Common ownership and firm dividend policies

This paper examines the relationship between common owners and firm dividend policy. We find that dividend policies of firms newly added to an investor's portfolio evolve towards the dividend policies of the existing firms in this portfolio. This relationship is neither driven by owners targeting firms forecasted to change their dividend policies, nor by firms with a similar dividend strategy to the companies in the new investor's existing portfolio. Our results suggest that owners have a dividend policy style, and that their influence depends on the type of co-owner and the existing governance characteristics of the co-purchased firm

Non-Standard Errors

In statistics, samples are drawn from a population in a data-generating process (DGP). Standard errors measure the uncertainty in estimates of population parameters. In science, evidence is generated to test hypotheses in an evidence-generating process (EGP). We claim that EGP variation across researchers adds uncertainty: Non-standard errors (NSEs). We study NSEs by letting 164 teams test the same hypotheses on the same data. NSEs turn out to be sizable, but smaller for better reproducible or higher rated research. Adding peer-review stages reduces NSEs. We further find that this type of uncertainty is underestimated by participants

Trainspotting: Board appointments in private firms

There is little evidence of how the supply side of potential candidates affects board appointments in private firms. This column exploits the gradual introduction of high-speed and high-comfort train services in Italy to examine whether access to a larger pool of talent improves the match between a firm and its directors. Easier access to non-local directors increases positive assortative matching between directors and firms – high-quality firms improve their boards’ quality, while low-quality firms reduce the quality. Moreover, director quality is positively associated with firm growth and productivity, and negatively associated with the probability of default

The greater the volume, the greater the analyst

Are sell-side security analysts paid for turnover-generating research? Using hand-collected annual income data from tax records in Sweden for the 1997-2007-year period, I show that analysts’ compensations increase in the trading turnover that their recommendations generate. Analysts are paid 0.002 % of broker-trading volume, or approximately 1 % of broker's commission revenues. The findings empirically validate the previously assumed turnover-compensation link and estimate its magnitude. The results may have policy implications related to the Markets in Financial Instruments Directive

Short Selling Equity Exchange Traded Funds and Its Effect on Stock Market Liquidity

We examine short selling of equity exchange traded funds (ETFs) using the 2008 short-sale ban. Contrasting the previously documented contractions in bearish strategies during the ban, we find a significant increase in short sales of the largest, most liquid ETF, the S&P 500 Spider. We offer evidence suggesting this upsurge was driven primarily by investors circumventing the ban. We show that the ban’s detrimental effect on stock liquidity was around 30% less severe for the Spider’s constituents. Our results suggest that ETF shorts can substitute for short sales of individual stocks, thereby alleviating short-sale constraints’ adverse effect on liquidity