Acquiring Acquirers
Target acquisitiveness stands out as one of the primary drivers of all the key aspects of the market for corporate takeovers: acquisition announcement returns, probability of deal success, propensity...
View ArticleThe Effect of Earned Versus House Money on Price Bubble Formation in...
Does house money exacerbate price bubbles? We compare house money asset market experiments with an earned money treatment where initial portfolios are constructed from a real effort task. Bubbles...
View ArticlePerformance Pay, CEO Dismissal, and the Dual Role of Takeovers
We propose that an active takeover market provides incentives by offering acquisition opportunities to successful managers. This allows firms to reduce performance-based compensation and can...
View ArticleThe Profits-Leverage Puzzle Revisited
The inverse relation between leverage and profitability is widely regarded as a serious defect of the trade-off theory. We show that the defect is not with the theory but with the use of a leverage...
View ArticleHow Much Can Financial Literacy Help?
We use a dataset of individual investors containing test-based measures of financial literacy and administrative records on their assets holding and trades before and during the financial crisis of...
View ArticleStock Market Integration and the Global Financial Crisis
We study the dynamics of stock market integration and its consequences during the recent financial crisis for twenty-three developed and sixty emerging markets. We find that integration increased...
View ArticleThe Conditional Effects of Market Power on Bank Risk--Cross-Country Evidence
We investigate the relationship between market power and risk for a large panel of banks worldwide. Loan and deposit market power are measured separately at bank-year level, and the risk effect of...
View ArticleMarket Size Structure and Small Business Lending: Are Crisis Times Different...
Conventional wisdom holds that small banks have comparative advantages vis-à-vis large banks in serving small firms, while recent literature suggests this may not be the case. Using a panel of recent...
View ArticleStock Market Literacy, Trust, and Participation
This article studies the importance of stock market literacy and trust for stock ownership decisions. We find that these two distinct channels simultaneously explain not only the probability of...
View ArticleTrade Credit, Relationship-specific Investment, and Product Market Power
We rely on a model with incomplete contracts and bargaining power to argue that trade credit (TC) can serve as a commitment device for making relationship-specific investments (RSIs). Unlike existing...
View ArticleExporting Sovereign Stress: Evidence from Syndicated Bank Lending during the...
We show that after the start of the euro area sovereign debt crisis, lending by non-GIIPS European banks with sizeable holdings of GIIPS sovereign bonds declined relative to nonexposed banks. This...
View ArticlePrivate Equity Fund Returns and Performance Persistence
Successful private equity managers have funds that are often oversubscribed and provide persistent abnormal returns. Why do not successful managers increase fund size or fees? We argue that managers...
View ArticleConvective Risk Flows in Commodity Futures Markets
We study the joint responses of commodity future prices and positions of various trader groups to changes of the CBOE Volatility Index (VIX) before and after the recent financial crisis. Financial...
View ArticleAn Out-of-Sample Evaluation of Dynamic Portfolio Strategies
This article evaluates out-of-sample portfolio performance for a real-time investor who can exploit time variation in the conditional mean and volatility of stock returns in optimizing a multiperiod...
View ArticleTug-of-War: Time-Varying Predictability of Stock Returns and Dividend Growth
We propose a regime-switching present-value model with latent variables to jointly investigate the predictability of stock returns and dividend growth. We find that both return predictability and...
View ArticleCorporate Aging and Takeover Risk
Although growth opportunities fade and profitability declines as firms mature, older firms are no more likely to be acquired than young firms are. This article documents and explains that phenomenon....
View ArticleImplied Risk Exposures
We show how to reverse-engineer banks’ risk disclosures, such as value-at-risk, to obtain an implied measure of their exposures to equity, interest rate, foreign exchange, and commodity risks. Factor...
View ArticleInstitutions, Bailout Policies, and Bank Loan Contracting: Evidence from...
In emerging economies, institutional and regulatory constraints can distort loan contracting and, hence, the incentives of lenders and borrowers. Studying the South Korean syndicated loan market, we...
View ArticleExecutive Compensation and Risk Taking
This article studies the connection between risk taking and executive compensation in financial institutions. A model of shareholders, debtholders, depositors, and an executive demonstrates that (i)...
View ArticleFinancial Relationships and the Limits to Arbitrage
We propose a model of limited arbitrage based on financial relationships. Financially constrained arbitrageurs may choose to seek additional financing from banks that have the technology to profit from...
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