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Institution

HEC Paris

EducationJouy-en-Josas, France
About: HEC Paris is a education organization based out in Jouy-en-Josas, France. It is known for research contribution in the topics: Market liquidity & Entrepreneurship. The organization has 584 authors who have published 2756 publications receiving 104467 citations. The organization is also known as: Ecole des Hautes Etudes Commerciales & HEC School of Management Paris.


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Journal ArticleDOI
TL;DR: In this article, the authors propose a network formation model of an OTC derivatives market where both prices and quantities are bilaterally negotiated, and investigate numerically the size of the derivatives network, the aggregate collateral demand and pricing of the contracts under the following schemes: (i) various levels of collateralization for uncleared transactions, (ii) rehypothecation of received collateral and (iii) clearing through a central clearing party (CCP).
Abstract: This paper proposes a network formation model of an OTC derivatives market where both prices and quantities are bilaterally negotiated. The key feature of the framework is to endogenize the network of exposures, the gross and net notional amounts traded and the collateral delivered through initial and variation margins, as a function of idiosyncratic counterparty risk and regulatory collateral and clearing requirements. Using the framework, we investigate numerically the size of the derivatives network, the aggregate collateral demand and the pricing of the contracts under the following schemes: (i) various levels of collateralization for uncleared transactions, (ii) rehypothecation of received collateral and (iii) clearing through a central clearing party (CCP). Overall results suggest that dynamic effects due to the endogeneity of the derivative network to the collateralization and clearing requirements have sizeable consequences on both contract volumes and prices. Intermediary trading and market liquidity are reduced by higher collateralization requirements and enhanced by rehypothecation, while the potential for contagion is reduced. Not accounting for dynamic effects in current market conditions may lead to over-estimate collateral demand induced by mandatory central clearing by up to 22%.

32 citations

Journal ArticleDOI
TL;DR: In this article, the authors use the investment fraud of Bernard Madoff to inquire into the production of trust in the context of financial markets, and shed particular light on the role of institution-based forms of trust which play a critical role in facilitating economic exchanges.
Abstract: In this paper, we use the investment fraud of Bernard Madoff to inquire into the production of trust in the context of financial markets. Drawing upon empirical data related to U.S. individual investors (interviews and letters) as well as documentary material, we investigate the mechanisms through which investing with Madoff came to be seen as a trustworthy investment opportunity. We show how different types of information contributed to construct Bernard Madoff as a trustworthy investment manager and how Madoff avoided meeting demands for accountability by manipulating investors in face-to-face encounters. We shed particular light on the role of institution-based forms of trust which play a critical role in facilitating economic exchanges. More specifically, we suggest that the Madoff case illuminates how the provision of information can lead to an “illusion of trustworthiness” that is difficult to escape for investors. An element of such illusion, we suggest, is inherent to the functioning of financial markets more generally. (This abstract was borrowed from another version of this item.)

32 citations

Journal ArticleDOI
TL;DR: It is found that abnormal returns are strongly positive in the year prior to takeoff, thus suggesting an important signal of the takeoff, and that negative abnormal returns in theyear of takeoff and one year after takeoff increase the hazard of market exit by 9.5 times.
Abstract: We evaluate whether stock prices can predict the sales takeoff and the long-term survival of firms at takeoff. We find that abnormal returns are strongly positive in the year prior to takeoff, thus suggesting an important signal of the takeoff. Moreover, we find that negative abnormal returns in the year of takeoff and one year after takeoff increase the hazard of market exit by 9.5 times relative to firms without these negative abnormal returns. We discuss the implications of these findings for managers and researchers.

32 citations

Journal ArticleDOI
TL;DR: The authors study the effect of investor horizons on corporate behavior and find that when a firm is undervalued, greater long-term investor ownership is associated with more investment, more equity financing, and less payouts to shareholders.
Abstract: We study the effect of investor horizons on corporate behavior. We argue that longer investor horizons attenuate the effect of stock mispricing on corporate policies. Consistent with our argument, we find that when a firm is undervalued, greater long-term investor ownership is associated with more investment, more equity financing, and less payouts to shareholders. Our results do not appear to be explained by long-term investor self-selection, monitoring (corporate governance), or concentration (blockholdings). Our results are consistent with a version of market timing in which mispriced firms cater to the tastes of their short-term investors rather than their long-term investors.

32 citations

Journal ArticleDOI
TL;DR: It is argued that the more prominent SMOs are within an industry, the more a firm increases its commitment to that industry by expanding its operations; yet, this main effect should be moderated substantially by a firm’s idiosyncratic characteristics.
Abstract: This article theorizes about and tests the conditions under which firms’ commitment to an industry is influenced by social movement organizations (SMOs) that favor the industry. We argue that the more prominent SMOs are within an industry, the more a firm increases its commitment to that industry by expanding its operations; yet, this main effect should be moderated substantially by a firm’s idiosyncratic characteristics. The current research predicts that a firm’s location, its sensitivity to information about the industry’s potential, and its history of associations with activists determine the magnitude of the effect of SMO prominence on its strategic commitment to the industry. We test and find support for these hypotheses using a longitudinal data set of European manufacturers of solar photovoltaic cells between 1990 and 2011. The findings offer new insights for literature on social movements and organizations, as well as strategic management research. The online appendix is available at https://doi....

32 citations


Authors

Showing all 605 results

NameH-indexPapersCitations
Sandor Czellar133126391049
Jean-Yves Reginster110119558146
Pierre Hansen7857532505
Gilles Laurent7726427052
Olivier Bruyère7257924788
David Dubois5016912396
Rodolphe Durand4917310075
Itzhak Gilboa4925913352
Yves Dallery471706373
Duc Khuong Nguyen472358639
Eric Jondeau451557088
Jean-Noël Kapferer4515112264
David Thesmar411617242
Bruno Biais411448936
Barbara B. Stern40896001
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Performance
Metrics
No. of papers from the Institution in previous years
YearPapers
20239
202233
2021129
2020141
2019110
2018136