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Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Using a cross-country setting, we document differences in the relation between earnings quality and the two components of trading volume around earnings announcements, one related to differential interpretation of the earnings signal and the other related to pre-event differential information precision. We find that in countries with stronger investor protection, less corrupt governments, and more liquid stock markets, a noisier earnings signal increases differential interpretation of the earnings signal but decreases investors' incentive for information acquisition before earnings announcements, leading to lower pre-event differential information precision. However, these trading patterns flip in countries with weaker investor protection, more corrupt governments, and less liquid stock markets. We also find that institutional investors in countries with stronger institutions are likely to benefit more from their superior information processing skills, leading to more information acquisition both at and before earnings announcements. Overall, our study adds to the literature by documenting significant cross-country variations in investors' trading volume reactions to earnings quality. [ABSTRACT FROM AUTHOR]

Following the Global Settlement, analysts extensively use a top pick designation allowing for greater granularity of information among buy recommended stocks, but conflicts of interest can potentially influence this designation. Examining a novel sample of top picks, we find that a calendar-time portfolio of top picks generates an abnormal performance of 17.6% per year. Top picks have greater investment value than do buy recommendations and alternative analyst investment strategies. Both institutional and retail investors trade in response to top picks. However, only institutional investors appear to identify top picks that have greater investment value when they are announced. [ABSTRACT FROM AUTHOR]

Using the exclusion of business development companies (BDCs) from stock indexes, this paper studies the effectiveness of market discipline in the direct lending space. Amid share sell-offs by institutional investors, a drop in BDCs' valuations limits their ability to raise new equity capital. Following this funding shock, BDCs do not adjust their capital structure. At the same time, they are reducing the risk exposure of their portfolios. We document a greater reduction in risk for BDCs subject to stronger market discipline from their debtholders. BDCs pass through the capital shock to their portfolio firms by reducing their investment intensity. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article investigates the relationship between the share of assets held by institutional investors relative to GDP and a synthetic index of union bargaining power in 20 OECD countries from 1980 to 2017. Findings from the use of fixed-effects OLS and instrumental variables regressions show that the share of assets held by institutional investors, especially insurance companies and pension funds, is correlated with a decline in union bargaining power. The authors argue that by contributing to significant changes in corporate strategies and governance through potential effects on jobs and wages, institutional investors in most OECD countries may have weakened the influence of trade unions, thereby leading to a higher decentralization of wage bargaining. Mixed evidence is found, however, when investigating the role of complementarity across institutions to explain cross-country heterogeneity. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We propose and test a framework of private information acquisition and decision timing for asset allocators hiring outside investment managers. Using unique data on due diligence interactions between an institutional allocator and 860 hedge fund managers, we find that the production of private information complements public information. The allocator strategically chooses how much proprietary information to collect, reducing due diligence time by 18 months and improving outcomes. Funds selected by the manager outperform those not selected by 9 |$\%$| over 20 months. The outperformance relates to the allocator learning about fund return-to-scale constraints and manager skill before other investors. [ABSTRACT FROM AUTHOR]

Socially responsible (SR) institutions tend to focus more on the environmental, social, and governance (ESG) performance and less on quantitative signals of value. Consistent with this difference in focus, we find that SR institutions react less to quantitative mispricing signals. Our evidence suggests that the increased focus on ESG may have influenced stock return patterns. Specifically, abnormal returns associated with these mispricing signals are greater for stocks held more by SR institutions. The link between SR ownership and the efficacy of mispricing signals only emerges in recent years with the rise of ESG investing, and is significant only when there are arbitrage-related funding constraints. [ABSTRACT FROM AUTHOR]

This paper investigates the impact of online interaction between investors and enterprises on stock liquidity, using data from A-share listed companies in China from 2010 to 2021. Firstly, our findings reveal that more frequent interaction leads to better stock liquidity, and this result remains consistent across various robustness tests. Secondly, we observe that the expected tenure of senior executives and the ratio of institutional investor ownership exert a significant moderating effect on this relationship. Thirdly, this effect varies across enterprises at different development stages and with different ownership structures, being more pronounced in growing and privately-owned companies. Furthermore, this paper finds an inverted U-shaped relationship between reply length and stock liquidity, indicating that excessively long replies may introduce noise and negatively affect liquidity. This study provides new insights into how online interactions can improve market efficiency and offers practical implications for corporate governance and investor relations. [ABSTRACT FROM AUTHOR]

