We establish a causal link between carbon emissions and shareholder value using the passage of the Regional Greenhouse Gas Initiative (RGGI) that imposed a cap-and-trade policy for carbon emission on electric utilities in several Northeastern and Mid-Atlantic states. The regulation was...

After the introduction of a nationwide Unified Payment Interface (UPI) in 2016, India has become one of the world's leading economies for cashless transactions. We exploit the heterogeneity in the intensity of the adoption of digital payments across districts to show that the household income...

We show that the U.S. commercial banks have become increasingly similar in their risk exposure after the global financial crisis. Pairwise correlation in bank equity returns increased threefold after the enactment of annual stress tests under the Dodd-Frank Act (DFA). Non-financials and non-bank...

Credit rating is determined by a borrower's credit risk, but can the rating in itself change a borrower's credit risk in an economically meaningful manner? Despite the theoretical and practical importance of this question, there is limited empirical evidence on this topic since it is hard to...

We find a positive cross-sectional relationship between expected stock returns and default risk, contrary to the negative relationship estimated by prior studies. Whereas prior studies use noisy ex post realized returns to estimate expected returns, we use ex ante estimates based on the implied...

We consider the effect of hedging with foreign currency derivatives on Brazilian firms in the period 1997 through 2004, a period that includes the Brazilian currency crisis of 1999. We find that, derivative users have valuations that are 6.7-7.8% higher than non-user firms. Hedging with currency...