Miracle-dz/UniFAR-FTUs huggingface dataset:
THE IDIOSYNCRASIES OF THE EUROPEAN MARKET OF CORPORATE CONTROL

This paper provides a comprehensive descriptive analysis of the European market of mergers and acquisitions (M&amp;A) between 1990 and 2017. We examine several features of the deal announcements in the region like: 1) completion; 2) method of payment; 3) geographical scope; 4) target’s attitude; 5) bidders’ competition; 6) industry relatedness; 7) public status of the firms involved; and 8) acquirers’ ownership of targets before and after the transaction. Additionally, we identify the similarities and differences of this market with those of the dominant market worldwide, namely the US. Both markets show similar trends in their activity and the occurrence of waves concentrated around economic shocks. However, the European market notably exhibits higher levels of friendly and cash deals.
The Co-Movement Puzzle

This paper shows that the discount rates on three major risky asset classes – equity, housing and corporate bonds – do not co-move. Using new long-run data for 17 advanced economies, I show that asset-specific discount rates are uncorrelated, and that asset valuations and macro-financial risk factors predict returns on individual asset classes, but not across asset classes. This lack of co-movement presents a new asset pricing puzzle with important implications. Most theories in macro-finance assume a joint pricing kernel and attribute excess volatility across all asset classes to time variation in this common discount factor. My findings show that most excess volatility is, in fact, asset-specific and is therefore not driven by cross-asset risk factors such as risk aversion, long-run risk, disaster risk and intermediary risk appetite.
The Anatomy of Factor Momentum

Do factor momentum stem from predictable factor dynamics or from their mechanical exposure to factor risk premia? To provide an answer to this question, we derive a novel theoretical decomposition of factor momentum into a buy-and-hold and a pure factor timing portfolio. Using 210 US equity factors, we show that factor premiums robustly account for a dominant fraction of the total factor momentum return. Because predictability is empirically too weak, the buy-and-hold portfolio outperforms factor momentum and survives the post-publication decay of factor returns. This evidence is also prevalent in different investment sets, different formation and holding periods, and global factors.
Regulatory Spillover and Monitoring Frictions at the SEC

I investigate how the Securities and Exchange Commission (SEC) monitors firms by analyzing internet downloads of regulatory filings by SEC employees. I find that SEC employees respond to negative financial reporting events, such as restatements and spikes in negative media coverage, by monitoring the peers of focal firms (“Regulatory Spillover”). This is consistent with the SEC using peer information to identify potential violators. However, there is less spillover when peer firms are assigned to different regional or industry offices, even when those offices are located within the same building, suggesting that SEC employees are poor at sharing information across organizational boundaries. Further, firms with names later in the alphabet are less likely to be monitored, indicating that SEC employees use simple heuristics when prioritizing targets. These findings contribute to the literature by exploring the monitoring activities through which the SEC identifies noncompliance and by identifying frictions that impair efficient monitoring.
Is Readability of Textual Corporate Disclosures Measurable?

This paper reviews the accounting literature that studied readability of corporate narrative disclosures as a dependent variable being affected by firm performance, desire to highlight good news or hide bad news, risk exposures, among others, or as an independent variable affecting decision makers such as investors or analysts in their judgements. We limited the studies reviewed in this literature to those which quantitatively measured readability in terms of the Fog Index, Flesch Kincaid, Flesch Reading Ease, or even the file size as an overall measure of the level of readability of the textual disclosure. The purpose of the review is to document the increasing trend in the number of studies depending on these indices over the last two decades, and to show why, although these computational linguistic techniques might be appropriate for the purposes they were developed for, they might suffer several deficiencies when used in the financial disclosure field.
Total Synthesis of the Natural Carbazoles Glycozolicine, Mukoline, and Mukolidine, Starting from 4,5-Dimethyleneoxazolidin-2-ones

A novel and efficient synthesis of naturally occurring 1-methoxycarbazoles glycozolicine, mukolidine, and mukoline is developed by applying a regioselective Diels-Alder reaction of a 4,5-dimethyleneoxazolidin-2-one with acrolein. The cycloadduct is transformed to the corresponding functionalized diarylamine. The key palladium-catalyzed cyclization/deformylation cascade reaction of the latter leads to glycozolicine in high overall yield. Oxidation of the C6 methyl group provides the 6-formylcarbazole mukolidine, which is reduced to the respective natural alcohol mukoline.
Here in the Real World: The Performance of Alternative Beta

