We investigate the effect of top managers' myopia on firms' market valuation. We devise a measure of expected CEO tenure as a proxy of the length of CEO decision horizon. After accounting for the endogenous nature of CEO horizon, our empirical tests show that it is significantly associated with...

Addressing climate change could cost the U.S. in the trillions of dollars in the future. How the nation will finance such a costly venture is yet to be determined. The upside of these expenditures is an increase in economic activity and GDP. The downside is that the economic activity might not...

A shift in the focus of finance research is needed so that it can benefit society. Practitioner-oriented journals should take the lead by proactively asking academics and practitioners to identify topics that address nascent challenges facing the financial system and invite them and...

The Tax Cuts and Jobs Act (TCJA) enacted in December 2017 will limit the deductibility of business interest expense to 30% of adjusted taxable income (ATI) beginning in 2022. This article uses earnings before interest and taxes (EBIT) as a proxy for ATI to examines how this bill will have an...

Hong, Kubik and Stein (JFE 2008) find that the price of a stock in the US is decreasing in the ratio of the aggregate book value of listed firms in a region to the aggregate personal income in the same region (“RATIO”), an “only-game-in-town” effect. We first replicate the HKS (2008)...

We show that political geography has a pervasive effect on the cross-section of stock returns. We collect election results over a 40-year period and use a political alignment index (PAI) of each state's leading politicians with the ruling (presidential) party to proxy for local firms' proximity...

Purpose – The purpose of this paper is to investigate how non-finance departmental involvement in the management of exchange rate risks impacts the extent of foreign exchange speculation in non-financial firms. Design/methodology/approach – We survey non-financial firms in a small open...

When do multinational corporations (MNCs) derive the most from internalizing the transfer of proprietary technological know how? We revisit this question, which lies at the core of theories on multinationality and performance, from the perspective of corporate strategy involving the mix of green...

In this paper we examine the relation between equity mispricing and arbitrage risk, and find that stocks with high arbitrage risk have higher estimated mispricing than stocks with low arbitrage risk. These results are not limited to high book-to-market or small capitalization stocks, and they...

We investigate the link between agency costs and equity mispricing. We find that mispricing is positively related with agency costs caused by divergent objectives between agents and owners in the presence of information asymmetry where managers discriminately have better/more information than...