Ying Mao, Zheng Wang, and Hong Zou ♦ We document that firms prefer counties with higher ethnic diversity in locating their interstate investments, especially for those pursuing innovation, seeking to establish service centers, or capable of managing a diverse workforce.…
Jonathan Brogaard, Davidson Heath, and Da Huang ♦ This paper shows that exchange-traded funds (ETFs) “sample” their indexes, systematically underweighting or omitting illiquid index stocks. As a result, arbitrage activity between the ETF and its index has heterogeneous effects on underlying…
John (Jianqiu) Bai, Massimo Massa, Chi Wan, and Yan Wang ♦ Using online job postings from 2007 to 2021, we create a firm-level metric of local labor market concentration. Firms in more concentrated labor markets tend to have higher financial…
Young Jun Cho, Holly Yang, and Yue Zhao ♦ We argue that cross-ownership increases the private information embedded in stock prices, improving their feedback to managers. Consistent with this, we find that greater cross-ownership heightens a firm’s investment-q sensitivity, especially…
Yongqiang Chu, Zhanbing Xiao, and Yuxiang Zheng ♦ We show that banks use industry knowledge acquired through corporate lending in mortgage lending, a phenomenon we refer to as the “industry expertise channel.” Specifically, we find that banks that specialize in…
Yunzhi Hu, Zhaojun Yang, and Nanhui Zhu ♦ We develop a continuous-time model examining agency conflicts among controlling shareholders (managers), minority shareholders, and creditors in corporate investment decisions. The manager’s private benefits encourage over-investment, while their equity stake and debt…
