Latest News

Do Credit Default Swaps Mitigate the Impact of Credit Downgrades?

The lead article in Volume 23, Issue 3 of the Review of Finance is Do Credit Default Swaps Mitigate the Impact of Credit Downgrades? by Sudheer Chava, Rohan Ganduri, and Chayawat Ornthanalai.  When a firm’s debt is downgraded, its stock price falls, it subsequently raises less debt, and its cost of debt increases.  This paper finds that, when credit default swaps (CDS) trade on its debt, all three effects are reduced – suggesting that CDS alleviates the financial frictions arising from downgrades.… Read more...

Option to Suggest Editors

The Review of Finance has now added the option to suggest editors. The submission system contains a drop-down where you can make a selection (or choose “None Selected”). We will take author suggestions into account but are not always able to accommodate them due to factors such as workload, fit, and conflicts.… Read more...

Labor and Capital Dynamics Under Financing Frictions

The lead article in Volume 23, Issue 2 of the Review of Finance is Labor and Capital Dynamics under Financing Frictions by Ryan Michaels, Beau Page, and Toni Whited. This paper uses a new quarterly panel dataset to examine how financing frictions affect firms’ investment and hiring decisions.  In particular, it shows that higher leverage reduces wages, even though it does not reduce employment.  To rationalize the findings, the authors build a model where higher leverage increases the probability of default, reducing the surplus to be shared with workers and thus wages.… Read more...

Important update for authors and referees

We have recently updated our information for authors and referees. For authors, this explains the requirement for EU authors to provide VAT information for their institution (or confirm they are paying the submission fee privately), plus the process and timescale of any refunds (e.g.… Read more...

Complex Mortgages

(This post is thanks to Editor Amiyatosh Purnanandam)

The lead article in Volume 22, Issue 6 of the Review of Finance is Complex Mortgages by Gene Amromin, Jennifer Huang, Clemens Sialm, and Edward Zhong. 

The Changing Nature of Mortgages

Mortgage products were extremely simple in the twentieth century.… Read more...

Which Factors?

(This post is thanks to Editor Amit Goyal)

The lead article in Volume 23, Issue 1 of the Review of Finance is “Which Factors?” by Kewei Hou, Haitao Mo, Chen Xue, and Lu Zhang.

A factor model proposes why different stocks have different returns.… Read more...

A Theory of Costly Sequential Bidding

The lead article in Volume 22, Issue 5 of the Review of Finance is A Theory of Costly Sequential Bidding by Kent Daniel and David Hirshleifer.  This paper explains why, in many real-life auctions such as M&A, bidders may engage in “jump-bids” – bid much more than needed to stay in the auction – when it might seem more prudent to bid the minimum possible increment

How to Bid in an Auction?… Read more...

Editorial Board Changes and Reappointments

The Review of Finance is delighted to announce the reappointment of Amit Goyal and Joel Peress as Editors for a second three-year term starting in 2019. We also welcome David Martinez-Miera as Associate Editor. We thank the outgoing Associate Editors Doron Avramov, David Thesmar, and Paolo Volpin for their service to the journal.… Read more...

Managing Editor’s Report for 2017/18

The Managing Editor’s Report for 2017/8 is available here. Some highlights include:

  • The number of R&Rs has fallen substantially from 156 in 2015/16 to 87 in 2016/17 and 38 in 2017/18, consistent with our new policy of applying top-three standards
    • As a result, our backlog has also fallen substantially, reducing the time between acceptance and in-print publication.
… Read more...