We examine the realized performance of alternative beta strategies using a database of returns since 2008. Despite diversified portfolios of risk premia strategies offered by global investment banks achieving satisfactory Sharpe ratios of 0.80–1.07 during the decade to 2017, up to two thirds of the performance can be explained by exposure to traditional benchmarks. Furthermore, the outcomes are very sensitive to the estimated all-in fees incurred by investors. We find no evidence of positive alpha in the aggregate industry returns, and document a pattern of time-varying, asymmetric, and statistically significant betas to global equities and bonds. Our results suggest that the poor performance of the strategies in 2018–20 was not an aberration, but rather a continuation of patterns already present in earlier data. The findings are representative of the wider risk premia industry, as returns of managed alternative risk premia funds and those of diversified investment bank strategy portfolios appear closely aligned.
Dispelling Misconceptions in Economics

Some popular views about the workings of the economy are completely at odds with solid empirical evidence and congruent theoretical explanations and therefore can be qualified as misconceptions. Such beliefs lead to support for harmful policies. Cognitive biases may contribute to explaining why misconceptions persist even when scientific information is provided to people. We conduct two types of experiments to investigate, for the first time in economics, whether presenting information in a refutational way affects people’s beliefs about an important socio-economic issue on which expert consensus is very strong: the harmful effects of rent controls. In the laboratory both our refutational and non-refutational messages induce a belief change in the direction of expert knowledge. The refutational message, however, does not improve significantly on the non-refutational one. In the field, where participants are college students receiving economic training, the refutational text improves on standard teaching. Overall, the refutational message has a moderate success since most participants stick to the misconception.
Corporate Governance Compliance and Herding

We show the corporate governance reforms introduced by the Japanese government since 2014 have not succeeded in increasing aggregate firm value. These policies, of which voluntary disclosure in the form of ‘comply or explain’ is a major element, have inadvertently led to overcompliance by target firms listed in the first section of the Tokyo Stock Exchange as well as a range of non-target firms. This results in smaller firms, which are typically not listed on the first section of the exchange, following the compliance behaviour of larger firms listed on the first section in the same industry sector. Importantly, this pressure to follow in the steps of leading firms is to the detriment of board effectiveness and shareholder value. We document a larger reduction in the market value of young and R&D intensive firms, and firms appointing outsider directors with lower advising quality. We posit this overcompliance behaviour is, inter alia, correlated with the cultural values of ‘conformity’, ‘respect for authority’ and ‘power distance’, which permeate the Japanese corporate culture. These findings highlight the risks in adopting corporate governance policies without sufficient attention to contextual factors.
Funding Stability and Bank Liquidity

In this paper, I study how rollover funding risk affects banks’ asset illiquidity choice. I address this question using the 2016 US money market fund reform, which reduced the availability of unstable MMF funding and imposed regulations that mitigated the incentives of MMF investors to run. Using this regulatory shock and a sample of MMF-borrowing international banks, I find that a reduction in rollover risk following MMF reform leads to an increase in the fraction of lending on bank balance sheets. I supplement this analysis with detailed corporate loan-level data and find that the increase in lending is concentrated in the most illiquid loan categories. This evidence supports the theory that unstable funding discourages investment in illiquid assets by exposing banks to fire-sale risk. <br>
The Value of Brand Names in Bank Financing: Evidence from the 1996 Federal Trademark Dilution Act

We construct a comprehensive database of public firms’ bank loans and trademarks to examine the role of brand names in bank financing; in particularly, we use the 1996 Federal Trademark Dilution Act (FTDA) that enhanced protection of famous trademarks as our identification strategy for a causal inference. A difference-in-differences analysis suggests that firms with more famous trademarks not only pay significantly lower interest rates, but also use more trademark collateral after the FTDA. Moreover, firms with more famous trademarks reveal lower cash flow volatility and higher profitability after the FTDA. Our empirical evidence indicates that banks indeed account for enhanced brand value in their lending decisions.
Local Experiences, Search and Spillovers in the Housing Market

Recent local price growth explains differences in search behavior across prospective homebuyers. Those experiencing higher growth in their postcode of residence search more broadly across locations and house characteristics, without changing attention devoted to individual sales listings, and have shorter search duration. Effects are stronger for homeowners, in particular those living in less wealthy areas and looking for a new primary residence. We use a quantitative equilibrium model and reduced-form analysis to show that the expansion of search breadth translates into widespread spillovers onto house sales prices and inventories of listings across postcodes within a metropolitan area.
Peer Influence, Strategic Discretion and Loan Repayment in Community Lending: Evidence from Indian Demonitization

