This paper investigates the information spillover and learning by observing among countries in the sovereign debt markets. We find that the coupon rate of a bond offering by a borrower-country is positively associated with the average coupon rate of bonds issued by peer countries during the previous three-month period and this is significant among economically similar peers. Our results are stronger among investment-grade than speculative-grade ranked countries, and they are also more significant among countries without an IMF program than those under IMF program. We, however, fail to find evidence of learning among neighboring countries or those with a common language. Our findings suggest that although learning from peers is affected by borrower-countries’ quality, sovereign bond markets learn information from their economically-similar peers, which could ensure greater price stability.

We investigate the impact of “learning from peers” on the fundraising abilities of startup companies. Employing data on the financing rounds of privately owned portfolio companies, we find that companies observe the round amounts of their most successful peers and learn to negotiate higher round amounts with venture capital investors. We further show that the number of common directors or venture capital firms between portfolio companies and their most successful peers has a positive impact on the round amounts of these portfolio companies, which supports the existence of conversational learning. Moreover, observational learning from peers is higher in hot markets, where investors rely on less costly information on peers. Our findings confirm that both observational and conversational learning allow portfolio companies to be in a better negotiating position, thus enhancing their ability to secure funding and invest in their growth.

This paper is the first study on the effects of pay–performance sensitivity (PPS) on the performance of initial public offerings (IPOs) in the presence of social ties and family ties of the top managers with board members. We find that both social ties and family ties increase PPS. In turn, PPS improves IPO performance. More importantly, greater PPS increases the positive effect of social ties on IPO performance whereas it reduces the negative effect of family ties.

This paper studies the two potentially contrasting effects on IPO pricing and post-IPO operating performance of family ties as well as social ties the top management has with board members. While family ties may solve manager–owner conflicts of interests, they may also give rise to minority-shareholder expropriation and/or private benefits of control. Similarly, social ties may either create value or lead to entrenchment and excessive managerial power. Using q-analysis to measure the strength of top manager ties to board members, we find that IPO performance is positively related to the strength of social ties, but negatively to the strength of family ties. We also find that, controlling for social ties, board independence affects both IPO pricing and post-IPO operating performance. Further, we show that the association between IPO performance and ties depends on whether they are with inside or outside directors.

This paper examines the impact of CEO IPO option grants on IPO underpricing. Contrary to Lowry and Murphy (2007) who do not find a relationship between the two, this paper finds such a relationship when board independence, the power of the CEO and venture capitalists (VCs) are taken into account. The results are threefold. First, powerful CEOs are able to reap substantial gains from IPO options, to the detriment of the shareholders. Second, young, powerful VCs use IPO option grants to bribe the CEO to agree to an early IPO which will leave more of the existing shareholders' money on the table. Finally, IPO options only work as a value-enhancing incentive in the presence of strong boards.

We examine whether media news reflect the extent to which issuing firms manage their earnings prior to their equity carve-outs (ECOs). We posit that managers will strategically respond to media requests prior to their equity offerings in order to signal their type and differentiate themselves from others. We find that media news at the time of the ECO is negatively related to earnings management during the year prior to the ECO date. However, when we examine the nature of media news (informative vs uninformative), we find that earnings management is negatively (positively) related to informative (uninformative) media news. Moreover, while price revision is positively related to both informative and uninformative media news, ECO underpricing is positively related to uninformative media news and negatively related to informative media news. This suggests that uninformative news induces investor sentiment during the first day of trading, whereas informative news reduces the asymmetric information between issuing firms and outside investors. Consistently, we document that long-run ECO performance decreases with earnings management and uninformative news, but is positively related to informative news. Our results highlight the importance of the nature of news in media coverage for issuers seeking to differentiate themselves from those managing their earnings prior to equity offerings, evidence consistent with signaling.

We investigate the behavior of analyst earnings forecast error in response to policy uncertainty. We find that the accuracy of analyst forecasts is compromised at times of increased economic policy uncertainty, when market volatility and information opacity are high. This negative association between policy uncertainty and earnings forecast accuracy is alleviated in firms where good CSR practices are in place. The disclosure of CSR-related nonfinancial information reportedly improves forecast accuracy; in the context of policy uncertainty, we document that CSR plays a stabilizing role by moderating analyst forecast error. Additionally, we report that the moderating effect of CSR is more pronounced in domestic rather than multinational firms, where, for the former, analysts are able to better assess the quality of information. Finally, we observe that analysts attach more value to the external legitimacy aspect of CSR rather than internal sustainability in guaranteeing earnings resilience in the face of high policy uncertainty. Our results remain valid in various robustness settings.

This paper investigates whether the takeover market has been affected by heightened macroeconomic uncertainty, following President Trump’s Election, both in the US and globally. We have based our analysis on a four-year period around the 2016 US elections, and as such we have observed an increase in M&A deals and associated valuations, after the election; this was especially true for cross-border deals acquiring U.S. targets, consistent with a tariff-jumping hypothesis. The high target valuations are also the product of the implementation of a lower corporate tax rate, which reveals positive externalities for U.S. targets, stemming from the protectionist and lower corporate tax initiatives of the regime.

Are MNEs more socially responsible, and where is this more likely to occur? Are firms less responsible in emerging or transitional economies, and what impact does the dominant national corporate governance regime have? We explore the association between public listing and the existence of a CSR code within specific institutional settings and assess whether MNEs are any different to their local counterparts, based on an internationally comparative survey. We find that listed firms as well as firms from civil law countries are more likely to have CSR statements. MNEs are also more likely to have CSR statements, independent of their country of origin. While we find consistent evidence of a correlation between the existence of a CSR statement and investment in staff training, the correlation between the former and employee-friendly HRM is weaker.