65 online-first articles · 2026-09-17 to 2026-10-01
JFThe Politicization of Social Responsibility2026-10-01
TODD A. GORMLEY, MANISH JHA, MENG WANG
Governance
Institutional investors are less likely to support shareholder proposals on environmental and social issues for firms headquartered in Republican‐led states. The decline in support has become more pronounced in recent years, aligning with politicians emphasizing companies’ social responsibility efforts, and among firms receiving state‐level subsidies and tax breaks. Investor support also varies with shifts in state leadership, dropping by 12 percentage points in the same state when Republicans are in control instead of Democrats. The findings indicate that institutional investors prioritize maximizing shareholder value and that politicians can influence investor votes by altering the value…
Open paper →JBFIntraday predictability in commodity futures: New evidence from China’s retail-dominated market2026-10-01
Biao Guo, Junping Zhu
General
CGIRInstitutional Cross‐Ownership and Asset–Liability Maturity Mismatches: Evidence From Chinese Listed Firms2026-10-01
WeiWei Li, Prasad Padmanabhan, Chia‐Hsing Huang
Capital Structure
Research Question/Issue This paper examines whether cross‐ownership, where institutional investors hold equity stakes in two or more firms within the same industry, affects asset–liability maturity mismatches that occur when cross‐owned firms use short‐term debt to finance long‐term assets. Research Findings/Insights Using a sample of Chinese listed firms for the 2007–2022 period, results suggest that firms with institutional cross‐owners increase asset–liability maturity mismatches since they use more short‐term debt, less long‐term debt, and allocate more resources to research and development (R&D) expenditures because of cross‐ownership. Increase in mismatches because of institutional…
Open paper →MSThe Effects of Stock Ownership on Individual Spending, Investments, and Loyalty2026-09-30
Paolina C. Medina, Vrinda Mittal, Michaela Pagel
Governance
In this paper, we analyze how one of the most fundamental behavioral biases in investing—people’s preference for buying specific stocks rather than holding the market portfolio—affects their life-cycle consumption, savings, and stock market participation. We first show that when investors receive stocks from specific companies, they increase their spending in those companies’ stores. Although specific stock ownership increases total spending in the short run, individuals’ overall stock market investments increase in the long run. For identification, we use the staggered allocation of brokerage accounts to individuals over time as well as quasirandomly distributed stock grants. This paper…
Open paper →JFQAHow Does Domestic Competition Affect Firms’ Foreign Market Expansion?2026-09-30
Tiago Loncan, Philip Valta
InvestmentSupply Chains & Trade
We examine how domestic product market competition shapes firms’ foreign market expansion. Using a panel of U.S. public firms from 1997 to 2017 and text-based measures of output offshoring, we show that stronger domestic competition increases foreign sales activity. To address endogeneity concerns, we exploit the competitive effects of policy-induced variation from staggered rejections of the Inevitable Disclosure Doctrine. Further tests indicate that these labor mobility shocks that intensify competitive pressure spur foreign expansion primarily among firms with stronger intangible and organizational capabilities and higher profitability. The findings suggest that domestic competition is…
Open paper →JFMoney to Burn: Crowdfunding Wildfire Recovery2026-09-30
J. ANTHONY COOKSON, EMILY A. GALLAGHER, PHILIP MULDER
Financing & IPOsClimate Uncertainty
Person‐to‐person crowdfunding is an increasingly important form of disaster relief, yet its distribution is poorly understood. Linking GoFundMe campaigns from a major wildfire to property and household credit records, we find that higher‐income households are 12 pp more likely to have campaigns and raise over 25% more, holding property losses constant. These disparities reflect unequal access to social capital: broader donor bases, more nonlocal ties, greater advocacy by friends, and more generous donors. Donors appear influenced by social pressure in online crowdfunding. These mechanisms mirror national patterns and underscore crowdfunding's limitations as a tool for equitable disaster…
Open paper →JFMind the App: Mobile Access to Financial Information and Consumer Behavior2026-09-30
YARON LEVI, SHLOMO BENARTZI
General
We study whether easier monitoring of personal finances affects consumer spending. We use transaction data from an account aggregation company to study consumers who installed the mobile app after using the same service on a personal computer for several months. We utilize the staggered release of the apps on different devices (iPhone, iPad, and Android) to identify a causal effect conditional on adoption of the mobile app. Consumers decrease their discretionary spending following the installation of the mobile app. The decrease is larger during evening hours and among individuals with lower proxies of self‐control, patterns consistent with a monitoring/self‐regulation channel and with…
