Finance
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- 07 Jan 2020
- Cold Call Podcast
Can Capitalism Be Fixed by Making Companies More Just?
JUST Capital seeks to make public companies more "just" by measuring and ranking their overall impact on society, based on priorities most important to average Americans. Ethan Rouen and Charles Wang explore whether JUST Capital's performance evaluation methodology can improve corporate behavior. Open for comment; Comment(s) posted.
- 16 Dec 2019
- Research & Ideas
Taking on the Taboos That Keep Women Out of India's Workforce
Giving women in rural India more control over household finances reduces the social stigma of working, says research by Natalia Rigol. Open for comment; Comment(s) posted.
- 03 Dec 2019
- Cold Call Podcast
Why CalSTRS Chooses to Engage with the Gun Industry
Should large institutional investors divest or engage if they have an issue with a company? In a recent case study, Vikram Gandhi discusses how CalSTRS, the $200 billion pension plan for California public school teachers, chose to engage with gun makers and retailers. Open for comment; Comment(s) posted.
- 19 Nov 2019
- Op-Ed
Gender Bias Complaints against Apple Card Signal a Dark Side to Fintech
The possibility that Apple Card applicants were subject to gender bias opens a new frontier for the financial services sector in which regulators are largely absent, argues Karen Mills. Open for comment; Comment(s) posted.
- 13 Nov 2019
- Working Paper Summaries
Shareholder Activism and Firms’ Voluntary Disclosure of Climate Change Risks
Shareholder resolutions typically fail, and often by a wide margin. So why do active investors bother? It turns out that resolutions nonetheless can influence corporate transparency. Specifically, after being targeted with shareholder resolutions on environmental topics, this research shows that companies are more likely to publicly disclose their climate change risks—and that such disclosure increases these companies’ valuation.
- 05 Nov 2019
- Working Paper Summaries
The Economic Effects of Private Equity Buyouts
Private equity buyouts are a major financial enterprise that critics see as dominated by rent-seeking activities with little in the way of societal benefits. This study of 6,000 US buyouts between 1980 and 2013 finds that the real side effects of buyouts on target firms and their workers vary greatly by deal type and market conditions.
- 23 Oct 2019
- Working Paper Summaries
Decarbonization Factors
This paper contributes to a growing knowledge base about how climate change impacts investor expectations, capital allocations and thereby pricing and returns. It provides actionable insights into how to decarbonize portfolios and evaluate the likely performance and carbon exposure differences across strategies.
- 16 Oct 2019
- Working Paper Summaries
Core Earnings? New Data and Evidence
Using a novel dataset of earnings-related disclosures embedded in the 10-Ks, this paper shows how detailed financial statement analysis can produce a measure of core earnings that is more persistent than traditional earnings measures and forecasts future performance. Analysts and market participants are slow to appreciate the importance of transitory earnings.
- 14 Oct 2019
- Working Paper Summaries
Undisclosed Debt Sustainability
Presenting a scenario in which non-Paris Club lending and borrowing is fully disclosed, this study illustrates that transparency has potential effects of decreased debt sustainability for investors such as China, and significant welfare gains for recipient countries. Effects are particularly strong if the debt is large.
- 18 Sep 2019
- Op-Ed
WeWork—The IPO That Shouldn’t?
WeWork's IPO has been one of the most debated in recent memory. But the real controversy, says Nori Gerardo Lietz, is what is contained in the company's prospectus. Open for comment; Comment(s) posted.
- 11 Sep 2019
- Research & Ideas
Germany May Have the Answer for Reducing Drug Prices
In Germany, drugmakers must prove that a new medication’s benefits merit a higher price than existing drugs. Ariel Dora Stern asks whether "value-based pricing" should become the standard elsewhere. Open for comment; Comment(s) posted.
- 05 Sep 2019
- Working Paper Summaries
The Value of Intermediation in the Stock Market
Despite the rise of alternative trading platforms, high-touch broker trading remains prominent in institutional equity markets. The authors analyze how fees, research, quality of execution, and information can help explain how execution decisions and preferences vary across investors.
- 20 Aug 2019
- Cold Call Podcast
Should a Pension Fund Try to Change the World?
Can inclusivity, sustainability, and better governance boost economies? Rebecca Henderson and George Serafeim discuss the impact investing efforts of GPIF, Japan’s government pension fund. Open for comment; Comment(s) posted.
- 10 Aug 2019
- Working Paper Summaries
Varieties of Outward Chinese Capital: Domestic Politics Status and Globalization of Chinese Firms
Most popular and scholarly writing about China’s global push overemphasizes the power of the state. This paper explains how three types of domestic Chinese capital—state capital, private capital, and crony capital—differ in political vulnerability and pursue globalization in different ways. All prefer capital openness, but they do so for different reasons.
- 15 Jul 2019
- Book
Many Executives Are Afraid of Finance. Here's How They Can Gain Confidence
Mihir Desai explains how managers can increase their understanding of how finance works. EXCERPT: Three valuation mistakes to avoid. Open for comment; Comment(s) posted.
- 29 Jun 2019
- Working Paper Summaries
Infrastructure and Finance: Evidence from India's GQ Highway Network
In India, the Golden Quadrilateral highway network connects four major cities. This study of the relationship between the infrastructure project and development of the local financial sector finds that, in districts along and near the GQ, initial levels of financial development shaped how, and where, infrastructure investment could jumpstart real economic activity.
- 27 Jun 2019
- Working Paper Summaries
The Effect of Payment Choices on Online Retail: Evidence from the 2016 Indian Demonetization
Online sellers in many emerging markets are in the early stages of a shift from cash-based payments to digital payments. Findings from this study of a leading Indian online retailer show that firms may enjoy gains from consumer demand on top of operational gains resulting from payment digitization.
- 10 Jun 2019
- Working Paper Summaries
Going Digital: Implications for Firm Value and Performance
More and more nontechnology companies are adopting digital technologies like AI, data analytics, and machine learning. This study of the economic performance of nontech firms adopting new digital technologies finds a persistent future increase in valuation. However, investors only slowly incorporate the value implications of digital activities into prices. Nontech companies with senior executives with tech talent improve performance more than those without.
- 07 Jun 2019
- Working Paper Summaries
Reflexivity in Credit Markets
Investors’ biases and market outcomes affect each other in a two-way feedback loop. This study develops a model of a credit market feedback loop, finding that when investors become more bullish this can predict positive returns in the short run, even if expected returns become more negative at longer horizons.
Do Private Equity Buyouts Get a Bad Rap?
Elizabeth Warren calls them Wall Street "looting," but a recent study by Josh Lerner and colleagues shows private equity buyouts have both good and bad impacts. Open for comment; Comment(s) posted.