This paper investigates three areas of corporate finance, and the role of alternative finance in contributing to our understanding of these areas. First, we look at disclosure, information asymmetry, and adverse selection, and how different alternative finance solutions are used to mitigate these issues. Second, we examine moral hazard and risk taking and how these behaviours are shaped by new types of alternative finance. Third, we consider the role of control rights, and show how their importance varies by context including types of alternative finance and the country-level institutional setting.

This paper studies the impact of qualitative business information on mitigating information asymmetry between equity crowdfunding entrepreneurs and investors. Qualitative business information covers the entrepreneurs' introduction on business model, competitive strategy, product market, drivers and barriers for product/service adoption and business milestones. Empirical data reveal that, overall, more detailed disclosure of qualitative business information leads to better fundraising outcome. However, while entrepreneurs' excessive use of promotional language, or self-praise on business quality without factual support, is not rewarded by sophisticated investors, ordinary investors are less resistant to promotional language. We also find that Title III of the JOBS Act results in a reduction of the percentage of completed fundraisings but exacerbates the effect of project description on the percentage of completed fundraisings.

Delaware hedge funds exhibit significant differences in contractual structure in terms of higher management and incentive fees. Delaware funds are more likely to use high watermark provisions and less likely to invest their personal capital. Both the redemption notice periods and lock up periods are significantly longer for Delaware hedge funds. While Delaware hedge funds do not outperform or underperform funds registered elsewhere, fund flows are more sensitive to Delaware funds' prior performance and Delaware funds are more likely to be liquidated due to poor performance. Further, Delaware funds are more likely to increase risk after poor absolute performance.

This paper reviews recent research on the causes and consequence of different forms of financial market misconduct and potential agency conflicts and the impact of regulating financial market misconduct. We examine regulatory responses to financial market misconduct and highlight the presence of complementarities in financial market misconduct regulation and enforcement. We feature papers that make use of natural experiments, rule changes, and market design changes. Further, the interdisciplinary nature of financial market misconduct research is highlighted, and potential avenues for future research are discussed.

This paper introduces a new dataset from 100 Dutch institutional investors’ domestic and international asset private equity allocations. The data indicate that the perceived comparative dearth of regulations of private equity funds impedes institutional investor participation in private equity funds, particularly in relation to the lack of transparency. The data further indicate that the perceived importance of regulatory harmonization of institutional investors has increased Dutch institutional investor allocations to domestic and international private equity funds. The Financieel Toetsingskader (regulation of portfolio management standards such as matching of assets and liabilities) has had the most pronounced and robust effect, followed by Basel II (regulation of risk management and disclosure standards) and the International Financial Reporting Standards (regulation of reporting standards and transparency).

This paper analyzes hedge fund performance, risk, and fund flows before and after the implementation of the Dodd–Frank Act. The data indicates that, relative to non-US hedge funds, US hedge funds that are regulated under Dodd–Frank have lower fund alphas in the post-Dodd–Frank implementation period, both statistically and economically significant, while the evidence on its effect on risk (standard deviations and idiosyncratic risk) is mixed. We find evidence that there is more fund outflow (or less fund inflow) for certain US hedge fund strategies after the implementation of Dodd–Frank. We show some differences in these findings dependent on fund size and strategy. The findings are robust to difference-in-differences analyses comparing US to non-US funds.

Numerous collapses and corporate scandals of large corporations have underscored the impact of corporate conduct on capital markets and society as a whole. These failures have highlighted the need for regulators to rethink regulatory frameworks and enforcement, and for corporations to rework their organizational structures and focus on business ethics. Establishing a clear understanding of the drivers of corporate failure is therefore key. In this paper, we review recent research that extends the debate on the causes and consequence of corporate failures.

Theories on contextual behavior (e.g., social norm, self-identity, and legitimacy theories) suggest that the religiosity of the geographical area in which an organization operates influences its behavior. Using a sample of 91,020 VC investments in the U.S., we study whether religiosity influences VC investment decisions. Based on prior literature that finds a positive relation between religiosity and risk aversion, we posit that VCs located in more religious counties make less risky investments. We find that VCs located in more religious areas are more likely to be involved in staging and syndication and have a greater propensity to invest in later and expansion stages of portfolio companies. Taken together, our results suggest that VCs located in religious counties tend to be more risk averse.

We examine stock exchange trading rules for market manipulation, insider trading, and broker–agency conflict, across countries and over time, in 42 stock exchanges around the world. Some stock exchanges have extremely detailed rules that explicitly prohibit specific manipulative practices, but others use less precise and broadly framed rules. We create new indices for market manipulation, insider trading, and broker–agency conflict based on the specific provisions in the trading rules of each stock exchange. We show that differences in exchange trading rules, over time and across markets, significantly affect liquidity.