How Companies and the Market Respond to the Issuance of Green Bonds

By Sanjai Bhagat and Aaron Yoon July 17, 2023 by renholding

During the past decade, many corporations across the globe have issued green bonds – which are identical to traditional corporate bonds except that their proceeds are dedicated to environmental and climate-friendly corporate investments. Since they were first created in 2013, …

On Earnings Calls, It’s How Managers Say It That Can Affect the Market

By Bok Baik, Alex G. Kim, David Sunghyo Kim and Sangwon Yoon June 6, 2023 by renholding

Corporate disclosures increasingly include multimedia content such as audio, images, and videos. In fact, as of 2022, 83 percent of U.S. public firms used graphics in annual reports and various other communications. Additionally, companies commonly provide their earnings calls, shareholder …

How Market Feedback Affects CEO Pay

By C.S. Agnes Cheng, Iftekhar Hasan, Feng Tang and Jing Xie December 13, 2022 by renholding

Stock prices affect various corporate decisions such as the amount of CEO compensation, as emphasized in traditional pay-for-performance studies, and capital investment. However, an unanswered question is whether changes in firms’ stock price in a short window around events related …

What Is Stock Market Short-Termism?

By Mark Roe September 16, 2022 by renholding

What is stock market short-termism? It’s important to know the boundaries between stock market short-termism and other economic ills, because in public discourse many social and economic woes are mistakenly attributed to stock market myopia. But when we mistakenly categorize …

SEC Chair Gensler Speaks on Plans to Overhaul Stock Trading

By Gary Gensler June 9, 2022 by renholding

Thank you, Rich (Repetto), for that kind introduction. It is good to be with you again. As is customary, I’d like to note my views are my own, and I’m not speaking on behalf of my fellow Commissioners or the

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Meme Investors and Retail Risk

By Sue S. Guan May 26, 2022 by renholding

Dramatic trading in GameStop, AMC, and other “meme stocks” has reignited debates about the efficiency of the stock market, its purposes, and whose interests it should serve. The changing role of retail investors and meme investors, a subset of retail …

Institutional Investors in China: Corporate Governance and Policy Channeling in the Market Within the State

By Lin Lin and Dan W. Puchniak August 17, 2021 by renholding

The extraordinary rise of China’s economy has made understanding Chinese corporate governance an issue of global importance. A rich literature has developed analyzing the Chinese Communist Party’s (CCP’s) role as China’s largest controlling shareholder and the impact that this has …

Short-Term Institutions, Analyst Recommendations, and Mispricing: The Role of Higher-Order Beliefs

By Martijn Cremers, Ankur Pareek and Zacharias Sautner August 4, 2021 by renholding

Discussions on the role of higher-order beliefs (investor beliefs about the beliefs of other investors) in financial markets can be traced back to Keynes’ (1936) comparison of the stock market to a beauty contest. Investors “are concerned,” he famously said, …

Has the Stock Market Become Less Representative of the Economy?

By Frederik P. Schlingemann and René M. Stulz October 19, 2020 by renholding

In the summer of 2020, with the U.S. economy bearing the impact of the COVID-19 pandemic, the unemployment rate was as high as it had been any time since 1948, and the NASDAQ and the S&P 500 indices reached their …

Should We Ban Short Sales in a Stock Market Crash?

By Marco Pagano March 17, 2020 by renholding

Few things are more predictable than loud demands for regulatory interventions to stop speculation when stock market prices plunge: In these days, as in any recent stock market crash, we hear politicians and commentators inviting regulators to enact interventions spanning

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Do Firms Conceal Material Misstatements by Reporting Revisions Rather than Restatements?

By Rachel Thompson October 15, 2019 by renholding

Disclosure of financial reporting errors is vital to maintaining investors’ trust in the capital markets. Yet, in recent years the number of misstatements corrected in restatements of financial reports has declined dramatically, and misstatements are now more likely to be …

Time Variation in the Relationship Between News and Returns

By Paul Glasserman, Fulin Li and Harry Mamaysky August 29, 2019 by renholding

How does the stock market respond to news reports about a company? Previous work has found that it takes a few days for prices to fully absorb news, and this underreaction has been attributed to investors’ limited ability to process …

The Long-Term Effects of Shareholder Activism

By Emmanuel Pezier June 26, 2019 by renholding

Shareholder activism is growing in popularity across the world and appears to deliver mostly benign results for firms and stockholders. However, testing the effects of activism is problematic. For at least 30 years, researchers have recognized the difficulty of causal …

The Social Functions of the Stock Market: A Primer

By Merritt B. Fox April 12, 2019 by renholding

A stock market is a key feature found in any economy with a substantial private sector. For example, in the United States, we see the New York Stock Exchange and Nasdaq, in the U.K, the London Stock Exchange, and in …

Listing Gaps, Merger Waves, and the Privatization of U.S. Equity Finance

By Gabriele Lattanzio, William L. Megginson and Ali Sanati March 11, 2019 by renholding

The number of U.S. listed companies declined by almost half between 1996 and 2012, from 8,090 to 4,102, and had risen only slightly, to 4,336, by year-end 2017. However, the real market valuation of these listed companies tripled over the …

Poison Pills and the 20 Percent Rule—a Dangerous Cocktail?

By Andrew G. Khanarian March 8, 2019 by renholding

Amidst the clamorous and wide-ranging debate over poison pills, few commentators have addressed whether these corporate defenses are consistent with NYSE’s and NASDAQ’s well-known prohibitions against large issuances absent shareholder approval (the “20 Percent Rule”). While poison pills are often …

SEC Commissioner Jackson on the State of America’s Stock Markets

By Robert J. Jackson, Jr. September 20, 2018 by renholding

Thank you so much, J.W. [Verret] and Ty [Gellasch], for that incredibly kind introduction. It’s a real honor to be here with you both today at George Mason, talking about the only issue you two have ever agreed on.[*

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Rumors of the Death of U.S. Public Companies Are Greatly Exaggerated

By Brian Cheffins September 4, 2018 by renholding

As of 2017, 172 of America’s 200 largest companies, ranked by revenue, were publicly traded. Public company dominance of the corporate economy of the United States has existed for decades. There has been much speculation recently that this era may …

Stock Market Indices: Inside the Black Box

By Anita Anand and Adriana Z. Robertson March 21, 2018 by renholding

The news that a whistleblower contacted U.S. regulators last month about alleged manipulation of the Chicago Board Options Exchange Volatility Index, or VIX, highlights near universal reliance on information that stock market indices provide. While the VIX is not itself …

Spotify’s Direct Listing in the U.S. and Lessons from the UK

By Ambrus Kecskés March 1, 2018 by renholding

If all goes well with its February 28 filing with the Securities and Exchange Commission, Spotify will be the first firm to go public in the U.S. via a direct listing on a stock exchange. Simply put, this means that, …

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