This paper studies how fund-family advisors use cross-fund subsidization to manipulate fund performances and maximize fund-family values, and how this activity shapes market equilibrium. The trade-off between subsidization efficiency and funds’ endogenous profit-performance convexities determines the subsidization. When the effect of profit-performance convexities dominates, advisors optimally use low-value funds to subsidize high-value funds. When the effect of subsidization efficiency dominates, advisors use liquid funds to subsidize temporarily distressed funds. The subsidization induces negative asymmetric cross-fund flow-performance sensitivities: high-value (liquid) funds’ performances strongly decrease low-value (temporarily distressed) funds’ flows, whereas low-value (temporarily distressed) funds’ performances weakly reduce high-value (liquid) funds’ flows.

Options contracts are listed on thousands of stocks with different numbers of contracts per stock. This paper proposes to construct four risk-targeting portfolios to consolidate information in all the option contracts on each stock. A cross-sectional regression identifies the market price of risk on each risk source for each stock at any given date. The market price of risk estimate strongly predicts the excess return of the corresponding risk-targeting portfolio. Long-short portfolio construction on the risk-targeting portfolios in proportion to the market price of risk estimates generates highly positive average excess returns per unit risk across all four risk dimensions.

This article develops the uniform asymptotic theory for local projection (LP) regression when the true lag order of the model is unknown and potentially infinite. The theory allows for varying degrees of persistence in the data, growing response horizons, and general conditionally heteroskedastic martingale-difference shocks. Based on the theory, we make two main contributions. First, we show that LPs can achieve semiparametric efficiency at a given horizon under classical assumptions on the data, provided that the controlled lag order diverges. Thus, the commonly perceived efficiency loss of LPs can become asymptotically negligible with many controls. Second, we propose LP-based inference procedures for (level and cumulated) impulse responses that possess robustness properties not shared by existing methods. Inference methods using two distinct standard errors are considered. The uniform validity for the first method depends on a zero fourth-order cumulant condition on shocks, while that of the second holds more generally for conditionally heteroskedastic martingale-difference shocks. We propose a bootstrap procedure that improves finite-sample performance and extend the standard error construction to structural responses.

We examine how firms are affected by the political bargaining power of their headquarters’ region. Exploiting variation in the strategic importance of swing states stemming from shifting partisan balance in the U.S. Senate, we find that corporate valuations and investments positively respond to increases in regional political influence. We verify the valuation findings using an event study based on the 2021 Georgia runoff election that unexpectedly produced a 50-50 balance in the Senate. We investigate potential policy mechanisms and find that tax incentives constitute the most likely channel through which firms benefit from the political bargaining power of their headquarters’ region.

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This article combines personnel records of the U.S. government with census data to study how exposure to greater female representation at work can persistently reduce intergenerational gender gaps in labour market outcomes. Exploiting city-by-department variation in the sudden expansion of female employment during World War I, we find that daughters of civil servants exposed to female co-workers are more likely to work later in life. This intergenerational effect operates through exposed fathers and extends beyond the public sector, reducing the earnings gap by 12%. Consistent with a broader shift in attitudes towards working women, exposure to female co-workers also made male civil servants more likely to marry working women. We show that cities exposed to larger increases in female federal workers saw persistently higher female labour force participation in both the public and the private sector. Increasing gender representation within the public sector can thus have broader labour market implications.

This paper examines the Reaching-for-Coupon (RFC) phenomenon in U.S. corporate bond mutual funds. We define RFC as a portfolio tilt toward higher-coupon bonds relative to peers with similar yields. Using detailed bond-level holdings data from 2002–2018, we construct a novel fund-level RFC measure and show that high-RFC funds attract larger inflows, particularly in low-interest-rate environments. Crucially, investor flows into RFC funds are less sensitive to poor performance, leading to a less concave flow–performance relationship and mitigating redemption-driven fragility. These altered flow dynamics strengthen managerial incentives to take risk. Moreover, compared to Reaching-for-Yield (RFY) funds, RFC funds provide more stable income streams and are less exposed to credit downgrades. Our results demonstrate that RFC captures a distinct channel through which income-driven investor demand shapes risk-taking and fragility in bond markets.

We explore the use of technical indicators to forecast corporate bond returns with various machine learning models. We show that technical indicators yield statistically significant and economically meaningful results, consistently outperforming bond characteristics. Although bond characteristics possess predictive power for bond returns, they do not provide incremental value beyond technical indicators across all bonds. Additionally, machine learning models do not offer substantial improvements over the benchmark linear model. These results underscore the significance of technical indicators in the corporate bond market.

Horizontal directors, board members who also hold board seats in same-industry peers, are common in U.S. corporations. We posit that horizontal directorships can enhance the efficiency of corporate investment decisions. Horizontal directors enjoy access to current information flows, which help boards fulfill their roles of advising and monitoring – a form of learning from peers. We find that horizontal directorships are negatively related to investment inefficiency, and with over-investment in particular. Exogenous shocks to board composition provide a causal interpretation to our findings. Our paper contributes to a nuanced view of horizontal directors by highlighting their contribution to mitigate excessive investment.