ABSTRACT This paper reexamines foundational liquidity factors in light of modern market dynamics, focusing on liquidity across thinly versus actively traded securities. Specifically, we explore whether the liquidity gap identified by the SEC is a byproduct of trading volume or a more complex response to evolving market factors such as market fragmentation, adverse selection, inventory costs, and competition. We find that modern liquidity components have asymmetric effects, with thinly traded securities facing significantly higher execution costs, latency, and temporal fragmentation compared to actively traded stocks. Market fragmentation, in particular, exacerbates these inefficiencies for low‐activity stocks, as liquidity becomes more fragmented and execution times increase. Furthermore, we show that competition among exchanges benefits high‐activity stocks but has a detrimental impact on the execution quality of low‐activity stocks, leading to larger quoted spreads and slower executions. Our findings suggest that liquidity disparities are not simply a function of trading volume but also reflect the impact of modern market dynamics. This has important implications for market design and regulatory policy, particularly for ensuring that thinly traded stocks are not unduly disadvantaged by fragmentation‐induced inefficiencies.

ABSTRACT Should measures of investment returns focus on representative or non‐representative investors? Should we consider only the magnitude of accumulated portfolio value relative to investment, or should we highlight the series of withdrawals to fund real activities that an investment can sustain? Should we ignore the importance of the time ordering of returns (distinct from the overall level), or should we consider “return sequence risk”? I argue herein that we should be thinking more about these issues, and in particular should be less focused on arithmetic means of short horizon returns, as employed in Sharpe ratios, alphas, and portfolio comparisons. I discuss some candidate methods, and highlight the need for expanded econometric tools to allow inference regarding alternative measures of returns.

ABSTRACT We place CEOs' formative experiences at the center of analyzing how firms respond to monetary policy. Specifically, we examine how early‐life exposure to natural disasters shapes CEOs’ investment behavior following monetary shocks. CEOs with exposure to moderate natural disasters during their formative years exhibit stronger risk‐taking tendencies: they invest more aggressively after expansionary shocks and cut back less during contractionary periods. These effects weaken when the exposure is to extreme disasters, leading to more conservative behavior. The patterns are especially pronounced in financially constrained firms and during periods of elevated monetary uncertainty. We also show that these behavioral predispositions have real consequences: the risk‐taking CEOs shaped by moderate exposure to natural disasters face a greater likelihood of forced turnover, suggesting that shareholders may perceive their decisions as excessively risky. This behavioral heterogeneity diminishes when monetary shocks are accompanied by FOMC press conferences, highlighting the role of clear communication in reducing uncertainty and standardizing firm responses.

ABSTRACT We study the relationship between analyst forecast dispersion, a proxy for the opacity of the information environment, and equity market quality surrounding FOMC announcements. Higher forecast dispersion is associated with changes in various market quality metrics. First, trading costs increase as reflected in wider bid‐ask spreads and elevated information asymmetry. Moreover, higher forecast dispersion is associated with heightened trading activity and less informationally efficient prices. Overall, our findings highlight the importance of the information environment during major news releases.

ABSTRACT Using environmental violations data of listed firms in China from 2011 to 2018, we examine the effect of public attention on corporate environmental violations. Our findings suggest that public attention to the environment in the city where a firm is located can reduce the probability and frequency of the firm's environmental violations. Furthermore, this effect is more salient for firms that contribute more to the economy and those in cities with higher economic pressure. We identify three potential mechanisms: public environmental participation, governments’ environmental governance, and firms’ environmental awareness. Additional tests show that firms located in areas with higher public environmental attention experience a larger stock price impact and higher financial constraint after committing environmental violations. Finally, public environmental attention has a spillover effect on firms in adjacent cities. This paper reveals a new determinant of corporate environmental violations and provides important implications for environmental governance.

ABSTRACT This study examines the impact of CFO gender on the use of relationship lending. Building on gender socialization theory, we hypothesize that female CFOs, driven by communal values and a focus on stakeholder balance, are more inclined to utilize relationship lending to reduce conflicts between creditors and investors. We find that firms with female CFOs exhibit stronger lending relationships, including higher relationship loan frequency and amounts. These findings are robust to various model specifications, including difference‐in‐differences and instrumental variable approaches. Additionally, female CFOs are more likely to maintain borrowing relationships with lenders even after transitioning to different firms, suggesting female CFOs maintain personal relations with lenders. Loan purpose analysis shows that female CFOs avoid using relationship loans for risky activities such as mergers and acquisitions, takeovers, or leveraged buyouts. Collectively, these findings provide new evidence of the role of gender in shaping corporate financial practices and decision‐making.

ABSTRACTThis paper investigates how resolution time affects firms under Chapter 11 protection. We find a robust negative association between a firm's resolution time and its probability of emergence, using several controls for endogeneity. The probability of emergence reduces by 0.4% for each month (or 4.8% per year) spent in bankruptcy. Firms filing during recessions have a lower likelihood of emergence. Conditional upon business cycles, the explanatory power of various determinants such as firm size, pre‐packaged or pre‐negotiated bankruptcy, and industry are found to be different. During economic recessions, firm size and pre‐packaged or pre‐negotiated filings have no significant impact on the probability of emergence.

Abstract During the 2010s, the number of community banks in the United States declined by almost one‐third. This paper provides evidence that the disappearance of community banks is related to the demand for economies of scale associated with technology investment. This paper documents that community banks with more technology investment are more likely to become acquisition targets. To address endogeneity concerns, this study employs an exact matching approach and an instrumental variable approach. Our study shows that the acquirer banks effectively attain economies of scale, demonstrated by enhanced operational efficiency. A rich battery of robustness checks confirms the results.

Abstract In this study, we rank each executive based on their job title and examine gender disparity among them. We find that female executives face a disadvantage in promotions within firms located in highly religious countries. This phenomenon is especially evident among lower‐ranked executives, whose promotions are more significantly influenced by cultural factors. Furthermore, our results remain intact when we adopt alternative specifications (e.g., propensity score matching, instrumental variable). This study unveils a hidden pullback of religiosity in restraining firms from advancing female leaders and has a broad implication that cultural dynamics surrounding a community can be very influential on corporate strategies and decisions.

Abstract The global financial crisis has raised new policy debates regarding the bank's size, especially among the largest banks. Using nonparametric, local‐linear methods, we provide new estimates of scope economies in cost, revenue, and profit for European commercial banks during 2000–2020. Our findings reveal that a substantial proportion of banks demonstrated economies of scope (EOS) annually: approximately 45% in cost, at least 61% in revenue, and no less than 67% in profit. These findings indicate that EOS may partly account for the sustained growth and expansion of European banks during this period.