Using aggregate data from national accounts, we study whether strengthening and harmonizing securities regulation across the European Union increases household equity ownership. We find a significant increase in the proportion of liquid assets invested in equity, both when a household's own...

Asset allocation models have evolved in complexity with the development of modern portfolio theory, but they continue to operate under the assumption of investor rationality and other assumptions that do not hold in the real world. For this reason, academics and industry professionals make...

Textual analysis, implemented at scale, has become an important addition to the methodological toolbox of finance. In this paper, given the proliferation of papers now using this method, we first provide an updated review of the literature while focusing on a few broad topics—social media,...

Existing research often assumes that firms’ financial reporting choices influence their return comovement with other firms. We examine the validity of that assumption. First, we provide initial evidence suggesting that similarity in two firms’ disclosures not only predicts, but influences,...

This paper examines whether portfolio disclosure requirements for actively managed investment funds affect the investment decisions of firms owned by the funds. We argue that mandatory portfolio disclosures reduce fund managers’ incentive to collect and trade on private information, which...

This paper examines whether portfolio disclosure requirements for actively managed investment funds affect the investment decisions of firms owned by those funds. We argue that mandatory portfolio disclosures reduce fund managers’ incentive to collect and trade on private information, which...

Scholars have roundly criticized disclosure as a regulatory regime over the past decade for good reason. Disclosures—whether describing the terms of a loan or the risks of investing—purport to inform consumers. But who actually reads disclosures? We argue that mutual fund disclosures are...

This paper investigates the extent to which voluntary disclosure quality (VDQ) of firms is reflected in equity prices. As a novel contribution, we explore the idea that the speed with which equity prices reflect any benefits or costs of VDQ varies across firms. We find that in environments where...

Managers tend to issue equity when a firm is overvalued. Short selling is generally frequent among overvalued firms. By conditioning short selling on firm overvaluation, we show that short selling reduces managerial equity market timing and increases leverage. This moderating impact of short...

Investors are inextricably linked to financial institutions, money managers, and the products they market. Mutual funds, exchange-traded funds (ETFs), hedge funds, and pension funds manage or hold roughly $55 trillion in combined wealth. This chapter examines these topics with a behavioral...