities. Co-signing incentivizes adult children to lever up and purchase housing beyond what they can afford, exposing them to a greater risk of financial stress.
{"title":"Housing affordability and parental income support: The role of mortgage co-signing","authors":"Jason Allen , Kyra Carmichael , Robert Clark , Shaoteng Li , Nicolas Vincent","doi":"10.1016/j.jfineco.2026.104239","DOIUrl":"10.1016/j.jfineco.2026.104239","url":null,"abstract":"<div><div>In many countries, the cost of housing has greatly outpaced income growth, leading to an affordability crisis. Leveraging Canadian loan-level data, we document an increasing reliance of first-time home-buyers on financial help from their parents through mortgage co-signing. We show that parental support can effectively relax the borrowing constraints of their adult children, and allow them to enter the housing market early. However, we also identify a novel channel through which parental support could increase borrower vulnerabilities. Co-signing incentivizes adult children to lever up and purchase housing beyond what they can afford, exposing them to a greater risk of financial stress.</div></div>","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"178 ","pages":"Article 104239"},"PeriodicalIF":10.4,"publicationDate":"2026-01-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146081587","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-27DOI: 10.1016/j.jfineco.2026.104237
George C. Nurisso
Short sellers convey negative information to securities lenders when borrowing shares. I model how this information generates novel interactions between institutional investors’ lending and trading decisions. Lower lending fees improve information quality by facilitating more shorting, but also make it less costly for lenders to strategically recall shares to enhance their trading profits. Lenders may then need to raise fees to commit not to recall shares and thereby attract short sellers. Conversely, index fund lenders cannot trade on lending market information. This restriction enables them to attract greater shorting demand and potentially improve price efficiency—despite charging higher fees.
{"title":"Learning by lending securities","authors":"George C. Nurisso","doi":"10.1016/j.jfineco.2026.104237","DOIUrl":"10.1016/j.jfineco.2026.104237","url":null,"abstract":"<div><div>Short sellers convey negative information to securities lenders when borrowing shares. I model how this information generates novel interactions between institutional investors’ lending and trading decisions. Lower lending fees improve information quality by facilitating more shorting, but also make it less costly for lenders to strategically recall shares to enhance their trading profits. Lenders may then need to raise fees to commit not to recall shares and thereby attract short sellers. Conversely, index fund lenders cannot trade on lending market information. This restriction enables them to attract greater shorting demand and potentially improve price efficiency—despite charging higher fees.</div></div>","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"178 ","pages":"Article 104237"},"PeriodicalIF":10.4,"publicationDate":"2026-01-27","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146045173","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-24DOI: 10.1016/j.jfineco.2026.104238
Gregory W. Eaton , T. Clifton Green , Brian S. Roseman , Yanbin Wu
Retail option traders are typically net purchasers of short-dated options, especially out-of-the-money contracts, whereas they frequently sell long-dated options. Using retail brokerage platform outages as shocks to trading, we find that outages are associated with commensurate demand shocks to implied volatility. Outages produce lower implied volatility on average, with stronger reductions for options that tend to be purchased by retail investors. In contrast, implied volatility increases for long-dated options during outages, consistent with reduced retail writing activity. The findings suggest that retail demand pressure can have important effects on the implied volatility term structure, moneyness curve, and call-put spread.
{"title":"Retail option traders and the implied volatility surface","authors":"Gregory W. Eaton , T. Clifton Green , Brian S. Roseman , Yanbin Wu","doi":"10.1016/j.jfineco.2026.104238","DOIUrl":"10.1016/j.jfineco.2026.104238","url":null,"abstract":"<div><div>Retail option traders are typically net purchasers of short-dated options, especially out-of-the-money contracts, whereas they frequently sell long-dated options. Using retail brokerage platform outages as shocks to trading, we find that outages are associated with commensurate demand shocks to implied volatility. Outages produce lower implied volatility on average, with stronger reductions for options that tend to be purchased by retail investors. In contrast, implied volatility increases for long-dated options during outages, consistent with reduced retail writing activity. The findings suggest that retail demand pressure can have important effects on the implied volatility term structure, moneyness curve, and call-put spread.</div></div>","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"177 ","pages":"Article 104238"},"PeriodicalIF":10.4,"publicationDate":"2026-01-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146038422","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-21DOI: 10.1016/j.jfineco.2026.104236
Nuno Clara , João F. Cocco , S. Lakshmi Naaraayanan , Varun Sharma
Operation of residential buildings is responsible for roughly 22% of global energy consumption and 17% of CO2 emissions. We study the investments triggered by a regulatory intervention requiring rented properties to satisfy minimum energy efficiency standards. The analysis shows significant investments in low capital expenditure retrofits. Using an instrumented difference-in-differences methodology, we show that the investments do not have an economically significant impact on rents, so that landlords are not compensated for them.