Prior research on community lending models in microfinance has emphasized the benefits of informal borrower-to-borrower relationships that enable peer monitoring and encourage loan repayment. However, we propose that following a crisis, the same relationships might hasten the spread of missed loan repayments within borrower communities, and thereby negatively affect the performance of lending organizations. We investigate this issue in the context of India’s 2016 demonetization, a one-time suspension of the legal tender status of 87 percent of the country’s currency that triggered a massive economywide shock. Analyzing proprietary data on approximately two million borrowers from a leading Indian microfinance organization, we find strong evidence that loan defaults did indeed spread through informal borrower-to-borrower relationships: the number of a borrower’s peers who defaulted immediately following demonetization was positively correlated with that borrower’s own likelihood of default in subsequent months. Further, we find that the involvement of specific borrowers in peer influence depended on the level of their strategic discretion to make timely loan repayment: borrowers with a greater ability to repay were more influenced by the defaults of their peers (incoming peer influence), and their defaults were also more influential upon their peers (outgoing peer influence). Our study thus uses community lending in microfinance as a context to generate new insights on peer influence following a crisis such as demonetization, and identifies the particular role of strategic discretion as a key moderator of such influence.
Third-Party Reaction to Hedge Fund Activism: The Auditor Perspective

The extant literature focuses on the significant changes that activist hedge funds enact and their effect on shareholders but overlooks other stakeholders. We fill this literature gap by investigating the third party – the auditor. We find that auditors react to hedge fund intervention by increasing audit fees, on average by 4.08%. This relationship holds in a battery of identification tests that address endogeneity, including difference-in-differences analysis with propensity score matching, coarsened exact matching, entropy balancing method, and a placebo test. Target firms experience significant changes, which can substantially increase financial reporting complexity and expose internal control weaknesses. We argue that auditors charge higher fees in reaction to these financial reporting issues after hedge fund intervention. The conjecture is supported by univariate tests, interaction tests, and path analysis. Moreover, auditors increase their effort after intervention but do not incur more litigation risk. Our findings underscore auditors’ heightened diligence when reacting to clients’ operational changes, especially changes related to financial reporting.
Diffusion of Ideas in Networks with Endogenous Search

I study the diffusion of technology when the decision to search for productivity-enhancing technologies depends on the network of interactions between agents. Agents have the option to engage in costly learning from their first-degree connections. The more productive an agent's connections, the higher the gains from learning. Hence, the network affects the reservation productivity at which agents choose to learn and, therefore, affects aggregate productivity. I find that the denser the network, the higher total factor productivity and the lower inequality. However, there is no effect of the network on the share of agents that learn in equilibrium. Furthermore, I find that nodes that are central in terms of their closeness to other nodes tend to exert more learning effort and have a higher productivity.
On Top of The Game? The Double-Edged Sword of Incorporating Social Features into Freemium Products

Freemium products rely on widespread diffusion for their success. One way to do this is by incorporating social features (e.g., multiplayer functionality, virtual collaboration, ridesharing), which can generate network effects and result in a product becoming a superstar. However, social features can be a double-edged sword: When the market for freemium products is large, social features can significantly boost a product’s appeal resulting in more adoption, more usage, and more in-app purchases; but when the market is constrained, network effects might fall short and users may feel they are missing out on key aspects of the product. We test this dynamic on a sample of 9,700 games on Steam. Findings contribute to our understanding of network effects, freemium strategies, and superstar products in platform markets.
Land Scarcity and Urban Density within Cities

This paper studies how limitations on land suitable for development affect within-city variation in urban density and its three components: crowding, residential coverage, and building height. We use the high variation in geographical obstacles − such as steep land slopes and the presence of water bodies within Norwegian cities − as exogenous sources of development limitations. We show that such constraints can create scarcity of certain types of land. Scarcer land types have higher urban density which arises mostly from higher buildings. The effect operates through the heterogeneous citywide supply of land types, rather than through local geography.
How Does the COVID-19 Outbreak Affect Macroeconomic Expectations?

We conduct an online experiment to investigate the effect of the COVID-19 outbreak on people’s expectation about the macroeconomy, including economic growth rate, inflation rate, unemployment rate, and their consumption, income, saving, and investment. We find that ambiguity aversion and time preference affect macroeconomic expectations. Ambiguity averse subjects are more pessimistic about the Covid-19 outbreak’s impact on the economic growth rate and are more likely to reduce their consumption. Subjects with a lower discount factor have more optimistic expectations, as they are less likely to expect lower economic growth, lower income, lower investment, higher inflation, and higher unemployment.
The Impact of Audit Technology on Audit Outcomes: Technology-Based Audit Techniques’ Impact on Internal Auditing

