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SSRN Research Paper Series
The Social Science Research Network’s Research Paper Series includes working papers produced by Stanford GSB the Rock Center.
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Option Prices and Disclosure: Theory and Measurement
In this paper, I develop an option-pricing model that formally incorporates a disclosure event. Using the model, I first theoretically examine how two properties of the disclosure — its overall informativeness and its informativeness given good…
Long-Term Economic Consequences of Hedge Fund Activist Interventions
We examine the long-term effects of interventions by activist hedge funds. Prior papers document positive equal-weighted long-term returns and operating performance improvements following activist interventions, and typically conclude that…
Financing Entrepreneurship and Innovation in China: A Public Policy Perspective
This study reports on the current state-of-affairs in the funding of entrepreneurship and innovations in China and provides a broad survey of academic findings on the subject. We discuss the implications of these findings for public policies…
The Big Thumb on the Scale: An Overview of the Proxy Advisory Industry
Proxy advisory firms have significant influence over the voting decisions of institutional investors and the governance choices of publicly traded companies. However, it is not clear that the recommendations of these firms are correct and…
Netflix Approach to Governance: Genuine Transparency with the Board
The hallmark of good corporate governance is an independent board of directors to oversee management. However, it is not clear that independent directors receive the information they need to make fully informed decisions on all key matters.…
How Investors Can (and Can’t) Create Social Value
Most investors have a single goal: to earn the highest financial return. These socially-neutral investors maximize their risk-adjusted returns and would not accept a lower financial return from an investment that also produced social benefits. An…
Accrual Accounting and Resource Allocation: A General Equilibrium Analysis
I evaluate the role of accrual accounting in improving rms’ production decisions and resource allocation across rms. I introduce both cash ow and accounting earnings as imperfect measures of performance into a general equilibrium model with…
Using Fair Value Earnings to Assess Firm Value
Whether fair value accounting should be used in financial reporting has been the subject of debate for many years. A key dimension to this debate is whether fair value earnings can provide information to financial statement users that is helpful…
Critical Update Needed: Cybersecurity Expertise in the Boardroom
The board of directors is expected to ensure that management has identified and developed processes to mitigate risks facing the organization, including risks arising from data theft and the loss of information. Unfortunately, recent experience…
Constrained Listening, Audience Alignment, and Expert Communication
We consider a cheap talk setting with two senders and a continuum of receivers with heterogeneous preferences. Receivers listen to just one sender, but can choose which sender to listen to. We determine that: (i) full communication is possible…
Increased Information Content of Earnings Announcements in the 21st Century: An Empirical Investigation
This study examines the factors contributing to a striking increase in information content of quarterly earnings announcements, measured as the absolute magnitude of stock price revision at earnings announcements relative to price revision at…
Technological Links and Predictable Returns
This paper finds evidence of return predictability across technology-linked firms. Employing a classic measure of technological closeness between firms, we show that the returns of technology-linked firms have strong predictive power for…
Reverse Mergers, Shell Value, and Regulation Risk in Chinese Equity Markets
Using a comprehensive sample of reverse merger (RM) transactions, we examine the effects of China’s IPO regulations on the prices and returns of its publicly listed stocks. During 2007-2015, unlisted Chinese firms paid an average of 3 to 4…
Managerial Flexibility in Levelized Cost Measures: A Framework for Incorporating Uncertainty in Energy Investment Decisions
Many irreversible long-run capital investments entail opportunities for managers to respond flexibly to changes in the economic environment. However, common levelized cost measures used to guide decision-making, such as the levelized cost of…
Carbon Capture and Utilization in the Industrial Sector
The fabrication and manufacturing of industrial commodities such as iron, glass and cement is carbon-intensive. A major reason capture of carbon dioxide from flue gases of industrial processes has not been widely adopted as a climate mitigation…
Financial Markets with Trade on Risk and Return
Forthcoming in The Review of Financial Studies
I analyze a model in which risk-averse investors trade on signals regarding both a stock’s expected payoffs and its risk. These investors may trade in the stock and a derivative…
Retired or Fired: How Can Investors Tell If a CEO Was Pressured to Leave?
CEO succession at many companies occurs in a black box. Shareholders are not privy to boardroom discussions prior to the announcement of a CEO departure, and press releases announcing the change contain boilerplate language that does not make it…
Robo-Journalism and Capital Markets
In 2014, the Associated Press (AP) began using algorithms to write media articles about firms’ earnings announcements. These “robo-journalism” articles synthesize information from firms’ press releases, analyst reports, and stock performance, and…
Repatriation Taxes and Foreign Cash Holdings: The Impact of Anticipated Tax Reform
We examine whether anticipation of a repatriation tax reduction affects the amount of cash U.S. multinational corporations (MNCs) hold overseas. We find that U.S. MNCs most likely to benefit from a repatriation tax reduction accumulated…
Stock Price Management and Share Issuance: Evidence from Equity Warrants
We address whether firms manage stock prices in anticipation of share issuances. A literature in finance attributes negative returns following share issuances to market timing, whereas studies in accounting interpret similar return patterns as…