The unintended consequences of the launch of the single supervisory mechanism in Europe

The launch of the Single Supervisory Mechanism (SSM) was an historic event. Beginning in Nov. 2014, the most significant banks came under the direct supervision of the European Central Bank, while national supervisory authorities maintained direct supervision of the remaining banks. Thus, supervision is conducted on two levels, which could cause inconsistency problems. Did the behavior of the significant banks differ from that of the less significant banks during the SSM launch? We find that the significant banks reduced their lending activity more than the less significant banks did in order to shrink their balance sheets and increase their capitalization

Creative Corporate Culture and Innovation

We identify creative companies by means of a textual analysis that hinges on the competing values framework. We show that a creative corporate culture is an important driver of innovation, as measured by the number of patents as well as the patents’ importance as captured by patents’ citations and market values. A portfolio of creative companies earns significantly positive annual four-factor alphas. We quantify potential biases that could be induced by the omission of relevant variables by formally examining coefficient movements after inclusion of controls

DOES IT ALWAYS PAY TO PAY YOUR INVESTMENT BANKER? DISTRACTED ADVISORS AND THE PERFORMANCE OF SMALL M&A DEALS BEFORE AND AFTER THE FINANCIAL CRISIS

This paper provides new evidence on the role of financial advisors in M&As. We examine how the value added by financial advisors to small and medium M&A transactions changed after the financial crisis. We show that before the crisis financial advisors prioritised large deals at the expenses of small M&A transactions. The involvement in a very large and complex deal hindered the ability of financial advisors to create value for the smaller transactions they were also assisting. However, after the crisis, this effect disappears especially in deals advised by large investment banks which merged with large financial conglomerates in the wake of the financial crisis. Our findings suggest that the financial crisis, and the resulting reorganisation of the banking sector, substantially changed the business models of financial advisors in M&As