Pages: 503-506 | Published: 3/2017 | DOI: 10.1111/jofi.12450 | Cited by: 0
Pages: 507-508 | Published: 3/2017 | DOI: 10.1111/jofi.12503 | Cited by: 0
Pages: 509-538 | Published: 3/2017 | DOI: 10.1111/jofi.12470 | Cited by: 108
SHAI BERNSTEIN, ARTHUR KORTEWEG, KEVIN LAWS
This paper uses a randomized field experiment to identify which startâup characteristics are most important to investors in earlyâstage firms. The experiment randomizes investorsâ information sets of fundâraising startâups. The average investor responds strongly to information about the founding team, but not to firm traction or existing lead investors. We provide evidence that the team is not merely a signal of quality, and that investing based on team information is a rational strategy. Together, our results indicate that information about human assets is causally important for the funding of earlyâstage firms and hence for entrepreneurial success.
Pages: 539-574 | Published: 3/2017 | DOI: 10.1111/jofi.12483 | Cited by: 40
MARA FACCIO, HUNG-CHIA HSU
We investigate the employment consequences of private equity buyouts. We find evidence of higher job creation, on average, at the establishments operated by targets of politically connected private equity firms than at those operated by targets of nonconnected private equity firms. Consistent with an exchange of favors story, establishments operated by targets of politically connected private equity firms increase employment more during election years and in states with high levels of corruption. In additional analyses, we provide evidence of specific benefits experienced by target firms from their political connections. Our results are robust to tests designed to mitigate selection concerns.
Pages: 575-612 | Published: 3/2017 | DOI: 10.1111/jofi.12482 | Cited by: 50
BRIAN T. MELZER
Homeowners at risk of default face a debt overhang that reduces their incentive to invest in their property: in expectation, some value created by investments in the property will go to the lender. This agency conflict affects housing investments. Homeowners at risk of default cut back substantially on home improvements and mortgage principal payments, even when they appear financially unconstrained. Meanwhile, they do not reduce spending on assets that they may retain in default, including home appliances, furniture, and vehicles. These findings highlight an important financial friction that has stifled housing investment since the Great Recession.
Pages: 613-654 | Published: 3/2017 | DOI: 10.1111/jofi.12467 | Cited by: 124
GIOVANNI DELL'ARICCIA, LUC LAEVEN, GUSTAVO A. SUAREZ
We present evidence of a riskâtaking channel of monetary policy for the U.S. banking system. We use confidential data on banksâ internal ratings on loans to businesses over the period 1997 to 2011 from the Federal Reserve's Survey of Terms of Business Lending. We find that ex ante riskâtaking by banks (measured by the risk rating of new loans) is negatively associated with increases in shortâterm interest rates. This relationship is more pronounced in regions that are less in sync with the nationwide business cycle, and less pronounced for banks with relatively low capital or during periods of financial distress.
Pages: 655-704 | Published: 3/2017 | DOI: 10.1111/jofi.12488 | Cited by: 51
DAMIR FILIPOVIÄ, MARTIN LARSSON, ANDERS B. TROLLE
We introduce the class of linearârational term structure models in which the state price density is modeled such that bond prices become linearârational functions of the factors. This class is highly tractable with several distinct advantages: (i)Â ensures nonnegative interest rates, (ii)Â easily accommodates unspanned factors affecting volatility and risk premiums, and (iii)Â admits semiâanalytical solutions to swaptions. A parsimonious model specification within the linearârational class has a very good fit to both interest rate swaps and swaptions since 1997 and captures many features of term structure, volatility, and risk premium dynamicsâincluding when interest rates are close to the zero lower bound.
Pages: 705-750 | Published: 3/2017 | DOI: 10.1111/jofi.12484 | Cited by: 80
ANDREAS FAGERENG, CHARLES GOTTLIEB, LUIGI GUISO
Using errorâfree data on lifeâcycle portfolio allocations of a large sample of Norwegian households, we document a double adjustment as households age: a rebalancing of the portfolio composition away from stocks as they approach retirement and stock market exit after retirement. When structurally estimating an extended lifeâcycle model, the parameter combination that best fits the data is one with a relatively large risk aversion, a small perâperiod participation cost, and a yearly probability of a large stock market loss in line with the frequency of stock market crashes in Norway.
Pages: 751-792 | Published: 3/2017 | DOI: 10.1111/jofi.12466 | Cited by: 65
DANIEL BRADLEY, SINAN GOKKAYA, XI LIU
Pages: 793-852 | Published: 3/2017 | DOI: 10.1111/jofi.12490 | Cited by: 42
RAN DUCHIN, THOMAS GILBERT, JARRAD HARFORD, CHRISTOPHER HRDLICKA
U.S. industrial firms invest heavily in noncash, risky financial assets such as corporate debt, equity, and mortgageâbacked securities. Risky assets represent 40% of firmsâ financial portfolios, or 6% of total book assets. We present a formal model to assess the optimality of this behavior. Consistent with the model, risky assets are concentrated in financially unconstrained firms holding large financial portfolios, are held by poorly governed firms, and are discounted by 13% to 22% compared to safe assets. We conclude that this activity represents an unregulated asset management industry of more than $1.5 trillion, questioning the traditional boundaries of nonfinancial firms.
Pages: 853-910 | Published: 3/2017 | DOI: 10.1111/jofi.12487 | Cited by: 168
HAO LIANG, LUC RENNEBOOG
Using corporate social responsibility (CSR) ratings for 23,000 companies from 114 countries, we find that a firm's CSR rating and its country's legal origin are strongly correlated. Legal origin is a stronger explanation than âdoing good by doing wellâ factors or firm and country characteristics (ownership concentration, political institutions, and globalization): firms from common law countries have lower CSR than companies from civil law countries, with Scandinavian civil law firms having the highest CSR ratings. Evidence from quasiânatural experiments such as scandals and natural disasters suggests that civil law firms are more responsive to CSR shocks than common law firms.
Pages: 911-950 | Published: 3/2017 | DOI: 10.1111/jofi.12489 | Cited by: 46
MAKOTO NAKAJIMA, IRINA A. TELYUKOVA
Reverse mortgage loans (RMLs) allow older homeowners to borrow against housing wealth without moving. Despite rapid growth in this market, only 1.9% of eligible homeowners had RMLs in 2013. In this paper, we analyze reverse mortgages in a calibrated lifeâcycle model of retirement. The average welfare gain from RMLs is $252 per homeowner, and $1,770 per RML borrower. Bequest motives, uncertainty about health and expenses, and loan costs account for low demand. According to the model, the Great Recession's impact differs across age, income, and wealth distributions, with a threefold increase in RML demand for lowest income and oldest households.
Pages: 951-952 | Published: 3/2017 | DOI: 10.1111/jofi.12449 | Cited by: 0
Pages: 953-953 | Published: 3/2017 | DOI: 10.1111/jofi.12491 | Cited by: 0
Pages: 954-957 | Published: 3/2017 | DOI: 10.1111/jofi.12451 | Cited by: 0