This study examines how increased regulatory attention to portfolio pumping affects the trading behavior of U.S. mutual funds. Attention by regulators should increase the likelihood of fines and reputational damage, raising the cost of such last-minute price manipulation. Consistent with this assertion, we find that last-minute price spikes in aggregate fund indices, in fund holdings and in institutional trading around quarter-ends declined, the declines are largest around year-ends, for small-cap and better-performing funds, and occurred faster for funds headquartered near SEC regional offices. These findings suggest that increased regulatory attention reduced portfolio pumping by U.S. mutual funds.

This study examines the factors driving corporate headquarters shutdown decisions among S&P 500 firms during the early months of the Covid-19 pandemic. Using mobile phone data to estimate shutdown timing, we find that financial flexibility and CEO characteristics, such as pay duration, overconfidence, power, age or gender, do not influence shutdown decisions. Instead, work-from-home adaptability, local shelter-in-place mandates, and political alignment emerge as critical drivers. Democratic-leaning firms, particularly those led by Democratic-leaning CEOs, shut down significantly earlier than their counterparts. These findings highlight the importance of political and regulatory dynamics in shaping corporate responses during crises.

We provide evidence that sophisticated investors like short sellers, option traders, and financial institutions are more informed when trading stocks of companies with more connected board members. For firms with large director networks, the annualized return difference between the highest and lowest quintile of informed trading ranges from 4% to 7.2% compared to the same return difference in firms with less connected directors. Sophisticated investors better predict outcomes of upcoming earnings surprises and firm-specific news sentiment for companies with more connected directors. Changes in board connectedness are positively associated with changes in measures of adverse selection.

Widely-cited research by Kamstra et al. (2003) argues that changes in mood resulting from Seasonal Affective Disorder (SAD) drive changes in investor risk aversion and cause seasonal patterns in aggregate stock returns around the world. In this paper we reexamine the so-called SAD effect by replicating and extending Kamstra et al. (2003). We study the psychological underpinnings of the SAD hypothesis and show that the time-series predictions of the SAD model do not correspond to the seasonal patterns in depression found in the general population. We also investigate the cross-sectional prediction that SAD has a greater effect on stock markets in countries where SAD is more prevalent and find no relation between the prevalence of SAD and stock returns. Finally, we document that the SAD effect is mechanically driven by an overlapping dummy-variable specification and higher returns around the turn of the year.

This paper presents a parsimonious, structural model that isolates primary economic determinants of the level and dispersion of managerial ownership, firm scale, and performance and the empirical associations among them. In particular, variation across firms and through time of estimated productivity parameters for physical assets and managerial input and corresponding variation in optimal compensation contract and firm size combine to deliver the well-known hump-shaped relation between Tobin's Q and managerial ownership. To assess the effectiveness of standard econometric approaches to the endogeneity problem, we apply those remedies to panel data generated from the model. The unfortunate conclusion is that, at least in the ownership–performance context, proxy variables, fixed effects, and instrumental variables do not generally provide reliable solutions to simultaneity bias.

Prior research shows that family control affects firm value through capital investment, debt financing, M&A activities, and governance structure. This study investigates the role of corporate culture in family firms and its implications for firm value. We use more than 100,000 surveys collected by Glassdoor between 2008 and 2012 that capture how employees perceive their company's culture. We find that employees who work for firms with active founders rate their companies higher than employees in nonfamily firms, especially if the founder runs the company. In contrast, employee satisfaction in scion firms does not differ from nonfamily firms, and when scions run the company, employees are less satisfied. Scion firms also exhibit significant lower employee satisfaction during the recent financial crisis. Furthermore, employee assessments predict subsequent firm performance measured by Tobin's q and return on assets (ROA). Our findings provide evidence that family firms exhibit a human-capital-enhancing culture that improves firm performance.