Several studies have documented that companies that increase capital investments or grow their total assets subsequently earn substantially lower risk-adjusted returns. While some studies attribute this phenomenon to investors' initial underreactions to overinvestments pursued by managers who...

Several studies document a robust negative association between net external financing and average stock returns, which is referred to as the external financing effect. Using total asset growth as a comprehensive measure of overall corporate investment and total profitability gross of Ramp;D...

The recent global financial crisis demonstrates that market liquidity is a prominent systematic risk globally. We find that local liquidity risk, in addition to the local market, value and size factors, demands a systematic premium across stocks in 11 developed markets. This local pricing...

We study outcomes to ADR investments between August 1954 and September 2020, with attention to ADRs associated with Chinese firms. Overall, ADRs improved investors’ wealth by $1.03 trillion, with more than a third of this amount attributable to ADRs associated with Chinese firms. A...

Institutional investors, collectively the majority shareholders of most publicly traded corporations, play important roles in almost all aspects of corporate finance. This special issue puts together sixteen papers covering a wide range of topics, such as M&As, capital structure, bonds and...

We study long-run outcomes to those who invested in non-U.S. stocks through American Depository Receipts (ADRs) between August 1954 and September 2020, with particular attention to ADRs associated with Chinese firms. Overall, ADRs improved their investors’ wealth by $1.03 trillion, as compared...

This study provides novel evidence that cash flow news quantitatively explains the investment effect in the cross-section of stock returns. The negative return predictability of asset growth, investment growth, and accruals is evident only through the cash flow news component of returns. The...

This paper attempts to distinguish between rational and behavioral explanations for the gross profitability effect in the international setting. Using data from 41 countries over the period 1980-2010, we find that in most countries, firms with higher gross profitability subsequently experience...

We study long-run shareholder outcomes for over 64,000 global common stocks during the January 1990 to December 2020 period. We document that the majority, 55.2% of U.S. stocks and 57.4% of non-U.S. stocks, underperform one-month U.S. Treasury bills in terms of compound returns over the full...

Friedman, Johnson, and Mitton (2003) develop a model in which, in equilibrium, controlling shareholders may choose either tunneling from or propping up their listed company depending on the magnitude of an adverse shock and the magnitude of the private benefits of control. In this paper, we...