To make high-quality research more accessible and easier to explore.

Fields:
470 results ✕ Clear filters

Discount‐Rate Risk in Private Equity: Evidence from Secondary Market Transactions

BRIAN H. BOYER; Taylor Nadauld; KEITH P. VORKINK; Michael S. Weisbach
Journal of Finance 2023 78(2), 835-885
Measures of private equity (PE) performance based on cash flows do not account for a discount‐rate risk premium that is a component of the capital asset pricing model (CAPM) alpha. We create secondary market PE indices and find that PE discount rates vary considerably. Net asset values are too smooth because they fail to reflect variation in discount rates. Although the CAPM alpha for our index is zero, the generalized public market equivalent based on cash flows is large and positive. We obtain similar results for a set of synthetic funds that invest in small cap stocks. Ignoring variation in PE discount rates can lead to a misallocation of capital.

Informed Trading through the Accounts of Children

Henk Berkman; Paul D. Koch; P. Joakim Westerholm
Journal of Finance 2014 69(1), 363-404 open access
This study shows that the guardians behind underaged accounts are successful at picking stocks. Moreover, they tend to channel their best trades through the accounts of children, especially when they trade just before major earnings announcements, large price changes, and takeover announcements. Building on these results, we argue that the proportion of total trading activity through underaged accounts (labeled BABYPIN ) should serve as an effective proxy for the probability of information trading in a stock. Consistent with this claim, we show that investors demand a higher return for holding stocks with a greater likelihood of private information, proxied by BABYPIN .

Changing Names with Style: Mutual Fund Name Changes and Their Effects on Fund Flows

Michael J. Cooper; Huseyin Gulen; P. Raghavendra Rau
Journal of Finance 2005 60(6), 2825-2858 open access
We examine whether mutual funds change their names to take advantage of current hot investment styles, and what effects these name changes have on inflows to the funds, and to the funds' subsequent returns. We find that the year after a fund changes its name to reflect a current hot style, the fund experiences an average cumulative abnormal flow of 28%, with no improvement in performance. The increase in flows is similar across funds whose holdings match the style implied by their new name and those whose holdings do not, suggesting that investors are irrationally influenced by cosmetic effects.

Too Busy to Mind the Business? Monitoring by Directors with Multiple Board Appointments

Stephen P. Ferris; Murali Jagannathan; Adam C. Pritchard
Journal of Finance 2003 58(3), 1087-1111
We examine the number of external appointments held by corporate directors. Directors who serve larger firms and sit on larger boards are more likely to attract directorships. Consistent with Fama and Jensen (1983), we find that firm performance has a positive effect on the number of appointments held by a director. We find no evidence that multiple directors shirk their responsibilities to serve on board committees. We do not find that multiple directors are associated with a greater likelihood of securities fraud litigation. We conclude that the evidence does not support calls for limits on directorships held by an individual.

Is Fraud Contagious? Coworker Influence on Misconduct by Financial Advisors

Stephen G. Dimmock; William Christopher Gerken; Nathaniel Graham
Journal of Finance 2018 73(3), 1417-1450 open access
Using a novel data set of U.S. financial advisors that includes individuals' employment histories and misconduct records, we show that coworkers influence an individual's propensity to commit financial misconduct. We identify coworkers' effect on misconduct using changes in coworkers caused by mergers of financial advisory firms. The tests include merger‐firm fixed effects to exploit the variation in changes to coworkers across branches of the same firm. The probability of an advisor committing misconduct increases if his new coworkers, encountered in the merger, have a history of misconduct. This effect is stronger between demographically similar coworkers.

