Does foreign portfolio investment reach small listed firms ?

Using a unique dataset, the author examines the impact of foreign portfolio investment on the capital issuance behavior of small listed firms. The author finds that foreign portfolio investment is associated with an increased probability of small firm security issuance in all nations, regardless of property rights development. Evidence suggests the mechanism by which this occurs is a freeing up of capital in domestic markets when large firms utilize the foreign investment directly. Debt levels in nations where property rights are more developed increase, suggesting that foreign portfolio investment may reach small firms through the banking channel as well as capital markets in these nations.Debt Markets,Access to Finance,Economic Theory&Research,Emerging Markets,Investment and Investment Climate

Taking the bad with the good : volatility of foreign portfolio investment and financial constraints of small firms

The author examines the impact of the volatility of foreign portfolio investment on the financial constraints of small firms. Using a dataset of over 195,000 firm-year observations across 53 countries, she examines the impact of foreign portfolio investment instability on capital issuance and firm growth across countries and firm characteristics, in particular size. After controlling for the endogeneity of foreign portfolio investment instability, as well as for firm-, industry-, and country-level characteristics such as GDP growth, as well as the levels of foreign portfolio and direct investment, the author finds that the volatility of foreign portfolio investment is only significantly associated with a decreased ability to issue publicly-traded securities for small firms in years when nations are considered less"creditworthy."The volatility of foreign portfolio investment only hinders the growth of small firms significantly in periods when nations are deemed less"creditworthy."These results underscore both the significance of a good financial system that minimizes capital flow volatility, as well as the influence of property rights and country creditworthiness to instill confidence in foreign investors.Investment and Investment Climate,Economic Theory&Research,Capital Flows,Financial Intermediation,Markets and Market Access

Stock Ownership of Federal Judges and its Impact on Corporations

This paper investigates whether and how litigant peer stock ownership by federal district judges affects characteristics of case outcomes for large corporate litigants. We find that industry-peer stock ownership by district judges is associated with the following outcomes for corporate litigants named in their assigned cases: 1) an increased likelihood of judgments for the corporate litigants, 2) a decrease in the amount received by the parties suing these corporate litigants, and 3) a decrease in the length of the litigation proceedings. The random assignment of district judges to cases provides exogenous variation in the judge stock ownership. We further identify the association outlined in our base results by examining appellate court reversals of district judgments, a triple difference analysis isolating large-stake investments, and outcomes in case types that should impact industries either cooperatively or competitively. Our results survive a falsification test as well as a battery of robustness tests. Our findings underscore the importance of mandates governing judge stock ownership, and more broadly, judge conflicts of interest