Seed-Stage Success and Growth of Angel Co-investment Networks

Abstract Using hand-collected data, we show that coinvestment is widespread in the angel investment market, even among seed-stage startups. Individual angels with demonstrated seed-stage success experience an increase in the quantity, quality, and geographic and industry spread of their coinvestment connections relative to unsuccessful peers and are rewarded with more deal flow. These results are stronger for less-established angels and for angels whose successes are more indicative of their ability. Success also begets more success: the portfolio companies of successful angels are more likely to receive follow-on financing, especially from VC firms. Our results highlight how angels grow their coinvestment networks. (JEL G24, L14, L26, M13). Received June 8, 2020; editorial decision June 21, 2021 by Editor Isil Erel. 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.

Noncognitive Abilities and Financial Distress: Evidence from a Representative Household Panel

10.1093/rfs/hhz010 ◽

2019 ◽

Vol 32 (10) ◽

pp. 3884-3919 ◽

Cited By ~ 4

Author(s):

Gianpaolo Parise ◽

Kim Peijnenburg

Keyword(s):

Financial Distress ◽

Web Site ◽

Income Shocks ◽

Oxford University ◽

Editorial Decision ◽

Differential Exposure ◽

Published Paper ◽

Oxford University Press ◽

Low Ability

AbstractThis paper provides evidence of how noncognitive abilities affect financial distress. In a representative panel of households, we find that people in the bottom quintile of noncognitive abilities are 10 times more likely to experience financial distress than those in the top quintile. We provide evidence that this relation largely arises from worse financial choices and lack of financial insight by low-ability individuals and reflects differential exposure to income shocks only to a lesser degree. We mitigate endogeneity concerns using an IV approach and an extensive set of controls. Implications for policy and finance research are discussed.Received September 24, 2017; editorial decision September 26, 2018 by Editor Stijn Van Nieuwerburgh. 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.

The Value of Offshore Secrets: Evidence from the Panama Papers

10.1093/rfs/hhz017 ◽

2019 ◽

Vol 32 (11) ◽

pp. 4117-4155 ◽

Cited By ~ 16

Author(s):

James O’Donovan ◽

Hannes F Wagner ◽

Stefan Zeume

Keyword(s):

Web Site ◽

Market Capitalization ◽

Listed Firms ◽

Oxford University ◽

Editorial Decision ◽

Published Paper ◽

AbstractWe exploit one of the largest data leaks, to date, to study whether and how firms use secret offshore vehicles. From the leaked data, we identify 338 listed firms as users of secret offshore vehicles and document that these vehicles are used to finance corruption, avoid taxes, and expropriate shareholders. Overall, the leak erased $\$$174 billion in market capitalization among implicated firms. Following the increased transparency brought about by the leak, implicated firms experience lower sales from perceptively corrupt countries and avoid less tax. We conservatively estimate that 1 in 7 firms have offshore secrets.Received May 29, 2017; editorial decision December 2, 2018 by Editor Itay Goldstein. 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.

How Close Are Close Shareholder Votes?

10.1093/rfs/hhy126 ◽

2018 ◽

Vol 32 (8) ◽

pp. 3183-3214 ◽

Cited By ~ 11

Author(s):

Laurent Bach ◽

Daniel Metzger

Keyword(s):

Corporate Governance ◽

Web Site ◽

Causal Effects ◽

Say On Pay ◽

Oxford University ◽

Shareholder Proposals ◽

Editorial Decision ◽

Published Paper ◽

Abstract We show that close votes on shareholder proposals are disproportionately more likely to be won by management than by shareholder activists. Using a sample of shareholder proposals from 2003 to 2016, we uncover a large and discontinuous drop in the density of voting results at the 50% threshold. We document similar patterns for say on pay votes and director elections. Our findings imply that shareholder influence through voting is limited by managerial opposition. It also follows that one cannot routinely use an RDD to identify the causal effects of changes in corporate governance generated by shareholder votes. Received May 29, 2017; editorial decision August 21, 2018 by Editor Itay Goldstein. 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.

