Do dividends signal future earnings in the Nordic stock markets?

We study the informational content of dividends on three Nordic civil law markets, where other simultaneous but blurring motives for dividends may be weaker. Using aggregate data on real earnings per share and payout ratios, long time series from 1969 to 2010, and methodologies which address problems of endogeneity, non-stationarity and autocorrelation (including a Vector Error Correction Model approach), we find evidence on dividend signaling in Nordic markets. However, we also find heterogeneity in the relationship between dividends and earnings on markets similar in many respects, suggesting that even small variations in the institutional surroundings may be important for the results

The effect of lock-ups on the suggested real estate portfolio weight

We test relative illiquidity, exemplified through a temporary lock-up, as a partial explanation for the gap between theoretical and empirical weights for real estate in a multi-asset portfolio. Since asset correlations are known to increase in bear markets, reducing their diversification benefits, the ex ante knowledge of a lock-up in an asset class offering diversification benefits in bull markets (Hung, Onayev and Tu, 2008) may reduce the optimal weight an investor wishes to put in it ex ante. Using the portfolio policies by Brandt and Santa-Clara (2006), and introducing a lock-up in line with de Roon, Guo and ter Horst (2009), we study the effects of a partial lock-up on the weight for REITs in a U.S. stock and bond portfolio. We find support for our prediction, in the form of lower weights for the illiquid asset once a lock-up is introduced

Heterogeneity in independent non-executive directors' attributes and risk-taking in large banks

The extant literature suggests that complex firms can benefit from independent non-executive director (INED) quality. To address the issue of INED quality, we look at heterogeneity in the independent non-executive directors' (INEDs') attributes and explore whether this is related to risk-taking behaviour in large banks. We gather novel, hand-collected, director-level data for approximately 2400 independent non-executive directors (INEDs) of 185 global large banks from 35 countries for the period of 2004–2016, concluding that heterogeneity in INEDs' gender, financial expertise, and board tenure all influence risk-taking behaviour. Employing several identification strategies, we show that the cause seems to be heterogeneity in the INEDs' attributes, as channelled through information asymmetry. We also find that heterogeneity in the INEDs' attributes significantly mitigates bank risk-taking in the post-2009 period. Our study contributes to the literature on both the benefits of INEDs and director heterogeneity