Abstract We distill evidence about the effects of COVID-19 on companies. Stock price reactions to the shock differed greatly across firms, depending on their resilience to social distancing, financial flexibility, and corporate culture. The same characteristics affected the response of firms’ sales, employment, and asset growth. Despite the shock, firms expanded their balance sheets and liquidity by raising funds from banks, bonds, and equity markets. While listed firms reduced their leverage, unlisted ones, especially small and medium enterprises, increased it. Government support programs helped firms access external funding. We conclude by identifying unexplored research issues regarding the long-run effects of COVID-19 on companies. (JEL: G11, G12, G13, G21, G24, G28, G32, G33, G35, G38, H81, H84)

[We analyze determinants of secondary debt market liquidity, identifying conditions under which a large investor can profitably buy stakes from small bondholders and offer unilateral debt relief to a distressed firm. We show that endogenous trading by small bondholders may result in multiple equilibria. Some equilibria entail vanishing liquidity and sharp increases in yields absent changing fundamentals. In turn, anticipation of illiquid equilibria induces firms to eschew public debt financing, since such equilibria create higher bankruptcy costs and debt illiquidity discounts. The model thus offers a rational micro-foundation for stylized facts commonly attributed to investor sentiment and CFO market timing. Finally, we show that the vulnerability of debt markets to multiple equilibria is highest during downturns, when small bondholders face severe adverse selection.]

The authors show that risk characteristics of projects' cash flows are endogenously determined by the investment decisions of all firms in an industry. As a result, in reasonable settings, financial structures which create incentives to expropriate debtholders by increasing risk are shown not to reduce value in an industry equilibrium. Without taxes, capital structure is irrelevant for individual firms despite its effect on the equityholders' incentives, but the maximum total amount of debt in the industry is determinate. Allowing for a corporate tax advantage of debt, capital structure becomes relevant but firms are indifferent between distinct alternative debt levels.

We examine the dynamics of assets under management (AUM) and management fees at the portfolio manager level in the closed-end fund industry. We find that managers capitalize on good past performance and favorable investor perceptions about future performance, as reflected in fund premiums, through AUM expansions and fee increases. However, the penalties for poor performance or unfavorable investor perceptions are either insignificant, or substantially mitigated by manager tenure. Long tenure is generally associated with poor performance and high discounts. Our findings suggest substantial managerial power in capturing CEF rents. We also document significant diseconomies of scale at the manager level.

[We develop a continuous-time model in which a portfolio manager is hired by a management company. On the basis of observed portfolio returns, all agents update their beliefs about the manager's skills. In response, investors can move capital into or out of the mutual fund, and the management company can fire the manager. Introducing firing rationalizes several empirically documented findings, such as the positive relation between manager tenure and fund size or the increase of portfolio risk before a manager replacement and the following risk decrease. The analysis predicts that the critical performance threshold that triggers firing increases signifi-cantly over a manager's tenure and that management replacements are accompanied by capital inflows when a young manager is replaced but may be accompanied by capital outflows when a manager with a long tenure is fired. Our model yields much lower valuation levels for management companies than simple applications of discounted cash flow (DCF) methods and is thus more consistent with empirical observations.]

We are delighted to announce that the winner of the 2011 Spängler IQAM Best Paper Prize is: “Operating Leverage” by Robert Novy-Marx, The two runners-up for the award are: “Inside Debt” by Alex Edmans and Qi Liu and “Fear of the Unknown: Familiarity and Economic Decisions” by Henry Cao, Bing Han, David Hirshleifer, and Harold Zhang, The awards were presented at the 2011 annual meeting of the European Finance Association in Stockholm on August 19. We are grateful to Spängler IQAM Invest for sponsoring this award.

We are delighted to announce that the winner of the 2010 Deutsche Bank Best Paper Award is: “Corporate Governance Externalities” by Viral Acharya and Paolo Volpin which appeared in issue 1 of Volume 14 and was voted by the editorial board as the best article published in the last four issues of the Review of Finance. The two runners-up for the award were: “Determinants of Sovereign Risk: Macroeconomic Fundamentals and the Pricing of Sovereign Debt” by Jens Hilscher and Yves Nosbusch and “The Limits of the Limits of Arbitrage” by Alon Brav, J.B. Heaton and Si Li The awards were presented at the 2010 annual meeting of the European Finance Association in Frankfurt on August 27th. We are grateful to the Deutsche Bank Foundation for sponsoring this award.

Winners of the Best Paper Competition in Corporate Governance Get access Review of Finance, Volume 13, Issue 4, October 2009, Page v, https://doi.org/10.1093/rof/rfp027 Published: 01 October 2009