Open paper →JFSupranational Banking Supervision, Credit Supply, and Risk‐Taking: European Evidence from Multi‐Country Credit Registers2026-09-30
CARLO ALTAVILLA, MIGUEL BOUCINHA, MARTINA JASOVA, JOSÉ‐LUIS PEYDRÓ, FRANK SMETS
Banking & Credit
Using a novel data set of multi‐country credit registers and an institutional change from national to supranational supervision, we show that supranational banking supervision can increase credit supply while mitigating excessive risk‐taking. Supranational supervision increases credit supply only in financially stressed countries while reducing the credit supply to the riskiest (zombie) firms. These improved lending effects stem from weaker national institutions, differential national supervisory incentives, lower national supervisory abilities, and weaker national insolvency laws. Moreover, improved access to external finance from wholesale and bond markets as well as lower risk‐weighted…
Open paper →JFThe Real Channel for Nominal Bond‐Stock Puzzles2026-09-30
MIKHAIL CHERNOV, LARS A. LOCHSTOER, DONGHO SONG
Capital Structure
We document that the nature of aggregate consumption dynamics changes when the bond‐stock correlation switches sign. We identify three regimes in a real‐time, sequential learning framework: two highly persistent regimes where permanent or transitory consumption shocks are more dominant, and a largely transitory disaster regime. We study the implications for asset prices. The transition from the second to the first regime in the late 1990s makes the correlation between equities and real bonds switch from positive to negative as in the data, providing an explanation from the perspective of real consumption dynamics. The findings extend to the international setting.
Open paper →JFQAResolution Design and Investment in Banking Groups – CORRIGENDUM2026-09-29
Albert Banal-Estañol, Gyöngyi Lóránth, David Pothier
Investment
JFQAFlow Diversification2026-09-29
Sunil Wahal, Albert Y. Wang
Governance
We measure flow diversification in mutual funds using the cross-sectional correlation of daily flows across investor clienteles. Greater flow diversification is associated with lower future flow volatility, smaller subsequent outflows, and lower cash holdings. We decompose flow correlation into predictable and unexpected components. Unexpectedly low flow correlation is associated with higher post-outflow fund returns, mitigating outflow-induced externalities on incumbent shareholders. Flow diversification also dampens the higher flow-performance sensitivity of illiquid funds, partially offsetting strategic complementarities that can generate fragility.
Open paper →JCFThe voting behavior of women-led mutual funds2026-09-29
Alberta Di Giuli, Alexandre Garel, Arthur Romec
General
JBFThe 52-week high liquidity mirage: How behavioral convergence impairs price discovery2026-09-29
Joshua Della Vedova, Mingze Gao, Andrew Grant, Joakim Westerholm, Barbara A. Bliss
Cash & Liquidity
MSWho Directs the Control Tower? Customer vs. Supplier-Managed Inventory in Supply Chains2026-09-28
Shi Chen, Morris A. Cohen, Hau L. Lee
GovernanceSupply Chains & Trade
Information distortion and incentive misalignment often undermine supply chain performance. In response, many firms adopt a “control tower” approach, whereby one party assumes responsibility for replenishment decisions across the supply chain. Industry examples showed that this role may be assigned to the customer, Customer-Managed Inventory (CMI), or to the supplier, Supplier-Managed Inventory (SMI). This paper investigates when one governance structure is preferable. We study a two-echelon, one-to-many supply chain consisting of a single supplier and a customer operating multiple warehouses. We characterize optimal base-stock policies and equilibrium holding-cost-sharing parameters under…
Open paper →JFAn IV Hazard Model of Loan Default with an Application to Subprime Mortgage Cohorts2026-09-28
CHRISTOPHER J. PALMER
Banking & Credit
I develop a control function methodology robust to endogenous or mismeasured regressors in hazard models. Applying the estimator to the subprime mortgage crisis, I quantify what caused the foreclosure rate to triple across the 2003 to 2007 subprime cohorts. To identify the elasticity of default to housing prices, I use various home price instruments including historical variation in home price cyclicality. Loose credit played a significant role in the crisis, but much of the increase in defaults across cohorts was caused by price declines unrelated to lending standards, with a 10% price decline increasing subprime mortgage default rates by 50%.
