We study how risk management through hedging affects firms and competition among firms in the life insurance industry, an industry with over 7 trillion in assets and over 1,000 private and public firms. We examine firms after a staggered state-level reform that reduces the costs of hedging by granting derivatives superpriority in case of insolvency. We show that firms that are likely to face costly

A significant portion of a merger's purchase price is allocated to goodwill. Currently, goodwill is not amortized but rather tested annually for impairment. When managers of acquiring firms care about earnings, goodwill's accounting treatment can have large effects on future earnings and may influence how much a manager will bid for a target company. We quantify the effects of goodwill accounting by

We study the contribution of banks and nonbanks to cyclical fluctuations in the supply of syndicated loans. We find that a reduction in nonbank lending explains most of the contraction in syndicated credit and the associated employment losses during the Global Financial Crisis, while banks’ contribution is small. Looking over multiple cycles, we find nonbanks’ credit supply is roughly three times as

Using international data, we quantify the magnitude of survivorship bias in U.S. equity market performance, finding that it explains about one-third of the equity risk premium in the past century. We model the subjective crash belief of an investor who infers the crash risk in the United States by cross-learning from other countries. The U.S. crash probability shows a persistent and widening divergence

Financial transaction taxes, or generally transaction costs, are salient in derivatives markets and seldom studied in equilibrium models. We study a tractable model with proportional transaction costs where agents trade a derivative with nonlinear payoffs to hedge nontraded endowments. We show that trade is sustained in an equilibrium with transaction costs only if there is sufficient heterogeneity

This study examines the capital market implications of common investor relations (IR) representation, a phenomenon in which multiple public firms share the same external IR representative. Using a difference‐in‐differences research design, I document that common IR representation is associated with greater overlap in institutional ownership and sell‐side analyst coverage as well as similarities in

We investigate the effects of a qualitative tax disclosure mandate aimed at improving tax transparency and compliance by imposing reputational costs for firms. We use, as an exogenous shock, the 2016 UK reform that required large businesses to disclose their tax strategy. We find that treated firms—those that must publish a tax strategy report—also significantly increase the volume of tax strategy

What explains cross-sectional dispersion in stock valuation ratios? We find that 75% of dispersion in price–earnings ratios is reflected in differences in future returns, while only 25% is reflected in differences in future earnings growth. This holds at both the portfolio-level and the firm-level. We reconcile these conclusions with previous literature which has found a strong relation between prices

An entrepreneur makes offers to multiple investors to fund a project that requires a minimum investment. Concerned about other investors' decisions, each investor strategically communicates information about the project to others. When investors have conflicts of interest, those with contractually stronger incentives to invest attempt to persuade others to invest. Depending on the project's ex ante

I find that foreign multinational firms engage in tax-motivated income shifting out of the United States. The analysis uses novel data on foreign-owned U.S. subsidiaries as well as variation in foreign countries’ tax rates and controlled foreign corporation rules. Foreign multinational firms primarily rely on tax-motivated transfer pricing to shift income out of the United States, and the aggregate

Houses with higher value uncertainty receive less mortgage credit: mortgages backed by these houses are more likely to be rejected, have higher interest rates, and have lower loan-to-price ratios. The relationship between house value uncertainty and credit availability is driven partly by a classic channel in which uncertainty lowers debt recovery rates, and partly by a novel channel where more uncertain

Focusing on the one-off tax gains and losses (i.e., windfalls) associated with the 2017 Tax Cuts and Jobs Act, we reexamine whether CEOs are rewarded for luck. We find that weakly monitored CEOs are compensated for the windfall tax gains but not penalized for the corresponding tax losses. No such pattern is observed for CEOs facing greater pay scrutiny. The pay for windfalls cannot be explained as

We assess racial discrimination in mortgage approvals using confidential data on mortgage applications. Minority applicants tend to have lower credit scores and higher leverage, and are less likely to receive algorithmic approval from race-blind automated underwriting systems (AUS). Observable applicant-risk factors explain most of the racial disparities in lender denials. Further, exploiting the AUS

