Digests

Inefficient Regulation: Mortgages versus Total Credit
Artashes Karapetyan, Jens Soerlie Kvaerner, Maximilian Rohrer
Review of Finance, Volume 28, Issue 1, January 2024, Pages 311–351, https://doi.org/10.1093/rof/rfad023

Regulators have implemented macro-prudential policies in response to rising household debt and real estate prices.… Read more...

Do Insiders Hire CEOs with High Managerial Talent?
Jason D Kotter, Yelena Larkin
Review of Finance, Volume 28, Issue 1, January 2024, Pages 271–310, https://doi.org/10.1093/rof/rfad016

Hiring a new CEO is an important and difficult task. The board of directors must evaluate candidates, considering both their skills and experience, in order to select the best person for the job.… Read more...

Asymmetric Information and Corporate Lending: Evidence from SME Bond Markets
Alessandra Iannamorelli, Stefano Nobili, Antonio Scalia, Luana Zaccaria
Review of Finance, Volume 28, Issue 1, January 2024, Pages 163–201, https://doi.org/10.1093/rof/rfad024

Different existing theories offer opposite predictions regarding the unobservable credit quality of firms that access bond financing in lieu of bank loans.… Read more...

Low Carbon Mutual Funds
Marco Ceccarelli, Stefano Ramelli, Alexander F Wagner
Review of Finance, Volume 28, Issue 1, January 2024, Pages 45–74, https://doi.org/10.1093/rof/rfad015

Climate change poses new challenges for portfolio management. In our not-yet-low carbon world, investors face a trade-off between minimizing their exposure to climate risks and maximizing the benefits of portfolio diversification.… Read more...

Do Anomalies Really Predict Market Returns? New Data and New Evidence
Nusret Cakici, Christian Fieberg, Daniel Metko, Adam Zaremba
Review of Finance, Volume 28, Issue 1, January 2024, Pages 1–44, https://doi.org/10.1093/rof/rfad025

Asset pricing literature typically views return predictability from two perspectives.… Read more...

Income, Liquidity, and the Consumption Response to the 2020 Economic Stimulus Payments
Scott R. Baker, Robert A Farrokhnia, Steffen Meyer, Michaela Pagel
Review of Finance, Volume 27, Issue 6, November 2023, Pages 2271–2304, https://doi.org/10.1093/rof/rfad010

The 2020 CARES Act directed large cash payments to households.… Read more...

Indirect Costs of Financial Distress
Cláudia Custódio, Miguel A Ferreira, Emilia Garcia-Appendini
Review of Finance, Volume 27, Issue 6, November 2023, Pages 2233–2270, https://doi.org/10.1093/rof/rfad014

In the presence of information asymmetry, contractual frictions, or other conflicts between the firm and its stakeholders, a firm facing financial distress might experience a reduction in sales.… Read more...

A Tale of Two Cities: Mainland Chinese Buyers in the Hong Kong Housing Market
Yi Fan, Maggie Rong Hu, Wayne Xinwei Wan, Zhenping Wang
Review of Finance, Volume 27, Issue 6, November 2023, Pages 2205–2232, https://doi.org/10.1093/rof/rfad006

A burgeoning literature shows that global real estate markets are subject to the “China shock” in recent years.… Read more...

Large Bets and Stock Market Crashes
Albert S Kyle and Anna A Obizhaeva
Review of Finance, Volume 27, Issue 6, November 2023, Pages 2163–2203, https://doi.org/10.1093/rof/rfad008

After stock market crashes, market participants, policymakers, and economists are usually unable to explain what happened.… Read more...

The Term Structure of Short Selling Costs
Gregory Weitzner
Review of Finance, Volume 27, Issue 6, November 2023, Pages 2125–2161, https://doi.org/10.1093/rof/rfad009

Short sellers not only care about how overvalued an asset is, but when the overvaluation will be corrected. Thus, short selling costs will be higher over horizons when negative information is more likely to arrive.… Read more...