Open paper →JCFMonetary policy and mergers and acquisitions2026-09-28
Johannes J. Fischer, Carl-Wolfram Horn
M&A
CGIRCorporate Governance and Evolving Corporate Disclosures: A Commentary and Reflections2026-09-28
Vasiliki Athanasakou, Bjørn N. Jørgensen, Gerardo Pérez Cavazos, Georgios Voulgaris
GovernanceESG & Sustainability
Research Question/Issue This editorial introduces the Special Issue on “Corporate Governance and Evolving Corporate Disclosures” and advances a framework for understanding how governance structures and disclosure practices co‐evolve in response to regulatory reforms, stakeholder pressures, and technological change. We conceptualize disclosure not only as an outcome of governance but also as a mechanism that reshapes monitoring and accountability. Research Findings/Insights The contributions demonstrate that disclosure outcomes depend on stakeholder salience, institutional context, and technological advances. While low‐power stakeholder interventions may have limited effects on reporting…
Open paper →RoFForbearance and the Cost of Credit2026-09-26
Pedro Gete, Andrey Pavlov, Athena Tsouderou, Susan Wachter
Banking & Credit
Using novel data from the GSE Credit Risk Transfer (CRT) market and the enactment of the 2020 CARES Act as a natural experiment, we study the ex-ante pricing of mortgage forbearance. We show that private investors demanded higher compensation for bearing mortgage credit risk following the introduction of federal mortgage forbearance. The increase in CRT spreads was larger for securities with greater exposure to judicial foreclosure regimes, lower expected house price growth, higher house price volatility, and riskier borrowers. These patterns suggest that investors priced heightened uncertainty regarding future collateral values and recovery outcomes. We find little evidence that the…
Open paper →JFEWhat can macro-active bond funds tell us about monetary policy change?2026-09-26
Claire Yurong Hong, Jun Pan, Shiwen Tian
Capital Structure
JBFThe role of government contracting in corporate environmental policies2026-09-25
Wendi Huang
General
MSGenerative Search: Evidence from a Large-Scale Field Experiment2026-09-24
Shuang Zheng, Yuting Zhu, Xin Ye, Liang Shen
GeneralAI & Technology
Generative search is an emerging search paradigm that integrates Generative AI (GenAI) into traditional search engines by presenting users with AI-generated responses before conventional search results. Whereas keyword-based search requires consumers to translate their underlying needs into effective keyword queries, generative search lets users express those intentions directly in natural language, a shift made possible by GenAI’s new mode of information presentation. This shift moves the consumer-search engine interaction upstream to the stage of problem formulation, rendering empirically observable a previously hidden phase of search behavior: the mapping from problem formulation to…
Open paper →JFQAConnected Social Media2026-09-24
Zhiqian Jiang, Baixiao Liu, Yuchen Xu, Bohui Zhang
Governance
We examine whether and how firms use connected social media outlets to counteract negative coverage in traditional media. Employing a sample of Chinese listed firms with ties to social media outlets, we find that connected outlets portray firms more favorably than unconnected ones. Following unfavorable coverage in traditional media, connected outlets shift attention toward long-term prospects and promote favorable narratives, consistent with an optimism-shifting mechanism. The effect is more pronounced when firms have stronger incentives to stabilize stock prices and when managers face heightened career concerns. Our findings highlight the role of connected social media outlets in shaping…
