Knowledge that Transforms

We study the transmission of macroprudential policy to loan issuance by banks and nonbank financial intermediaries, and the associated real effects on firm-level outcomes including mergers and acquisitions. We use loan-level data from the global syndicated credit market, information on the type of participating lenders between banks and nonbanks, and shocks to regulatory limits to the banks’ ratio on loans-to-deposits (LTD) to document that a LTD policy tightening reduces credit supply by banks and simultaneously shifts financial intermediation to nonbanks. We show that this credit migration is driven by banks facing high pre-regulation LTD ratios and by nonbanks that are less regulated and free from leading the loan arrangements when issuing term loans. We also find evidence that in response to tighter LTD, borrowing firms with stronger nonbank relationships are shielded more by the decline in bank credit with ensuing relative increases in corporate debt, assets, and capital investment. Finally, firms in countries with better access to nonbank credit differentially increase the number of acquisitions they undertake when LTD policy intensifies.

This paper explores the interplay between female representation in mutual funds’ management teams and their voting behavior. We find that women-led mutual funds are more likely to support environmental and social (ES) proposals, but not governance ones. This result is robust to excluding sustainable funds, alleviating concerns that the findings are driven by the self-selection of female fund managers into sustainable funds. While women-led mutual funds are also more likely to vote with management in firms headed by female CEOs, this does not conflict with their greater support for ES shareholder proposals. Overall, our results suggest that female representation in fund management teams is related to their voting behavior on ES issues.

This paper examines how bank loans evolve following unexpected deposit flows. Using bank-level U.S. commercial banks' data, we show that while large banks' lending is largely unaffected, loans at small banks significantly change after deposit shocks. Furthermore, the extent of this change among small banks depends on their exposure to off-balance-sheet liquidity risk, proxied by the level of unused commitments. Small banks with higher off-balance sheet exposures tend to extend fewer new loans following positive deposit shocks, suggesting that liquidity absorbed from the failure of other banks or market disruptions might not as easily be lent again to borrowers. Overall, these findings emphasize how off-balance-sheet risks can constrain the credit supply channel, even in the presence of liquidity surpluses.

We examine how variation in trade distortions across countries and industries is associated with the investment behavior of private equity funds, taking explicit account of their country and industry mandates. We use a sample of 9142 transactions across 60 countries and 52 industries completed by 1623 PE funds during 2010–2020. Overall, we find a negative and statistically significant association between trade policies that restrict imports in a given country-industry combination and the odds of a PE fund investment in that market. This association differs by trade policy instrument. We observe a positive and statistically significant link between tariffs and the likelihood of investment in the affected country-industry combination. In contrast, subsidies to import-competing firms are negatively associated with investment.

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 show that leading investor disagreement proxies have near-zero cross-correlation – making disagreement pricing inferences challenging. We develop a frictionless model that generates overpricing from latent disagreement, jointly rationalizes major proxies, and generates new testable predictions. Equilibrium interrelationships motivate a new disagreement measure, DIS, which is more predictive of returns cross-sectionally than major proxies and more consistently predictive across macroeconomic regimes. We provide evidence that the friction-based channel of Miller (1977) and a frictionless mechanism coexist and are empirically separable. DIS also provides a micro-founded, disagreement-based account of the IVOL puzzle, absorbing IVOL’s predictability while revealing its regime and friction dependence.

We develop a model to study the efficiency of socially responsible investing (SRI) as a mechanism to control firms' externalities. When SRI is not too popular, responsible investors favor strategies that lead to a concentration of SRI in a subset of firms in the economy. This concentration can mitigate coordination issues in adopting green technologies, but it can also crowd out the green investments of excluded firms and increase the price of green products. In equilibrium, responsible investors continue to favor concentration even as SRI becomes more popular, and concentrate the most when concentration is least desirable.