Since the capitalist and colonial enclosure of land-qua-property, the property parcel has served as the geographic foundation of land ownership. Bounded, self-contained, and mutually exclusive with all surrounding parcels, this geography is taken for granted in our contemporary understandings of property. As the ownership of land, property, and housing has become increasingly concentrated in fewer and fewer hands in recent years, however, it perhaps makes more sense to think of property not as isolated and individual, but as fundamentally networked and relational. Properties that are quite distant from one another are often connected through tangled webs of corporate property ownership, which are meant to deliberately obscure the true ownership—and concentration—of such property from public view. This article demonstrates the importance of untangling these corporate networks, using a case study of three large corporate landlords operating in metropolitan Atlanta, Georgia: Invitation Homes, Pretium Partners, and Amherst Holdings. The article shows how the true extent of these corporate landlords' holdings is hidden by these networks, and how researchers can untangle that to produce a more complete understanding of concentrated housing ownership. Through this method, we can uncover that these three firms control more than 19,000 single-family homes across the five core counties of Metro Atlanta, using an extensive network of more than 190 corporate aliases—registered to seventy-four different addresses across ten states and one territory—to hide their holdings behind a veil of secrecy and insulate themselves from liability. [ABSTRACT FROM AUTHOR]

To the best of our knowledge, this article is the first to present a conceptual approach for a private market-based direct index. Based on the growing data availability of capital table management vendors, the authors propose a new way of determining a start-up's fair value. Using hedonic methods as an enabler, the authors consider changing value-determining components, thus creating a dynamic valuation model. Finally, the authors outline several implications for the index constituents, such as increased information efficiency and benefits from decreasing capital costs. In this way, the authors introduce a new niche for direct indexing (DI) applications that pressures indexing vendors and creates extended investment diversification opportunities for preliminary institutional investors. This allows the creation of major benchmarks that act as private equity (PE) proxies. [ABSTRACT FROM AUTHOR]

Investors, corporate executives, and board members cannot escape environmental, social, and governance (ESG)-related risks and opportunities. Initially conceptualized in 2004 as a risk mitigation and value creation tool, ESG has evolved into a necessary component of comprehensive investment analysis and a business imperative. Today, most institutional investors globally have an ESG-related policy. The inclination to determine a quantitative figure for generally qualitative factors spawned an industry of ESG data providers. ESG's evolution, however, has not been without challenges. Why are ESG scores across data providers variegated? How should users interpret ESG scores? ESG scores are frequently and incorrectly referred to as ESG ratings, even though ESG scores contain different characteristics expected from well-understood, ordinal rating scales. The relatively low correlation exhibited across ESG data providers signals that carte blanche standardization of ESG data is impractical and perhaps impossible. ESG scores are unsurprisingly consistently inconsistent; however, applying pragmatic guidance can unlock value, improve investment analysis, and prepare chief executives to meet the demands of shareholders and stakeholders. Looking ahead, it is likely that ESG will become even more integral to investment analysis and corporate decision-making. [ABSTRACT FROM AUTHOR]

Environmental and social (ES) funds in non-ES families must balance incorporating the stakeholders' interests they advertise and maximizing shareholder value favored by their families. We find that these funds support ES proposals that are far from the majority threshold, while opposing them when their vote is more likely to be pivotal. This strategy results in a high average support for ES proposals, seemingly consistent with their fiduciary responsibilities, while opposing contested ES proposals. This greenwashing strategy is driven by ES funds in non-ES families who cater to institutional investors. Indeed, these funds experience lower inflows when providing low average support for ES proposals. This strategic voting is not exhibited in governance proposals, nor by ES funds in ES families or by non-ES funds in non-ES families, reinforcing the notion of strategic voting to accommodate family preferences while appearing to meet the fiduciary responsibilities of the funds. [ABSTRACT FROM AUTHOR]

Although more scholars have studied the economic consequences of ESG, no conclusive results have been reached yet. In addition, there is a lack of research on the relationship between corporate ESG performance and surplus persistence. This paper adopts the ordinary least squares (OLS) method to analyze the impact of corporate ESG performance on corporate surplus persistence based on stakeholder theory and principal-agent theory using companies listed in Shanghai and Shenzhen A-shares from 2010 to 2022 as research objects. It was found that there is a significant positive correlation between ESG performance and both the social (S) and governance (G) dimensions, as well as surplus sustainability; conversely, the environmental (E) dimension is significantly negatively correlated with surplus sustainability in the short term, but further analysis reveals that it can enhance corporate surplus sustainability in the long run. Institutional investor shareholding and debt financing costs mediate the relationship between corporate ESG performance and both the S and G dimensions, influencing surplus persistence. Further analysis shows that the positive correlation between a firm's ESG performance and its governance (G) dimension related to surplus persistence is more significant in the eastern region. [ABSTRACT FROM AUTHOR]

Previous research has debated about whether institutionalization could improve market efficiency. We develop a theoretical model under anticipated utility combined with probability weighting to study the impacts of institutionalization on market participation and market efficiency. The prudence attitude towards probability uncertainty leads to limited participation by investors. We find that institutionalization influences the market in two different ways. An increase in the total sector size of institutional investors facilitates price discovery but discourages market participation from naïve investors due to information asymmetry. However, when the top institution has high market power, this large institution trades strategically to induce more participation by naïve traders for risk-sharing at the cost of lowering information efficiency. [ABSTRACT FROM AUTHOR]