Open paper →JFQAPolitical Connections, Financial Constraints, and Corporate Taxation2026-09-24
Ke Na, Terry Shevlin, Youan Wang, Zigan Wang
Banking & CreditPolitical Geography
We find that the effect of political connections on tax planning depends on firms’ financial conditions. After increased political connections, financially unconstrained firms increase tax planning and spending on tax services, as documented in prior studies, whereas constrained firms decrease tax planning and spending on tax services. Moreover, decreases in tax planning are only present for constrained firms that obtain new bank loans and public debt and when the connected politicians serve on banking-related committees. Our results suggest that by facilitating access to external financing, political connections reduce financially constrained firms’ use of tax planning as an internal…
Open paper →JFEBankruptcy lawyers and credit recovery2026-09-24
Brian Jonghwan Lee
Banking & Credit
JFESustainable organizations2026-09-24
Thomas Geelen, Jakub Hajda, Jan Starmans
GeneralESG & Sustainability
JBFWhen ambiguity strikes: Climate-transition ambiguity and green–brown return spreads2026-09-24
Garvin Kruthof
GeneralClimate UncertaintyESG & Sustainability
JBFForeign reserves as a monetary policy buffer2026-09-24
Tianhang Zhou, Sihao Du, Jie Li
General
JBFFundamental Sentiment and Cryptocurrency Risk Premia2026-09-24
Ilias Filippou, My T. Nguyen, Ganesh Viswanath-Natraj
GeneralCrypto & Digital Assets
JBFThe unintended environmental benefit of short sales constraints: Evidence from plant-level toxic chemical releases2026-09-24
Jieying Hong
General
RFSUniversal Portfolio Shrinkage2026-09-23
Bryan Kelly, Semyon Malamud, Mo Pourmohammadi, Fabio Trojani
General
We introduce a nonlinear covariance shrinkage method for building optimal portfolios. Our universal portfolio shrinkage approximator (UPSA) is built from closed-form basis portfolios, is cheap to implement, and improves on existing shrinkage methods. Rather than uniformly penalizing all principal components of returns or discarding low-variance ones, UPSA instead reweights components to explicitly optimize expected out-of-sample portfolio performance. In empirical applications using a large cross-section of anomaly factors, it delivers robust improvements over alternative shrinkage methods in the literature.
Open paper →MSSuperstition Everywhere2026-09-23
Jeffery (Jinfan) Chang, Huancheng Du
Capital Structure
In Chinese culture, the digit 8 is considered lucky and the digit 4 unlucky. We find that this numerological superstition has a significant impact across China’s stock, bond, foreign exchange, and commodity futures markets, affecting asset prices in both the primary and secondary markets. The superstition effect, that is, asset prices ending in a lucky (unlucky) digit are far more (less) frequent than expected by chance, is prevalent across finance markets. We show that this phenomenon is driven by two mechanisms: sophisticated investors’ reliance on superstition as an anchor to manage ambiguity, and the overoptimism of unsophisticated investors. While the superstition effect does not lead…
Open paper →JCFGreen washing in supply chains?2026-09-23
Swarnodeep Homroy, Asad Rauf
GeneralSupply Chains & TradeESG & Sustainability
JBFReal-time macroeconomic quantile factors for daily Value-at-Risk and Expected Shortfall forecasting: Statistical significance and economic value2026-09-23
Xiao Huang, Xiaochun Liu
General
CGIRCollaboration or Opportunism? Supplier Equity Stakes in Customers and Audit Fees2026-09-23
Duo Wang, Yunge Hu, Yanxi Li, Lijia Yang
GeneralSupply Chains & Trade