Mortgage Dollar Roll

10.1093/rfs/hhy117 ◽

2018 ◽

Vol 32 (8) ◽

pp. 2955-2996 ◽

Cited By ~ 3

Author(s):

Zhaogang Song ◽

Haoxiang Zhu

Keyword(s):

Web Site ◽

Risk Exposure ◽

Quantitative Easing ◽

Prepayment Risk ◽

Oxford University ◽

Editorial Decision ◽

Financing Strategy ◽

Published Paper ◽

Abstract Mortgage dollar roll, the most common financing strategy for agency MBS, differs from repo in that the returned collateral can differ from those received. Also, MBS ownership changes hands in the funding period. We show that dollar roll “specialness,” how much implied financing rates fall below MBS repo rates, (1) increases in the value of the cheapest-to-deliver option, (2) decreases in the leverage of primary dealers, (3) decreases in prepayment risk exposure during the financing period, and (4) decreases in MBS returns. The Federal Reserve’s dollar roll sales in quantitative easing operations are associated with lower specialness. Received February 3, 2016; editorial decision July 30, 2018 by Editor Itay Goldstein. 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.

Opportunistic Proposals by Union Shareholders

10.1093/rfs/hhy125 ◽

2018 ◽

Vol 32 (8) ◽

pp. 3215-3265 ◽

Cited By ~ 11

Author(s):

John G Matsusaka ◽

Oguzhan Ozbas ◽

Irene Yi

Keyword(s):

Executive Compensation ◽

Labor Unions ◽

Web Site ◽

Contract Negotiations ◽

Oxford University ◽

Editorial Decision ◽

Contract Expiration ◽

Published Paper ◽

Abstract This paper investigates whether labor unions use proposals opportunistically to influence contract negotiations. Our empirical strategy relies on the observation that proposals have higher bargaining-chip value in contract expiration years, when a new contract must be negotiated. We find that in contract expiration years compared with nonexpiration years, unions increase their proposal rate by one-fifth, particularly proposals concerning executive compensation. Union proposals made during expiration years are less likely to be supported by other shareholders or a leading proxy advisor; the market reacts negatively to union proposals in expiration years; and withdrawn union proposals are accompanied by higher wage settlements. Received March 14, 2017; editorial decision July 19, 2018 by Editor Wei Jiang. 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

Priority Spreading of Corporate Debt

10.1093/rfs/hhz045 ◽

2019 ◽

Vol 33 (1) ◽

pp. 261-308 ◽

Cited By ~ 3

Author(s):

Dominique C Badoer ◽

Evan Dudley ◽

Christopher M James

Keyword(s):

Web Site ◽

Corporate Debt ◽

Subordinated Debt ◽

Credit Quality ◽

Oxford University ◽

Asset Volatility ◽

Editorial Decision ◽

Published Paper ◽

Abstract Priority spreading refers to the practice of firms increasing their reliance on secured and subordinated debt and reducing their reliance on senior debt as their credit quality deteriorates. We argue that priority spreading occurs because security provides creditors with greater protection from dilution from other creditors than do covenants that prioritize payments. Consistent with this argument, we find that secured bank creditors are rarely diluted by junior creditors in distressed restructurings, whereas senior unsecured creditors are frequently diluted, exogenous increases in asset volatility result in greater priority spreading and yields on senior and subordinated bonds converge as asset volatility increases. Received January 22, 2018; editorial decision January 27, 2019 by Editor David Denis. 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.

