Residential Property Assessed Clean Energy (PACE) loans are a new class of financial contract whereby homeowners borrow to fund green residential projects and repay the loan via their local property tax payments. We assess equity-efficiency trade-offs of PACE using loan-level data from Florida merged to property transaction, tax, and permitting records. Consistent with the program's objectives, borrowers are more likely to obtain permits related to disaster-proofing homes, and loan takeup is concentrated in areas with higher ex ante and ex post natural hazard risk. Such investments are capitalized into home values, but expansions of the property tax base are partially offset by an uptick in tax delinquency rates among borrowers. Although PACE loans are super senior to other debt, lenders expand their provision of mortgage credit in PACE-enabled counties. Enabling PACE loans increases the fiscal income of participating local governments while closing the investment gap in projects which improve the climate resiliency of the housing stock.

We document that in the wake of the Supreme Court's Citizens United decision, which increased in the ability of the wealthy to finance political campaigns, the share of total electoral giving attributable to top 1% donors increased by 2.7 times. Further, we find that the voting by U.S. legislators became more responsive to the preferences of the wealthy post-Citizens United and less responsive to the preferences of the less affluent. The increase in legislators' alignment with the wealthy is most pronounced for the bills that deal with fiscal matters and for those bills on which the preferences of higher- and lower-income individuals diverge. Finally, it is the politicians who receive a larger share of their campaign funding from the top 1% donors that are more likely to shift their voting toward the preferences of the wealthy. Overall, our results highlight the importance of campaign finance in changing the nature of political representation in the United States.

Involuntarily green firms—those whose environmental performance increases after mandatory environmental regulations pass—try to lessen their compliance burden by donating to “traditionalist” politicians who frequently vote against recommendations by the League of Conservation Voters (LCV). To achieve this goal, involuntarily green firms target legislators staffing congressional committees overseeing the EPA or politicians with influence over local environmental agencies. Involuntarily green firms exhibit significantly higher market-adjusted abnormal stock returns when their supported politicians narrowly win congressional races. Moreover, a $1 gift by involuntarily green firms to traditionalist politicians is associated with a $900 market capitalization increase when LCV-opposed bills pass.

Institutional shareholders affected by hurricanes subsequently support environmental proposals in non-affected firms even if they never voted for similar initiatives. Affected shareholders raise their holdings in firms where their pro-climate votes are consequential. More voting support after hurricanes has real effects as environmental proposals endorsed by more hurricane-afflicted shareholders are more likely to pass. Moreover, upon passing environmental proposals, firms exhibit non-trivial decreases in their market capitalization and downgrades by equity analysts. Our evidence indicates that by changing shareholders’ perceptions of the risks faced by their portfolio firms, disruptive life events ultimately shape environmental activism, corporate policies, and firm performance.

This paper studies how corporate tax hikes transmit across countries through multinationals' internal networks of subsidiaries. We build a parsimonious multicountry model to highlight two opposing spillover effects: while tax competition between countries generates positive investment spillover, intra-firm production linkages predict negative spillover. Using subsidiary-level data and exogenous corporate tax hikes, we find that local business units cut investment by 0.5% for a 1% increase in foreign corporate tax. This result highlights the importance of production linkages in propagating foreign tax shocks, as the supply-chain-induced negative spillover dominates the positive spillover effect suggested by the conventional wisdom of tax competition.

Connected financial journalists—those with working relationships, common school ties, or social media connections to company management—introduce a marked media slant into their news coverage. Using a comprehensive set of newspaper articles covering M&A transactions from 1997 to 2016, I find that connected journalists use significantly fewer negative words in their coverage of connected acquirers. These journalists are also more likely to quote connected executives and include less accurate language in their reporting. Moreover, they tend to portray other firms in the same network in a less negative light. Journalists’ favoritism bias has implications for both capital market outcomes and their careers. I find that acquirers whose M&As are covered by connected journalists receive significantly higher stock returns on the news article publication date. However, these acquirers’ stock prices reverse in the long term, suggesting market overreaction to news covered by connected journalists. Around M&A transactions, connected articles are correlated with increased bid competition and deal premiums. In terms of future career development, connected journalists are more likely to leave journalism and join their associated industries in the long run. Taken together, the evidence suggests that financial journalists’ personal networks promote news bias that potentially hinders the efficient dissemination of information.

This research employs a difference-in-differences framework to study the impact of major board reforms on the performance of mergers and acquisitions (M&As). Using an international sample of board reforms implemented in 61 countries from 1985 to 2021, we document a drastic redistribution of wealth from target shareholders to acquirer shareholders after the board reforms in target countries. This effect is most pronounced in M&A transactions that involve the sale of controlling shares, thereby supporting the hypothesis that corporate board reforms mitigate the private benefits of control in the target firm. Furthermore, these reforms increase expected deal synergies, in that deal-level announcement returns are higher after the implementation of the reforms. When country-level institutional quality and legal protection of shareholders are greater, it reinforces the reform effects. Overall M&A activity remains unchanged following the reforms, yet financial bidders complete fewer transactions, implying a reform-induced squeeze-out of financial bidders from the M&A market in the target country. Collectively, these international results are consistent with the predictions of the private benefits of control theory and underscore the role of institutional quality and investor protection in reinforcing the effects of board reforms worldwide.

An assimilation bias occurs when people’s evaluative judgement is positively influenced by a previously observed signal. We study this effect by examining investors’ appraisal of M&A deals announced one day after other firms in the same 1-digit SIC as the merging parties release earnings surprises. Consistent with assimilation effects, acquirers’ M&A announcement stock return initially correlates with the previous day’s earnings surprises. This effect reverses after one week. Assimilation generates other distortions as more positive surprises are related to increases in bid competition, takeover premiums, and withdrawn M&As. Evidence from IPOs corroborates the presence of assimilation effects in financial markets.

This paper provides insights into the inner workings of internal corporate M&A teams using survey evidence from 65 firms from Austria, Germany, and Switzerland. We find that internal teams create value, especially relative to external advisors, by directing transaction rationales, screening targets, and employing performance metrics to assess post-merger success. Teams emphasizing economic rationales as a merger motive are associated with higher returns than those teams more apt to consider behavioral motives. We consider several team characteristics and find that financial experience is the most persistent and significant attribute in explaining the outcomes across various deal stages. Another key result from our survey-based evidence is that latent M&A team factors explain approximately 54% of the acquirer fixed effects in announcement return regressions.

Some bidders voluntarily announce a merger negotiation before the definitive agreement. We propose an “announce-to-signal” explanation to these early announcements: they allow bidders to signal to target shareholders high synergies so as to overcome negotiation frictions and improve success rates. Consistent with signaling, we show that negotiation frictions predict earlier announcements. Early announced transactions are associated with higher expected synergies, offer premium, completion rates, and public competition. Moreover, bidder announcement returns do not suggest overpayment and the existence of agency issues in these transactions. Taken collectively, our findings rule out alternative explanations such as managerial learning from investors and jump bidding.