Private Benefits of Control, Ownership, and the Cross‐listing Decision

Craig Doidge; G. Andrew Karolyi; Karl V. Lins; Darius P. Miller; René M. Stulz
Journal of Finance 2009 64(1), 425-466 open access
This paper investigates how a foreign firm's decision to cross‐list on a U.S. stock exchange is related to the consumption of private benefits of control by its controlling shareholders. Theory has proposed that when private benefits are high, controlling shareholders are less likely to choose to cross‐list in the United States because of constraints on the consumption of private benefits resulting from such listings. Using several proxies for private benefits related to the control and cash flow ownership rights of controlling shareholders, we find support for this hypothesis with a sample of more than 4,000 firms from 31 countries.

Monitoring and Controlling Bank Risk: Does Risky Debt Help?

C. N. V. Krishnan; Peter Ritchken; James B. Thomson
Journal of Finance 2005 60(1), 343-378 open access
We examine whether mandating banks to issue subordinated debt would enhance market monitoring and control risk taking. To evaluate whether subordinated debt enhances risk monitoring, we extract the credit‐spread curve for each banking firm in our sample and examine whether changes in credit spreads reflect changes in bank risk variables, after controlling for changes in market and liquidity variables. We do not find strong and consistent evidence that they do. To evaluate whether subordinated debt controls risk taking, we examine whether the first issue of subordinated debt changes the risk‐taking behavior of a bank. We find that it does not.

The Global Financial System: A Functional Perspective.

Mark R. Eaker; Dwight B. Crane; Kenneth A. Froot; Scott P. Mason; Andre F. Perold; Robert C. Merton; Zvi Bodie; Erik R. Sirri; Peter Tufano
Journal of Finance 1997 52(2), 915
Leading financial scholars present essays examining the performance of the basic financial functions underlying global financial systems: payments, lending and investing, pooling funds, allocating risk, providing information, and dealing with incentive issues - with particular emphasis on how their performance is changing and implications for the future.

