Version of Record online: 3/30/2026 | DOI: 10.1111/jofi.70037
DORON LEVIT, NADYA MALENKO, ERNST MAUG
We develop a unified theory of blockholder governance and the voting premium in a setting without takeovers or controlling shareholders. A voting premium emerges when a minority blockholder can influence shareholder composition by accumulating votes and buying shares from dissenting shareholders. Our theory reconciles conflicting empirical findings by showing that standard measures of the voting premium often misrepresent the true value of voting rights, increased conflicts between the blockholder and small shareholders do not necessarily raise the voting premium, and the voting premium can even turn negative when small shareholders free‐ride on the blockholder's trades.
Version of Record online: 3/29/2026 | DOI: 10.1111/jofi.70032
KRISTIAN BLICKLE, CECILIA PARLATORE, ANTHONY SAUNDERS
Using supervisory data on the loan portfolios of large U.S. banks, we document that these banks specialize by concentrating their lending disproportionately in a few industries. This specialization is consistent with banks having industry‐specific knowledge, reflected in reduced risk of loan defaults, lower aggregate charge‐offs, and higher propensity to lend to opaque firms in the preferred industry. Banks attract high‐quality borrowers by offering generous loan terms in their specialized industry, especially to borrowers with alternative options. Banks focus on their preferred industry in times of instability and relatively lower Tier 1 capital as well as after surges in deposits.
Consumer Choice and Corporate Bankruptcy
Version of Record online: 3/23/2026 | DOI: 10.1111/jofi.70030
SAMUEL ANTILL, MEGAN HUNTER
We estimate the indirect costs of corporate bankruptcy associated with lost customers. In incentivized experiments, randomly informing consumers about a firm's Chapter 11 reorganization lowers their willingness to pay for the firm's products by 17% to 28%. Consumers worry that bankruptcy could reduce product quality or prevent future interactions with the bankrupt firm. On average, 38% of consumers are aware of major bankruptcies. Using our experiments to estimate a structural model, we show that these indirect costs of bankruptcy amount to 12% to 15% of a firm's value. We show that these costs are unlikely to arise before bankruptcy.
Pricing of Climate Risk Insurance: Regulation and Cross‐Subsidies
Version of Record online: 3/16/2026 | DOI: 10.1111/jofi.70029
SANGMIN S. OH, ISHITA SEN, ANA‐MARIA TENEKEDJIEVA
Homeowners insurance is central to managing the rising losses from climate‐related disasters. We show that insurance premiums are subject to starkly different regulations across states, creating persistent cross‐subsidies and price distortions. We employ states' regulatory rules in an instrumental variable estimation and a border discontinuity design to show insurers do not adjust rates in highly regulated states and compensate by raising rates in less regulated states. Rates and risks diverge in the long run, distorting cross‐state risk‐sharing and increasing insurer exits from highly regulated states. We argue these patterns stem from the interactions between rate regulation and insurers' financing constraints.
Competition Enforcement and Accounting for Intangible Capital
Version of Record online: 2/6/2026 | DOI: 10.1111/jofi.70028
JOHN D. KEPLER, CHARLES G. MCCLURE, CHRISTOPHER R. STEWART
Antitrust laws mandate review of mergers and acquisitions (M&As) that exceed an asset size threshold based on accounting standards that exclude most intangible capital. We show that this exclusion leads to thousands of intangible‐intensive M&As being nonreportable. Acquirers in nonreportable deals achieve higher equity values and price markups, especially when consolidating product markets. Furthermore, nonreportable pharmaceutical deals are three times more likely to involve overlapping drug projects, which are subsequently 40% more likely to be terminated. Our results suggest that the growth of intangible assets may exacerbate market power through nonreportable consolidation of the sectors most concerning for consumers.
Model Ambiguity versus Model Misspecification in Dynamic Portfolio Choice
Version of Record online: 1/21/2026 | DOI: 10.1111/jofi.70027
PASCAL J. MAENHOUT, HAO XING, ANNE G. BALTER
We study aversion to model ambiguity and misspecification in dynamic portfolio choice. Risk‐averse investors (relative risk aversion ) fear return persistence, while risk‐tolerant investors () fear mean reversion, when confronting model misspecification concerns of identically and independently distributed (IID) returns. The intuition is that risk‐averse investors, who want to hedge intertemporally, endogenously fear return persistence, which precludes hedging. A log investor is myopic and unaffected by model misspecification, therefore only worrying about model ambiguity. Our model can generate belief scarring, nonparticipation in equity markets, and extrapolative return expectations. Extending beyond IID returns, we study model misspecification for a mean‐reverting Sharpe ratio.