Mutual Fund Trading Pressure: Firm-Level Stock Price Impact and Timing of SEOs

We use price pressure resulting from purchases by mutual funds with large capital inflows to identify overvalued equity. This is a relatively exogenous overvaluation indicator as it is associated with who is buying—buyers with excess liquidity—rather than what is being purchased. We document substantial stock price impact associated with purchases by high-inflow mutual funds, and find the probability of a seasoned equity offering (SEO), insider sales, and the probability of a stock-based acquisition increase significantly in the four quarters following the mutual fund buying pressure. These results provide new evidence that firm managers are able to identify and exploit overvalued equity

Naturally Occurring Mentorship in a National Sample of First-Generation College Goers: A Promising Portal for Academic and Developmental Success.

Attending college is increasingly important to compete in this global world; however, young people whose parents did not attend college are significantly less likely to enroll in and finish college. Formal programs to support first-generation college goers are common, but not scalable to provide support to all young people who need it. Instead, mentoring that naturally occurs on these students\u27 journeys into and out of college may be a more practical avenue for supporting their success. This study investigated the role community members, relatives, and educators play in first-generation college goers\u27 educational outcomes. Data from 4,181 participants of the National Longitudinal Study of Adolescent and Adult Health were used to test differences in supports received between first-generation, continuing-generation, and non-college goers. Results demonstrated that mentorship in adolescence moderated the relationship between parental college attendance and educational attainment in adulthood. Next, findings suggested that first-generation students received less support for identity development from their mentors than continuing-generation students. This study has program implications for facilitating college attendance and fostering the development and success of first-generation students. Moreover, this project continues to concretize an emerging taxonomy of mentoring functions for youth and emerging adults

Aggregate dividends and consumption smoothing

We show that net equity payouts from the corporate sector play a crucial role in helping individuals manage their consumption path across the business cycle. In particular, we show that, as investors' desire to smooth consumption increases, optimal aggregate dividends become both more volatile and more counter-cyclical to help counterbalance pro-cyclical labor income. These findings are robust to whether or not agency conflicts exist in the economy

Pecking order theory versus trade-off theory : are service SMEs’ capital structure decisions different?

This paper seeks to analyse if the capital structure decisions of service small and medium-sized enterprises (SMEs) are different from those of other types of firm. To do so, we consider four research samples: (i) 610 service SMEs; (ii) 126 service large firms; (iii) 679 manufacturing and construction SMEs; and (iv) 132 manufacturing and construction large firms. Using the two-step estimation method, the empirical evidence obtained in this study shows that the capital structure decisions of service SMEs are different from those of other types of firm. Service SMEs’ capital structure decisions are closer to the assumptions of Pecking Order Theory and further removed from those of Trade-Off Theory compared with the case of other types of firm

REIT Capital Structure Choices: Preparation Matters

Sun, Titman and Twite find that capital structure risks, namely, high leverage and a high share of short-term debt, reduced the cumulative total return of U.S. REITs in the 2007–2009 financial crisis. We find that mitigating capital structure risks ahead of the crisis by reducing leverage and extending debt maturity in 2006 was associated with a significantly higher cumulative total return 2007–2009, after controlling for the levels of those variables at the start of the financial crisis. We further identify two systematic cross-sectional differences between those REITs that reduced capital structure risks prior to the financial crisis and those that did not: the exposure to capital structure risks and the strength of corporate governance. On balance, our findings are consistent with the interpretation of risk-reducing adjustments to capital structure ahead of the crisis as a component of managerial skill and discipline with significant implications for firm value during the crisis.Andrey Pavlov acknowledges financial support from the Social Science and Humanities Research Council of Canada. Eva Steiner acknowledges support from the Cambridge Endowment for Research in Finance. Susan Wachter acknowledges financial support from the Zell Lurie Real Estate Center at the Wharton School of the University of Pennsylvania