Nonstandard Errors

Albert J. Menkveld; Anna Dreber; Felix Holzmeister; Jürgen Huber; Magnus Johannesson; Michael Kirchler; SEBASTIAN NEUSÜß; Michael Razen; Utz Weitzel; DAVID ABAD-DÍAZ; Menachem Abudy; Tobias Adrian; Yacine Aït-Sahalia; Olivier Akmansoy; Jamie Alcock; Vitali Alexeev; Arash Aloosh; LIVIA AMATO; Diego Amaya; James J. Angel; ALEJANDRO T. AVETIKIAN; AMADEUS BACH; EDWIN BAIDOO; GAETAN BAKALLI; LI BAO; Andrea Barbon; OKSANA BASHCHENKO; Parampreet Christopher Bindra; Geir Høidal Bjønnes; Jeffrey R. Black; Bernard S. Black; DIMITAR BOGOEV; SANTIAGO BOHORQUEZ CORREA; Oleg Bondarenko; CHARLES S. BOS; Ciril Bosch-Rosa; ELIE BOURI; Christian T. Brownlees; ANNA CALAMIA; Viet Nga Cao; Gunther Capelle-Blancard; LAURA M. CAPERA ROMERO; Massimiliano Caporin; Allen Carrion; TOLGA CASKURLU; Bidisha Chakrabarty; Jian Chen; Mikhail Chernov; WILLIAM CHEUNG; LUDWIG B. CHINCARINI; Tarun Chordia; SHEUNG-CHI CHOW; BENJAMIN CLAPHAM; Jean-Edouard Colliard; Carole Comerton-Forde; EDWARD CURRAN; THONG DAO; WALE DARE; Ryan J. Davies; RICCARDO DE BLASIS; GIANLUCA F. DE NARD; Fany Declerck; OLEG DEEV; Hans Degryse; SOLOMON Y. DEKU; CHRISTOPHE DESAGRE; Mathijs A. van Dijk; Chukwuma Dim; Thomas Dimpfl; YUN JIANG DONG; PHILIP A. DRUMMOND; Tom L. Dudda; TEODOR DUEVSKI; Ariadna Dumitrescu; Teodor Dyakov; Anne Haubo Dyhrberg; Michał Dzieliński; ASLI EKSI; Izidin El Kalak; Saskia ter Ellen; Nicolas Eugster; Martin D. D. Evans; Michael Farrell; ESTER FELEZ-VINAS; Gerardo Ferrara; EL MEHDI FERROUHI; Andrea Flori; JONATHAN T. FLUHARTY-JAIDEE; Sean Foley; Kingsley Y. L. Fong; Thierry Foucault; TATIANA FRANUS; Francesco A. Franzoni; Bart Frijns; MICHAEL FRÖMMEL; SERVANNA M. FU; Sascha Füllbrunn; BAOQING GAN; GE GAO; Thomas Gehrig; ROLAND GEMAYEL; DIRK GERRITSEN; Javier Gil-Bazo; Dudley Gilder; Lawrence R. Glosten; THOMAS GOMEZ; Arseny Gorbenko; Joachim Grammig; Vincent Grégoire; Ufuk Güçbilmez; Björn Hagströmer; JULIEN HAMBUCKERS; ERIK HAPNES; Jeffrey H. Harris; Lawrence Harris; SIMON HARTMANN; JEAN-BAPTISTE HASSE; Nikolaus Hautsch; XUE-ZHONG (TONY) HE; Davidson Heath; SIMON HEDIGER; Terrence Hendershott; Ann Marie Hibbert; Erik Hjalmarsson; Seth A. Hoelscher; Peter Hoffmann; Craig W. Holden; Alex R. Horenstein; Wenqian Huang; DA HUANG; Christophe Hurlin; KONRAD ILCZUK; ALEXEY IVASHCHENKO; Subramanian R. Iyer; Hossein Jahanshahloo; NAJI JALKH; Charles M. Jones; SIMON JURKATIS; Petri Jylhä; ANDREAS T. KAECK; GABRIEL KAISER; ARZÉ KARAM; Egle Karmaziene; BERNHARD KASSNER; Markku Kaustia; EKATERINA KAZAK; Fearghal Kearney; Vincent van Kervel; SAAD A. KHAN; MARTA K. KHOMYN; Tony Klein; OLGA KLEIN; Alexander Klos; Michael Koetter; Aleksey Kolokolov; Robert A. Korajczyk; Roman Kozhan; Jan P. Krahnen; PAUL KUHLE; Amy Kwan; QUENTIN LAJAUNIE; F. Y. Eric C. Lam; Marie Lambert; Hugues Langlois; JENS LAUSEN; Tobias Lauter; Markus Leippold; VLADIMIR LEVIN; YIJIE LI; HUI LI; CHEE YOONG LIEW; THOMAS LINDNER; Oliver Linton; JIACHENG LIU; Anqi Liu; Guillermo Llorente; Matthijs Lof; ARIEL LOHR; FRANCIS LONGSTAFF; Alejandro Lopez-Lira; Shawn Mankad; NICOLA MANO; ALEXIS MARCHAL; Charles Martineau; Francesco Mazzola; Debrah Meloso; MICHAEL G. MI; Roxana Mihet; Vijay