What Moves the Stock and Bond Markets? A Variance Decomposition for Long-Term Asset Returns

This paper uses a vector autoregressive model to decompose excess stock and 10-year bond returns into changes in expectations of future stock dividends, inflation, short-term real interest rates, and excess stock and bond returns. In monthly postwar U.S. data, stock and bond returns are driven largely by news about future excess stock returns and inflation, respectively. Real interest rates have little impact on returns, although they do affect the short-term nominal interest rate and the slope of the term structure. These findings help to explain the low correlation between excess stock and bond returns.Economic

Look at Me Now: What Attracts U.S. Shareholders?

This paper investigates the underlying determinants of home bias using a comprehensive data set on U.S. investors' aggregate holdings of every foreign stock. Among those foreign stocks that are not listed on U.S. exchanges, which account for more than 96 percent of our usable data sample, we find that U.S. investors prefer firms with characteristics associated with greater information transparency, such as stronger home-country accounting standards. We document that a U.S. cross-listing is economically important, as U.S. ownership of a foreign firm roughly doubles upon cross-listing in the United States. We explore the cross-sectional variation in this "cross-listing effect" and find that the increase in U.S. investment is greatest for firms that are from weak accounting backgrounds and are otherwise informationally opaque, suggesting that the key effect of cross-listing is improvements in disclosure that are valued by U.S. investors. By contrast, cross-listing does not increase the appeal of stocks from countries with weak shareholder rights, suggesting that U.S. cross-listing cannot substitute for legal protections in the home country. Nor does the cross-listing effect appear to be driven simply by increased "familiarity"� with the stock or lowered cross-border transactions costs.

U.S. International Equity Investment

U.S. investors are the largest group of international equity investors in the world, but to date conclusive evidence on which types of foreign firms are able to attract U.S. investment is not available. Using a comprehensive dataset of all U.S. investment in foreign equities, we find that the single most important determinant of the amount of U.S. investment a foreign firm receives is whether the firm cross-lists on a U.S. exchange. Correcting for selection biases, cross-listing leads to a doubling (or more) in U.S. investment, an impact greater than all other factors combined. We also show that our firm-level analysis has implications for country-level studies, suggesting that research investigating equity investment patterns at the country-level should include cross-listing as an endogenous control variable. We describe easy-to-implement methods for including the importance of cross-listing at the country level.

The global biogeography of tree leaf form and habit

Understanding what controls global leaf type variation in trees is crucial for comprehending their role in terrestrial ecosystems, including carbon, water and nutrient dynamics. Yet our understanding of the factors influencing forest leaf types remains incomplete, leaving us uncertain about the global proportions of needle-leaved, broadleaved, evergreen and deciduous trees. To address these gaps, we conducted a global, ground-sourced assessment of forest leaf-type variation by integrating forest inventory data with comprehensive leaf form (broadleaf vs needle-leaf) and habit (evergreen vs deciduous) records. We found that global variation in leaf habit is primarily driven by isothermality and soil characteristics, while leaf form is predominantly driven by temperature. Given these relationships, we estimate that 38% of global tree individuals are needle-leaved evergreen, 29% are broadleaved evergreen, 27% are broadleaved deciduous and 5% are needle-leaved deciduous. The aboveground biomass distribution among these tree types is approximately 21% (126.4 Gt), 54% (335.7 Gt), 22% (136.2 Gt) and 3% (18.7 Gt), respectively. We further project that, depending on future emissions pathways, 17–34% of forested areas will experience climate conditions by the end of the century that currently support a different forest type, highlighting the intensification of climatic stress on existing forests. By quantifying the distribution of tree leaf types and their corresponding biomass, and identifying regions where climate change will exert greatest pressure on current leaf types, our results can help improve predictions of future terrestrial ecosystem functioning and carbon cycling