Although auditors invest significantly in technology, research has provided limited evidence of the ability of audit technology to enhance audit outcomes. Using a unique and proprietary dataset, our study examines the effects of technology-based audit techniques (TBATs) on the efficiency and effectiveness of internal audits as well as on internal auditors’ perception of stakeholder reliance on their audits. Using a dataset that measures individual audit engagements, we found that the degree to which TBATs are used is positively associated with more efficient and effective audits and with more perceived reliance on audit results. We also found that TBATs’ impact depends on the particular phases of the audit in which they are used. Specifically, we found that effectiveness and efficiency are improved in all areas except when used in planning where TBATS are associated with increased effectiveness but not increased efficiency. Our findings contribute to the discussion about the costs and benefits of using technology in internal audits and assurance work more generally.
Bad Losers? Bad Winners? The Effect of the Quality of Competitors on Dishonesty and Effort in Repeated Competitions

Competitive rewards are often assigned on a regular basis, e.g., in annual salary negotiations or employee-of-the-month schemes. In many settings, this implies that the quality of the competitor varies with earlier outcomes. Using a real-effort experiment, we examine how dishonesty and effort evolve in two rounds of competitions in which subjects are matched with different types of competitors in the second round (random/based on first round outcome). We find that (i) first round losers increase cheating in the second round while winners tend to reduce cheating. (ii) Individuals do not anticipate the possibility of a more difficult opponent. In line with expectations, winners increase reported points (sum of effort and cheating) when competing against another winner. This cannot be ascribed to an increase in cheating or effort alone.
Control, Cost, and Confidence: Perseverance and Procrastination in the Face of Failure

We study perseverance and the development of control beliefs: a student is uncertain whether success can be controlled through effort or is determined by her innate ability, which she also does not know. In each period, what she can learn about her control and her ability depends on the level of effort she exerts. We characterize the student's optimal effort policy in this two-dimensional bandit problem, which may feature repeated switching of the effort level. Moreover, we analyze how control, cost, and confidence impact perseverance. Finally, we relate our results to findings in psychology and discuss policies to foster perseverance.
When to Broadcast? An Analysis of Inventory Disclosure Policies for Online Sales of Limited Inventory with Learning and Scarcity Effects

The extant literature on sales of limited inventory has provided evidence for the impact of disclosing inventory on the expected sales. However, an important question still remains: when is the best timing for the disclosure? In this paper, we analyze common disclosure policies: “always-to-disclose,” “never-to-disclose,” and fixed threshold policies. We also propose and analyze a time-dependent threshold policy, which is optimal under certain assumptions. We first derive the expected total sales under a given threshold and then develop a dynamic-programming-based algorithm to optimize the parameters of the proposed policy. We also develop a customer choice model under a Bayesian updating framework, which captures the observational learning and scarcity effects. Through a numerical study, we find that both threshold policies outperform the two simple policies when the learning effect dominates the scarcity effect, and the fixed threshold policy is near optimal in such cases. However, when the scarcity effect dominates, employment of a threshold policy may backfire, as the customers may interpret not disclosing as a signal of slow sales. Moreover, when both effects are weak, there is clearly room for improvement in the fixed threshold policy, and it is desirable for the platform to employ the proposed policy. Therefore, our study provides not only efficient procedures for policy optimization but valuable guidelines for policy selection under different customer behaviors.
1 Investor Biases in Japan ( formerly “ Home Bias in Japan ” )

We examine how foreign and domestic portfolio investors similarly or dissimilarly invest in Japanese firms for the period of 1985-1998. We propose the agency as well as relational explanations of foreign and domestic institutional investor biases. These explanations can explain bias patterns of foreign investors as well as those of domestic institutional investors in Japan; the latter are uniquely different from domestic money managers in other countries. We find that foreign investors over-invest in familiar and prudent firms while domestic institutional investors over-invest in large firms but do under-invest in the prudent in financial ratios. In addition, foreign investors become more export-firm oriented while the opposite time varying pattern is found for domestic institutional investors. Our empirical tests reveal that biases of these two classes of institutional investors do not exactly get subsumed under a common institutional investor bias mainly because of the unique relational factor in Japan. JEL classification: G1; G15
Conspicuous Consumption: Vehicle Purchases by Non-Prime Consumers

Consumers with higher income often spend more on luxury goods. As a result, lower-income consumers who seek to increase their perceived income status may be motivated to purchase conspicuous luxury goods. They may also desire to emulate the visible consumption displayed by their wealthier peers. Using a unique vehicle financing dataset, we find that consumers with lower credit scores value vehicle brand prestige more than average consumers. The stronger preferences for prestige lead non-prime consumers to purchase more expensive vehicles than they otherwise would have. We find evidence that the preferences for prestige are driven both by status signaling and peer emulation motives. Furthermore, we show that larger vehicle purchases financed by auto loans lead to worse loan performance and credit standing for non-prime consumers.