Mohan; Sophie Moinas; DAVID MOORE; Liangyi Mu; Dmitriy Muravyev; Dermot Murphy; GABOR NESZVEDA; CHRISTIAN NEUMEIER; Ulf Nielsson; Mahendrarajah Nimalendran; Sven Nolte; LARS L. NORDEN; Peter O’Neill; Khaled Obaid; BERNT A. ØDEGAARD; Per Östberg; EMILIANO PAGNOTTA; Marcus Painter; Stefan Palan; IMON J. PALIT; Andreas Park; Roberto Pascual; Paolo Pasquariello; Ľuboš Pástor; VINAY PA℡; Andrew J. Patton; Neil D. Pearson; Loriana Pelizzon; MICHELE PELLI; Matthias Pelster; Christophe Pérignon; CAMERON PFIFFER; Richard Philip; TOMÁŠ PLÍHAL; PUNEET PRAKASH; OLIVER-ALEXANDER PRESS; TINA PRODROMOU; Marcel Prokopczuk; Talis Putnins; YA QIAN; GAURAV RAIZADA; David Rakowski; Angelo Ranaldo; Luca Regis; Stefan Reitz; Thomas Renault; REX W. RENJIE; Roberto Renò; Steven J. Riddiough; Kalle Rinne; PAUL RINTAMÄKI; Ryan Riordan; THOMAS RITTMANNSBERGER; IÑAKI RODRÍGUEZ LONGARELA; Dominik Roesch; LAVINIA ROGNONE; Brian Roseman; Ioanid Roşu; Saurabh Roy; NICOLAS RUDOLF; STEPHEN R. RUSH; Khaladdin Rzayev; ALEKSANDRA A. RZEŹNIK; Anthony Sanford; Harikumar Sankaran; Asani Sarkar; Lucio Sarno; Olivier Scaillet; STEFAN SCHARNOWSKI; KLAUS R. SCHENK-HOPPÉ; ANDREA SCHERTLER; MICHAEL SCHNEIDER; FLORIAN SCHROEDER; Norman Schürhoff; Philipp Schuster; MARCO A. SCHWARZ; Mark S. Seasholes; Norman J. Seeger; Or Shachar; Andriy Shkilko; JESSICA SHUI; MARIO SIKIC; Giorgia Simion; Lee A. Smales; Paul Söderlind; Elvira Sojli; Konstantin Sokolov; JANTJE SÖNKSEN; Laima Spokeviciute; Denitsa Stefanova; Marti G. Subrahmanyam; BARNABAS SZASZI; Oleksandr Talavera; Yuehua Tang; Nick Taylor; Wing Wah Tham; Erik Theissen; Julian Thimme; Ian Tonks; Hai Tran; Luca Trapin; Anders B. Trolle; M. ANDREEA VADUVA; Giorgio Valente; Robert A. Van Ness; Aurelio Vasquez; Thanos Verousis; Patrick Verwijmeren; ANDERS VILHELMSSON; Grigory Vilkov; Vladimir Vladimirov; SEBASTIAN VOGEL; Stefan Voigt; Wolf Wagner; THOMAS WALTHER; Patrick Weiss; Michel van der Wel; Ingrid M. Werner; P. Joakim Westerholm; Christian Westheide; HANS C. WIKA; Evert Wipplinger; Michael Wolf; Christian C. P. Wolff; LEONARD WOLK; WING-KEUNG WONG; Jan Wrampelmeyer; Zhen-Xing Wu; Shuo Xia; Dacheng Xiu; KE XU; CAIHONG XU; Pradeep K. Yadav; JOSÉ YAGÜE; Cheng Yan; Antti Yang; Woongsun Yoo; WENJIA YU; YIHE YU; Shihao Yu; Bart Z. Yueshen; Darya Yuferova; MARCIN ZAMOJSKI; Abalfazl Zareei; STEFAN M. ZEISBERGER; LU ZHANG; S. Sarah Zhang; Xiaoyu Zhang; LU ZHAO; Zhuo Zhong; Z. IVY ZHOU; CHEN ZHOU; XINGYU S. ZHU; Marius Zoican; REMCO ZWINKELS
Journal of Finance 2024 79(3), 2339-2390 open access
In statistics, samples are drawn from a population in a data‐generating process (DGP). Standard errors measure the uncertainty in estimates of population parameters. In science, evidence is generated to test hypotheses in an evidence‐generating process (EGP). We claim that EGP variation across researchers adds uncertainty—nonstandard errors (NSEs). We study NSEs by letting 164 teams test the same hypotheses on the same data. NSEs turn out to be sizable, but smaller for more reproducible or higher rated research. Adding peer‐review stages reduces NSEs. We further find that this type of uncertainty is underestimated by participants.