Emanuel Moench and Tobias Stein ♦ Equity returns follow a pronounced V-shape pattern around the onset of recessions. They sharply drop into negative territory just before business cycle peaks and then strongly recover as the recession unfolds. Recessions are typically…
Scott Guernsey, Matthew Serfling, and Cheng Yan ♦ After medical marijuana legalization (MML) by U.S. states, firms’ cost of equity (COE) decreases, especially for those with more growth opportunities, higher productivity, or a more skilled workforce. This policy change also…
C. S. Agnes Cheng, Iftekhar Hasan, Feng Teng, and Jing Xie ♦ This paper shows that when a compensation peer firm experiences a significant failure in its say on pay (SOP) voting, the focal firm’s stock price is adversely affected,…
Seth Armitage and Woon Sau Leung ♦ Exploiting changes in countries’ competition laws, we find that competition increases firms’ propensity to use zero leverage (ZL). We test the financial-flexibility, financial-constraint and quiet-life explanations for this result, concluding that desire for…
Jianying Qiu, Gijs van de Kuilen, Utz Weitzel, and Yilong Xu ♦ We administer a theory-driven, lab-in-the-field experiment to study the disposition effect among financial professionals. Our novel design identifies, at the individual participant level, key behavioral drivers of the…
Kentaro Asai and Dong Beom Choi ♦ This study provides direct evidence of the association between debt-equity conflict and investment efficiency in financially distressed firms. Leveraging a unique institutional setting in Japan, we examine the impact of lender-affiliated directors on…
