Journal of Financial Research
- Publisher:
- Wiley
- Publication date:
- 2021-02-01
- ISBN:
- 0270-2592
Issue Number
- No. 43-4, December 2020
- No. 43-3, August 2020
- No. 43-2, May 2020
- No. 43-1, March 2020
- No. 42-4, December 2019
- No. 42-3, September 2019
- No. 42-2, July 2019
- No. 42-1, March 2019
- No. 41-4, December 2018
- No. 41-3, September 2018
- No. 41-2, June 2018
- No. 41-1, March 2018
- No. 40-4, December 2017
- No. 40-3, September 2017
- No. 40-2, June 2017
- No. 40-1, March 2017
- No. 39-4, December 2016
- No. 39-3, September 2016
- No. 39-2, June 2016
- No. 39-1, March 2016
Latest documents
- CEO EXTRAVERSION AND CAPITAL STRUCTURE DECISIONS: THE ROLE OF FIRM DYNAMICS, PRODUCT MARKET COMPETITION, AND FINANCIAL CRISIS
Using panel data of U.S. firms, we focus on an important yet understudied facet of the chief executive officer's (CEO) personality—extraversion—and how it affects corporate capital structure decisions. We examine how this relation is moderated by financing (tax) benefits, financial crisis, firm size, growth opportunities, and collateralization. The results show that firms managed by extraverted CEOs use greater financial leverage, adjusting toward target leverage levels at a faster speed, with about half‐life within a year for book and market leverage. In addition, the positive extraversion–leverage relation is enhanced for firms that are large, have greater collateralizable assets, and are more vulnerable to external shocks (financial crisis). Last, although the positive extraversion–leverage relation holds particularly when product market competition is high, the effect is attenuated for high‐growth opportunity firms.
- Issue Information
- THE COMOVEMENTS OF STOCK, BOND, AND CDS ILLIQUIDITY BEFORE, DURING, AND AFTER THE GLOBAL FINANCIAL CRISIS
Using both marketwide and firm‐level illiquidity measures of the stock, bond, and credit default swap markets, we find that comovements of illiquidity across markets increase significantly during the recent global financial crisis. Moreover, the degree of comovement remains significantly higher in the postcrisis period and regulatory period than in the precrisis period. Specifically, the distribution of firm‐level comovements is notably different before and after the crisis (e.g., a much larger portion of firms with positive pairwise correlations between illiquidity measures in the postcrisis period than in the precrisis period). Our results provide suggestive evidence of the financial crisis effects and the subsequent postcrisis regulations on the comovements of illiquidity across markets.
- DO WELL‐CONNECTED BOARDS INVEST OPTIMALLY IN R&D ACTIVITIES?
Researchers have argued that the uncertainty surrounding innovative activities causes firms to either underinvest or overinvest in research and development (R&D). We examine whether the information gained by boards through directors’ connections helps mitigate such distortions. We find that an increase in directors’ connections has an asymmetric impact on under‐ and overinvesting firms. R&D expenditures are shown to increase with board connections. Such increases in R&D intensity exacerbate the extent of overinvestment, resulting in a loss in future market‐to‐book value. The increase in R&D intensity, however, reduces underinvestment only among firms with higher than average R&D productivity. We find that increased director busyness is one cause of overinvestment.
- HOW DID THE FINANCIAL CRISIS AFFECT SMALL‐BUSINESS LENDING IN THE UNITED STATES?
We analyze changes in lending by U.S. banks to businesses from 1994 to 2011. We find that lending to businesses, and in particular to small businesses, declined precipitously following onset of the financial crisis. We also examine the relative changes in business lending by banks that did, and did not, receive Troubled Asset Relief Program (TARP) funds from the U.S. Treasury, and find that banks receiving capital injections from the TARP failed to increase their small‐business lending. Finally, we find strong and significant positive relations of both bank capital adequacy and profitability with small‐business lending.
- DO STOCK MARKET FLUCTUATIONS AFFECT SUICIDE RATES?
In this study, we extend the standard economic model of suicide by considering a new influential factor driving the voluntary death rate. Using an international sample, we estimate the model and document a robust and significant inverse relation between stock market returns and the percentage increase in suicide rates. Trends in male and female suicide are affected by market fluctuations, both contemporaneously and at a lag. This predictive quality of stock returns offers the potential to implement pro‐active suicide prevention strategies for those who could be affected by the vagaries of the market and general economic downturns.
- MANAGING FOR RATINGS: REAL EFFECTS OF A CORPORATE RATINGS CRITERIA CHANGE
We exploit a criteria change by Standard & Poor's (S&P) to examine the real effects of a credit ratings change. Using a recalibration by S&P, unrelated to firms’ fundamentals, as a quasi‐natural experiment we analyze the impact of a ratings upgrade on the issuance activity, investment, cash holdings, and payout policy of companies. Our findings suggest upgraded firms subsequently issue more debt relative to equity, enjoy lower debt yields, and increase their investment rate and share repurchases. We find limited evidence that upgraded firms decrease their cash holdings. Our results support the view that credit ratings have a real effect on corporations.
