Annual Conference

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Investment Finance

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May 2022

Getting to the Core: Inflation Risks Within and Across Asset Classes

Xiang FANG, Yang LIU, Nikolai ROUSSANOV
Decomposing inflation into core and non-core components (e.g., energy) sheds new light on the nature of inflation risk and risk premia. While stocks have insignificant exposures to headline inflation in the U.S., their core inflation betas are negative while energy betas are positive. Conventional i...
Keywords: Inflation Risks, Core inflation, Cross-section of asset returns
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Annual Conference

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Corporate Finance

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May 2022

What Explains the Geographic Variation in Corporate Investment?

Shohini KUNDU, Nishant VATS
We show that history can explain the geographic concentration of investment over and above traditional agglomerative forces, geography, and expectations. We use spatial variation in direct and indirect British rule to identify differences in historical circumstances. Using this within-country variat...
Keywords: investment, agglomeration, history, colonial rule, economic organization, state capacity
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Annual Conference

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Corporate Finance

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May 2022

Trust, but verify: The economics of scams in initial coin offerings

Yang (Gloria) YU, Chishen WEI, Kenny PHUA, Bo SANG
Losses from frauds and financial scams are estimated to exceed U.S. $5 trillion annually. To study the economics of financial scams, we investigate the market for initial coin offerings (ICOs) using point-in-time data snapshots of 5,935 ICOs. Our evidence indicates that ICO issuers strategically scr...
Keywords: Financial scams, Screening, Cryptocurrencies, Advisors
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Annual Conference

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Corporate Finance

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May 2022

Strategic Learning and Corporate Investment

Paul H. DECAIRE, Michael D. WITTRY
We show that firms anticipate information spillover from peers’ investment decisions and delay project exercise to learn from them. While this information improves project selection, the cost of waiting offsets those gains. To establish causality, we exploit local exogenous variation from the 1800...
Keywords: Real options, corporate investment, strategic interactions, peer learning, historical data
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Annual Conference

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Corporate Finance

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May 2022

The Reverse Bail-Out of Indebted Local Governments by Local Firms

Ben CHAROENWONG, Meng MIAO, Zhengyu ZUO
Using a dataset of over one million local government procurement contracts in China, we study whether the government’s indebtedness causes delays in payment which can be averse to suppliers’ financial conditions. Higher local government distress predicts an increase in accounts receivables for s...
Keywords: Public procurement auctions, sovereign risk, financial distress
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