{"title":"Investments that make our homes greener: The role of regulation","authors":"Nuno Clara , João F. Cocco , S. Lakshmi Naaraayanan , Varun Sharma","doi":"10.1016/j.jfineco.2026.104236","DOIUrl":"10.1016/j.jfineco.2026.104236","url":null,"abstract":"<div><div>Operation of residential buildings is responsible for roughly 22% of global energy consumption and 17% of CO<sub>2</sub> emissions. We study the investments triggered by a regulatory intervention requiring rented properties to satisfy minimum energy efficiency standards. The analysis shows significant investments in low capital expenditure retrofits. Using an instrumented difference-in-differences methodology, we show that the investments do not have an economically significant impact on rents, so that landlords are not compensated for them.</div></div>","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"177 ","pages":"Article 104236"},"PeriodicalIF":10.4,"publicationDate":"2026-01-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"146014272","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-12DOI: 10.1016/j.jfineco.2025.104227
Stefano Cassella , A. Emanuele Rizzo , Oliver G. Spalt , Leah Zimmerer
We study the equity market implications of a reform in the fiduciary laws that govern trust investments (prudent man laws), implemented in a staggered fashion across U.S. states from 1985 to 2006. As trusts account for a substantial fraction of institutional equity holdings in our sample period, and since the reform does not pertain to other investors, our empirical setting provides a rare opportunity to study the impact of a regulatory change on institutional investor holdings and relative prices in the U.S. equity market. We show that, before the reform, trusts tilt their portfolios towards prudent stocks. After the law change, trusts undo these tilts, which leads to substantial changes in portfolio performance, investor demand, and stock returns, consistent with a model of inelastic equity markets. More broadly, our paper documents a striking case of investment distortions: while the concept of diversification has been playing a key role in asset pricing theory since the 1950s, fiduciary duties severely constrained trusts’ ability to diversify their portfolios for up to half a century later.
{"title":"Constrained by law: The impact of fiduciary duties on portfolios and prices in US equity markets","authors":"Stefano Cassella , A. Emanuele Rizzo , Oliver G. Spalt , Leah Zimmerer","doi":"10.1016/j.jfineco.2025.104227","DOIUrl":"10.1016/j.jfineco.2025.104227","url":null,"abstract":"<div><div>We study the equity market implications of a reform in the fiduciary laws that govern trust investments (prudent man laws), implemented in a staggered fashion across U.S. states from 1985 to 2006. As trusts account for a substantial fraction of institutional equity holdings in our sample period, and since the reform does not pertain to other investors, our empirical setting provides a rare opportunity to study the impact of a regulatory change on institutional investor holdings and relative prices in the U.S. equity market. We show that, before the reform, trusts tilt their portfolios towards prudent stocks. After the law change, trusts undo these tilts, which leads to substantial changes in portfolio performance, investor demand, and stock returns, consistent with a model of inelastic equity markets. More broadly, our paper documents a striking case of investment distortions: while the concept of diversification has been playing a key role in asset pricing theory since the 1950s, fiduciary duties severely constrained trusts’ ability to diversify their portfolios for up to half a century later.</div></div>","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"177 ","pages":"Article 104227"},"PeriodicalIF":10.4,"publicationDate":"2026-01-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145957090","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2026-01-09DOI: 10.1016/j.jfineco.2025.104220
Felix Feng , Tom Nohel , Xuan Tian , Wenyu Wang , Yufeng Wu
Special Purpose Acquisition Companies (SPACs) took Wall Street by storm in 2020/2021 and continue to play a significant role in today’s capital markets. Estimating a structural model using a hand-collected comprehensive dataset, we find that SPACs add value by identifying and bringing high-potential firms to public markets, though contractual frictions skew the distribution of spoils away from SPAC shareholders and towards sponsors and target owners. Nonetheless, shareholder excess returns are positive once redemptions are accounted for. Policy analyses reveal that earnout provisions enhance welfare, while modest improvements in disclosure and limits on warrant usage have minimal impact on improving outcomes.
{"title":"The incentives of SPAC sponsors","authors":"Felix Feng , Tom Nohel , Xuan Tian , Wenyu Wang , Yufeng Wu","doi":"10.1016/j.jfineco.2025.104220","DOIUrl":"10.1016/j.jfineco.2025.104220","url":null,"abstract":"<div><div>Special Purpose Acquisition Companies (SPACs) took Wall Street by storm in 2020/2021 and continue to play a significant role in today’s capital markets. Estimating a structural model using a hand-collected comprehensive dataset, we find that SPACs add value by identifying and bringing high-potential firms to public markets, though contractual frictions skew the distribution of spoils away from SPAC shareholders and towards sponsors and target owners. Nonetheless, shareholder excess returns are positive once redemptions are accounted for. Policy analyses reveal that earnout provisions enhance welfare, while modest improvements in disclosure and limits on warrant usage have minimal impact on improving outcomes.</div></div>","PeriodicalId":51346,"journal":{"name":"Journal of Financial Economics","volume":"177 ","pages":"Article 104220"},"PeriodicalIF":10.4,"publicationDate":"2026-01-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"145927976","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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