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Too few institutional investors are prepared to invest in young and innovative companies. This hampers the long-term growth prospects of the German economy. Instead, institutional investors in Germany hold more conservative portfolios than their European counterparts, investing heavily in bonds. Building up supplementary funded pensions and removing barriers to investing in riskier but growth-enhancing activities can help mobilise more growth capital in the long term. [ABSTRACT FROM AUTHOR]

We show that past inflation experiences strongly predict homeownership within and across countries. First, we collect novel survey data, which reveal inflation protection to be a key motivation for homeownership, especially after high inflation experiences. Second, using household data from 22 European countries, we find that higher exposure to historical inflation predicts higher homeownership rates. We estimate similar associations among immigrants to the United States who experienced different past inflation in their home countries but face the same U.S. housing market. Consistent with the experience effects model, the relationship is strongest in countries with predominantly fixed‐rate mortgages. [ABSTRACT FROM AUTHOR]

Much of the evidence on managerial biases in corporate finance focuses on the CEO and, in particular, CEO overconfidence. This singular focus can lead to misattribution as it ignores the roles of other managers who are responsible for a given corporate outcome. We evaluate the influence of the CFO and other C-suite executives as compared with the CEO. Mirroring the widely used Longholder CEO measure of CEO overconfidence, we construct Longholder CFO and Longholder Other measures. For financing decisions, we find that CEO overconfidence becomes an insignificant predictor of most decisions when included jointly with the CFO proxy, whereas CFO overconfidence has strong predictive power. The reverse holds for nonfinancing decisions: CEO beliefs predict the risk and return of investment projects and, thus, their cost of financing as well as acquisitions. Other C-suite managers' overconfidence is not significant in either of these two realms. CEO overconfidence does remain significant even for financing decisions in the subsample of firms with "powerful" (entrenched) CEOs. We also show that overconfident CEOs tend to hire overconfident CFOs, which generates a multiplier effect and explains the misattribution to the CEO in analyses that do not account for the roles of other managers. Our results imply that analyses of managerial biases need to identify the dominant decision makers and account for their respective influence. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2022.4467. [ABSTRACT FROM AUTHOR]

When Corporate Finance emerged as a field of academic research and instruction in the first half of the last century, it revolved to a large extent around the role of [...]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jfineco.2007.05.009 Byline: A. Burak Guner (a), Ulrike Malmendier (b), Geoffrey Tate (c) Keywords: Corporate Governance; Board of Directors; Finance Experts; Sarbanes-Oxley; Agency Conflicts Abstract: We analyze how directors with financial expertise affect corporate decisions. Using a novel panel data set, we find that financial experts exert significant influence, though not necessarily in the interest of shareholders. When commercial bankers join boards, external funding increases and investment-cash flow sensitivity decreases. However, the increased financing flows to firms with good credit but poor investment opportunities. Similarly, investment bankers on boards are associated with larger bond issues but worse acquisitions. We find little evidence that financial experts affect compensation policy. The results suggest that increasing financial expertise on boards may not benefit shareholders if conflicting interests (e.g., bank profits) are neglected. Author Affiliation: (a) Barclays Global Investors, San Francisco, CA 94105, USA (b) University of California, Berkeley, CA 94720, USA (c) University of California at Los Angeles, Los Angeles, CA 90095, USA Article History: Received 28 April 2006; Revised 20 May 2007; Accepted 24 May 2007 Article Note: (footnote) [star] We thank Alexander Ljungqvist, Ernst Maug, Stefan Nagel and Philip Strahan for helpful comments. We also thank the seminar audiences at the NBER Summer Institute Corporate Governance meeting, WFA meeting, Fall 2004 NBER Corporate Finance program meeting, the University of Pennsylvania, Stanford, Cornell, University of Notre Dame, UC Irvine, Emory University, UT Austin, Columbia University, USC and University of North Carolina. Justin Fernandez, George Georgiev, Vaibhav Gupta, Nicole Hammer, Rumit Kanakia, Jared Katseff, Catherine Leung, Chenkay Li, Scott McLin, Felix Momsen, Neeraj Shah, Ning Xu, and Nancy Yu provided excellent research assistance. Earlier versions of this paper were titled 'The Impact of Boards with Financial Expertise on Corporate Policies.'