RCFS News

              Leveraged buyouts by private equity funds have been a constant, and growing, phenomenon in corporate finance over the last two decades and their importance is likely to increase in the post-COVID world. Empirical literature on this subject has explored various angles, but one unanswered question is whether the high leverage used in private equity (PE) buyout transactions contributes to the disproportionately high default… Read More »Paper Spotlight: Private Equity and the Resolution of Financial Distress

“Corporate Transactions in Hard-to-Value Stocks” by Itzhak Ben-David, Byungwook Kim, Hala Moussawi, and Darren Roulstone

“Sharing R&D Risk in Healthcare via FDA Hedges” by Adam Jorring, Andrew Lo, Tomas J. Philipson, Manita Singh, and Richard T. Thakor “Information asymmetry, financial intermediation, and wealth effects of project finance loans” by Andrew Ferguson and Peter Lam

Despite the large theoretical literature that asserts the importance of taxes on corporate investment and financing decisions, the empirical literature often fails to demonstrate the effects of taxes in a convincing way. One reason for the discrepancy could be measurement error in variables. In “The Effect of Taxation on Corporate Financing and Investment,” Hong Chen and Murray Z. Frank take issue with the theoretical predictions themselves. They construct a model… Read More »Paper Spotlight: The Effect of Taxation on Corporate Financing and Investment

“P2P Lenders versus Banks: Cream Skimming or Bottom Fishing?” by Calebe DeRoure, Loriana Pelizzon, and Anjan V. Thakor

The Editor’s Choice paper for issue 10(3) is “Skilled Labor Risk and Corporate Policies” by Yue Qiu and Tracy Yue Wang. You can read the paper free online.

“Public Firm Borrowers of the US Paycheck Protection Program” by Anna Cororaton and Samuel Rosen

“Foreign Banks, Liquidity Shocks, and Credit Stability” by Daniel Belton, Leonardo Gambacorta, Sotirios Kokas, and Raoul Minetti

              Initial coin offerings are fast becoming a new type of crowdfunding for blockchain-related startups. In this type of offerings, an entrepreneur raises capital through the creation and selling of virtual currencies or “tokens,” which themselves give rights to their holders (for example, access to a platform). As is to be expected, there are severe problems of information asymmetry associated with these instruments and… Read More »Paper Spotlight: The Wisdom of Crowds in FinTech: Evidence from Initial Coin Offerings