This paper explores how the cost of risk management varies with firm characteristics, offering the first comparison between private, public, and family-owned firms. It exploits a natural experiment in highway procurement, which features diverse firms with common exposure to commodity risk. The Kansas government began to insure highway paving firms against oil price risk in 2006. The analysis compares Kansas to Iowa, which has an otherwise similar highway procurement system but never introduced such a policy. Using data from 1998 to 2012, I show that the policy reduced average bid sensitivity to oil price volatility. Private firms with high credit risk and low industry diversification exhibit the most risk pass-through, while public firms exhibit no pass-through. Family-owned firms do not have a higher than average cost of risk. Financial constraints and distress costs appear to best explain the cost of risk management, rather than risk aversion, information, or agency problems.

We apply a structural topic model (STM) to analyze European Central Bank (ECB) communication regarding the monetary pillar of its monetary policy strategy. We do so by quantifying the transcripts of the ECB President’s introductory statements at the press conferences that accompany the regular meetings of the ECB Governing Council. Our evidence shows that, within its monetary pillar, the ECB has gradually shifted its focus away from a genuine monetary analysis towards monitoring the stability of the European financial system. We go on to augment a standard Taylor rule by quantitative indicators obtained from the STM to assess whether the monetary pillar in general, and the shift in focus in particular, has had a measurable impact on the ECB’s monetary policy stance. We find that the monetary analysis has had a bearing on the interest rate setting in the early years of the ECB’s existence, but this influence completely disappears in the latter years of the sample. Furthermore, we find no evidence that financial stability considerations in the ECB communication have influenced interest rate decisions either before or after the financial crisis.

Venture capital, an important source of financing for potentially high-growth new businesses, is believed to suffer from information frictions. This paper quantifies the magnitude of these frictions among participants in new venture competitions. In a regression discontinuity design with data from 87 competitions, winning a round increases the chances of external financing by about 35%. Winning is most impactful for ventures that are ranked just above the cutoff but receive no cash prize, and judge ranks strongly predict venture success. The results indicate that these information problems in new venture finance are large, and competitions can help resolve them through certification.

Based on the twin sovereign-banking crisis nexus evolution of the Euro debt crisis era, we address the (volatility) mitigation of credit risk, measured by Credit Default Swap spreads (CDS) in both the banking and sovereign sectors within the Eurozone and the US/UK. Secondly, we highlight the volatility interconnectedness or the risk pass-through between sovereign-bank CDS markets with reference to the core vs. periphery EMU. Moreover, we identify the regime states of crises and recovery periods based on the bivariate CDS dynamic correlation series, categorized as the endogenous EMU sovereign risk coherence index. Finally, we investigate the “efficient” (parity) sovereign credit risk pricing during the post-crisis spillover period identified by the CDS and bond markets. We find heterogeneity between markets in pricing the sovereign risk in the regional tier (core-periphery EMU), emphasized by the absence of long-term association. Cointegration results are country-dependent as well as maturity-dependent. Empirical results reject the “no arbitrage” approach.

Using a proprietary data set from a provider of internal whistleblowing (WB) systems, we analyze nearly two million internal WB reports submitted to over 1,000 publicly traded U.S. firms. We provide descriptive statistics, over time and across report types, on the amount and summary details of information provided, how extensively management reviews reports, the amount of time until reviews were completed, and the outcome of these reviews. Further, we examine the characteristics of firms with more actively used systems (i.e., a higher volume of reports, more information provided in reports, and reports that are more frequently reviewed by management). Finally, we show that internal WB report volume is associated with fewer and lower amounts of government fines and material lawsuits.

This study examines whether the volatility of interim estimates of the annual effective tax rate (ETR) provides ex ante information about the quality of firms' internal control environments. Recent research suggests that some firms selectively disclose internal control weaknesses (ICWs). Given the negative consequences associated with ICWs, it is important for capital market participants to be able to identify firms with ineffective internal controls in a timely manner. We find that firms with more volatile annual ETR estimates are more likely to report both tax‐ and nontax‐related ICWs in the current year. Our results also indicate that the volatility of annual ETR estimates declines following the remediation of tax‐related ICWs, but not following the remediation of nontax‐related ICWs. In addition, we find that ETR volatility in the current year is associated with the likelihood that a firm will report an ICW in the following year. Finally, we provide evidence that the volatility of annual ETR estimates is associated with the likelihood that a firm has an undisclosed ICW. In combination, our results suggest that the volatility of interim estimates of the annual ETR provides an ex ante signal of the likelihood that a firm's internal controls are ineffective.

It has been argued that accountancy and finance have struggled to promote gender equality despite their intentions and efforts to do so. The paper contributes to explanations for this ongoing inequality by theorising the psychic life of women working in these fields, as displayed in their reflections on moments where they have failed to embody an identity that is the discursive and structural ideal within the profession. The ‘perfect worker’ is an idealised subjectivity modelled on the traditional male career and inflected by neoliberalism. Prior critiques of ‘postfeminism’ identify a pattern of self-blaming for inequality among women, but do not explain how and why they readily responsibilize themselves. Drawing on Freud’s theory of melancholia we suggest self-blame is the result of an unconscious confrontation with the loss of the perfect worker ideal: the ego’s response leading to a destructive cycle of self-reproach and atonement. The implication of melancholia is that structural contributors to inequality are reinforced. Furthermore, we develop Freud’s melancholia to theorise a contemporary manifestation that sees neoliberalism acting in concert with the psyche’s predisposition to defense, precipitating an epidemic of individualisation. This implies that neoliberalism employs a form of ‘perfectionist power’ that reinforces oppression at the level of the unconscious. We conclude that the advancement of equality requires a deliberate intervention in the melancholic cycle by moving the psyche into a process of mourning that recognises sociality as a condition of solidaristic resistance.

While reports in the financial press suggest that share repurchases are harmful to bondholders, academic studies report conflicting empirical evidence. Using newly available daily bond data (versus monthly data used in existing studies) and modern methods of analysis, we find no evidence of bondholder wealth expropriation. Merton (1974) model estimates of changes in the value of debt during share repurchases and changes in credit ratings following share repurchases produce no evidence of bondholder wealth expropriation. Overall, we find no evidence that repurchases measurably harm bondholders, suggesting concerns raised in the financial press are unfounded.