We develop a theory of secured debt, unsecured debt, and debt with anti-dilution covenants. We assume that, as in practice, covenants convey the right to accelerate if violated, but the new secured debt retains its priority even if issued in violation of covenants. We find that such covenants are nonetheless useful: They provide state-contingent financing flexibility, balancing over- and underinvestment

This study explores the link between environmental, social, and governance (ESG) performance and higher return moments (i.e., skewness and kurtosis) addressing a key research gap. It hypothesizes that firms with stronger ESG performance exhibit higher return skewness due to improved market perception and reduced downside risk, as well as lower return kurtosis resulting from better risk management and

This paper examines the transformative role of board gender diversity in shaping both the absolute performance and strategic prioritization of environmental, social, and governance (ESG) dimensions in Gulf Cooperation Council (GCC) firms. Using data from 132 non-financial firms (2013–2022), we employ simultaneous equations modeling and relative weight analysis to investigate this dual impact. Our findings

We present the first comprehensive descriptive evidence on the labor market and personal consequences for audit professionals in the United States who are named in SEC or PCAOB enforcement actions. Three key findings emerge. First, between 38% and 73% of culpable auditors depart from their firms within one year after the enforcement event. These departure rates are three to four times higher compared

Complexity in applying financial accounting standards can have real operational effects if firms alter their actions in response to increased reporting costs. We examine whether the introduction of ASU 2017‐12, designed to reduce compliance burden and better align hedge accounting rules with risk management practices, led to more effective hedging. Using detailed hedging disclosures, we show that firms

We propose a model of lending, payments choice, and privacy in the digital economy. While digital payments enable merchants to sell goods online, they reveal information to their lender. Cash guarantees anonymity, but limits distribution to less efficient offline venues. In equilibrium, merchants trade off the efficiency gains from online distribution (with digital payments) and the informational rents

We explore indicators of market power in a data market. Markups cannot measure competition, because most data products’ marginal cost is zero, making the markup infinite. Yet, data monopolists may not exert monopoly power because they cannot commit to restricting data sales to future customers. This limited commitment and strategic substitutability of data undermine sellers’ monopoly power. But data

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Recent influential work finds large increases in inequality in the United States based on measures of wealth concentration that notably exclude the value of social insurance programs. This paper shows that top wealth shares have not changed much over the last three decades when Social Security is properly accounted for. This is because Social Security wealth increased substantially from $7.2 trillion

We investigate a seller's strategic choice between optimally structured negotiations with fewer bidders and an auction with more competing bidders when payments can have a contingent component, as is common in mergers and acquisitions (M&A), patent licensing, and employee compensation. The key factor favoring negotiations is that it allows the seller to set her preferred payment structure—that is,

This paper takes a long-term look at the sovereign-bank nexus, analysing not only the vulnerabilities that led to its build-up, but also the impact of post-GFC financial regulatory reforms, and unconventional monetary policy. Using a panel of euro area countries from 2003–2023, we show that a significant driver of banks’ holdings of domestic sovereign debt is search for yield, which holds for crisis

This study investigates the impact of Sino-American tensions, as captured by the U.S.‒China Tension (UCT) index, on international gold price volatility. Bivariate GARCH-MIDAS-UCT models were employed in this study, and the findings reveal that UCT significantly amplifies gold price volatility, surpassing the effects of traditional indicators such as economic policy uncertainty and geopolitical risk

Building on human relations and stakeholder theories, we demonstrate a negative relationship between state-level diabetes burden, measured by diabetes-related death rates, and firm value. We identify three key moderating channels: organizational capital, which captures a firm's ability to attract and retain skilled labor; labor-intensive industries, such as mining and manufacturing; and labor productivity

We study capital regulation in a dynamic model for bank deposits. Capital regulation addresses banks’ incentive for excessive leverage that dilutes depositors, but preserves some dilution to reduce bank defaults. We show theoretically that capital regulation is subject to a time inconsistency problem. In a model with non-maturing deposits where optimal withdrawals make deposits endogenously long-term

Open banking (OB) empowers bank customers to share their financial transaction data with fintechs and other banks. New cross-country data shows 49 countries adopted OB policies, privacy preferences predict policy adoption, and adoption spurs fintech entry. UK microdata shows that OB enables: (i) consumers to access both financial advice and credit; (ii) SMEs to establish new lending relationships.

