A Fast Literature Search Engine based on top-quality journals, by Dr. Mingze Gao.

• Ilhan, E., Krueger, P., Sautner, Z., & Starks, L. T. (2023). Climate Risk Disclosure and Institutional Investors. Review of Financial Studies, 36, 2617–2650.

  Through a survey and analyses of observational data, we provide systematic evidence that institutional investors value and demand climate risk disclosures. The survey reveals the investors have a strong demand for climate risk disclosures, and many actively engage their portfolio firms for improvements. Empirical analyses of holdings data corroborate this evidence by showing a significantly positive association between climate-conscious institutional ownership and better firm-level climate risk disclosure. We establish further evidence of institutional investors’ influence on firms’ climate risk disclosures by examining a shock to the climate risk disclosure demand of French institutional investors (French Article 173).Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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• Kim, H. B., Kim, W., & Kronlund, M. (2023). Do Corporations Retain Too Much Cash? Evidence from a Natural Experiment. Review of Financial Studies, 36, 2839–2877.

  Corporations have accumulated record amounts of cash. We study whether firms’ cash retention has been excessive by examining a Korean reform that introduced a new tax on earnings retained as cash. Difference-in-differences tests show that treated firms reduce cash retention and instead increase payouts and investments. Market participants react favorably to the reform, consistent with excessive cash retention. The valuation effects and the alternative uses of the cash are associated with behavioral and agency frictions. Firms that are more subject to behavioral biases increase payouts and experience higher valuations, while poorly governed firms allocate more to investment and experience relatively lower valuations.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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• Krishnamurthy, A., & Li, W. (2023). The Demand for Money, Near-Money, and Treasury Bonds. Review of Financial Studies, 36, 2091–2130.

  Bank-created money, shadow-bank money, and Treasury bonds all satisfy investors’ demand for liquidity. We measure the quantity of these forms of liquidity and their corresponding liquidity premium in a sample from 1934 to 2016, estimating the substitutability of these assets and the liquidity per unit delivered by each asset. Treasuries and bank transaction deposits are imperfect substitutes, in contrast to perfect substitutes found by Nagel (2016). Bank and nonbank non-transaction deposits are closer substitutes for Treasuries. Our empirical results inform theories of the monetary transmission mechanism running through shifts in asset supplies and models of the coexistence of the shadow banking and regulated banking system.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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• Kuehn, L.-A., Schreindorfer, D., & Schulz, F. (2023). Persistent Crises and Levered Asset Prices. Review of Financial Studies, 36, 2571–2616.

  This paper shows that standard disaster risk models are inconsistent with movements in stock market volatility and credit spreads during disasters. We resolve this shortcoming by incorporating persistent macroeconomic crises into a structural credit risk model. The model successfully captures the joint dynamics of aggregate consumption, financial leverage, and asset market risks, both unconditionally and during crises. Leverage strongly amplifies fundamental shocks by continuing to rise while crises endure. We structurally estimate the model and show that it replicates the firm-level implied volatility curve and its cross-sectional relation with observable proxies of default risk.

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• Limodio, N., & de Roux, N. (2023). Deposit Insurance and Depositor Behavior: Evidence from Colombia. Review of Financial Studies, 36, 2721–2755.

  This paper studies the effect of deposit insurance on depositor behavior. Our theoretical framework integrates insights from public and financial economics and predicts that (1) deposit insurance induces bunching at the threshold in the deposit distribution and (2) an increase in the insurance threshold promotes deposit growth, particularly higher for individuals bunching at the initial limit. We exploit a large and unexpected increase in the Colombian insurance together with monthly depositor-level records from a major bank to test these predictions. We validate the existence of bunching in deposits and quantify the heterogeneous effect of deposit insurance on individual deposit growth.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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• Mabille, P. (2023). The Missing Homebuyers: Regional Heterogeneity and Credit Contractions. Review of Financial Studies, 36, 2756–2796.

  This paper documents an unprecedented decrease in young homeownership since the Great Recession driven by regions with high house prices. Using a panel of U.S. metro areas, I calibrate an equilibrium spatial macro-finance model with overlapping generations of mobile households. The dynamics of regional housing markets is explained by an aggregate credit contraction with heterogeneous local impacts rather than by local shocks. Lower millennial income and wealth amplify its effect. The impact of subsidies to first-time buyers is dampened, because they fail to stimulate regions that suffer from larger busts. Place-based subsidies achieve larger gains.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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• Schwarz, C., & Sun, Z. (2023). How Fast Do Investors Learn? Asset Management Investors and Bayesian Learning. Review of Financial Studies, 36, 2397–2430.

  We study the speed with which investors learn about managers’ skills by examining how quickly investor and managers’ beliefs converge. After showing our measure proxies for the change in the dispersion of beliefs, we find that hedge fund investors learn as fast as suggested by Bayes’ rule. However, we find mutual fund investors learn more slowly than suggested by Bayes’ rule. Mutual fund investors’ slow learning is not due to the use of different performance measures, institutional frictions, or lack of sophistication, but could be due to a low payoff from learning. Our results indicate learning speed depends on financial participants’ incentives.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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• Sen, I. (2023). Regulatory Limits to Risk Management. Review of Financial Studies, 36, 2175–2223.

  Variable annuities, the largest liability of U.S. life insurers, are investment products containing long-dated minimum return guarantees. I show that guarantees with similar economic risks are treated differently by regulation and these differences impact insurers’ hedging behavior. When the regulatory regime recognizes certain risks, insurers start to hedge these risks in a substantial way. For some guarantees, this involves hedging both interest rate and equity market risks. However, for others, it involves hedging only equity market risk. As the regulatory regime still does not recognize the interest rate risk of all guarantees, insurers remain exposed to substantial interest rate risk.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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• Suh, P. (2023). Intellectual Property Rights and Debt Financing. Review of Financial Studies, 36, 1970–2003.

  I examine how the investment and financing of innovation are affected by the contractual allocation of intellectual property rights using a Federal Circuit ruling that strengthened firms’ property rights to employee patents. I find that treatment firms’ total debt-to-assets ratio and R&D spending increase by 18% and 9%, respectively, as the residual control over patents increases firms’ incentives to innovate. These effects are more pronounced when ex ante holdup exposure is high. Furthermore, I find a positive marginal effect of asset complementarity as it limits the decline in employee incentives. Consistently, I show that firms’ ex post asset complementarity improves.Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

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• Celik, M. A., Tian, X., & Wang, W. (2022). Acquiring Innovation under Information Frictions*. Review of Financial Studies, 35, 4474–4517.

  Acquiring innovation through M&A is subject to information frictions, as assessing the value of innovative targets is a challenging task. We find an inverted U-shaped relation between firm innovation and takeover exposure; equity usage increases with target innovation; and the deal completion rate drops with innovation. We develop and estimate a model of acquiring innovation under information frictions, featuring endogenous merger, innovation, and offer composition decisions. Our estimates suggest that acquirers’ due diligence reveals only 30 of private information possessed by targets. Eliminating information frictions increases capitalized merger gains by 59, stimulates innovation, and boosts productivity, business dynamism, and social welfare.

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