Showing papers in "Journal of Financial Economics in 2010"

TL;DR: This paper found that new loans to large borrowers fell by 37% during the peak period of the financial crisis (September-November 2008) relative to the prior three-month period and by 68% compared to the peak of the credit boom (Mar-May 2007).

TL;DR: The authors survey 1,050 chief financial officers (CFOs) in the U.S., Europe, and Asia to assess whether their firms are credit constrained during the global financial crisis of 2008 and find that constrained firms planned deeper cuts in tech spending, employment, and capital spending.

TL;DR: Li et al. as mentioned in this paper investigated a particularly brazen form of corporate abuse, in which controlling shareholders use intercorporate loans to siphon billions of RMB from hundreds of Chinese listed companies during the 1996-2006 period.

TL;DR: This article found that family firms are less tax aggressive than their non-family counterparts, ceteris paribus, which suggests that family owners are willing to forgo tax benefits to avoid the non-tax cost of a potential price discount, which can arise from minority shareholders concerned with family rent-seeking masked by tax avoidance activities.

TL;DR: This article study the effect of the recent financial crisis on corporate investment and find that firms that have low cash reserves or high net short-term debt, are financially constrained, or operate in industries dependent on external finance are less likely to invest.

TL;DR: In this article, the authors argue that asset pricing tests are often highly misleading, in the sense that apparently strong explanatory power (high cross-sectional R2s and small pricing errors) can provide quite weak support for a model.

TL;DR: This paper found that stronger creditor rights tend to promote greater bank risk-taking and increase the likelihood of financial crisis, while the benefits of information sharing among creditors appear to be universally positive.

TL;DR: In this article, the authors investigated the effects of largest-shareholder ownership concentration, foreign ownership, and audit quality on the amount of firm-specific information incorporated into share prices, as measured by stock price synchronicity, of Chinese-listed firms over the 1996-2003 period.

TL;DR: The authors found that while firms in non-competitive industries experienced a significant drop in operating performance after the BC laws' passage, firms in competitive industries experienced no significant effect, and they found evidence in support of a "quiet-life" hypothesis that competition mitigates managerial slack.

TL;DR: In this paper, the authors conduct an empirical investigation into the pricing of subprime asset-backed collateralized debt obligations (CDOs) and their contagion effects on other markets, finding strong evidence of contagion in the financial markets.

TL;DR: The authors found that the effectiveness of outside directors depends on the cost of acquiring information about the firm and that outsider effectiveness varies with information costs, and that board effectiveness depends on information cost supports a nascent theoretical literature emphasizing information asymmetry.

TL;DR: In this paper, the authors provide empirical evidence that strategic complementarities among investors generate fragility in financial markets, and find that funds with illiquid assets exhibit stronger sensitivity of outflows to bad past performance than funds with liquid assets.

TL;DR: The authors survey chief financial officers from 29 countries to examine whether and why firms use lines of credit versus non-operational (excess) cash for their corporate liquidity for hedge against different risks.

TL;DR: This paper examined the effect of aviation disasters on stock prices and found evidence of a significant negative event effect with an average market loss of more than $60 billion per aviation disaster, whereas the estimated actual loss is no more than$1 billion.

TL;DR: In this article, the authors examined the association between chief financial officer (CFO) equity incentives and earnings management and found that the magnitude of accruals and the likelihood of beating analyst forecasts are more sensitive to CFO equity incentives than to those of the CEO.

TL;DR: In this paper, the authors quantify the empirical relevance of the pecking order hypothesis using a novel empirical model and testing strategy that addresses statistical power concerns with previous tests, and show that what little pecking-order behavior can be found in the data is driven more by incentive conflicts, as opposed to information asymmetry.

TL;DR: In this paper, a broad-based study of the effect of managerial risk-taking incentives on corporate financial policies was conducted and it was found that risk-decreasing (-increasing) incentives are associated with lower leverage and higher cash balances.

TL;DR: In this article, a firm's market-timing opportunities and its corporate lifecycle stage exert statistically and economically significant influences on the probability that it conducts a seasoned equity offering (SEO), with the lifecycle effect empirically stronger.

TL;DR: In this article, the authors propose new and simple ways to test for monotonicity in financial variables and compare the proposed tests with extant alternatives such as t-tests, Bonferroni bounds, and multivariate inequality tests through empirical applications and simulations.

TL;DR: The authors studied short-selling prior to the release of analyst downgrades in a sample of 670 downgrades of Nasdaq stocks between 2000 and 2001 and found abnormal levels of short selling in the three days before downgrades are publicly announced.

TL;DR: In this article, the authors consider the features of newly disclosed compensation peer groups and demonstrate their significant role in explaining variations in chief executive officer (CEO) compensation beyond that of other benchmarks such as the industry-size peers.

TL;DR: This paper examined the informational role of geographically proximate institutions in stock markets and found that both the level of and change in local institutional ownership predict future stock returns, particularly for firms with high information asymmetry; in contrast, such predictive abilities are relatively weak for nonlocal institutional ownership.

TL;DR: In this paper, the authors find evidence of a large transitory increase in the elasticity of demand for issuers conducting fully marketed equity offering (SEO)s and propose that the marketing effort flattens the issuer's short-run demand curve.

TL;DR: This paper examined whether securitization impacts renegotiation decisions of loan servicers, focusing on their decision to foreclose a delinquent loan and found a significantly lower foreclosure rate associated with bank-held loans when compared to similar securitized loans.

TL;DR: In this article, the authors calculate the costs and benefits of the largest ever US government intervention in the financial sector announced during the 2008 Columbus-day weekend, and estimate that this intervention increased the value of banks' financial claims by $130 billion (bn) at a taxpayers' cost of $21-$44 billion with a net benefit between $86 and $109bn.

TL;DR: In this article, the authors demonstrate that liquidity risk as measured by the covariation of fund returns with unexpected changes in aggregate liquidity is an important determinant in the cross-section of hedge-fund returns.

TL;DR: In this paper, the authors investigated the contribution of independent directors to shareholder value by examining stock price reactions to sudden deaths in the US from 1994 to 2007, and found that following a director death stock prices drop by 0.85% on average.

TL;DR: This article showed that the first outside CEO director appointment has a higher stock-price reaction than the appointment of another outside director, and that CEO directors do not affect the appointing firm's operating performance, decision-making, and CEO compensation.

TL;DR: In this paper, the authors examine the market response to an unexpected announcement of the sale of government-owned shares in China and find a negative effect of government ownership on returns at the announcement date and a symmetric positive effect from the policy's cancellation.