The study examines the impact of board attributes, ownership structures and other bank-specific factors on bank risk-taking. Using a sample of 220 banks in 16 sub-Saharan Africa countries for the years 2007–2018, the findings of the study are fourfold. First, the findings indicate that independent directors who are financial experts reduce bank risk-taking. Second, the study finds that the number of board meetings has a negative impact on bank risk-taking. Third, the estimation results suggest that government and foreign ownership encourage banks to take more risks. Finally, the study observes that institutional shareholder ownership influence bank risk-taking negatively. We observe that an increase in the ownership stake held by long-term institutional investors is associated with a decrease in risk-taking. Furthermore, we show that the predicted relationships vary across different periods. The findings are robust to different types of endogeneities and alternative measures of bank risk-taking. The study concludes that different corporate governance characteristics have different implications for banks' risk-taking in the region. The findings have key policy implications for banking practitioners, regulators, and policy makers in the region. [ABSTRACT FROM AUTHOR]

The innovation of defense industry base requires not only technological progress but also scientific organization and management and reasonable business model. Based on the data of A‐share listed companies related to defense industry base in China from 2013 to 2021, this paper employs panel‐probit model with instrumental variable to empirically test the relationship and influence mechanism of financing efficiency on non‐technological innovation. It is found that the financing efficiency of the defense industry base has a significantly positive effect on organizational innovation and market innovation, which is more prominent in state‐owned enterprises and military enterprises. The influence mechanism is mainly to improve information symmetry and reduce agency costs. Internally, the defense industry base should strengthen the management of financing and innovation activities; from the external point of view, the government needs to improve the construction of capital market, and financial institutions need to play the role of professional institutional investors and external supervisors, which is conducive to improving the non‐technical innovation ability of defense industry base. [ABSTRACT FROM AUTHOR]

Peer-to-peer (P2P) lending has attracted scholarly attention because of its economic significance and potential to democratize access to finance. However, P2P lending platforms face many challenges and failures that we need to understand more clearly. We build a computational model to study how borrower default affects P2P platform lending. We show that borrower default disrupts the P2P network formation process and undermines platform stability. Moreover, we find that defaults increase the inequality in accessing funding and provide a rationale for using curation rules, widely used in P2P platforms, in contrast to P2P insurance, which fosters cascading defaults. We also address a new trend in P2P lending platforms in which large companies (institutional investors) play an increasingly important role. We find that the presence of large companies creates a denser network (more loans) but generates a trade-off between making the platform more resilient to cascading defaults and more dependent on specific players. Overall, we explain how borrower defaults affect platform stability and what makes a platform vulnerable, threatening its survival. We discuss research and managerial insights into platform stability and the economic effect of P2P lending platforms. [ABSTRACT FROM AUTHOR]

This study uses behavioural portfolio theory (BPT) within the Markowitz Portfolio Theory framework to enhance portfolio management by focusing on sustainability and risk mitigation during market downturns. It selects portfolios to hedge against market lows using Conditional Drawdown at Risk (CDaR) and Expected Regret of Drawdown (ERoD). These measures help choose securities that perform well during a market decline. This study applies drawdown-based risk metrics to assist institutional investors and fiduciaries in making informed investment and fund management decisions. By merging BPT with Markowitz’s mean–variance framework, selected investments are maintained above a safety threshold, contributing to the portfolio’s overall quality and sustainability. Additionally, by incorporating an Environmental, Social, and Governance (ESG) preference function, the findings suggest that BPT built portfolios meet traditional performance standards and align with socially responsible investment principles, thereby offering higher utility and alignment with investor values focused on sustainable investing. [ABSTRACT FROM AUTHOR]

This paper examines equilibrium asset prices and leverage in an exchange economy populated with both retail and institutional investors. Institutional investors influence the price of the stocks they trade and are aware of the price impact of the opponent and, thus, interact strategically. Because of the price impact, institutional investors decrease their demand for stocks and lend money to the retail sector, thereby increasing leverage in the economy. The risk-free rate (equity premium) tends to be lower (higher) as compared to an economy populated by retail investors only. Retail investors' compensation for liquidity provision depends on the behavior of institutional investors and the state of the economy. [ABSTRACT FROM AUTHOR]

This article studies the connections between lessor landowners, land grabbing and land financialization in contemporary capital accumulation. Drawing upon extensive empirical research conducted in Uruguay, which combined database analysis and in‐depth interviews, the paper provides key insights to understand why land leasing has become a central strategy of ground rent appropriation among different types of landowners at the beginning of the 21st century. Our main results show that the leasing strategy is a combination of tenant‐capitalists' expansion, social differentiation and demographic processes of the small landowning capitals displaced from production that rent out their lands, the process of land financialization through large institutional investors, which deploy a land banking strategy, and the optimization of land exploitation among landowner‐capitalists. Moreover, our results highlight the importance of prioritising the study of landowners as a class in itself and the different forms of ground rent appropriation. [ABSTRACT FROM AUTHOR]

