CBDC – How Dangerous is Programmability?

Among Central Bankers, the issuance of a Central Bank Digital Currency (CBDC) is a topic of great interest. The Bank for International Settlement (BIS) has recently published a report showing that many central banks are conducting research and experiments and a small number are already deploying pilot projects. Research projects have been set up by European Central Bank (ECB), […]

Corporate Investment and Stock Return Momentum

In their seminal study, Jegadeesh and Titman (1993) document the existence of the momentum effect in stock returns. Using data from 1965 to 1989, they show that when stocks are ranked in deciles based on their immediate past returns, the past winners (the best performing stocks in upper tenth decile) continue to outperform the past losers (the worst performing […]

Has Post-reorg Equity Outperformed in the Last Three Decades?

In the US, financially distressed firms use Chapter 11 of the Bankruptcy Code to restructure their liabilities and business operations under the supervision of the bankruptcy court. Many of the Chapter 11 firms successfully reorganize and emerge from bankruptcy. Upon emergence, they often cancel old equity interest and issue new stock (i.e., post-reorg equity) to […]

Digital Finance Platforms: Toward a New Regulatory Paradigm

The computers upon which we work all have operating systems that we generally ignore. We mainly deal with the apps that run on these systems. Email, ubiquitous as it is, is merely an app. Nothing works without the system in the background, and because it works so well, we tend to neglect it. The same […]


Special Purpose Acquisition Companies (SPACs) are simply enterprises that raise money from the public with the intention of purchasing an existing business and becoming publicly traded in the securities markets. If the SPAC is successful in raising money and the acquisition takes place, the target company takes the SPAC’s place on a stock exchange, in […]

Do Private Equity Funds Over-Lever Portfolio Companies?

Private Equity (PE) has become a vital component of the financial system. At the end of 2020, global assets under management in PE funds that execute leveraged buyouts (LBO) mushroomed to $2.6 trillion. Despite its role as a vital source of capital in private markets that can potentially lead to greater employment and shared prosperity, […]

The Supreme Court as a Source of Systemic Risk

Self-regulatory organizations (SROs) play an enormous role in financial markets. The Financial Industry Regulatory Authority (FINRA) oversees the brokerage industry, while the National Futures Association (NFA) covers the futures markets. Securities clearing firms, derivatives clearinghouses, the Municipal Securities Rulemaking Board (MSRB), and exchanges, such as the New York Stock Exchange (NYSE), are all SROs. Modern […]

The Effect of Shareholder Scrutiny on Corporate Tax Behavior: Evidence from Shareholder Tax Litigation

What are the causes and consequences of shareholder tax litigation? The annual frequency of shareholder tax litigation has nearly tripled in recent years, but little is known about why certain firms get targeted with this kind of litigation and how this litigation affects not only the sued firm but also its industry peers. Our recent paper examines […]

When Companies Don’t Die: Analyzing Zombie and Distressed Firms in a Low Interest Rate Environment

Last September, The Economist published an article titled “Why Covid-19 will make killing off zombie firms harder.” The article fueled an already widely debated topic and expresses general concerns that schemes put in place to help pandemic-stricken businesses to survive might exacerbate therise of the corporate undead. The ongoing crisis highlights the necessity of analyzing the ”zombification” phenomenon; a constellation in which public support schemes and bank lending activities could keep non-viable firms afloat for longer. There are several examples […]

Nature’s locus standi: Taking the Environment to Court

With institutions, both public and private, defining the functioning of major world economies, we have come a long way from the early days of industrialization to extensive urban development and technical advancement. In this developmental process, vital players in the economy seem to have neglected the importance of safeguarding the natural environment. Actions of individuals, […]