Contingent Capital Trigger Effects: Evidence from Liability Management Exercises

The Review of Corporate Finance Studies ◽

10.1093/rcfs/cfz004 ◽

2019 ◽

Vol 8 (2) ◽

pp. 235-259 ◽

Cited By ~ 2

Author(s):

Boris Vallée

Keyword(s):

Time Series ◽

Cross Section ◽

Web Site ◽

Regulatory Capital ◽

Oxford University ◽

Contingent Capital ◽

Liability Management ◽

Editorial Decision ◽

Debt Holders ◽

Published Paper

AbstractThis paper studies liability management exercises (LME) by banks, which have comparable regulatory capital effects than contingent capital triggers. LMEs are concentrated on low capitalization situations, both in the cross-section and in the time series and are frequently associated with equity issuances. These exercises prove effective at improving bank capitalization levels. The market reaction to LMEs is positive and mostly accrues to debt holders. These findings strengthen the case for innovative liabilities securities as a tool to improve bank resilience.Received February 8, 2019; editorial decision May 16, 2019 by Editor Andrew Ellul. 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.

Auto Credit and the 2005 Bankruptcy Reform: The Impact of Eliminating Cramdowns

10.1093/rfs/hhz039 ◽

2019 ◽

Vol 32 (12) ◽

pp. 4734-4766 ◽

Cited By ~ 2

Author(s):

Rajashri Chakrabarti ◽

Nathaniel Pattison

Keyword(s):

Interest Rates ◽

Strong Evidence ◽

Web Site ◽

Causal Effect ◽

Oxford University ◽

Editorial Decision ◽

Historical Variation ◽

The Impact ◽

Published Paper ◽

Rule Out

Abstract Auto lenders were perhaps the biggest winners of the 2005 Bankruptcy Reform, as Chapter 13 bankruptcy filers can no longer “cramdown” the amount owed on recent auto loans. We estimate the causal effect of this anticramdown provision on the price and quantity of auto credit. Exploiting historical variation in states’ usage of Chapter 13 bankruptcy, we find strong evidence that eliminating cramdowns decreased interest rates and some evidence that loan sizes increased among subprime borrowers. The decline in interest rates is persistent and is robust to a battery of sensitivity checks. We rule out other reform changes as possible causes. Received September 29, 2016; editorial decision January 15, 2019 by Editor Philip Strahan. 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.

Countercyclical Bank Equity Issuance

10.1093/rfs/hhaa008 ◽

2020 ◽

Vol 33 (9) ◽

pp. 4186-4230 ◽

Cited By ~ 5

Author(s):

Matthew Baron

Keyword(s):

Financial Distress ◽

Commercial Banks ◽

Web Site ◽

Market Discipline ◽

Equity Issuance ◽

Oxford University ◽

Bank Equity ◽

Published Paper ◽

Abstract Over the period 1980–2012, large U.S. commercial banks raise and retain less equity during credit expansions, which amplifies their leverage. The decrease in equity issuance is large relative to subsequent banking losses. I consider a variety of explanations for why banks resist raising equity and find evidence consistent with the diminishment of creditor market discipline due to government guarantees. I test this explanation by analyzing the removal of government guarantees to German Landesbank creditors and find that creditor market discipline and equity issuance increase. These findings help explain why banks resist raising equity, making financial distress more likely. 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.

Resiliency and Stock Returns

10.1093/rfs/hhz048 ◽

2019 ◽

Vol 33 (2) ◽

pp. 747-782

Author(s):

Jian Hua ◽

Lin Peng ◽

Robert A Schwartz ◽

Nazli Sila Alan

Keyword(s):

Stock Returns ◽

Web Site ◽

Trading Volume ◽

Expected Returns ◽

Control Variables ◽

Oxford University ◽

And Control ◽

Published Paper ◽

Extensive List ◽

Abstract We present resiliency as a measure of liquidity and assess its relationship to expected returns. We establish a covariance-based measure, RES, that captures opening period resiliency, and use it to find a significant nonresiliency premium that ranges from 33 to 57 basis points per month. The premium persists after accounting for an extensive list of other liquidity-related measures and control variables. The results are significant for both value-weighted and equal-weighted returns, when micro-cap stocks are excluded, and for a sample of large cap stocks. The premium is particularly pronounced when trading volume is high. 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.