Copyright of Environmental & Social Management Journal / Revista de Gestão Social e Ambiental is the property of Environmental & Social Management Journal and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

We examine whether high-frequency trading (HFT) is associated with greater deviations of stock prices from firms' fundamental, intrinsic values. Prior studies show that HFT can improve market liquidity and price discovery in the short-term, but countervailing effects can discourage new information acquisition, reduce the amount of fundamental news reflected in stock prices, and reduce institutional investors' desire to invest and trade in stocks subject to high levels of HFT. We find that greater HFT leads to a greater deviation of stock prices from accounting-based valuation estimates. The results hold across univariate, multivariate, and cross-sectional tests, as well as a natural experiment that induces an exogenous shock to HFT for a small sample of firms. Our findings contribute to the understanding of the longer-term valuation implications of HFT, as well as the traditional valuation role of accounting variables. [ABSTRACT FROM AUTHOR]

The asset-backed securitization of public-private partnership (PPP-ABS) provides new opportunities to achieve the infrastructure sustainable development goals (SDGs). It is considered to be a refinancing instrument for PPP projects and an alternative investment instrument for institutional investors. Compared with other investment instruments, PPP-ABS has many investment advantages. However, PPP-ABS investment is a multi-criteria decision-making (MCDM) problem. In order to explore the factors influencing PPP-ABS investment and how institutional investors making decision, an empirical study is conducted in this paper. Firstly, the critical external factors influencing PPP-ABS investment decision-making, including investment environment, the stability of PPP projects' cash flow, asset-backed securitization (ABS) design, and relevant parties' dutiful and contractual capacity, were identified through literature review. Then, the hesitant fuzzy numbers were used to describe the criteria values and the dispersion rate of hesitant fuzzy numbers was used to determine the criteria weights. Next, the prospect theory was used to evaluate the alternative projects' value and the VIKOR method was used to rank the projects and determine the optimal project. Finally, five PPP-ABS projects from different industries were selected for a case study, verifying the feasibility and effectiveness of the proposed method. All above studies are expected to provide helpful reference for institutional investors' investment decision-making. In addition, we proposed some practical and feasible suggestions which can protect investors' rights and also promote the sustainable development of PPP-ABS. [ABSTRACT FROM AUTHOR]

This study examines the effect of short selling on total-factor productivity (TFP) using China's short-selling pilot program as a quasi-natural experiment. Short-selling significantly improves TFP, and this positive effect is mainly driven by improvements in firms' innovation ability and resource-allocation efficiency. The results are robust to potential endogeneity using propensity-score matching, a placebo test, and exogenous shocks. Further, the positive effect is more pronounced when external governance mechanisms (i.e. market competition and institutional investor supervision) are weak. [ABSTRACT FROM AUTHOR]

In initial public offerings (IPOs), underpricing refers to pricing the issue at a price lower than its fair value which results in the listing price being much higher than the issue price. This higher information asymmetry results in more underpricing. To reduce such asymmetry, the Securities and Exchange Board of India (SEBI) introduced IPO grading and anchor investor participation in India. This article aims to assess the impact of these two factors on the underpricing of Indian IPOs over 2007–2017. This study uses multivariate regression analysis to compare the impact of graded versus ungraded IPOs and of anchor-backed versus non-anchor backed IPOs on underpricing; it finds that IPO grading and anchor investment do not have a significant overall impact on underpricing. These results justify the scrapping of mandatory IPO grading. Although insignificant, IPO grading has a greater influence on underpricing than anchor investor participation. Furthermore, the current study also analyses the subscription patterns of qualified institutional buyers (QIBs), non-institutional investors (NIIs) and retail individual investors (RIIs) and their influence on one another. Accordingly, it reveals that QIB subscription influences both NII and RII subscriptions. [ABSTRACT FROM AUTHOR]

Copyright of NTU Management Review is the property of NTU Management Review and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this study, we examine the green innovation effect of investor preference on Chinese listed companies from 2008 to 2020. We observe that investors with environmental protection preferences can significantly increase enterprise green innovation. The baseline conclusions remain robust after we conduct multiple sensitivity tests, such as establishing a shift-share instrumental variable (Bartik IV), using the Heckman's two-step method, changing the regression methods, substituting the core variables, adopting the DID method, and considering investors' ownership. Our analysis shows that the green innovation effect of environmental investors is highly pronounced in companies with a high level of indebtedness and low managerial ability. We verify that environmental investors can improve the green innovation level of enterprises through two potential mechanisms, namely, easing corporate financing constraints and incentivising managers. In addition, political and public attention can strengthen the positive relationship between environmental investors and green innovation. [ABSTRACT FROM AUTHOR]

