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This paper investigates how individual attention triggers influence financial risk-taking based on a large sample of trading records from a brokerage service that sends standardized push messages on stocks to retail investors. By exploiting the data in a difference-in-differences (DID) setting, we find attention triggers increase investors’ risk-taking. Our DID coefficient implies attention trades carry, on average, a 19 percentage-point-higher leverage than non-attention trades. We provide a battery of cross-sectional analyses to identify the groups of investors and stocks for which this effect is stronger.

This article develops a model to explore the implications of nondistressed debt renegotiation on debt prices and corporate policies. The model incorporates the empirical observation that creditors can influence firms also outside corporate distress through debt covenant renegotiation and not only in distress. We find that considering both distressed and nondistressed creditor interventions is key to investigating how creditor governance affects firms. The model explains cross-sectional patterns of control premiums and credit spreads that traditional debt renegotiation models do not capture. We also derive novel implications for the impact of firm characteristics associated with renegotiation on debt prices and corporate policies.

We investigate the compensation of counterparty exposure in the prices of structured products. Our analysis reveals that product issuers did not compensate retail investors for counterparty exposure before the Lehman default. Post‐Lehman, retail prices have no longer neglected this risk. We also measure retail investor attention towards issuer credit risk. For a given level of issuer credit risk, counterparty exposure is compensated more when attention is higher. Furthermore, issuers tend to construct products with larger counterparty exposure. Overall, our results shed light on the conditions under which financial engineering generates neglected risk.

In this paper, I investigate the impact of central clearing in credit risk transfer markets on a loan-originating bank's lending behavior. Under the current market regulation, central clearing undermines banks’ lending discipline. The regulatory design of the credit risk transfer market in terms of capital requirements, disclosure standards, risk retention, and access to uncleared credit risk transfer can mitigate this problem. I also show that the lending discipline channel is an essential element of the impact of central clearing on banks’ loan default loss exposure, which is a first-order consideration for systemic risk analysis.

This paper analyzes the decision of firms to sell assets to fund investments (financing asset sales). For a sample of U.S. manufacturing firms during the 1971-2010 period, we document new stylized facts about financing asset sales that cannot be explained by traditional motives for selling assets, such as financial distress or financing constraints. Using a structural model of financing, investment, and acroeconomic risk, we show that financing asset sales attenuate the debt overhang problem, because asset sale financed investments imply lower wealth transfers from equity to debt than otherwise identical but equity financed investments. This novel motive to reduce the debt overhang problem can explain how financing asset sales relate to firm characteristics and business cycles. We also confirm with simulated panels of model firms that are structurally similar to their empirical counterpart that they indeed feature the dynamic patterns of financing asset sales we observe in the data for real firms.

This paper investigates how individual attention triggers influence financial risk-taking based on a large sample of trading records from a brokerage service that sends standardized push messages on stocks to retail investors. By exploiting the data in a difference-in-differences (DID) setting, we find that attention triggers increase investors' risk-taking. Our DID coefficient implies that attention trades carry, on average, a 19-percentage point higher leverage than non-attention trades. We provide a battery of cross-sectional analyses to identify the groups of investors and stocks for which this effect is stronger.

Lipids in marine sediments have been widely used in proxies to reconstruct Sea Surface Temperatures (SSTs). For example, the U_37^K proxy, based on the degree of unsaturation of long chain alkenones synthesized by haptophytes, the TEX86, based on glycerol dialkyl glycerol tetraethers (GDGTs) produced by Thaumarchaeota and the LDI, based on long chain diols by Eustigmatophyte algae. However, there is still some uncertainty regarding the biological producers of these lipids and their biosynthetic pathways. In this thesis, the pelagic and benthic archaeal community composition was investigated in multiple marine regions and compared it with the composition of GDGTs. This showed that Marine Group II Euryarchaeota, one of the most abundant marine archaeal groups, are incapable of producing these lipids. Studying three water columns in the Mediterranean Sea indicated the presence of deep-water Thaumarchaeota, which are potentially responsible for the overestimation of reconstructed SSTs in this region. Further, the biosynthetic pathway of long chain alkenones was investigated in a culture of the Haptophyte Emiliania huxleyi and identified a potential gene coding for the desaturase responsible for transforming C37:2 into C37:3 alkenones. In the African Lake Challa, a correlation was observed between the abundance of LCDs and uncultured Eustigmatophyceae algae. Besides, seasonal changes in LCD composition suggest multiple producers or changes in the LCD composition of the same producer within an annual cycle. The combination of omic (lipid and DNA) approaches in this thesis has proven to be key in increasing our knowledge on the biological producers of lipids involved in paleotemperature proxies.

This paper investigates the impact of investor information on financial innovation. We identify specific channels through which issuers of financially engineered products exploit retail investors by using their privileged access to information. Our results imply that imperfect investor information regarding volatility and dividends is crucial to explain the pricing and design of financially engineered products. We confirm our conjecture by exploiting a discontinuity in issuers' informational advantage. The insights are of systemic importance because they suggest that product issuers' behavior in the financial innovation market aggravates investor information problems of the financial system.

This document contains the Online Appendices for the paper Financing Asset Sales and Business Cycles. Full paper is available at: http://ssrn.com/abstract=2356377.