This study investigates the relationship between cyberattacks and corporate share repurchases among U.S. firms. The results indicate that firms typically increase share repurchases following a cyberattack, driven by firm undervaluation and improvements in corporate governance. To address potential endogeneity concerns, this research employs several methods to enhance the robustness of our findings

We model the competition between digital forms of fiat money and private digital money. Countries digitize their currencies–by upgrading existing or launching new payment systems (including CBDCs)–to compete with foreign fiat currencies and private digital money. A pecking order emerges: less dominant currencies digitize earlier, reflecting a first-mover advantage; dominant currencies delay digitization

The application of big data in tax administration has emerged as a crucial catalyst for technological advancements in enterprises, promoting sustained growth and significantly enhancing the development of new quality productivity. This research uses a difference-in-difference (DID) model, anchored by the ‘Golden Tax Phase III’ project as a natural experiment benchmark, to empirically investigates how

This study analyzes data from A-share listed companies on the Shanghai and Shenzhen stock exchanges from 2000 to 2022. Using the launch of government open data platforms as a quasi-natural experiment, it investigates how public data openness affects corporate technology diversification and its underlying mechanisms. The results show that the introduction of public data platforms reduces firms’ technology

This study, based on panel fixed effects models applied to subnational-level panel data from 1,500 regions across 130 countries, reveals that global warming has worsened gender equality. First, the impact of global warming on gender equality is predominantly negative, with considerable heterogeneity across income groups and climatic regions. Second, these adverse effects are driven by mechanisms such

This paper explores implications of weak identification in common ‘long memory’ and recent ‘rough’ approaches to modeling volatility dynamics of financial assets. We unveil an asymptotic near-observational equivalence between a long memory model with weak autoregressive dynamics and a rough model with a near-unit autoregressive root. Standard methods struggle to distinguish them, and conventional asymptotics

We document that the reallocation of central bank reserves towards banks with higher liquidity needs fosters credit supply. Exploiting the ECB's tiered reserve remuneration system for identification, we show that this system encouraged banks with low reserve holdings to obtain more reserves through the money market. Concomitantly, these banks reduced their securities holdings and extended more credit

The literature has documented “reaching for yield”—the phenomenon of investing more in risky assets when interest rates drop—among institutional investors. We analyze detailed transaction data from a large brokerage firm to provide direct field evidence that individual investors also exhibit this behavior. Consistent with models of portfolio choice with labor income, reaching for yield is more pronounced

We attribute variation in the strength of the U.S. dollar and its covariance with other currencies to economic primitives using a global asset demand system. We take global investor savings, asset supply, and monetary policy as exogenous primitives, and show how these variables explain dollar exchange rate behavior. Prior to the global financial crisis, global savings and demand shifts explain dollar

We demonstrate that off-exchange (wholesaler) executions provide significant cost savings to retail investors. Wholesaler concentration has raised regulatory concerns; however, we show that the largest wholesalers offer the lowest costs due to economies of scale. The entry of a new large wholesaler reduces incumbent scale economies, resulting in higher execution costs. Most retail brokers route to

Based on the data of Shanghai and Shenzhen listed enterprises from 2008 to 2022, we empirically test the impact of CEO legal responsibility on the financialization of entity enterprises. We find that CEO legal responsibility has a significant inhibitory effect on the financialization of entity enterprise. This impact will exhibit heterogeneity based on the different characteristics of the enterprise

This study examines optimism bias in how analysts and investors assess corporate social responsibility (CSR). Prior research documents this bias separately, but we provide a direct comparison, showing their biases differ based on managers’ underlying motivation: legal CSR (compliance-driven) versus normative CSR (discretionary-driven). Using the V/P ratio (analysts’ equity value estimates over stock

This study examines the interconnectedness between biofuel commodities and oil market. The paper introduces the notion and measures of excess connectedness for networks. It extends previous research by comparing connectedness levels across regions and employs advanced methodologies, including the quantile frequency connectedness technique, which integrates frequency and quantile approaches.

