Distorted prices misguide managerial incentives and resource allocation. Distorted prices may occur when firms' stock prices are near their 52-week highs because investors tend to perceive the stocks as relatively overvalued and are reluctant to bid prices higher even if new information warrants...

This paper explores whether firms manage their earnings after stock splits to meet the raised expectations from the market due to the positive signal sent by the splits. We first document that post-split drift mainly exists in the first three months and is positively associated with post-split...

We hypothesize that high stock price levels impede informed trading on the stocks and reduce price informativeness. This is because uninformed trading is needed to facilitate informed trading, and high stock prices may impose budget constraints on uninformed investors. Indeed, we find, for...

We identify “anchoring CEOs” based on whether CEOs' insider trading anchors on their firms' 52-week highs. We hypothesize that these CEOs imprint anchoring heuristic for personal decision-making on corporate decisions of similar nature, i.e., equity trading. We find that firms with anchoring...

We find that analysts are more likely to downgrade stocks when prices approach the 52-week high. The results are stronger for stocks with higher information asymmetry but moderated by analysts' reputation, work experience, and educational background. We also find a strategy that shorts stocks...

We propose that active options markets facilitate shareholder activism and improve informational efficiency, thereby enhancing corporate social responsibility (CSR) performance. We find supportive evidence that options trading is positively related to firms’ CSR scores. Our identification...

Using firm-level R&D and patent data for 88 countries, we find that country climate vulnerability negatively affects firms’ R&D investment and innovation performance. This effect operates through the decreased responsiveness of R&D investment to investment opportunities (i.e., investment...