That's Interesting
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Quadrophobia: Strategic Rounding of EPS Data
15th February, 2024Managers’ incentives to round up reported earnings per share (EPS) cause an underrepresentation of the number 4 in the first post-decimal digit of EPS, or “quadrophobia.” This article has developed a novel measure of aggressive financial reporting practices based on a firm’s history of quadrophobia. Quadrophobia is pervasive, persistent, and successfully predicts future restatements, Securities and Exchange Commission enforcement actions, and class action litigation.
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Counterproductive Sustainable Investing: The Impact Elasticity of Brown and Green Firms
11th January, 2024The article develops a new measure of impact elasticity, defined as a firm’s change in environmental impact due to a change in its cost of capital. It shows empirically that a reduction in financing costs for firms that are already green leads to small improvements in impact at best. In contrast, increasing financing costs for brown firms leads to large negative changes in firm impact. Thus, sustainable investing that directs capital away from brown firms and toward green firms may be counterproductive, in that it makes brown firms more brown without making green firms more green.
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OECD Corporate Governance Factbook 2021
27th November, 2023Between 2005 and 2020, according to the OECD, almost 30,000 companies delisted from global markets via conventional takeovers, share buybacks and leverage buyouts. Over most of that period delistings were not matched by new issues so there was a net loss of listed companies, mainly in the US and Europe.
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Eclipse of the Public Corporation
23rd November, 2023New organizations are emerging in its place—organizations that are corporate in form but have no public shareholders and are not listed or traded on organized exchanges. These organizations use public and private debt, rather than public equity, as their major source of capital.
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Mental Models of the Stock Market
15th November, 2023Investors’ return expectations are pivotal in stock markets, but the reasoning behind these expectations remains a black box for economists. This paper sheds light on economic agents’ mental models – their subjective understanding – of the stock market, drawing on surveys with the US general population, US retail investors, US financial professionals, and academic experts.
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Greenwashing: Do Investors, Markets and Boards Really Care?
12th November, 2023What are the financial repercussions of corporate greenwashing? To answer this question, this article focuses on the impact of such ethically flawed practices on corporate stock market performance.
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A Review of Electric Vehicle Consumer Subsidies in Canada
06th November, 2023A look at EV purchase subsidies in Canada, which have been introduced to accelerate market uptake of these vehicles as part of governments’ efforts to reduce greenhouse gas (GHG) emissions that contribute to climate change. Transportation accounts for almost one-quarter of Canada’s total GHG emissions, so it is not surprising that Canadian policymakers are focusing on emissions from this sector.
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The Economic Dynamics of City Structure: Evidence from Hiroshima’s Recovery
03rd November, 2023The article provides a new theory and evidence on the resilience of internal city structure after a large shock, by analyzing the atomic bombing of Hiroshima, which destroyed the city center but not
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Fortunate Timing: Scheduled Insider Trades, Earnings News, and Spin
08th December, 2022In a sample of scheduled (10b5-1 transactions) routine sales by insiders that occur between 2015 and 2020, we find evidence of an increased incidence of favorable earnings-related news occurring in the weeks leading up to large sale transactions (greater than $1 million).
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Buy Now Pay (Pain?) Later
08th December, 2022“Buy Now Pay Later” (BNPL) is a largely unregulated FinTech innovation that provides consumers with easy access to credit for specific retail purchases. The BNPL market is projected to reach $1 trillion by 2025, but what effect does it have on consumers’ financial health.
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