Knowledge that Transforms

We examine how corporate misconduct affects merger and acquisition (M&A) activity of non-prosecuted peer firms. We find that exposure to peer misconduct increases the propensity to participate in M&A transactions, both as an acquirer and as a target. Firms exposed to peer misconduct experience adverse financial and valuation pressures, creating opportunities for financially stronger firms to acquire distressed rivals at discounted prices. We show that acquisitions involving targets exposed to peer misconduct are characterized by lower takeover premiums, a higher fraction of stock payment, higher acquirer announcement returns, and greater deal synergies. Overall, the evidence supports the view that misconduct spillovers disproportionately affect targets through heightened regulatory pressures and compliance costs, shifting bargaining power toward acquirers in M&A transactions.

Firms’ green technology investments are increasingly important for competitive positioning, yet their impact on long-run performance remains unclear. Using electricity capacity data for global utility firms, we construct a unique structural measure of technological greenness based on renewable versus fossil fuel physical infrastructure. We find that adopting sustainable technologies is followed by a long-run improvement in corporate fundamentals that is only partially reflected in stock prices, yielding superior returns over a multi-year horizon. These results partly reflect higher revenue growth in liberalized retail markets rather than investor sentiment, revealing a consumer-based mechanism that likely extends to competitive downstream sectors.

We survey 153 empirical studies of family firms and document 192 operational definitions representing 25 distinct definition types. These definitions can be decomposed into five recurring, codable dimensions: ownership, management, board representation, embeddedness, and succession. We relate these dimensions to economic mechanisms including agency conflicts, residual control rights, transaction costs, and dynastic control. Alternative definitions select systematically different populations and yield materially different estimates of firm performance and innovation. Definition choice is largely unrelated to the research question, except in succession studies. Ownership thresholds track private enforcement of self-dealing rules, but not statutory shareholder rights or rule of law. We conclude that the family firm is a family of related constructs rather than a single latent construct. Definitions should therefore match the family-firm construct implied by the research question, and results should be reported across alternative classification rules.

We propose and examine a novel mechanism whereby holdings of dollar assets by foreign institutions can have a large, unexpected impact on foreign Treasury yields in crisis periods. Non‐U.S. institutions hold substantial dollar assets and hedge dollar exposures by selling dollars forward. In crisis periods, the dollar appreciates against other currencies. To meet margin calls on foreign exchange (FX) hedging positions, traditionally passive institutions liquidate domestic safe assets to raise cash. We show that during the recent COVID crisis, U.K. institutions with substantial dollar holdings and FX hedging positions sold large amounts of gilts, contributing significantly to the observed gilt yield spike.