The Sustainability Arbitrage Problem and Regulation of Private Companies 

The climate crisis presents a challenge of unprecedented scale for policymakers around the globe. Unsurprisingly, corporate governance has drawn considerable attention in this context from scholars and regulators alike. This has resulted in an abundance of policy proposals—some already implemented and others still being debated—to ensure that corporations play their part as the world transitions […]

Does Auditor Litigation Risk Affect Corporate Investments? 

To what extent can the risk of litigation against auditors be beneficial or harmful to companies? Auditors play an important role in financial contracting by certifying the credibility and reliability of financial statements that third parties rely upon. Increased risk of liability claims against auditors by third parties could result in huge financial costs and […]

Regulating Sustainability Risk and Sustainable Investments in Europe

The emergence of EU sustainable finance policy is a product of a new world reality characterized by increasingly degrading environmental and social conditions on one hand,[1] and deeper awareness of the substantial damage to people and property that flows from these phenomena on the other.[2] Sustainable finance policy provides critical solutions to these serious problems by improving the […]

Sustainability or Greenwashing: Evidence from the Asset Market for Industrial Pollution

In response to increasing pressures from activists, regulators, and governments, firms are accelerating the divestment of polluting assets. While this trend reflects mounting concerns about climate change, a natural question is how effective these divestments are in reducing pollution. On the one hand, Environmental, Social, and Governance (ESG) supporters can point to successful pressures that […]

State Ownership and Corporate Leverage around the World

Corporate indebtedness has risen sharply in the wake of the global financial crisis as low interest rates enticed many firms to issue bonds and borrow from banks. This debt surge occurred in developed countries and emerging markets alike. As a result, the total debt of non-financial companies increased from 84 percent of global GDP in […]

Decentralized Finance, Crypto Funds, and Value Creation in Tokenized Firms

Decentralized fundraising through Initial Coin Offerings (ICOs) for early-stage ventures is one important new business model that has only become viable through blockchain technology and smart contracts. Utility tokens, voucher-like assets providing access to a service or product that a venture promises to provide in the future, are generally considered as perfectly disintermediated peer-to-peer transactions, […]

Corporate Hedging, Family Firms, and CEO Identity  

Hedging marketable risks is a strategic corporate decision. Locking in interest rates, exchange rates, and commodity prices allows the firm’s expected cash flows and margins to be protected against unexpected changes in these variables. For example, firms that strategically hedged against severe energy price changes are now relatively shielded from surging prices. Most empirical studies […]

Cheap Stock Options: Antecedents and Outcomes

Between August and February of 2011, Pandora Media granted over six million stock options, each with an exercise price of $3.14. Pandora stated this exercise price was greater than or equal to the fair market value of its common stock. Five months later, on June 14, 2011, Pandora completed its initial public offering (IPO), issuing […]

How do Consumers Respond to Corporate Bankruptcy?

Firms rely extensively on debt financing. While debt has many benefits, value can be destroyed when lenders worry they will not be repaid. For example, a firm at risk of liquidating may lose customers who derive utility from future interactions with a stable business. Likewise, a firm may be perceived by consumers as having low […]

A Critical Analysis of the SEC’s Reaction to Crypto Lending 

For the past several years, investors around the world who are interested in owning and holding certain cryptoassets for the long term have had the opportunity to deposit their assets with various companies and protocols and earn interest. One such company is CoinLoan, based in Europe and regulated under applicable EU financial law. It offers […]