Research Question Based on relational and resource dependence theories, this study investigates the impact of supplier equity stakes in customers (SESC) on audit fees and its underlying mechanisms from the perspective of auditors' behavioral decision‐making. Research Findings The findings reveal that SESC significantly reduces audit fees, supporting the collaboration hypothesis. Mechanism analysis indicates that SESC lowers audit fees by reducing operational risk and audit complexity. Heterogeneity analysis shows that the effect of SESC on reducing audit fees is weakened when the holding level is high, the duration is short, and the supplier is state‐owned, whereas when the firm's external…
Open paper →CGIRDirector Expertise and Compliance to Corporate Social Responsibility Regulations2026-09-23
Swarnodeep Homroy, Wentao Li, Nassima Selmane
GovernanceESG & Sustainability
Research Question/Issue This paper investigates whether assigning CSR‐specific expertise to the board committee legally responsible for CSR improves compliance with mandatory CSR law and shapes how firms organize that compliance. Research Findings/Insights Using Indian listed companies subject to mandatory CSR regulation, we find that CSR expertise on CSR committees is associated with higher compliance and more concentrated CSR activities across categories and locations. These associations are stronger among firms facing greater competitive or financial pressures and those without prior CSR engagement. High compliance combined with CSR expertise is also associated with higher firm value,…
Open paper →RFSAffordable Housing, Unaffordable Credit? Concentration and High-Cost Lending for Manufactured Homes2026-09-22
Sebastian Doerr, Andreas Fuster
Banking & Credit
This paper shows that high market concentration in the U.S. manufactured home loan market allows lenders to charge markedly higher interest rates than in the mortgage market for site-built homes. Borrowers in counties with higher lender concentration face significantly higher rates, and evidence from bunching at a regulatory rate threshold, an instrumental variable analysis, and a difference-in-differences analysis suggests a causal link. Integrated lenders, which play an outsized role in this market, charge particularly high rates, and we provide evidence suggesting that these lenders exploit their market power over borrowers. We discuss factors that may explain limited lender entry.
Open paper →RFSOriginal Sin Redux: Role of Duration Risk*2026-09-22
Carol Bertaut, Valentina Bruno, Hyun Song Shin
Capital Structure
We highlight the role of duration and exchange rate risks on portfolio flows by using a unique and comprehensive database of U.S. investor flows into emerging market government bonds denominated in local currency. Borrowing long-term mitigates rollover risk but amplifies valuation changes that further interact with currency movements. Our analysis highlights the double-edged nature of long-term borrowing and draws attention to market stress dynamics due to strategic complementarities among mutual fund investors.
Open paper →MSSocial Networks as Information Conduits for Online Credit Supply and Demand2026-09-22
Linda Allen, Lin Peng, Yu Shan
Banking & CreditAI & Technology
We study how intercommunity social networks influence loan demand and supply on fintech lending platforms. Demand for online loans rises following increases in online borrowing activity in geographically distant but socially connected areas. On the supply side, borrower area social proximity to deposit-rich regions increases funding likelihood and is associated with better ex post loan performance. We establish causality with shift-share instrumental variables (SSIVs) obtained from natural disasters (demand side) and financial adviser misconduct (supply side). Social connectedness expands both loan demand and supply in disadvantaged communities without increasing delinquency rates.…
