Do firms with liquid stocks hold more cash? If so, why? We show that liquidity has a positive effect on the level and value of cash holdings. Using a regression discontinuity design based on the Russell 1000/2000 index reconstitution, we also show that there is a causal link between liquidity...

This study examines whether the flow volatility experienced by institutional investors affects firms' financing costs. Using Greenwood and Thesmar's (2011) stock price fragility, a proxy for firm exposure to its institutional investors' flow volatility, we find that firms with high stock price...

This short paper shows how excess global saving led to asset price inflation in U.S. stocks during 1981 to 2019. It compares stock PE ratios to corporate bond values to explain that investor exuberance for stocks enabled and enhanced the extent of the secular stock rise

The paper shows that issuing activity does not result in superior liquidity. Even the kinds of new issues that are supposed to be more liquid than others (IPOs backed by venture capital, new issues with high-prestige underwriters, severely underpriced IPOs) are just as liquid as their peer...

We investigate the impact of fraud risk - measured by the probability for earnings overstatements - on a firm's future stock market performance. Based on an out-of-sample estimation of individual firms' fraud risk, we find that stocks with higher fraud risk earn significantly lower stock market...

This paper examines stock liquidity in explaining the mixed relations between financial constraints and stock returns and the pricing of stock liquidity across financially constrained and unconstrained firms. We find a negative relation in liquid portfolios and a positive relation in illiquid...

The literature suggests that voluntary IPO lockups (thereafter lockups) have both roles as a commitment device to control moral hazard and a signaling device to minimize asymmetric information. Using a hand collected data on lockups in China from 2006 to 2012, this paper disentangles the two...

We show that stock liquidity negatively affects firms' corporate social responsibility (CSR) ratings. To identify the causal effect, we use the decimalization of stock trading as an exogenous shock to liquidity. The negative CSR effect of liquidity is more pronounced for firms where short-term...

I provide new evidence of the S&P500 inclusion effect that highlights the importance of stock supply. If excess demand from S&P500-linked capital drives the inclusion effect, it should depend as well on the effective supply of a stock. Standard & Poor's index methodology gives two distinct...

I examine how an important attribute of financial reporting quality, i.e., accounting conservatism, affects the sensitivity of corporate bond returns to changes in the value of equity (i.e., the hedge ratio). The correlation between stock and bond returns (co-movement) is a fundamental input for...