We develop a model in which time-varying real investment opportunities lead to time-varying adverse selection in the market for initial public offerings. The model is consistent with several stylized facts known about the IPO market: economic expansions are associated with a dramatic increase in...

Using a sample of 56 companies going public in 1996-2000 in which top executives received allocations of other hot initial public offerings (IPOs) from the bookrunner, a practice known as spinning, we examine the consequences of spinning. The 56 IPOs had first-day returns that were, on average,...

We study the effect of bank loan announcements on the borrowing firms' bond and equity prices. Our sample consists of 896 loan deals signed between 1997 to 2003 involving 364 different U.S. firms. We report the first comprehensive evidence that also firm bond prices react to bank loan...

The European Union's Markets in Financial Instruments Directive (MiFID), that will be implemented by October 2007, significantly modifies the regulation of the European securities industry. It will allow, among other things, investment firms to act as systematic internalizers. A systematic...

Berk and Green (2004) argue that investment inflow at high-performing mutual funds eliminates return persistence because fund managers face diminishing returns to scale. Our study examines the role of trading costs as a source of diseconomies of scale for mutual funds. We estimate annual trading...

An analyst who owns stock in the company she covers may be tempted to protect or enhance her personal interests. I examine how this conflict of interest affects the reporting of sell-side analysts. I identify and collect two samples, the first from SEC Form 144 filings, and the second from...

European family-controlled public companies tend to perform less well in the stock market than their American counterparts. Also, while more and more investment funds that focus on family-firm opportunities are being formed in the United States, data indicates that institutional investors remain...

Using a new set of monthly stock price data for a random sample of German companies, we investigate the pattern of common stock returns on the Berlin Stock Exchange between 1904 and 1910, when it ranked among the very top markets worldwide. We find that the CAPM performs poorly in this context:...

The bond market represents a large proportion of the GDP in developed countries but it seems to be underdeveloped in emerging markets. In the particular case of Brazil, it is widely known that firms do not have access to enough credit at a reasonable cost. Our goal is to provide a better...

This paper analyzes convertible arbitrage, one of the most successful hedge fund strategies. The aim of the strategy is to exploit underpricing of convertible bonds by taking a long position in a convertible and a short position in the underlying asset. We find that convertible bonds are...