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Implemented in 2018, MiFID II changed sell-side analyst incentives in Europe, forcing analysts to justify the value they add. While the number of analysts decreases, the average stock return synchronicity with the market also decreases, implying an improvement in price informativeness. The decrease in synchronicity is larger for firms that are more important for the analysts and brokers covering them. It is also asymmetric and substantially larger for downside market movements. Our results suggest that, by changing incentives, MiFID II not only improves the quality of individual analyst work, but also achieves an improvement in the aggregate stock price informativeness.

Stock returns during the week are negatively associated with the reported incidence of domestic violence during the weekend. This relationship is primarily driven by negative returns. The incidence of domestic violence increases with the magnitude of losses, and the effect increases with local stock market participation. Our findings suggest that negative wealth shocks caused by stock market crashes can affect stress levels within intimate relationships, escalate arguments, and trigger domestic violence. Stock market losses may reduce household utility beyond the shock to financial wealth, supporting gain-loss models where disutility from losses outweighs the utility from gains of a similar magnitude. Authors have furnished an Internet Appendix, which is available on the Oxford University Press Web site next to the link to the final published paper online.

A more positive cultural trust bias by an equity analyst's country of origin toward a firm's headquarter country is associated with significantly more positive stock recommendations. The cultural bias effect is stronger for eponymous firms whose names mention their home country and varies over time, increasing with negative sentiment. I find evidence of a negative North-South bias during the European debt crisis and UK-Europe divergence amid Brexit. Share price reactions to recommendations by more biased analysts are weaker, and more biased recommendations are worse at predicting monthly stock returns. More positively biased analysts also assign higher target prices.

Geographic proximity is associated with significantly higher returns from short selling within London and the UK. Short trades by funds near the target headquarters are followed by larger negative abnormal returns. Proximity matters more for stocks that are smaller, more volatile, and less actively covered by sellside analysts, and less for large trades and trades following more proximate institutions' trades. Short trades are correlated geographically, with proximate funds more likely to short the same stocks. Geographically closer short trades predict more negative earnings surprises. Covering of short positions by more proximate institutions is followed by more positive abnormal stock returns.

Depositor responses to a large currency shock vary depending on political views. Triggered by a combination of economic policies and a geopolitical conflict with the U.S., the Turkish lira depreciated 14% against the U.S. dollar on August 10, 2018. Using unique depositor-level micro data from a Turkish bank, we find that households significantly increase their share of deposits held in foreign currency after the currency shock, and the shift to FX is most pronounced in areas with low support for president Erdogan, while people in areas with high support are significantly less likely to move from lira to FX. These shifts to FX persist long after the shock, despite the lira regaining much of its lost value. The change in depositor currency preferences is associated with an increase in foreign-currency lending and increasing currency mismatches on Turkish banks' balance sheets, which translate into differences in bank profitability.

This paper reports findings from a survey of 1,008 Finnish small-and-medium-sized enterprises (SMEs) on their business outlook and financing alternatives during the COVID-19 crisis as of June 2020. Sales have dropped by an average of 25%. The decline in revenues is generally uncorrelated with the number of coronavirus cases in a municipality, except in the hospitality industry and the arts, entertainment and recreation industry. 54% of respondents have applied for public subsidies, while only 16% have applied for a new loan from the bank. Across the cross-section of firms, firms reporting a larger loss of revenues and with a more precarious financial position at the end of 2019 (high debt and/or low cash) were more likely to apply for both direct grants as well as loans.

We study the role of statistical literacy in interpreting COVID-19-related information, assessments of infection risk, and compliance with mobility restrictions. Using a large-scale panel survey of about 4,000 Dutch households, we find that more statistically literate people adjust their risk estimates more strongly to the actual infection risk, measured by the current number of confirmed COVID-19 cases in their home province. They are also generally more likely to socially distance, less concerned about their own infection risk, and more concerned about infecting others, especially vulnerable populations such as the elderly. We also find that more statistically literate people generally consider a flu shot more important, potentially suggesting a more positive attitude toward vaccines.

We study the role of competition in customers’ reactions to litigation against firms, using anonymized mobile phone location data. A class action lawsuit filing results in a 4% average reduction in customer visits to target firms’ outlets in the following months. The effect strongly depends on competition. Outlets facing more competition experience significantly larger negative effects. Closer competition matters more, both in terms of geographic and industry proximity. Announcement returns and quarterly accounting revenues around lawsuit filings also strongly depend on competition. Our results suggest that competition is an important component in customers’ ability to discipline firms for misbehavior.