Open paper →JFEMachine-learning about ESG preferences: Evidence from fund flows2026-09-22
George O. Aragon, Shuaiyu Chen
GeneralESG & Sustainability
JFERelated exposures to distressed borrowers and bank lending2026-09-22
Sumit Agarwal, Ricardo Correa, Bernardo Morais, Jessica Roldán, Claudia Ruiz-Ortega
Banking & Credit
JFEDebt and assets2026-09-22
Efraim Benmelech, Nitish Kumar, Raghuram Rajan
Capital Structure
JFJustice Good as Random?2026-09-22
NIKLAS HÜTHER, KRISTOPH KLEINER
Banking & Credit
The random assignment of judges promotes fairness and underpins causal identification across the social sciences. Analyzing Chapter 11 bankruptcies, we find sophisticated parties “judge‐shop”: relative to secured hedge fund creditors, cases involving unsecured hedge fund creditors and equity holders are assigned judges with lower past conversion rates and higher unsecured recovery rates. Experienced legal counsel similarly influences assignment. Because judges are not assigned consecutive large cases, knowledgeable parties can judge‐shop by timing the filing date. We develop a method to measure the resulting bias and demonstrate the need for controls and bounded instrumental variable…
Open paper →JFAMERICAN FINANCE ASSOCIATION2026-09-22
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General
JCFOne size doesn't fit all: flexible financing as a catalyst for innovation2026-09-22
Junyu Pan, Ahmed Imran Hunjra, Jia Liu, Shikuan Zhao
Financing & IPOs
JBFIntegrating minds: An ensemble approach to portfolio optimization2026-09-22
Fangquan Shi, Jiaping Qiu, Xinhua Gu, Lianjie Shu
General
MSCommunicating Corporate Culture in Labor Markets: Evidence from Job Postings2026-09-21
Allen H. Huang, Joseph Pacelli, Terrence Tianshuo Shi, Yuan Zou
GeneralAI & Technology
We examine how culture information in job postings influences firms’ hiring outcomes. We utilize machine learning methods to measure five core values present in job postings and demonstrate that culture information helps attract job seekers, as it is associated with higher worker inflows. The effect strengthens when job seekers value culture in their job searches and face frictions in learning about culture from other sources. Additional analyses indicate that individual cultural dimensions in job postings are more salient to job seekers when they have heightened preferences for that particular value. Finally, culture information is associated with a higher likelihood that interviews result…
Open paper →JCFSmall banks really are different: Unexpected deposit flows, loan production, and off-balance-sheet funding liquidity risk2026-09-21
Thierno Amadou Barry, Alassane Diabaté, Gamze Ozturk, Amine Tarazi, Lawrence White
Banking & Credit
EFMRepeat SPAC Sponsors2026-09-21
Gustav Finne, Jesper Haga
M&A
Sponsors are the key value‐generating resource for special purpose acquisition companies (SPACs). We identify a subgroup of sponsors—repeat sponsors—who have formed and managed multiple SPACs. Repeat sponsors identify target companies faster, and their SPACs merge with private companies of higher quality. However, these benefits are attenuated when sponsors manage multiple SPACs simultaneously, suggesting that overlapping commitments create conflicts of interest and dilute sponsor attention. Overall, our findings highlight a tradeoff between the benefits of sponsor expertise and experience, and the costs associated with concurrent sponsorship.