The consideration of environmental, social, and governance (ESG) aspects has become an integral part of investment decisions for individual and institutional investors. Most recently, corporate leaders recognized the core value of the ESG framework in fulfilling their environmental and social responsibility efforts. While stock market prediction is a complex and challenging task, several factors associated with developing an ESG framework further increase the complexity and volatility of ESG portfolios compared with broad market indices. To address this challenge, we propose an integrated computational framework to implement deep learning model architectures, specifically long short-term memory (LSTM), gated recurrent unit, and convolutional neural network, to predict the volatility of the ESG index in an identical environment. A comprehensive analysis was performed to identify a balanced combination of input features from fundamental data, technical indicators, and macroeconomic factors to delineate the cone of uncertainty in market volatility prediction. The performance of the constructed models was evaluated using standard assessment metrics. Rigorous hyperparameter tuning and model-selection strategies were implemented to identify the best model. Furthermore, a series of statistical analyses was conducted to validate the robustness and reliability of the model. Experimental results showed that a single-layer LSTM model with a relatively small number of neurons provides a superior fit with high prediction accuracy relative to more complex models. [ABSTRACT FROM AUTHOR]

The integration of tokenization into corporate governance marks a transformative shift in managing corporate ownership and transparency through blockchain technology. This research agenda explores the practical and managerial implications of tokenization, focusing on enhancing shareholder communication and decisionmaking. By addressing inefficiencies and opacity in traditional corporate governance, tokenization democratizes shareholder participation, streamlines processes, and improves transparency and accountability. Anchored in a comprehensive literature review, the study synthesizes existing research and identifies gaps in understanding tokenization's impact on corporate governance. Key themes include the role of institutions and governance mechanisms, blockchain's potential to enhance transparency, reduce intermediaries, lower costs, and boost shareholder engagement. The study also examines evolving legal frameworks and regulatory challenges, emphasizing the need for regulatory clarity to facilitate adoption. A comparative analysis of blockchain platforms versus traditional financial markets highlights unique advantages and challenges related to liquidity, regulatory frameworks, accessibility, transparency, efficiency, stability, trust, and security. This agenda provides a structured framework for investigating the multifaceted impact of tokenization on corporate governance. The findings underscore the importance of innovative regulatory approaches and robust security measures to ensure blockchain platform stability. Future efforts should focus on developing comprehensive regulatory frameworks and ongoing education initiatives to support the democratization of financial markets through blockchain technology, ultimately contributing to a more efficient and equitable corporate landscape. [ABSTRACT FROM AUTHOR]

Purpose: This study examines whether and how the legal origin of foreign institutional investors (FIIs) impacts corporate investment efficiency. Design/methodology/approach: The study employs a large panel dataset of firms from 32 non-USA countries from 2005 to 2018. Financial and institutional ownership data are obtained from the COMPUSTAT Global and Public Ownership databases in S&P Capital IQ, respectively. The study employed ordinary least squares (OLS) regression with year and firm fixed effects. In addition, two-stage least squares with instrumental variable regression (2SLS-IV) and propensity score matching (PSM) approaches were employed to address the potential endogeneity. Findings: The findings of this study suggest that common- and civil-law FIIs differ in their monitoring capabilities to promote investment efficiency. The authors find evidence that increased equity ownership by common-law FIIs, not civil-law investors, strengthens the investment-Q sensitivity, resulting in higher investment efficiency. Consistent with the monitoring and information channel, the results further indicate that the positive impact of common-law FIIs on investment efficiency is stronger in host environments susceptible to agency conflicts and information asymmetry. Originality/value: This study offers novel evidence on the heterogeneous monitoring role of FIIs with regard to their home countries' legal origins and their impact on investment efficiency in an international context. [ABSTRACT FROM AUTHOR]

We use account-level transaction data to examine trading styles and profitability in a leading derivatives market. Approximately 66% of active retail investors predominantly hold simple, one-sided positions in only one class of options, whereas institutional investors are more likely to use complex strategies. Hypothesizing that the complexity of trading styles reflects investors' skills, we examine the effect of options trading styles on investment performance. We find that retail investors using simple strategies lose to the rest of the market. For both retail and institutional investors, selling volatility is the most successful strategy. We conclude that these style effects are persistent and cannot be fully explained by systematic risk exposure. This paper was accepted by Lukas Schmid, finance. Funding: J. Hu acknowledges financial support from Lee Kong Chian Fellowship. A. Kirilova acknowledges financial support from the Spanish Ministry of Science and Innovation [Grant PID2021-128994NA-I00]. Supplemental Material: The online appendix and data are available at https://doi.org/10.1287/mnsc.2023.4916. [ABSTRACT FROM AUTHOR]

