This paper investigates how venture-backed companies are affected when others sharing the same investor suffer a negative shock. In theory, companies may be helped or hurt in this scenario. To examine the topic empirically, I estimate the impact of the collapse of the technology bubble on...

In this paper, we investigate the damage to real-sector investment spending and corporate financing activities triggered by the failure of three major investment banks during the 2007-09 financial crisis. We find that firms characterized by pre-crisis corporate investment banking relationships...

In the immediate aftermath of the Lehman collapse, investors ran from risky money market funds. In 27 of them, outflows were large enough to overwhelm cash inflows from maturing assets, thus forcing asset sales. We find that these money funds responded by selling their safest and most liquid...

We study the severe credit crunch of finance companies (SOFOLES) in Mexico using firm-level data between 2001 and 2011. Our results provide supporting evidence for a liquidity shock in the form of restricted access to commercial bank loans, loans from other organizations and public debt markets...

We investigate liquidity shocks and shocks to fundamentals during financial crises at commercial banks, investment banks, and hedge funds. Liquidity shock amplification models assume that widespread funding problems cause fire sales. We find that most banks do not experience funding declines...

We examine how local product market shocks impact individual investors' willingness to own and trade the underlying stock. Using the US airlines industry as our test market, we exploit plausibly exogenous variation generated when airlines supply flights to new markets. We find that active...

We find that Credit Rating Agencies (CRAs) see through transitory shocks to credit risk that stem from transitory shocks to equity prices, while market-based measures of credit risk do not. For a given stock return, CRAs are significantly less likely to downgrade firms with transitory shocks...

We study the interaction between supply- and demand-side factors and its effect on innovation. Employing a quasi-natural experiment, we show that a shift in demand has an impact on innovation and this effect is conditional on an enabling supply-side environment. Specifically, we exploit a shift...

We investigate how shocks to the reputation of credit rating agencies and the subsequent introduction of stricter regulation affect investors' reaction to rating signals. We focus on three major episodes of reputational distress: The Enron/WorldCom scandals, the subprime crisis and the lawsuit...

In this paper, we analyze the conflicts of interest of an informed agent who is responsible for divulging his private information about a company and has a reward function positively dependent on its stock price. We assume that the demand for the stock is subject to shocks that may increase...