Author name: Patricia Ponce

The Active World of Passive Investing
David Easley, David Michayluk, Maureen O’Hara and Talis J. Putninš
Review of Finance, Volume 25, Issue 5, September 2021, Pages 1433–1471, https://doi.org/10.1093/rof/rfab021

Worldwide, there are approximately 43,192 publicly listed stocks but around 3.3 million indexes, many of which are related to exchange-traded funds (ETFs).… Read more...

How Much Does Size Erode Mutual Fund Performance
Jonathan Reuter, Eric Zitzewitz
Review of Finance, Volume 25, Issue 5, September 2021, Pages 1395–1432, https://doi.org/10.1093/rof/rfab016

The low level of performance persistence among actively managed mutual funds has led many researchers to conclude that high past returns are more likely to reflect luck than skill.… Read more...

Experience Effects in Finance: Foundations, Applications, and Future Directions
Ulrike Malmendier
Review of Finance, Volume 25, Issue 5, September 2021, Pages 1339–1363, https://doi.org/10.1093/rof/rfab020

This article establishes four key findings of the growing literature on experience effects in finance: (1) the long-lasting imprint of past experiences on beliefs and risk taking, (2) recency effects, (3) the domain-specificity of experience effects, and (4) imperviousness to information that is not experience-based.… Read more...

New Mortgage Lenders and the Housing Market
Nikodem Szumilo
Review of Finance, Volume 25, Issue 4, July 2021, Pages 1299–1336, https://doi.org/10.1093/rof/rfaa031

This paper examines the effect of a new lender’s entry into a local mortgage market on the supply of new loans, housing prices and repossessions in areas around its branches.… Read more...

Time-Varying Crash Risk Embedded in Index Options: The Role of Stock Market Liquidity
Peter Christoffersen, Bruno Feunou, Yoontae Jeon, Chayawat Ornthanalai
Review of Finance, Volume 25, Issue 4, July 2021, Pages 1261–1298, https://doi.org/10.1093/rof/rfaa040

Market crashes refer to large, unexpected drops in asset prices.… Read more...

“Sorry, We’re Closed” Bank Branch Closures, Loan Pricing, and Information Asymmetries
Diana Bonfim, Gil Nogueira, Steven Ongena
Review of Finance, Volume 25, Issue 4, July 2021, Pages 1211–1259, https://doi.org/10.1093/rof/rfaa036

Bank branch closures are a recurring concern for policy makers and researchers alike.… Read more...

The Leverage–Profitability Puzzle Resurrected
B Espen Eckbo, Michael Kisser
Review of Finance, Volume 25, Issue 4, July 2021, Pages 1089–1128, https://doi.org/10.1093/rof/rfaa032

The leverage-profitability puzzle is the tension between the positive leverage-profitability correlation predicted by classical tradeoff theory of capital structure choice and the robust negative correlation observed for industrial companies.… Read more...

The Role of Internal M&A Teams in Takeovers
Nihat Aktas, Audra Boone, Alexander Witkowski, Guosong Xu, Burcin Yurtoglu
Review of Finance, Volume 25, Issue 4, July 2021,Pages 1047–1088, https://doi.org/10.1093/rof/rfaa034

The economic importance of mergers and acquisitions (M&As) has spurred extensive research into the drivers of takeover activity and associated gains.… Read more...

Financial Media, Price Discovery, and Merger Arbitrage
Matthias M M Buehlmaier, Josef Zechner
Review of Finance, Volume 25, Issue 4, July 2021, Pages 997–1046, https://doi.org/10.1093/rof/rfaa037

Using merger announcements and applying methods from computational linguistics we find strong evidence that stock prices underreact to information in financial media.… Read more...