Open paper →EFMEnvironmental Impact Shaping a Firm's Zero Leverage Decision: Analysing Debt Demand and Supply Determinants2026-09-21
Paolo Saona, Antonio Renzi, Gianluca Vagnani, Pietro Taragoni
Capital StructureESG & Sustainability
Zero‐leverage firms remain a puzzle in corporate finance. We propose a supply‐side mechanism linking environmental impact to debt access. Because creditors favour firms with high negative externalities and strong cash flows, environmentally friendly firms with high initial costs face tighter credit constraints. Using a theoretical model and a bivariate probit on 1113 firms across 54 countries (2011–2024), we show that positive environmental impact significantly reduces debt availability. The effect varies with firm development, industry environmental sensitivity, environmental regulation and Environmental, Social and Governance (ESG) performance. The findings highlight the importance of…
Open paper →EFMThe Price of Toxic Secrecy: Employee Voice and Stock Price Crash2026-09-21
Yanguang Liu, Yankuo Qiao
Governance
This paper examines whether Toxic Secrecy Bans, state laws restricting overly broad non‐disclosure agreements, affect stock price crash risk. Exploiting the staggered adoption of these bans across US states as a quasi‐natural experiment, we find that Toxic Secrecy Bans significantly reduce crash risk. Consistent with an employee‐voice mechanism, EEOC complaints and negative workplace disclosures increase following adoption. Effects are stronger among firms with lower employee satisfaction, weaker ethical cultures, and greater ownership monitoring, but weaker in high‐unemployment environments. The bans also improve firms' governance, social, and community performance. Overall, Toxic Secrecy…
Open paper →JFEDo rights offerings reduce bargaining complexity in Chapter 11?2026-09-19
Gunjan Seth
General
JFEDiscounting timing strategies2026-09-19
Toomas Laarits
General
JCFInformation source diversity and analyst forecast bias2026-09-19
Yumeng Zhang, Xiong Xiong, Xu Feng, Qingchong Chen
General
MSIndex-Based Yield Protection for Smallholder Farmers2026-09-18
Kehan Lu, Jing-Sheng Song, Can Zhang
GeneralClimate Uncertainty
Smallholder farmers in emerging economies are vital to the global food supply, yet they remain highly vulnerable to yield risks such as extreme weather. Whereas government subsidies that compensate farmers in low-yield scenarios are common in developed countries, such policies are often impractical in emerging economies because of the high cost of assessing yields on small farms. To address this, an innovative index-based approach has gained traction, under which payments are triggered when a predetermined index (e.g., rainfall) predicts a low yield. Yet the inevitable inaccuracy of indices in reflecting actual yields weakens the alignment between payments and actual yields, reducing risk…
Open paper →MSBad News Bearers: The Negative Tilt of the Financial Press2026-09-18
Betty Liu, Marina Niessner, Eric C. So
Payout Policy
We show that increased media coverage strongly predicts lower subsequently announced firm fundamentals, earnings surprises, and higher likelihoods of bankruptcy, dividend cuts, and delistings. Additionally, we find that media articles often convey negative sentiment, with investor attention increasing around the publication of negative articles, suggesting that the media tilts coverage toward negative events to drive readership. We also show that media coverage initially impedes price discovery for negative news through an attention effect and that investors respond sluggishly to the negative signal embedded in media coverage decisions, leading to a gradual incorporation of the negative…
Open paper →JCFPrivate communication between managers and financial analysts: evidence from taxi-ride patterns in New York City2026-09-18
Stacey Choy, Ole-Kristian Hope
General
JCFTrade distortions and investment decisions of private equity funds2026-09-18
Simon J. Evenett, Stefan Morkoetter, Dominic Rainsborough
Financing & IPOs
RFSThe Coherence Side of Rationality Theory and Evidence from Firm Plans2026-09-17
Pamela Giustinelli, Stefano Rossi
General
Using the Duke Survey data on firms’ internal plans, we show that over 80% of Chief Financial Officer (CFO) forecasts align closely with simple heuristics taught in MBA textbooks. We introduce forecast coherence—internal consistency across forecasts of jointly determined variables—as a benchmark for evaluating these heuristics. Nearly half of CFOs issue forecasts closely aligned with incoherent heuristics. Such forecasts are associated with predictable reversals in forecast errors, lower firm performance, and underinvestment. We develop a parsimonious model illustrating how reliance on restricted forecasting heuristics can generate incoherence and resource misallocation within firms,…
Open paper →RFSOptimal Time-Consistent Debt Policies2026-09-17
Andrey Malenko, Anton Tsoy
Capital Structure
