138 records from EconBiz based on author Name

1. Busy Analysts and Firm Monitoring

abstract

Consistent with the view that “busy” analysts face time and effort constraints in monitoring firms, we find that higher busyness lowers firm valuation. The underlying mechanisms include lower operating performance, higher cost of capital, greater earnings management, excessive CEO compensation, and lower institutional ownership. These effects are less pronounced for larger firms and when analysts have greater experience covering the firm/industry. Our inferences are supported by a novel experimental design based on shocks to analyst busyness from broker mergers. These results suggest that analyst monitoring relies not only on the level of analyst coverage, but also on its quality

Kini, Omesh; Rebello, Michael J.; Tyagi, Ashutosh;
2020
Availability: Link Link

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2. Distressed Firm Restructurings and Hedge Funds with Expertise : Saviors or Vultures?

abstract

We model restructuring when hedge funds with expertise in navigating distress intervene. Whether hedge funds help distressed firms or act like vultures are two sides of the same coin. Interventions help when firm prospects are bright and assets are not easily redeploy-able. Interventions are vulture like when bankruptcy is costly and fire sale conditions prevail in the market for distressed assets. Positive outcomes are more likely when funds intervene by acquiring equity though acquiring debt is more likely. These effects are the result of systematic changes in expectations and strategies of firms' other claimants in response to hedge fund intervention

Baranchuk, Nina; Rebello, Michael J.;
2020
Availability: Link Link

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3. Composition of Cash Flow Shocks, Firm Investment, and Cash Holdings

abstract

We empirically examine the effect of exposure to temporary and persistent cash flow shocks on firm investment and its link with cash holdings. Theoretical models demonstrate that an expectation channel drives a wedge between the investment effects of temporary and persistent cash flow shocks, and the channel is stronger for firms with more prominent persistent shocks. We identify temporary and persistent cash flow shocks for individual firms using filtering methods and find strong evidence of the expectation channel as well as the predicted cross-sectional variation in its strength. Our results underscore the importance of distinguishing between persistent and temporary cash flow shocks in the analyses of corporate policies

Byun, Seong K.; Polkovnichenko, Valery; Rebello, Michael J.;
2019
Availability: Link Link
Citations: 4 (based on OpenCitations) Cited By

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4. The Long and Short of Cash Flow Shocks and Debt Financing

abstract

We investigate how debt financing responds to exposure to long-lived and temporary cash flow shocks. We identify these shocks using filtering methods that we demonstrate are highly effective for corporate finance data using Monte-Carlo simulations. The long-lived and temporary shocks we identify for our sample of US firms have distinct economic roots. Consistent with predictions from theoretical models, we find that firms with higher relative exposure to long-lived cash flow shocks maintain higher leverage. Firms also issue more debt following cash flow increases arising from long-lived as opposed to temporary shocks. This link between cash flow shocks and debt financing is economically large and long-lived. It is primarily driven by profitable firms and stronger among less financially constrained firms

Byun, Seong K.; Polkovnichenko, Valery; Rebello, Michael J.;
2019
Availability: Link Link
Citations: 2 (based on OpenCitations) Cited By

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5. Horses for Courses : Fund Managers and Organizational Structures

abstract

This paper considers the team management of mutual funds, fund manager ability, performance, and holdings. We find evidence suggesting there is a positive relation between performance and team management concurrent with a negative relation between managerial ability and the use of team management. Consistent with the notion that the team management suppresses portfolio eccentricity and leads to more generic trading strategies, thereby both increasing returns and making returns less informative of fund manager ability, we also find that team management is associated with less idiosyncratic portfolio holdings and a greater loading on large capitalization, low book-to-market, and momentum stocks

Han, Yufeng; Noe, Thomas H.; Rebello, Michael J.;
2019
Availability: Link Link
Citations: 3 (based on OpenCitations) Cited By

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6. Ownership Structure, Reputation Crises and Recovery : Theory and Experiment

abstract

We model the repair of damaged corporate reputations through organizational structure reform. In a rational-choice framework our model explains the effects of the emergence and growth of the professional reputation-crisis management industry. The model produces two key conclusions: (a) Although, ex post, reputation repair can increase firm value, ex ante, the option to repair reputation dilutes the incentive to maintain reputation. (b) Separating ownership and control by delegating management to professionals can ameliorate this dilution. An experimental implementation of the model supports these conclusions and shows that they are robust to behavioral deviations from rational-choice behavior

Noe, Thomas H.; Rebello, Michael J.; Rietz, Thomas;
2018
Availability: Link Link

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7. Information, Competition, and Investment Sensitivity to Peer Stock Prices

abstract

We examine the response of investment to peers' stock prices. While the response to average peer-Q is typically positive, the response to prices of peer firms that are more threatening and those of industry leaders is reliably negative. The responses are more strongly negative when the prices contain more firm-specific information. We also show that different measures of peer price informativeness can capture either positive or negative investment signals. Thus, the response to peer prices varies with industry competition and whether the prices reflect firm-specific or industry information, clouding the traditional interpretation of variation in the responses to peers prices

Ozoguz, Arzu; Rebello, Michael J.; Wardlaw, Malcolm;
2018
Availability: Link Link
Citations: 4 (based on OpenCitations) Cited By

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8. Spillovers from good-news and other bankruptcies : real effects and price responses

Baranchuk, Nina; Rebello, Michael J.;
2018
Type: Aufsatz in Zeitschrift; Article in journal;
Availability: Link
Citations: 7 (based on OpenCitations) Cited By

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9. The Separation of Firm Ownership and Management : A Reputational Perspective

abstract

We examine the effect of ownership and governance structures on what is arguably a firm's most valuable asset: its reputation. We model reputations based on alterable organizational and structural firm characteristics rather than the personal characteristics of the management team. We show that, in some cases, delegated “professional” management combined with outside shareholder governance supports reputable firm behavior even when owner management cannot. The option to reform after a reputation is damaged further increases the advantage of delegated management because the reform option reduces the ability of owner managers to commit ex ante to reputable behavior

Noe, Thomas H.; Rebello, Michael J.; Rietz, Thomas;
2015
Availability: Link Link

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10. Sell-Side Analyst Research and Stock Comovement

abstract

We document that a stock's price around a recommendation or forecast covaries with prices of other stocks the issuing analyst covers. The effect of shared analyst coverage on stock price comovement extends beyond analyst activity days. A stock's daily returns covary with the returns of other stocks with which it shares analyst coverage. These links between stock price comovement and shared analyst coverage are consistent with the coverage-specific information we find in earnings forecasts; analysts who cover both stocks in a pair expect future earnings of the stocks to be more highly correlated than do analysts who cover only one stock from the pair. Collectively, our evidence indicates that analyst research produces coverage-specific spillovers that raise price comovement among stocks that share analyst coverage. The strength of these spillovers is comparable to spillovers from broad industry and market information in analyst research

Muslu, Volkan; Rebello, Michael J.; Xu, Yexiao;
2014
Availability: Link Link

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