The purpose of the Harvard Business School-Journal of Financial Economics conference was to reexamine the role of clinical work in our profession. Clinical research–empirical work that examines a relatively small number of events intensively–accounts for a very small fraction of published work in the field. The pieces in this conference volume are case studies of different “clinical” research techniques that are used to develop, test, apply and communicate theory.

This paper uses a database of 58 financial innovations from 1974–1986 to examine how investment banks are compensated for their investments in developing new products. Investment banks that create new products do not charge higher prices in the brief period of ‘monopoly’ before imitative products appear, and in the long-run charge prices below, not above, those charged by rivals offering imitative products. However, banks capture a larger share of underwritings with innovations than with imitative products. One interpretation of the price and quantity evidence is that innovators become inframarginal rivals that enjoy lower costs of trading, underwriting, and marketing.

For over three centuries and across the globe, lottery-linked savings (LLS) programs have offered individuals the opportunity to save, and in lieu of paying traditional interest, have given savers periodic chances to win money or prizes. Despite their long history, LLS programs are relatively unstudied by scholars. In this paper, I detail an LLS program that the UK government has offered continuously since 1956, the UK Premium Bond (PB) program. PBs guarantee holders risk-free return of nominal principal. In aggregate, they pay a market-related return, distributed to holders each month by a lottery like mechanism. Premium bonds are popular savings vehicles in the UK. Over £31.1 billion of PBs were outstanding as of March 2006, and public reports suggest that they were held by between 22 percent and 40 percent of UK citizens. The 60.2 million residents of the UK had £517 invested in PBs per capita. If held in the banking sector, PB holdings would have accounted for 3.9 percent of household sterling deposits in UK financial institutions. LLS programs, such as PBs, are fascinating not just because of their size, but because of their appeal to nonsavers, especially low-income families. Mauro Guillen and Adrian Tschoegl (2002, reviewing LLS programs in Latin America, concluded: “The bankers we spoke with believe that [LLS] are especially successful with low income depositors, and in cases where there are lots of people outside the banking system.” In South Africa, a new LLS program raised over 1.2 billion rand and enrolled 750,000 participants across a wide spectrum of the economy in two years. In the United Kingdom, while PBs are held by about the same fraction of the population holding stocks, PBs have a stronger appeal to lower-income British households. PBs are held by a larger fraction of British households than are stocks and shares for all households, except those earning over £52,000 annually (Department for Work and Pensions 2007). Are PB holders saving, gambling, or engaging in both activities? This question is not just academic, because national laws and regulations in many countries bar private LLS programs on the basis that they are prohibited gambling activities. For example, in South Africa, the government has tried to shut down the popular LLS program mentioned above; in the United States, these programs would violate state lottery laws and federal banking regulations. In this paper, I analyze the time series of net sales of the PB program and conclude that the program appears to be a hybrid of gambling and savings, but with a clear savings element.

This paper studies the exposure of North American gold mining firms to changes in the price of gold. The average mining stock moves 2 percent for each 1 percent change in gold prices, but exposures vary considerably over time and across firms. As predicted by valuation models, gold firm exposures are significantly negatively related to the firm's hedging and diversification activities and to gold prices and gold return volatility, and are positively related to firm leverage. Simple discounted cash flow models produce useful exposure predictions but they systematically overestimate exposures, possibly due to their failure to reflect managerial flexibility.

ABSTRACT This paper studies the exposure of North American gold mining firms to changes in the price of gold. The average mining stock moves 2 percent for each 1 percent change in gold prices, but exposures vary considerably over time and across firms. As predicted by valuation models, gold firm exposures are significantly negatively related to the firm's hedging and diversification activities and to gold prices and gold return volatility, and are positively related to firm leverage. Simple discounted cash flow models produce useful exposure predictions but they systematically overestimate exposures, possibly due to their failure to reflect managerial flexibility.

This paper examines a new database that details corporate risk management activity in the North American gold mining industry. I find little empirical support for the predictive power of theories that view risk management as a means to maximize shareholder value. However, firms whose managers hold more options manage less gold price risk and firms whose managers hold more stock manage more gold price risk, suggesting that managerial risk aversion may affect corporate risk management policy. Further, risk management is negatively associated with the tenure of firms' CFOs, perhaps reflecting managerial interests, skills, or preferences.

ABSTRACT This article examines a new database that details corporate risk management activity in the North American gold mining industry. I find little empirical support for the predictive power of theories that view risk management as a means to maximize shareholder value. However, firms whose managers hold more options manage less gold price risk, and firms whose managers hold more stock manage more gold price risk, suggesting that managerial risk aversion may affect corporate risk management policy. Further, risk management is negatively associated with the tenure of firms' CFOs, perhaps reflecting managerial interests, skills, or preferences.

This article examines a new database that details corporate risk management activity in the North American gold mining industry. The author finds little empirical support for the predictive power of theories that view risk management as a means to maximize shareholder value. However, firms whose managers hold more options manage less gold price risk, and firms whose managers hold more stock manage more gold price risk, suggesting that managerial risk aversion may affect corporate risk management policy. Further, risk management is negatively associated with the tenure of firms' CFOs, perhaps reflecting managerial interests, skills, or preferences.

Journal Article When Are Real Options Exercised? An Empirical Study of Mine Closings Get access Alberto Moel, Alberto Moel Monitor Corporate Finance, Monitor Group Address correspondence to Peter Tufano, Harvard Business School, Morgan Hall, Soliders Field, Boston, MA 02163, or e-mail: [email protected]. Search for other works by this author on: Oxford Academic Google Scholar Peter Tufano Peter Tufano Harvard Business School and NBER Search for other works by this author on: Oxford Academic Google Scholar The Review of Financial Studies, Volume 15, Issue 1, January 2002, Pages 35–64, https://doi.org/10.1093/rfs/15.1.35 Published: 16 June 2015

In this article, we study a well-known real option: the opening and closing of mines. Using a new database that tracks the annual opening and closing decisions of 285 developed North American gold mines in the period 1988-1997, we find that the real options model is a useful descriptor of mines' opening and shutting decisions. In addition, we find that the decision whether to shut a mine is related to firm-specific managerial factors not normally considered within a strict real options model.