We study a dynamic trade-off model where shareholders can freely adjust debt but lack commitment to future debt policies. A debt policy is time-consistent if shareholders prefer it to deviating and losing credibility ex post. We characterize the optimal time-consistent policy in a class. It includes a stable regime, where shareholders actively manage liabilities to maintain the target interest coverage ratio, and a distress regime triggered by large negative shocks, where shareholders temporarily abandon the target. This policy has realistic properties and bridges the gap between the static trade-off theory of debt and theory based on the leverage ratchet effect. (JEL G32, C73)
Open paper →RFSCorporate Bond Multipliers: Substitutes Matter2026-09-17
Manav Chaudhary, Julie Zhiyu Fu, Jian Li
Capital Structure
Many economic questions require estimating the price effect of demand shifts (multipliers) in the bond market. Corporate bonds have salient characteristics that distinguish between close and distant substitutes. We show that accounting for heterogeneous substitutability between bonds is critical for correctly estimating multipliers. We find that security-level multipliers are very small. In fact, an order of magnitude smaller than the estimate ignoring heterogeneous substitutability. Nonetheless, portfolio multipliers are substantially larger and monotonically increase with the aggregation level. Furthermore, we find that the multiplier is larger for high-yield bonds, longer-maturity bonds,…
Open paper →RFSAdverse Selection and the Government Intervention Trap2026-09-17
Fenghua Song, Anjan Thakor
Investment
In a dynamic setting, high-quality firms may tolerate current adverse selection when raising financing because they expect future opportunities to profitably acquire assets from failed lower-quality firms. But search frictions in asset trading impede efficiency, inviting government intervention. Anticipation of such intervention affects ex ante adverse selection and project investment because it reduces buyers’ ex post trading profits. Depending on parameter values, this anticipation can have either pernicious or salutary effects. The pernicious effect reduces participation by high-quality firms, worsens adverse selection, and depresses project investment, potentially triggering…
Open paper →MSBeyond Value: On the Role of Symmetry in Demand for Information2026-09-17
Aniol Llorente-Saguer, Santiago Oliveros, Ro’i Zultan
Governance
We study demand for symmetric and asymmetric information sources in the laboratory. Although participants respond to incentives and instrumental considerations, they exhibit a systematic bias towards symmetric sources. These patterns persist among individuals with higher cognitive abilities and better task comprehension, and they are not accounted for by their elicited subjective beliefs. This paper was accepted by Dorothea Kübler, behavioural economics and decision analysis. Funding: This project was supported by a British Academy/Leverhulme Small Research [Grant SG171679]. R. Z. acknowledges support from the Israel Science Foundation [Grant 524/24]. Supplemental Material: The online…
Open paper →JFQAPrivate Equity and Gas Emissions: Evidence from Electric Power Plants2026-09-17
Xuanyu Bai, Youchang Wu
Financing & IPOsClimate UncertaintyESG & Sustainability
We examine the effect of private equity buyouts on the environmental performance of U.S. fossil fuel power plants. Output-scaled CO 2 emissions are, on average, 4.2% lower after buyouts, predominantly because of fuel-saving improvements in production efficiency. Emission intensities decline more significantly following buyouts backed by pro-ESG private equity because of not only greater efficiency gains but also enhanced emission control. Our results suggest that while private equity firms are effective at implementing environmentally beneficial operational changes that also increase profitability, they do not have strong incentives to undertake environmentally beneficial changes that are…
Open paper →JBFCultural beliefs and equity prices: Evidence from astrological belief in mercury retrograde2026-09-17
Yanling Qi, Hang Wang, Bohui Zhang
General
CGIRClassified Boards and Corporate Environmental and Social Performance2026-09-17
Lars Helge Haß, Georgios Loukopoulos, Nor Nabilah Binti Nazimuddin
GovernanceESG & Sustainability
Research Question/Issue This study examines the relationship between classified boards and firms' environmental and social (E&S) performance. We ask whether the insulation associated with classified boards is related to firms' sustainability outcomes and whether external monitoring and investor horizon condition this relationship. Research Findings/Insights Using 14,066 US firm‐year observations from 2002 to 2020, we find that firms with classified boards exhibit significantly lower overall E&S performance. This negative association is concentrated in the environmental dimension. The adverse association with E&S performance is weaker among firms subject to stronger institutional monitoring…
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