Inaccuracy of borrower-provided information in marketplace loans for credit card debt repayment and consolidation contains information about credit risk. I identify inaccuracies based on three indicators: consistency of loan amount with outstanding credit balance, roundness of reported income, and roundness of chosen loan amount. An Inaccuracy Index constructed from these indicators has significant predictive power over the likelihood of default, and the additional default risk is not compensated by higher interest. Inaccurate information is more prevalent in areas with lower social capital, implying weaker social norms, among borrowers whose professions are considered less honest, and among borrowers with higher genuine income uncertainty.

We document a novel pattern that campaign goal amounts set by entrepreneurs on Kickstarter exhibit clear clustering at round numbers. We propose that the round number heuristic, a tendency to adopt round numbers as cognitive shortcuts when facing complicated and uncertain situations, may explain the clustering pattern and predict campaign outcomes. Based on 162,863 campaigns between 2009 and 2017, we find a negative relation between the use of round goal amounts and the likelihood of campaign success. Our findings suggest that setting a round number goal conveys useful information about entrepreneur quality that could be used by campaign backers or platforms.

We find a significant negative relationship between stock returns during the week and the reported incidence of domestic violence during the weekend. Our findings suggest that wealth shocks caused by the stock market can affect stress levels within families, escalate arguments, and trigger violence. The effect of stock returns on reported domestic violence is primarily attributable to negative returns, and the incidence of domestic violence increases with the magnitude of loss. The effect also increases with local stock market participation. Using Google search volumes as an alternative proxy for the incidence of domestic violence yields similar results.

We document a novel pattern that campaign goal amounts set by entrepreneurs on Kickstarter exhibit clear clustering at round numbers. We propose that the round number heuristic, a tendency to adopt round numbers as cognitive shortcuts when facing complicated and uncertain situations, may explain the clustering pattern and predict campaign outcomes. Based on 162,863 campaigns between 2009 and 2017, we find a negative relation between the use of round goal amounts and the likelihood of campaign success. Our findings suggest that setting a round number goal conveys useful information about entrepreneur quality that could be used by campaign backers or platforms.

Crowdfunding is one of the most successful segments of the burgeoning fintech industry that might challenge the role of traditional financial intermediaries. We document a number of gender differences in crowdfunding by analyzing a near-comprehensive sample of Kickstarter campaigns launched by individual entrepreneurs in the U.S. We argue that these differences are most plausibly explained by male entrepreneurs' relative overconfidence. Suggesting a tendency to overestimate the potential demand for their products, we find that male entrepreneurs set higher goal amounts, which results in more frequent campaign failures. In contrast, female entrepreneurs' campaigns are more likely to succeed and achieve higher pledged amounts relative to campaign goals. In successive campaigns, both male entrepreneurs' goal amounts and success rates converge toward those of female entrepreneurs, consistent with entrepreneurial experience mitigating the effects of overconfidence. The results are robust to using matched control groups, alleviating the potential concern about a selection effect.

We find a strong positive relationship between entrepreneurs' home-county social capital and their crowdfunding performance on Kickstarter. We exploit a quasi-experiment based on a Kickstarter rule change that strengthens entrepreneurs' obligation to provide backers with the promised rewards and find a significant reduction in the effect of social capital on campaign outcomes. In addition, the results are stronger for campaigns that are more vulnerable to moral hazard, as proxied by entrepreneur, regional, and campaign characteristics, and in times of poor market environment. Overall, our findings suggest that crowdfunding campaigns benefit from social capital via the alleviation of moral hazard concerns.

This paper studies the role of regional cultural differences in M\&A transactions in the U.S. We construct a county-level measure of cultural trust based on the World Values Survey data and find that a larger social trust distance between two companies reduces the likelihood of them combining via an M\&A transaction. Conditional on the deal being announced, a larger social trust distance between the acquirer and the target results in lower completion rates and longer completion times, indicating a higher complexity in deal execution. However, we also find that a larger social trust distance is associated with higher gains from mergers, as measured by both acquirer and combined announcement returns as well as medium-term buy-and-hold abnormal returns. The result suggests that for these announced deals, the synergy potential is high enough to offset the costs induced by the large cultural distance.