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Do asset managers engage in friendly investing to obtain privileged investment information? We test this hypothesis in the context of mutual fund connections to financial groups. Using brokers as the source of connections, we find that funds overweight the stock of connected financial groups and side with management in contested votes. We also find that fund performance improves with the extent of friendly investing. The improvement stems from trading the stock of companies that borrow from connected financial groups. Brokerage commissions do not drive the results. Our findings suggest that funds can obtain valuable information by acting as friendly shareholders. [ABSTRACT FROM AUTHOR]

The U.S. Consumer Financial Protection Bureau has released a database of consumer complaints about banks' financial products to the public since 2013. We find a greater reduction in mortgage applications to banks that receive more mortgage complaints in local markets after the disclosures. The effect is stronger in areas with more sophisticated consumers and higher credit competition, and for banks receiving more severe complaints. The number of monthly mortgage complaints per bank exhibits faster mean reversion after the publication of the database. These findings suggest that the public disclosure of mortgage complaints enhances product market discipline and consumer financial protection. [ABSTRACT FROM AUTHOR]

Using the 2016 U.S. presidential election result as a shock to the expectations about the future regulatory environment, I find that most regulated firms earned approximately 4% higher cumulative abnormal stock returns than least regulated firms during the first 10 trading days after the election. Exploring economic mechanisms, I find evidence consistent with the explanation that more regulations disproportionately harm high-growth firms and allow incumbent firms to extract rents through lower competition and political favoritism. Stock returns are also followed by a shift in firm fundamentals over 3 years after 2016, consistent with the economic mechanisms. [ABSTRACT FROM AUTHOR]

We identify two issues in the work of Ouazad and Kahn (2022). Correcting either reverses the original result. The two changes are to use the correct FHFA conforming loan limits for each county and year and to compare the individual loan amount to that limit correctly. There is no evidence that lenders transfer climate risk by altering loan origination and securitization behavior. None of our results calls into question the value and importance of the O&K model as a test for adverse selection. The question addressed and the setup of the test are important and should be replicated over time. [ABSTRACT FROM AUTHOR]

We test for gender bias in promotions at financial institutions using two central predictions of Becker's (1957 , 1993) model: firms with bias will (1) raise the promotion bar for marginally promoted female workers, and (2) incur costs from forgoing efficient employment practices. We find support for both of these predictions using a new nationwide panel of mortgage loan officers and their managers encompassing approximately 72,000 workers from over 1,000 shadow banks from 2014 to 2019. Overall, our findings provide evidence that gender bias is an important factor in gender gaps at financial institutions. [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 confirm prior evidence that bonds on average are offered at prices below their immediate post-offer secondary market prices. However, in cases where banks lead–manage their own bond offerings the underpricing is significantly less as compared with other non-self-marketed offerings. These findings are robust across various matched samples and selection models. Our results suggest that the bond offering process is characterized by substantive agency conflicts between shareholders of corporations (issuers) and underwriters. [ABSTRACT FROM AUTHOR]

Effective policies for adaptation to climate change require understanding how impacts are related to exposures and vulnerability, the dimensions of the climate system that will change most and where human impacts will be most draconian, and the institutions best suited to respond. Here, we propose a simple method for more credibly pairing empirical statistical damage estimates derived from recent weather and outcome observations with projected future climate changes and proposed responses. We first analyze agricultural production and loan repayment data from Brazil to understand vulnerability to historical variation in the more predictable components of temperature and rainfall (trend and seasonality) as well as to shocks (both local and over larger spatial scales). This decomposed weather variation over the past two decades explains over 50% of the yield variation in major Brazilian crops and, critically, can be constructed in the same way for future climate projections. Combining our estimates with bias-corrected downscaled climate simulations for Brazil, we find increased variation in yields and revenues (including more bad years and worse outcomes) and higher agricultural loan default at midcentury. Results in this context point to two particularly acute dimensions of vulnerability: Intensified seasonality and local idiosyncratic shocks both contribute to worsening outcomes, along with a reduced capacity for spatially correlated (covariate) shocks to ameliorate these effects through prices. These findings suggest that resilience strategies should focus on institutions such as water storage, financial services, and reinsurance.