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The ESG framework, which integrates economic development with environmental conservation, is essential for climate action. By embedding environmental, social, and governance priorities, firms can implement the UN Sustainable Development Goals (SDGs) while shifting towards low-carbon operations. This study examines longitudinal data (2011–2023) to determine causal relationships between fiscal obligations

Entrepreneurship is an engine of economic growth and development in societies around the world. There are many accounting and finance issues faced by entrepreneurial firms related to financing, ownership structure, and corporate governance. Likewise, a growing body of literature in accounting and finance that highlights the importance of entrepreneurship has emerged in recent years. In this special

This study uses data from publicly listed companies from 2013 to 2022 to explore the relationship between innovation policy-driven factors, digital financial transformation, and corporate value chain resilience. The research findings indicate that innovation policy-driven factors positively impact value chain resilience, with differences between state-owned and private enterprises. Digital financial

Auditors frequently outsource audit work to offshore Shared Service Centers (SSCs) to reduce costs and ease the workload burdens of audit team members. However, concerns persist about whether these benefits come at the expense of audit quality. Using proprietary audit engagement-level data, I evaluate whether greater SSC usage by Big 4 audit teams has an association with either, or both, audit quality

Oil shocks have caused economic recessions over the years, affecting various markets, especially the stock market. The objective of this study is to analyze how global oil price index variable and shocks related to supply, economic activity, demand, and inventory affect the volatility and dynamics of G7 countries' stock market indices in the context of the 2014 oil shock. Using monthly data from January

This research investigates the macroeconomic determinants of crypto adoption, illuminating the potentials of cryptocurrencies to accelerate financial inclusion. By exploiting an extensive dataset from 165 countries between 2019 and 2021, this study employs various econometric methodologies, including Panel Feasible Generalized Least Squares (PFGLS), Robust Least Squares (RLS), and Quantile Regressions

We employ a novel three-stage analysis method of ICEEMDAN-Van der Waerden Test-Elastic Net to analyze Bitcoin's price. Our research aims to explain how Bitcoin's price has been formed at different phases of development over the past decade. We have segmented the daily closing price of Bitcoin from November 1, 2013, to December 31, 2023, into five phases, utilizing the ICEEMDAN method to decompose them

We study the use and environmental impact of AI technologies. We propose a measure of the country-level AI development index. Utilizing the double machine learning method, we discover a net mitigating impact of AI on climate risk. Mechanism analysis indicates that this influence primarily stems from advancements in resource utilization efficiency, the promotion of green innovation, the reinforcement

This paper examines venture capital's (VC) role in the geographic clustering of high-growth startups. We exploit a rule change that disproportionately impacted U.S. regions that historically lacked VC financing via a restriction of banks to invest in the asset class. A one-standard-deviation increase in VCs' exposure to the rule led to a 20% decline in fund size and a 10% decrease in the likelihood

We examine whether the general managerial skills of chief executive officers (CEOs) affect corporate default risk. Employing a large panel of data on US firms, we find that generalist CEOs help reduce default risk. This result is robust to using different fixed effects (i.e., firm, CEO, and industry fixed effects), propensity score matching, and a difference-in-differences analysis to address endogeneity

Tax enforcement deters noncompliance, increasing tax revenue, but may also discourage taxpayer investment in activities that policymakers aim to incentivize through tax credits and deductions. This paper investigates this investment-revenue trade-off through the lens of the research and development (R&D) tax credit, a federal tax incentive that is highly scrutinized by the Internal Revenue Service

We propose a robust Bayesian model using the normal-inverse-Wishart and Gamma distributions for an investment portfolio consisting of the stocks of the United States Dow Jones Industrial Index. To this end, the Bayesian approach and the robust portfolio model are integrated to determine the uncertainty of the estimated parameters in expected returns and covariances using ellipsoidal or quadratic type

The reordering of transactions from “high-to-low” is a controversial bank practice thought to maximize fees paid by low-income customers on overdrawn accounts. We exploit a series of class-action lawsuits that mandated that some banks cease the practice. Using alternative credit bureau data, we find that after banks cease high-to-low reordering, low-income individuals reduce payday borrowing, increase