Digests

The saliency of the CEO pay ratio
Audra Boone, Austin Starkweather, Joshua T White
Review of Finance, Volume 28, Issue 3, May 2024, Pages 1059–1104, https://doi.org/10.1093/rof/rfad039

The CEO pay ratio disclosure became effective in the U.S. in 2018. Although CEO pay disclosure was required, revealing the median employee’s salary and the corresponding ratio was not.… Read more...

External financing, technological changes, and employees
E Han Kim, Yuan Li, Yao Lu, Xinzheng Shi
Review of Finance, Volume 28, Issue 3, May 2024, Pages 985–1025, https://doi.org/10.1093/rof/rfad040

The choice to go public is arguably the most important and impactful decision firms make in their corporate lives.… Read more...

Credit risk, debt overhang, and the life cycle of callable bonds
Bo Becker, Murillo Campello, Viktor Thell, Dong Yan
Review of Finance, Volume 28, Issue 3, May 2024, Pages 945–985, https://doi.org/10.1093/rof/rfae001

In this paper, we propose that callable bonds may reduce the debt overhang otherwise created by corporate leverage.… Read more...

When passive funds affect prices: evidence from volatility and commodity ETFs
Karamfil Todorov
Review of Finance, Volume 28, Issue 3, May 2024, Pages 831–863, https://doi.org/10.1093/rof/rfad038

Focus

This paper studies ETF price impact in the most ETF-dominated asset classes: volatility (VIX) and commodities.… Read more...

Yield curve momentum
Markus Sihvonen
Review of Finance, Volume 28, Issue 3, May 2024, Pages 805–830, https://doi.org/10.1093/rof/rfae003

I find that past month Treasury bond returns predict bond returns also in the following month. This time series momentum pattern is easiest to detect at shorter maturities but exists also for longer maturities.… Read more...

Leveraged speculators and asset prices
Wenxi Jiang
Review of Finance, Volume 28, Issue 3, May 2024, Pages 769–804, https://doi.org/10.1093/rof/rfad037

From the episode of the Long-Term Capital Management (LTCM) in 1998 to the stock market crashes in 1929 and 1987, the quant crisis in 2007, the financial crisis in 2007-2008, and the bond market turmoil in 2020, there is ample anecdotal evidence suggesting that excessive leverage used by speculators can greatly amplify market crashes. … Read more...

The term structure of equity yields—a bottom-up approach
David Schröder
Review of Finance, Volume 28, Issue 2, March 2024, Pages 661–697, https://doi.org/10.1093/rof/rfad036

This article proposes a new perspective on the market equity yield curve. Instead of treating the equity market as one single entity, we go one level deeper and consider the equity market as what it really is — a large market of many different individual equity shares.… Read more...

Firm financing through insider stock pledges
Xiaofei Pan and Meijun Qian
Review of Finance, Volume 28, Issue 2, March 2024, Pages 621–659, https://doi.org/10.1093/rof/rfad030

Insiders pledging company stocks as collateral for personal loans is a worldwide practice. However, existing studies based on firm data from the U.S.… Read more...

Property rights, political connections, and corporate investment
Meng Miao, Dragon Yongjun Tang, Lixin Colin Xu, Xiao Yan
Review of Finance, Volume 28, Issue 2, March 2024, Pages 593–619, https://doi.org/10.1093/rof/rfad029

Strengthening property rights, the critical goal of modern economic systems, is expected to facilitate investment and development.… Read more...