Institutional investors increasingly hold firms in both the industrial and financial sectors. These cross-industry holdings link firms to "outside" banks that they have not borrowed from, creating a network between the two sectors. We show that such networks reduce firms' loan spreads. This effect is more prominent when cross-holders are actively involved in borrowers' routine operations and when they have stronger incentives to advocate for borrowers in the loan process. Furthermore, outside banks begin to lend more to firms once the two parties become linked. This network is "behind-the-scenes" because it does not arise from prior interactions between firms and banks, but is instead built through institutions' cross-holdings. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The data files and online appendices are available at https://doi.org/10.1287/mnsc.2023.4911. [ABSTRACT FROM AUTHOR]

This study investigates the impact of foreign institutional investors (FIIs) on corporate green innovation. We manually collected data on foreign institutional ownership (FIO) from 34 international jurisdictions between 2009 and 2020. We find that FIO has a positive, robust, and causal effect on the green innovation practices of Chinese listed companies. Moreover, our heterogeneity analyses indicate that this positive effect is more pronounced for FIIs originating from jurisdictions exhibiting greater environmental consciousness of and advancements in green technology as well as for those FIIs committed to the United Nations—supported Principles of Responsible Investment. Furthermore, we provide evidence suggesting that environmental information disclosure and monitoring serve as potential mechanisms through which FIIs catalyze corporate green innovation. [ABSTRACT FROM AUTHOR]

The Southern District of New York's July 2023 decision in SEC v. Ripple Labs, Inc. has been touted as a monumental win for cryptocurrency purchasers and related businesses. The Ripple court held that, except institutional investor transactions, all sales of Ripple's XRP token were not investment contracts, a class of security subject to federal securities law. The court's ruling meant that Ripple could not be held liable for the unregistered trading of XRP beyond its sales to institutional investors. Ripple adds new insights to a pervasive policymaking dilemma addressed in this Note: is the Securities and Exchange Commission's (SEC) regulatory approach effectively serving purchasers? This Note answers this question in the negative and explores the disconnect between the SEC's approach and the actual protection of purchasers. First, it briefly surveys the value of cryptocurrency like XRP to outline the many forms digital assets take beyond a passive, speculative investment. Second, it outlines the framework for SEC enforcement under the Supreme Court's Howey test for "investment contracts" and securities registration requirements in Section 5 of the Securities Act. Third, it examines the Ripple court's holding regarding reasonable expectation of profit to distinguish XRP trading activity from investment contracts under Howey. Fourth, it contends that the Ripple court's focus on enforcing securities law to protect reasonable investor expectations of profit is a proper step toward addressing a larger regulatory disconnect between the SEC and the investing public it is entrusted to serve. [ABSTRACT FROM AUTHOR]

This study aims to improve asset allocation by combining traditional finance theory and behavioral finance. The authors construct efficient portfolios using modern portfolio theory (MPT) and identify an appropriate portfolio for a particular investor through a risk assessment score (RAS). The identified portfolio is not only optimal but also suitable based on the investor's risk profile. An RAS questionnaire is designed to produce an additive score in the range of 0 to 100 (i.e., a percentage) that maps linearly to the range of the tangency slope. Their framework is highly flexible and cost effective in terms of both capital market assumptions and the delineation of investor preferences. To emphasize the flexibility of the process, they provide an example questionnaire for retail investors in India, as well as an illustration of a three-asset-class efficient frontier. They also briefly discuss the ability of mapping responses to qualitative inquiries to the tangency slope in the allocation decisions of institutional investors (e.g., defined-benefit pension funds). [ABSTRACT FROM AUTHOR]

Purpose: Common institutional ownership is a phenomenon that has extended throughout the capital markets in recent years and has a significant impact on business strategy decisions. The study intends to investigate the effect of common institutional ownership on corporate over-financialization and potential functioning mechanisms. Design/methodology/approach: Using panel data from Chinese-listed companies over the period of 2003–2021, the authors conduct regression models which controlled year-, industry- and regional fixed effects to explore the impact of common institutional ownership on corporate over-financialization. Findings: This study concludes that corporate over-financialization may be prevented via common institutional ownership. The mechanism test suggests that common institutional ownership inhibits corporate over-financialization by improving internal control quality and enhancing financial flexibility. Besides, heterogeneity analysis shows that the inhibiting effect of common institutional ownership on corporate over-financialization is more pronounced in stability-oriented institutional investors and high financing constraints firms. Originality/value: This paper makes a valuable contribution to the current studies on effective strategies to prevent enterprises from becoming overly financialized by recognizing common institutional ownership. Furthermore, this paper adds to the research on common institutional ownership's economic consequences. Finally, this study provides management implications for how to optimize corporate governance structures, curb the financialization of entities in practice and promote the development of the real economy. [ABSTRACT FROM AUTHOR]

