With increasing globalization, to what extent do stock market returns reflect global or domestic risk factors? We find a significant relationship between stock market returns and the global market risk factor and macroeconomic factors respectively. In particular, global factors offer four times...

Akerlof (2007) proposes that the norms of decision makers can bridge the gap between New Classical economic theories and conflicting empirical evidence. We apply his framework to cross-country capital structure decision making and propose a norm theory of capital structure. Consistent with its...

This study discusses the implication of information asymmetry between firms and investors for the estimation risk of asset returns. We evaluate various risk measures of information asymmetry between firms and investors for China, an excellent example of a low information environment. We find a...

This is an exploratory study on the characteristics and performance of firms that choose to grant executive stock options as a strategic compensation practice. According to the push theory of employee ownership, stock options are granted to push employees to create superior financial...

Consistent with predictions of agency theory, we find direct evidence that executive stock option grants have value implications for firm performance. This inference is drawn from evaluation of various motivations for the use of such grants in executive compensation: value enhancement, risk...

Policy risk, and not information asymmetry, explains the cross-sectional underpricing of privatized initial public offerings. The issuer governments of high policy-risk issues tend to retain a large equity stake and underprice more, with underpricing increasing in retained equity. While the...

We test whether policy risk is systematically priced in equity returns across 49 countries from 1995 to 2013. We construct two global policy risk factors based on the ratings from international country risk guide. They capture the policy risk from government instability (GOVLMH) and the quality...

Microfinance institutions (MFIs) are hybrid organisations with the dual mission of financial sustainability and social purpose. However, there is little empirical evidence on how the two missions may affect each other intertemporally. In this study, we test the lead-lag reciprocal relation...

The developing Chinese economy has gone through significant market reforms in recent decades by taking a deliberate path of trail-and-error policymaking. We hand-collect a sample of 59 policy reversals related to market liberalization from 1999 to 2017. Using a general equilibrium term structure...

The study examines how stock market prices the stocks of socially ambiguous “Grey” firms, who are socially responsible in certain corporate social responsibility (CSR) dimensions while being socially irresponsible in other dimensions. Using firm data from 1992 to 2011, we find that the...