Integrated global assessment of the natural forest carbon potential

Forests are a substantial terrestrial carbon sink, but anthropogenic changes in land use and climate have considerably reduced the scale of this system 1. Remote-sensing estimates to quantify carbon losses from global forests 2–5 are characterized by considerable uncertainty and we lack a comprehensive ground-sourced evaluation to benchmark these estimates. Here we combine several ground-sourced 6 and satellite-derived approaches 2,7,8 to evaluate the scale of the global forest carbon potential outside agricultural and urban lands. Despite regional variation, the predictions demonstrated remarkable consistency at a global scale, with only a 12% difference between the ground-sourced and satellite-derived estimates. At present, global forest carbon storage is markedly under the natural potential, with a total deficit of 226 Gt (model range = 151–363 Gt) in areas with low human footprint. Most (61%, 139 Gt C) of this potential is in areas with existing forests, in which ecosystem protection can allow forests to recover to maturity. The remaining 39% (87 Gt C) of potential lies in regions in which forests have been removed or fragmented. Although forests cannot be a substitute for emissions reductions, our results support the idea 2,3,9 that the conservation, restoration and sustainable management of diverse forests offer valuable contributions to meeting global climate and biodiversity targets

Evenness mediates the global relationship between forest productivity and richness

1. Biodiversity is an important component of natural ecosystems, with higher species richness often correlating with an increase in ecosystem productivity. Yet, this relationship varies substantially across environments, typically becoming less pronounced at high levels of species richness. However, species richness alone cannot reflect all important properties of a community, including community evenness, which may mediate the relationship between biodiversity and productivity. If the evenness of a community correlates negatively with richness across forests globally, then a greater number of species may not always increase overall diversity and productivity of the system. Theoretical work and local empirical studies have shown that the effect of evenness on ecosystem functioning may be especially strong at high richness levels, yet the consistency of this remains untested at a global scale. 2. Here, we used a dataset of forests from across the globe, which includes composition, biomass accumulation and net primary productivity, to explore whether productivity correlates with community evenness and richness in a way that evenness appears to buffer the effect of richness. Specifically, we evaluated whether low levels of evenness in speciose communities correlate with the attenuation of the richness–productivity relationship. 3. We found that tree species richness and evenness are negatively correlated across forests globally, with highly speciose forests typically comprising a few dominant and many rare species. Furthermore, we found that the correlation between diversity and productivity changes with evenness: at low richness, uneven communities are more productive, while at high richness, even communities are more productive. 4. Synthesis. Collectively, these results demonstrate that evenness is an integral component of the relationship between biodiversity and productivity, and that the attenuating effect of richness on forest productivity might be partly explained by low evenness in speciose communities. Productivity generally increases with species richness, until reduced evenness limits the overall increases in community diversity. Our research suggests that evenness is a fundamental component of biodiversity–ecosystem function relationships, and is of critical importance for guiding conservation and sustainable ecosystem management decisions

The global biogeography of tree leaf form and habit

Understanding what controls global leaf type variation in trees is crucial for comprehending their role in terrestrial ecosystems, including carbon, water and nutrient dynamics. Yet our understanding of the factors influencing forest leaf types remains incomplete, leaving us uncertain about the global proportions of needle-leaved, broadleaved, evergreen and deciduous trees. To address these gaps, we conducted a global, ground-sourced assessment of forest leaf-type variation by integrating forest inventory data with comprehensive leaf form (broadleaf vs needle-leaf) and habit (evergreen vs deciduous) records. We found that global variation in leaf habit is primarily driven by isothermality and soil characteristics, while leaf form is predominantly driven by temperature. Given these relationships, we estimate that 38% of global tree individuals are needle-leaved evergreen, 29% are broadleaved evergreen, 27% are broadleaved deciduous and 5% are needle-leaved deciduous. The aboveground biomass distribution among these tree types is approximately 21% (126.4 Gt), 54% (335.7 Gt), 22% (136.2 Gt) and 3% (18.7 Gt), respectively. We further project that, depending on future emissions pathways, 17-34% of forested areas will experience climate conditions by the end of the century that currently support a different forest type, highlighting the intensification of climatic stress on existing forests. By quantifying the distribution of tree leaf types and their corresponding biomass, and identifying regions where climate change will exert greatest pressure on current leaf types, our results can help improve predictions of future terrestrial ecosystem functioning and carbon cycling