As an effective external governance factor, the effectiveness of analysts' governance and tracking options has been one of the most important topics of research. In recent years, there has been an influx of capital from real companies into finance, real estate and other industries related to the virtual economy, which has a significant impact on the financial position of companies and can also affect analysts' tracking choices. This paper takes A‐share listed companies from 2010 to 2021 as the research object and finds that as the financialisation of enterprises deepens, the number of analysts' tracking decreases; however, with the increase of market attention, the negative impact of the financialisation of enterprises on analysts' tracking will be weakened. Further research shows that, first, financial risk plays a mediating role between corporate financialisation and analyst tracking, in that corporate financialisation increases financial risk, which in turn leads to a decrease in the number of analyst tracking; second, as institutional investors have a greater influence on analysts, the impact of corporate financialisation on analyst tracking is weakened as the shareholding of institutional investors increases; finally, that holding two different types of financial assets, short‐term and long‐term, also has different consequences. The findings of this paper examine the impact of corporate financialisation from the analyst's perspective, confirming the identification and selection capabilities that analysts have. [ABSTRACT FROM AUTHOR]

The rise of index funds, or passive investing, in recent decades has caused heated debates over the efficacy of passive investors' stewardship role in corporate governance. Our study adds to this emerging line of literature by examining whether passive investors enhance the quality of financial statement audits, a key aspect of corporate governance mechanisms. We exploit the yearly Russell index reassignment, which provides us with an ideal setting to study the causal relation between passive institutional investors (i.e., index trackers) and firms' audit quality. Examining firms closely surrounding the Russell 1000/2000 cutoff line, we find that higher passive ownership leads to higher audit quality proxied by audit fees. To investigate the channel through which passive investors influence audit-related governance issues, our evidence from auditor ratification voting records suggests that passive investors do 'voice' their opinion on low-quality audits. Such effort also leads to a higher likelihood of auditor turnover in the following year. In the cross-sectional analysis, we also find that the positive effect of passive investors on audit quality is more pronounced in firms with higher agency costs. Thus, our study supports the view that passive investors play an active role in improving corporate governance. [ABSTRACT FROM AUTHOR]

We investigate postings on two unique online interactive platforms by investors around earnings announcements of publicly listed firms in China. We find posting volumes on the platforms increase around earnings announcement dates, suggesting that investors acquire firm-specific information via the interactive platforms. This relation is stronger for firms with higher reply rates or more timely replies, for firms with fewer shares held by institutional investors, for firms with larger information asymmetry, and when market uncertainty is higher. Furthermore, the positive association between posting volumes and earnings announcements is more pronounced for firms with smaller Baidu search volumes. This suggests a substitution relationship in collecting information between asking listed firms questions directly and searching online. Finally, our evidence suggests that questions posted around earnings announcements accelerate the price discovery of earnings and attenuate post-earnings announcement drift and stock price synchronicity. [ABSTRACT FROM AUTHOR]

The article investigates how the devastating repercussions of fraud allegations, as outlined in the Hindenburg report, are actively and critically affecting the stock prices of the Adani Group. This investigation, which explores the foundation of the accused companies' financial health and market trust, is crucial. These ramifications go far beyond Adani Group and are highly relevant to potential investors globally, highlighting the urgent need for a thorough comprehension of these dynamics in the context of the global market environment. The journey from stock market crash to market correction is analyzed using the theoretical lens of Risk Aversion theory. At the same time, the Efficient Market Hypothesis (EMH) assumptions are being tested. The study employs a long‐term event study approach to analyze the stock price impact of the Hindenburg report using the Cumulative Abnormal Returns (CAR) methodology. For analysis, a sample of six Adani group companies and relevant stakeholders like creditors, LIC, immediate counterparts of each company, and NIFTY bank indices are considered. The study finds that the stock prices of four out of six Adani Group companies declined significantly after the Hindenburg report, defying the assumptions of the EMH. Risk‐seeking investors' regulatory assurance and investment may have helped in a market correction. The associated banks (lenders to Adani) and Banking indices depicted a price decline on the second and third days, which reversed on the fourth day, indicating a diminished spillover effect. Moreover, no competitor besides Tata Power saw abnormally large gains. This study analyses the event from the lens of Risk aversion and tests the assumption of EMH. The study concludes that these findings have practical implications for investors (risk‐averse and risk‐seeking), policymakers, and researchers. [ABSTRACT FROM AUTHOR]

Summary: Most cryptocurrency spot trading occurs on centralized crypto exchanges, where offers for buying and selling are organized via an order book. In liquid markets, the price achieved for buying and selling deviates only slightly from the assumed reference price, that is, trading is associated with low implicit costs. However, compared to traditional finance, crypto markets are still illiquid, and consequently, the reduction of implicit costs is crucial for any trading strategy and of high interest, especially for institutional investors. This paper describes the design and implementation of Athena, a system that automatically splits orders across multiple exchanges to minimize implicit costs. For this purpose, order books are collected from several centralized crypto exchanges and merged into an internal unified order book. In addition to price and quantity, the entries in the unified order book are enriched with information about the exchange. This enables a smart order routing algorithm to split an order into several slices and execute these on several exchanges to reduce implicit costs and achieve a better price. An extensive evaluation shows the savings of using the smart order routing algorithm. [ABSTRACT FROM AUTHOR]

