RCFS News

It is not just managers that can have a short-term orientation—the forthcoming theoretical paper “Competition for Flow and Short-Termism in Activism,” by Mike Burkart and Amil Dasgupta, shows that activist funds too can focus on the short term. In the model, activists add value by preventing wastage by the manager. To signal their type to their own investors, they take a short-term action such as boosting leverage to make a… Read More »Paper Spotlight: Competition for Flow and Short-Termism in Activism

              Recent survey evidence shows that the list of institutional investors paying close attention to environmental issues, with a consequent impact on their investment decisions, is increasing. A central factor that ought to be considered is the role of government regulation, especially the uncertainty surrounding it, and subsequent response of firms to those regulations against the background of a worsening environmental scenario. This is… Read More »Paper Spotlight: Investor Rewards to Climate Responsibility: Stock-Price Responses to the Opposite Shocks of the 2016 and 2020 U.S. Elections

The Call for Papers for the 17th Annual Meeting of the Financial Research Association is now available. The conference will feature a dual submission option with RAPS and RCFS. It will take place in person, December 11-12, 2021, in Las Vegas. The submission deadline is August 31, 2021. Please see the Call for Papers for more details.

“Private Equity and the Resolution of Financial Distress” by Edith Hotchkiss, David Carl Smith, and Per Stromberg

Are managers too myopic, relative to what shareholders would want? In “Short-termism, Managerial Talent, and Firm Value,” Richard Thakor provides a theoretical model in which the answer is “no,” with a surprising twist: In the model, managers prefer long-term projects, because it allows talented managers to earn higher rents. However, to reduce managerial rents, the firm may induce a manager to invest in a short-term project, even though the long-term… Read More »Paper Spotlight: Short-termism, Managerial Talent, and Firm Value

“Disregarding the Shoulders of the Giants: Inferences from Innovation Research” by David Reeb and Wanli Zhao

Do staggered (or classified) boards harm shareholder value through entrenchment or help through stability? In a forthcoming RCFS paper, “Staggered Boards and the Value of Voting Rights,” Oğuzhan Karakaş and Mahdi Mohseni revisit this question by using a novel methodology and provide causal evidence on the entrenchment view of staggered boards. Existence of staggered boards, where only a fraction of board members is up for election in a year, has… Read More »Paper Spotlight: Staggered Boards and the Value of Voting Rights

The 17th Annual Meeting of the Financial Research Association will feature a dual submission option with RAPS and RCFS. The deadline for paper submissions is August 31, 2021. The conference will take place December 11-12, at the Encore Hotel in Las Vegas. Submit online here.

“The Wisdom of Crowds in FinTech: Evidence from Initial Coin Offerings” by Tao Li, Donghwa Shin, and Jongsub Lee

Risk taking by banks has been discussed extensively by researchers and policy makers for many years, even preceding the Great Recession. Literature has focused on two mechanisms that alter banks’ risk-taking behavior: higher regulatory capital ratios and higher competition due to bank deregulation. But, how does a bank’s equity capital ratio interact with banking competition in their impact on risk taking? In a forthcoming RCFS paper, “Effect of the Equity Capital… Read More »Paper Spotlight: Effect of the Equity Capital Ratio on the Relationship between Competition and Bank Risk-Taking Behavior