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Corporate goodness and shareholder wealth

Krüger, Philipp - In: Journal of Financial Economics 115 (2015) 2, pp. 304-329

Using a unique data set, I study how stock markets react to positive and negative events concerned with a firm׳s corporate social responsibility (CSR). I show that investors respond strongly negatively to negative events and weakly negatively to positive events. I then show that investors do...

Persistent link: https://www.econbiz.de/10011189254

China׳s secondary privatization: Perspectives from the Split-Share Structure Reform

Liao, Li; Liu, Bibo; Wang, Hao - In: Journal of Financial Economics 113 (2014) 3, pp. 500-518

-owned enterprises (SOEs), opening up the gate to China׳s secondary privatization. The expectation of privatization quickly boosted SOE … SOE performance are positively correlated to government agents’ privatization-led incentive of increasing state …-owned share value. In terms of privatization methodology, the reform adopted a market mechanism that played an effective …

Persistent link: https://www.econbiz.de/10011039280

Risk tolerance and entrepreneurship

Hvide, Hans K.; Panos, Georgios A. - In: Journal of Financial Economics 111 (2014) 1, pp. 200-223

A theoretical tradition argues that more risk tolerant individuals are more likely to become entrepreneurs but perform worse. We test and confirm these predictions with several risk tolerance proxies. Using investment data for 400,000 individuals, we find that common stock investors are around...

Persistent link: https://www.econbiz.de/10010718731

Learning from peers' stock prices and corporate investment

Foucault, Thierry; Fresard, Laurent - In: Journal of Financial Economics 111 (2014) 3, pp. 554-577

Peers' valuation matters for firms' investment: a one standard deviation increase in peers' valuation is associated with a 5.9% increase in corporate investment. This association is stronger when a firm's stock price informativeness is lower or when its managers appear less informed. Also, the...

Persistent link: https://www.econbiz.de/10010743553

Entrepreneurial risk, investment, and innovation

Caggese, Andrea - In: Journal of Financial Economics 106 (2012) 2, pp. 287-307

I estimate the effect of uncertainty on risky innovation using a panel of 11,417 manufacturing firms. I find that an increase in uncertainty has a large negative effect on the risky innovation of entrepreneurial firms, while it does not have any significant impact on other firms. This negative...

Persistent link: https://www.econbiz.de/10010593844

Monitoring and corporate disclosure: Evidence from a natural experiment

Irani, Rustom M.; Oesch, David - In: Journal of Financial Economics 109 (2013) 2, pp. 398-418

Using an experimental design that exploits exogenous reductions in coverage resulting from brokerage house mergers, we find that a reduction in coverage causes a deterioration in financial reporting quality. The effect of coverage on disclosure is more pronounced for firms with weak shareholder...

Persistent link: https://www.econbiz.de/10010678708

CAPM for estimating the cost of equity capital: Interpreting the empirical evidence

Da, Zhi; Guo, Re-Jin; Jagannathan, Ravi - In: Journal of Financial Economics 103 (2012) 1, pp. 204-220

We argue that the empirical evidence against the capital asset pricing model (CAPM) based on stock returns does not invalidate its use for estimating the cost of capital for projects in making capital budgeting decisions. Because stocks are backed not only by projects in place, but also by the...

Persistent link: https://www.econbiz.de/10010702354

Behavioral consistency in corporate finance: CEO personal and corporate leverage

Cronqvist, Henrik; Makhija, Anil K.; Yonker, Scott E. - In: Journal of Financial Economics 103 (2012) 1, pp. 20-40

We find that firms behave consistently with how their CEOs behave personally in the context of leverage choices. Analyzing data on CEOs' leverage in their most recent primary home purchases, we find a positive, economically relevant, robust relation between corporate and personal leverage in the...

Persistent link: https://www.econbiz.de/10010702365

Directors' and officers' liability insurance and loan spreads

Lin, Chen; Officer, Micah S.; Wang, Rui; Zou, Hong - In: Journal of Financial Economics 110 (2013) 1, pp. 37-60

We analyze the effect of directors' and officers' liability insurance (D&O insurance) on the spreads charged on bank loans. We find that higher levels of D&O insurance coverage are associated with higher loan spreads and that this relation depends on loan characteristics in economically sensible...

Persistent link: https://www.econbiz.de/10010702369

Brand perception, cash flow stability, and financial policy

Larkin, Yelena - In: Journal of Financial Economics 110 (2013) 1, pp. 232-253

This paper demonstrates that intangible assets play an important role in financial policy. Using a proprietary database of consumer brand evaluation, I show that positive consumer attitude toward a firm's products alleviates financial frictions and provides additional net debt capacity, as...

Persistent link: https://www.econbiz.de/10010702372