This paper, rooted in agency theory, explores the intricate relationship between stock price crash risk and customer concentration within the context of Iran, a developing nation. Utilising innovative indicators to measure corporate and government customers, we address inconsistent findings in existing research and offer fresh insights into stock price crash risk dynamics. Focusing on 82 companies listed on the Tehran Stock Exchange from 2013 to 2020, our study employs a robust methodological framework, including panel data, multiple regression and three distinct metrics to measure customer concentration. Specifically, we introduce the proportion of significant customer sales, the Herfindahl-Hirschman Index, and a Ranking Index based on substantial customer sales. Our investigation reveals a noteworthy inverse relationship between the highest concentration level of corporate customer concentration, as measured by the Ranking Index, and stock price crash risk. Similarly, we establish an inverse association between the Ranking Index for government customer concentration and stock price crash risk. Moreover, institutional investors positively influence the correlation between corporate customer concentration and stock price crash risk but do not exert a discernible impact on the relationship between government customer concentration and stock price crash risk. [ABSTRACT FROM AUTHOR]

Heterogeneous institutional investors' shareholding preferences have been driven to change by the deepening of ESG investment philosophy. Therefore, we examine the impact of corporate ESG performance on institutional investors' shareholding preferences and its mechanism of action. We conduct mixed OLS and mediation effect tests using data on ESG responsibility scores and institutional investors' shareholding ratios of A‐share listed companies in China from 2010 to 2020 as samples. We find that corporate ESG performance can significantly and robustly increase institutional investors' shareholdings; the mediation effect analysis shows that overall corporate ESG performance contributes to increases in corporate book and market values, thus encouraging institutional investors to increase their shareholdings. The heterogeneity analysis shows that independent institutional investors attach more importance to corporate ESG responsibility performance, and long‐term institutional investors attach more importance to corporate environmental performance; moreover, institutional investors have more significant ESG shareholding preferences for Chinese SOEs. Our study can strengthen the encouragement of institutional investors to integrate ESG investment concepts from multiple perspectives, such as research and analysis, portfolio management, risk control, and due diligence management, to design and develop targeted ESG investment tools, give full play to the role of shareholders and guide the sound development of listed companies from the perspective of investment strategy objectives. [ABSTRACT FROM AUTHOR]

We investigate the relationship between operational leanness and institutional ownership. Based on a sample of 12,291 firm‐year observations of US manufacturing firms from 1998 to 2020, we find leaner firms to attract significantly more institutional investors – both in terms of the fraction of shares held and the number of institutional investors holding shares of the firm. This finding holds in several tests addressing endogeneity concerns. Contrary to studies investigating the relationship between operational leanness and operating performance or credit ratings, our results do not provide consistent evidence that this relationship is also of a concave shape. However, we provide evidence that the relationship is stronger (i) for firms with weak corporate governance and high firm‐specific monitoring costs and (ii) for active institutions, suggesting that not only firm performance considerations but also perceived lower agency costs are important mechanisms explaining why institutional investors prefer lean manufacturing firms. Taken together, these findings contribute to our understanding of institutional investors' preferences in general and across institution types. [ABSTRACT FROM AUTHOR]

With the rise of environmental, social, and governance (ESG) investment concepts, foreign institutional investors have become increasingly concerned about corporate ESG performance. Based on data of China's A‐share listed companies from 2011 to 2021, we empirically find that corporate ESG performance enhances foreign institutional investors to hold shares. Economic policy uncertainty significantly reduces the impact of corporate ESG performance on foreign institutional investors' shareholdings. The mechanism analyses show that information asymmetry and corporate reputation are the two transmission channels for corporate ESG performance that influence foreign institutional investors to hold shares. Further analysis shows that companies with good ESG performance are prone to become heavy investments and long‐term shareholdings for foreign institutional investors. The heterogeneity analyses show that the effect of ESG performance on foreign institutional investors' shareholdings is more significant among firms that are not state‐owned, with high business risk and in heavily polluting industries. [ABSTRACT FROM AUTHOR]

The purpose of this study is to investigate the effects of ownership by institutional investors on the financial performance of a sample of 15 French firms that were listed between 2015 and 2022 on the CAC40 index. To achieve the study’s objective, the percentage of shares owned by foreign and domestic institutional investors was used as a measure of institutional investors’ ownership, while the return on assets was used as a measure of financial performance. The study employed a statistical approach using Dynamic Panel Data Models with the Generalised Method of Moments (GMM). The study found a statistically significant negative impact between the ownership percentages of foreign and domestic institutional investors and financial performance. Regarding control variables, agency costs had a positive and statistically significant impact on financial performance, while liquidity had no significant effect.