Can Shareholders Be at Rest after Adopting Clawback Provisions? Evidence from Stock Price Crash Risk

Using a propensity score matched sample and a difference‐in‐differences research design, we find that stock price crash risk increases after a firm voluntarily incorporates clawback provisions in executive officers' compensation contracts. This heightened crash risk is concentrated in adopters that increase upward real activities‐based earnings management and those that reduce the readability of 10‐K reports. Based on cross‐sectional analyses, we also find that the increased crash risk is more pronounced for adopters with high ex ante fraud risk, low‐ability managers, high CEO equity incentives, and low dedicated institutional ownership. Collectively, our results suggest that the clawback adoption per se does not curb managerial opportunism but rather induces managers to use alternative channels for concealing bad news, which may contribute to a greater stock price crash risk; and the increase in crash risk is more likely in cases where incentives are strong or monitoring is weak. Our results should be of interest to regulators and policymakers considering the effects of clawback adoption on the investing public.     

Co-opted directors,gender diversity,and crash risk: evidence from China

Review of Quantitative Finance and Accounting - This study examines how the composition of the board of directors at Chinese firms affects crash risk. The results indicate that co-opted directors...     

The response of asset prices to monetary policy shocks: Stronger than thought

Standard macroeconomic theory predicts rapid responses of asset prices to monetary policy shocks. Small‐scale vector autoregressions (VARs), however, often find sluggish and insignificant impact effects. Using the same high‐frequency instrument to identify monetary policy shocks, we show that a large‐scale dynamic factor model finds overall stronger and quicker asset price reactions compared to a benchmark VAR, both on euro area and US data. Our results suggest that incorporating a sufficiently large information set is crucial to estimate monetary policy effects.     

Learning in a double-phase cobweb model

Decisions in Economics and Finance - In this paper, we study a class of markets, among which we can mention agricultural and energy markets, characterized by seasonality, i.e., in which demand...     

Competition and cooperation in the exploitation of the groundwater resource

We study the exploitation of a common groundwater resource, first as a static and then as a differential game, in order to take into account the strategic and dynamic interactions among the users of the resource. We suppose that firms can form coalitions or can decide not to cooperate. The non-cooperation regime is characterized by pumping that lead to depletion of the aquifer; the cooperation preserves the resource. Open-loop and feedback equilibria have been computed and compared in order to characterize the existence of cooperators and defectors in water resources management.     

Exogenous and Endogenous Attention and the Convergence of Analysts’ Forecasts

The propensity of the forecasts of sell-side financial analysts to converge (or diverge) is a function of their exogenous and endogenous selective attention and overconfidence. When returns are negative, the endogenous form of selective attention—a static measure of analysts’ goal-driven attention at a particular point in time—has a positive association with convergence. The exogenous form of selective attention—a relatively involuntary dynamic process of exogenous attentional shift driven by external changes in the market over time—is associated with a tendency for forecasts to diverge.     

Thoughts,attitudes and profile of Brazilian consumers regarding food irradiation

This study aimed to examine the neophobia, knowledge, thoughts, and opinions related to food irradiation among consumers living in a small city in Brazil through the application of a behavioral and sociodemographic questionnaire. It was found that the 271 respondents had little knowledge about the process of food irradiation and had low intent to purchase irradiated food; several consumers associated irradiated food with radioactivity and cancer. Individuals with better knowledge about irradiation and those who are young, single, did not live with children, and had higher levels of education and higher monthly family incomes were more likely to buy irradiated foods than others. These results describe the profile of potential consumers of irradiated foods and the knowledge, thoughts and opinions of the residents of a small city relative to food irradiation. This data could assist industries that irradiate foods to adopt strategies that ensure greater acceptance of their products.     

Market Reaction to Corporate Social Responsibility Announcements： Evidence from China

This study uses an event study methodology to examine how the Chinese market reacts to announcements of involvement in corporate social responsibilitY （CSR） by Southern Weekend （a Chinese newspaper）for Chinese firms from 2008 to 2012. Our results show significant and pcsitive market reactions, supporting the instrumental stakeholder theory. We attribute the positive market response to social capital development and real growth options related to the CSR involvement by the Chinese firms.     

Consumers and deregulation of the electricity market in Germany

Against the backcloth of EU regulation, this note looks at the “politics of necessity” regarding electricity provision in Germany. Electricity as a case is chosen because its provision has been undergoing a profound process of liberalisation and deregulation, and there is a considerable amount of experience with the chances and pitfalls of liberalisation in this sector. Secondly, electricity is a network industry and a natural monopoly subject to systematic market failure, which calls for regulation. The paper starts out with a closer look at the consumer as an actor in the regulation process, proposing a three-role model of the consumer as a market player, as a citizen, and as a micro-producer in households and networks. In these roles, consumers take on different social and political identities; they are affected differently by (de)regulation of essential services and have different options for reacting to quality and price issues. It then describes the legal state and the development of deregulation in the electricity sector in Germany. Selected empirical data are presented, and consumer policy implications are drawn.