Using supervisory data on operational losses from large U.S. bank holding companies (BHCs), we show that BHCs with socially responsible workforce policies suffer lower operational losses per dollar of total assets. The association significantly varies by the type of workforce policies and the type of operational losses. It is driven not only by small frequent losses but also by severe tail operational risk events. Further, the risk-reducing effects of the socially responsible workforce policies are stronger for larger BHCs with more employees. Our findings have important implications for banking organization performance, risk, and supervision. [ABSTRACT FROM AUTHOR]

We study the design of stress tests that provide information about aggregate and idiosyncratic risk in banks' portfolios and impose contingent capital requirements. In the optimal static test, an adverse scenario fails all weak and some strong banks, limiting the stigma of failure. Sequential tests outperform static tests. Under natural conditions, the optimal sequential test consists of a precautionary recapitalization, followed by a scenario that fails only weak banks, similar to TARP in 2008, followed by SCAP in 2009. Our results also shed light on the Federal Reserve's decision to test the banks twice in 2020 during the COVID-19 pandemic. 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. [ABSTRACT FROM AUTHOR]

Mutual funds often invest in other funds. In this paper, we analyze the economics behind such cross-fund investments and investigate their financial stability implications. Using granular data for the German fund sector, our main findings are that cross-fund investments (a) are becoming increasingly important over time, (b) were heavily liquidated during March 2020, and (c) display measurable contagion effects. Overall, cross-fund investments can elevate structural fund sector vulnerabilities. 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. [ABSTRACT FROM AUTHOR]

We examine the role of non-venture private equity (PE) firms as intermediaries in the market for corporate assets. We argue that, in order to create and capture value by acquiring established businesses and selling them to corporate buyers, PE firms must possess at least one of three potential advantages: (a) they must be able to identify businesses that are currently undervalued (valuation advantage), (b) they must be able to enhance the intrinsic value of the business (governance advantage), or (c) they must be able to match the business to a more synergistic corporate owner than is immediately available (timing advantage). We discuss why, and under what conditions, PE firms may thus have an advantage in buying, owning, and selling businesses, and derive a set of propositions predicting which targets PE firms are most likely to pursue. Our study thus offers a comprehensive yet contingent theory of non-venture PE, developing an integrated value-based framework to explain this important and growing phenomenon. In doing so, we also offer new insights into the role of intermediaries in strategic factor markets, especially the market for the buying and selling of businesses. [ABSTRACT FROM AUTHOR]

Using novel shadow bank funding data, I find that shadow banks are funded by the very banks they compete with when originating mortgages. Evidence suggests that banks have market power in the upstream market for shadow banks' funding, which in turn softens mortgage market competition through their strategic behaviors in both markets. I build and calibrate a quantitative model of vertical integration and competition to show that those consumers who would most benefit from shadow bank services are the ones to bear the costs. Secondary market innovation could increase downstream competition by reducing shadow banks' reliance on their competitors. 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. [ABSTRACT FROM AUTHOR]

Many hospitals risk closure owing to rising costs, declining revenue, and reduced profits. Given the importance of identifying factors that impact hospital profitability, our study examines the relationship between tangible assets and the financial performance of hospitals in South Korea. We also investigate the moderation effects of hospital location. Our analysis is based on hospital accounting data provided by public institutions in South Korea and includes medical facilities, machine facilities, structures, buildings, and vehicle assets as tangible assets, which affect three types of return on assets. The results indicate that medical facilities and building assets have a significant positive impact on medical profits but a negative effect on income before reserve funds for essential business and net income, which can be offset by increased vehicle and transportation equipment assets. Operating vehicles and transportation are particularly beneficial for hospitals in Seoul metropolitan areas. This study is meaningful because it uses reliable, externally audited data from an advanced South Korean medical market. Our findings may provide valuable insights for policymakers and hospital management seeking to improve hospital profitability and identify institutions requiring financial assistance not only in South Korea but also in other countries that have advanced medical markets. [ABSTRACT FROM AUTHOR]

The article is devoted to general analysis of the current legislation in the field of ensuring financial security of the non-banking sector of the economy. The author considers theoretical developments of domestic scholars on this topic, namely namely, the definition and approach to the term 'financial security'. It is established that financial security is an important part of the national security mechanism that ensures sustainability and efficiency of development of any state. The risks and obstacles that a national that Ukraine's national security may face, namely, the growth of the of the shadow economy and criminalisation of almost all areas of economy, which leads to a decrease in public confidence in democraticinstitutions and values. The importance of the importance of the Concept of National Security in the Financial Sector and the Strategy of Economic Security of Ukraine until 2025 as key documents in the field of financial security, documents in the field of financial security. Since the latest information and developments in this area pointed to the unsatisfactory state of financial security in Ukr aine. The author characterises the role of licensingand state registration in ensuring financial market stability, the essence and nature of licensing as a legal category are analysed. Thus, the main function of licensing is to minimise the risk of admission to the financial market of non-bank financial institutions whose activities whose activities may threaten the interests of market participants. And the main task of state registration is to support the protection of the interests of financial services consumers, ensuring state. [ABSTRACT FROM AUTHOR]