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Stock Liquidity and Corporate Cash Holdings

Nyborg, Kjell G; Wang, Zexi - C.E.P.R. Discussion Papers - 2013

the introduction of tick size decimalization in 2001 as a natural experiment where liquidity was exogenously shocked. We … also find evidence of two-way causality; a higher level of stock liquidity leads to more cash holdings, and vice versa. …

Persistent link: https://www.econbiz.de/10011084593

Option-Based Credit Spreads

Culp, Christopher L.; Nozawa, Yoshio; Veronesi, Pietro - C.E.P.R. Discussion Papers - 2014

Theoretically, corporate debt is economically equivalent to safe debt minus a put option on the firm’s assets. We empirically show that indeed portfolios of long Treasuries and short traded put options ("pseudo bonds") closely match the properties of traded corporate bonds. Pseudo bonds...

Persistent link: https://www.econbiz.de/10011145468

Entrepreneurial Learning, the IPO Decision, and the Post-IPO Drop in Firm Profitability

Pástor, Luboš; Taylor, Lucian; Veronesi, Pietro - C.E.P.R. Discussion Papers - 2007

We develop a model in which an entrepreneur learns about the average profitability of a private firm before deciding whether to take the firm public. In this decision, the entrepreneur trades off diversification benefits of going public against benefits of private control. The model predicts...

Persistent link: https://www.econbiz.de/10005666477

Favouritism or Markets in Capital Allocation?

Giannetti, Mariassunta; Yu, Xiaoyun - C.E.P.R. Discussion Papers - 2007

Casual observation suggests that capital allocation is often driven by favouritism and connections rather than by market mechanisms and information on future expected returns. We investigate when favouritism or markets emerge as an equilibrium outcome in the allocation of capital. We show that...

Persistent link: https://www.econbiz.de/10005666824

Financial Innovations and Macroeconomic Volatility

Jermann, Urban; Quadrini, Vincenzo - C.E.P.R. Discussion Papers - 2006

The volatility of US business cycle has declined during the last two decades. During the same period the financial … volatility of output together with a higher volatile in the financial structure of firms. …

Persistent link: https://www.econbiz.de/10005791629

Finance, Growth and Fragility: The Role of Government

Beck, Thorsten - C.E.P.R. Discussion Papers - 2013

This paper offers a critical survey of the literature on the role of financial deepening in economic development, focusing on the role of government. Specifically, I distinguish between the policy view that relates financial sector development to an array of necessary policies and institutions,...

Persistent link: https://www.econbiz.de/10011084237

Short-Sale Constraints and the Pricing of Managerial Skills

Cheng, Si; Massa, Massimo; Zhang, Hong - C.E.P.R. Discussion Papers - 2015

We investigate the impact of the absence of short selling on the pricing of managerial skills in the mutual fund industry. In the presence of divergent opinions regarding managerial skills, fund managers can strategically use fees to attract only the most optimistic capital. The recognition of...

Persistent link: https://www.econbiz.de/10011186626

When Everyone Runs for the Exit

Pedersen, Lasse Heje - C.E.P.R. Discussion Papers - 2009

recent global liquidity crisis and, in particular, the quant event of 2007. …

Persistent link: https://www.econbiz.de/10005082543

Market Liquidity and Funding Liquidity

Brunnermeier, Markus K; Pedersen, Lasse Heje - C.E.P.R. Discussion Papers - 2007

We provide a model that links an asset's market liquidity - i.e., the ease with which it is traded - and traders …' funding liquidity - i.e., the ease with which they can obtain funding. Traders provide market liquidity, and their ability to … are charged, depend on the assets' market liquidity. We show that, under certain conditions, margins are destabilizing and …

Persistent link: https://www.econbiz.de/10005067436

India's Public Finances: Excessive Budget Deficits, a Government-Abused Financial System and Fiscal Rules

Buiter, Willem H.; Patel, Urjit R. - C.E.P.R. Discussion Papers - 2006

. In addition, they create a mechanism for macroeconomic volatility-enhancing, pro-cyclical fiscal policy. …

Persistent link: https://www.econbiz.de/10005123636