- DOES SPEED MATTER? THE ROLE OF HIGH‐FREQUENCY TRADING FOR ORDER BOOK RESILIENCY
We analyze limit order book resiliency following liquidity shocks initiated by large market orders. Based on a unique data set, we investigate whether high‐frequency traders are involved in replenishing the order book. Therefore, we relate the net liquidity provision of high‐frequency traders, algorithmic traders, and human traders around these market impact events to order book resiliency. Although all groups of traders react, our results show that only high‐frequency traders reduce the spread within the first seconds after the market impact event. Order book depth replenishment, however, takes significantly longer and is mainly accomplished by human traders’ liquidity provision.
- AUTHOR INDEX OF VOLUME XLIII, 2020
- Issue Information
Featured documents
- LEARNING BANKS' EXPOSURE TO SYSTEMATIC RISK: EVIDENCE FROM THE FINANCIAL CRISIS OF 2008
Using a two‐state Markov regime‐switching intertemporal capital asset pricing model, we find that the exposure to systematic risk of bank stocks varies with size and the state of the economy. Across large banks, those with higher net interest margins and lower capital ratios are the most exposed to ...
- DOES MANAGERIAL OPPORTUNISM EXPLAIN THE DIFFERENTIAL PRICING OF LEVEL 3 FAIR VALUE ESTIMATES?
Using hand‐collected Level 3 data, we find that banks near key capital ratios report higher unrealized gains in Level 3 assets, consistent with managers using Level 3 valuations to boost capital ratios. Additionally, we document an incremental pricing discount for Level 3 assets among these firms,...
- BANK FAILURES UNDER MANAGERIAL AND REGULATORY INEFFICIENCY: THREE DECADES OF EVIDENCE FROM TURKEY
Drawing on a comprehensive data set from Turkey (1970–2003) and using both nonparametric (data envelopment analysis) and parametric (stochastic frontier analysis) frontier methods, we estimate 16 alternative efficiency measures to study their associations with the probability of bank failures in an ...
- CEO EXTRAVERSION AND CAPITAL STRUCTURE DECISIONS: THE ROLE OF FIRM DYNAMICS, PRODUCT MARKET COMPETITION, AND FINANCIAL CRISIS
Using panel data of U.S. firms, we focus on an important yet understudied facet of the chief executive officer's (CEO) personality—extraversion—and how it affects corporate capital structure decisions. We examine how this relation is moderated by financing (tax) benefits, financial crisis, firm...
- IS DIVERSIFICATION A JOB SAFETY NET FOR SELL‐SIDE ANALYSTS?
We study sell‐side analysts’ motives to diversify their portfolios across industries. Despite the negative association between diversification and accuracy, more than 60% of analysts cover multiple industries. We argue that analysts’ choice to diversify is rooted in concerns about future job...
- CLAWBACK PROVISIONS IN REAL ESTATE INVESTMENT TRUSTS
Using a sample of 195 unique real estate investment trusts (REITs), we examine factors related to the adoption of clawback provisions within managerial compensation contracts. In general, we find strong and consistent empirical evidence that clawback provision are directly related to firm size,...
- UNDERWRITERS AND THE BROKEN CHINESE WALL: INSTITUTIONAL HOLDINGS AND POST‐IPO SECURITIES LITIGATION
We examine whether underwriters have an information advantage over other institutional investors in new public companies. Focusing on firms targeted by IPO‐related class action litigation and a matched sample of nonsued firms, we find evidence suggesting that lead underwriters retain an information ...
- COME ON IN, THE WATER'S FINE! AN EXPERIMENTAL EXAMINATION OF HYBRID IPO AUCTIONS WITH A PUBLIC POOL
We offer experimental and theoretical evidence that auction methods for initial public offerings (IPOs) in the United States may be improved through hybrids that include a separate retail tranche or “public pool.” The multi‐unit uniform price auctions in our laboratory experiments incorporate key...
- U.S. POLITICAL CORRUPTION AND LOAN PRICING
Using U.S. Department of Justice data on state‐level political corruption, we find that banks charge higher loan spreads (all‐in‐drawn spreads) to firms in states with higher corruption and that these effects are more pronounced for firms facing financial constraints but less pronounced for firms...
- WHAT DRIVES INVESTMENT FLOWS INTO SOCIAL TRADING PORTFOLIOS?
We investigate investment flows into more than 5,300 social trading portfolios that are issued as structured products and are tradable at a regular exchange. We find that investment flows chase past performance. However, in contrast to mutual fund flows, the flow–performance relation exists nearly...