Using U.S. and global data, we examine the impact of Smart Beta ETFs on active mutual funds. As Smart Beta ETFs become widely available and actively traded, active mutual fund flows become “smarter”, that is they become more sensitive to multi-factor alphas. Our findings demonstrate how...

This paper documents an industry expertise channel that reduces the information asymmetry between banks and mortgage borrowers. This channel is a result of information spillover from a bank’s specialization in corporate lending to its mortgage lending. We find that banks indeed rely on the...

This paper shows the importance of interest rate risk and prepayment risk in fixed-rate mortgages in influencing banks’ securitization of mortgages. Banks with longer-maturity liabilities are more capable of taking the interest rate risk and therefore securitize fewer mortgages. In contrast,...

Prior studies show that creditors' simultaneous equity holding mitigates shareholder-creditor conflict. We show that a new type of conflict arises in syndicates with such dual holders, due to the heterogeneity across syndicate members' equity-to-loan positions. We find that loans with higher...

Using daily foot-traffic data, we find a significant decrease in firms’ store visits following negative environmental and social (E&S) incidents. The decrease in visits by more E&S-conscious consumers is four times greater than that by less E&S-conscious consumers. Our results are stronger...

We add stochastic sales revenues to the business operations and model companies' total liquidity management, assuming that companies are exposed to shocks of revenues below expectations. We offer an explanation that separates all companies into three liquidity groups. Companies in group one...