Visionary CEOs have strong beliefs about the right course of action for their firms. How should a board of directors that does not necessarily share the visionary CEO's confidence advise and monitor the CEO? We consider a model in which the board can acquire costly information about the firm's optimal strategic direction. The board not only advises the CEO on strategy, but also must approve it, and the CEO exerts effort to implement the strategy. We find that the board gathers less information when the CEO believes more strongly in his vision. Further, depending on the strength of the CEO's belief bias, the board either plays an advisory role, a monitoring role, or a rubberstamping role. The model predicts that in firms that are led by highly visionary CEOs, boards are passive in that they acquire little information and rubberstamp the visionary's proposal. Nevertheless, shareholders prefer the visionary over an unbiased manager in industries in which obtaining information about the correct course of action is difficult and costly.

We study the impact of an urban land titling program on firm investment in Shenzhen, China. We find that this program increased the investment rate for titling firms, but this positive effect only holds for politically connected firms. Further analysis suggests that the titling effect is more pronounced for those titling firms associated with greater expropriation risk. During program implementation, the connected titling firms increased their investment perhaps because, as observed, they experienced fewer disputes than non-connected titling firms.

Target acquisitiveness stands out as one of the primary drivers of all the key aspects of the market for corporate takeovers: acquisition announcement returns, probability of deal success, propensity to acquire and be acquired. Acquisitive targets, though a small proportion of the sample, are responsible for half of the overall negative acquisition announcement returns. Our large body of empirical evidence consistently supports the view that the motivation behind acquisitions of acquisitive targets is defensive: acquirers “eat in order not to be eaten”.

When a firm exercises discretion to disclose or withhold information (strategic disclosure), risk-averse investors command higher expected returns when expected cash flows decrease, producing a negative correlation between these expectations. Moreover, stock returns exhibit stronger reversal than they do when full disclosure is enforced. We propose a model that makes these predictions and provide consistent evidence using a panel of foreign firms that list American Depositary Receipts (ADRs). We find significant shifts in the time-series properties of stock returns for firms that undergo large changes in disclosure environments, such as those cross-listing on the NYSE/AMEX/NASDAQ and those from less-developed/emerging markets and code-law countries.

Using experimental data, we document that the impact of professional norms on the risk-taking of bank employees depends on their expectations of peers’ risk preferences. When the professional identity of bank employees is made salient, those who expect colleagues to take more risk than themselves increase risky investments by 5.2% points in a mock investment task, while others do not statistically change their risk-taking behaviors. Data from placebo experiments with non-bank employees do not exhibit such empirical patterns. The results are consistent with peer effects and social identity theories, and challenge the existing evidence that professional norms in the banking industry decrease risk-taking.

This paper examines the Reaching-for-Coupon (RFC) phenomenon in U.S. corporate bond mutual funds. We define RFC as a portfolio tilt toward higher-coupon bonds relative to peers with similar yields. Using detailed bond-level holdings data from 2002–2018, we construct a novel fund-level RFC measure and show that high-RFC funds attract larger inflows, particularly in low-interest-rate environments. Crucially, investor flows into RFC funds are less sensitive to poor performance, leading to a less concave flow–performance relationship and mitigating redemption-driven fragility. These altered flow dynamics strengthen managerial incentives to take risk. Moreover, compared to Reaching-for-Yield (RFY) funds, RFC funds provide more stable income streams and are less exposed to credit downgrades. Our results demonstrate that RFC captures a distinct channel through which income-driven investor demand shapes risk-taking and fragility in bond markets.

We examine how financial market development affects technological innovation. Using a large data set that includes 32 developed and emerging countries and a fixed effects identification strategy, we identify economic mechanisms through which the development of equity markets and credit markets affects technological innovation. We show that industries that are more dependent on external finance and that are more high-tech intensive exhibit a disproportionally higher innovation level in countries with better developed equity markets. However, the development of credit markets appears to discourage innovation in industries with these characteristics. Our paper provides new insights into the real effects of financial market development on the economy.

We explore the use of technical indicators to forecast corporate bond returns with various machine learning models. We show that technical indicators yield statistically significant and economically meaningful results, consistently outperforming bond characteristics. Although bond characteristics possess predictive power for bond returns, they do not provide incremental value beyond technical indicators across all bonds. Additionally, machine learning models do not offer substantial improvements over the benchmark linear model. These results underscore the significance of technical indicators in the corporate bond market.

We use a multitude of tax reforms across the Organisation for Economic Co-Operation and Development (OECD) countries as natural experiments to estimate the market value of the tax benefits of debt financing. We report time-series evidence that tax reforms are followed by large changes in the value of corporate equity. However, the impact of tax reforms is greatly mitigated by the presence of leverage. The value of debt tax savings is greater among top taxpayers, among highly profitable firms, and in countries where tax laws are more strongly enforced. Importantly, the value of debt tax savings is in line with the benchmark implied by a traditional approach.

This article studies how corporate tax hikes transmit across countries through multinationals’ internal networks of subsidiaries. We build a parsimonious multicountry model to highlight two opposing spillover effects: while tax competition between countries generates positive investment spillover, intra-firm production linkages predict negative spillover. Using subsidiary-level data and exogenous corporate tax hikes, we find that local business units cut investment by 0.5 percent for a 1 percent increase in foreign corporate tax. This result highlights the importance of production linkages in propagating foreign tax shocks, as the supply-chain-induced negative spillover dominates the positive spillover effect suggested by the conventional wisdom of tax competition.