I examine how the robustness of investment opportunities influence firm payout policy and cash holdings. By exploiting new measures, the perturbations of q, a novel counterintuitive yet reasonable fact emerge: low robustness of investment opportunities (high perturbations of q) is able to spur...

We analyze the impact of the French 2012 financial transaction tax (FTT) on trading volumes, stock prices, stock liquidity and volatility. We extend the empirical research by the identification of FTT announcement and short-run treatment effects, which may distort difference-in-differences...

The last decade has seen rapid growth in trading of credit instruments on secondary markets. The ensuing availability of a rich set of credit market data has created a novel environment for testing a variety of financial economic theories. In this discussion, we provide a simple framework for...

This paper examines the relationship between liquidity and quality of financial information by analyzing long-term trends in Amihud's (2002) illiquidity measure for firms that restate financial statements. I find that for most income decreasing restatements illiquidity increases several months...

This paper investigates whether the business press serves as an information intermediary. The press potentially shapes firms' information environments by packaging and disseminating information, as well as by creating new information through journalism activities. We find that greater press...

This paper examines the relation between information differences across investors (i.e., information asymmetry) and the cost of capital, and establishes that with perfect competition information asymmetry makes no difference. Instead, a firm's cost of capital is governed solely by the average...

We experimentally explore how common knowledge provided by accounting systems affects investors' decision and shapes the formation of security prices over time. We design alternative accounting structures and run experiments in artificial security markets framed by these structures. In sessions...

Across multiple measures of “liquidity” and a variety of methods to control for correlated characteristics of more (less) liquid bonds, we find only limited evidence of a liquidity premium in the cross section of corporate bonds. Specifically, while illiquid bonds have slightly higher credit...

We show that a lack of investor trust affects the revision of cash flow expectations and delays the incorporation of accounting information into the stock price. To overcome investors' dependence on trust, managers can obtain external certification—either through credit ratings or by employing...

We document the emergence of “social executives,” top executives who connect with investors directly, personally, and in real time through social media, and we study the consequences of this development for financial markets. We contend that the emergence of social executives enables...