Leveraging the exogenous surge in anti-Asian racial animus during the COVID-19 pandemic, we examine its effects on analysts' forecasting behavior. We find that Asian financial analysts become less bold in their forecasts, particularly among those most sensitive to career concerns. Consistent with the evidence that heightened anti-Asian sentiment adversely affects mental health and psychological well-being, their forecasts become more pessimistic as well. Moreover, the market responds less strongly to revisions issued by Asian financial analysts, particularly for upward revisions. These findings suggest that racial animus influences not only analysts' forecasting decisions but also the extent to which their information is incorporated into stock prices, with potential implications for market efficiency.
ABSTRACT We examine whether employee‐based assessments of CEO quality convey value‐relevant information to debt markets. Using over half a million Glassdoor employee reviews from 2012 to 2018, matched to corporate bond issuance data for US firms, we study the relation between employee approval of CEOs and firms’ credit ratings and borrowing costs. We find that higher CEO approval predicts higher bond credit ratings and significantly lower at‐issue yield spreads, with the strongest formal cross‐sectional evidence among speculative‐grade issuers and directionally consistent evidence among smaller and highly leveraged issuers. The bond‐spread relation remains significant after controlling for firm and bond characteristics, firm fixed effects, and overall employee satisfaction, and we provide complementary evidence using orthogonalized CEO approval, instrumental variables, and change regressions. We further show that CEO approval mitigates increases in debt financing costs during the COVID‐19 crisis. Overall, our findings indicate that employee assessments of top executives provide incremental, priced information about firm risk that is incorporated into credit market outcomes.
ABSTRACT This study examines how labor protection affects the dynamics of corporate cash policy. Using the staggered adoption of U.S. state‐level wrongful discharge laws, we find that stronger labor protection reduces the speed of cash adjustment by 16.7%. The effect is asymmetric, concentrated among cash‐rich firms, and more pronounced for firms with weak governance, tighter financial constraints, and higher distress risk. We also find that the profitability losses associated with suboptimal cash holdings intensify following adoption. Our findings show that labor protection affects how efficiently firms manage cash, revealing a distinct channel that is less visible when studying cash levels alone.
ABSTRACT We examine how salient chemical spill incidents influence mutual fund portfolio allocations. Using a sample of 36 major chemical spills between 2000 and 2019, we find that funds located in the same designated market area as a spill increase their portfolio ESG scores in the year following the incident, primarily by divesting from low‐ESG firms. This response is particularly pronounced for funds with a higher share of socially responsible investors and for funds located in Democratic‐leaning counties and regions with stronger pro‐environmental attitudes. These patterns indicate that social and reputational considerations significantly shape fund managers’ portfolio responses to local environmental shocks.
This paper investigates whether financial statement comparability influences corporate debt choice (i.e., the use of public and bank debt). Using a panel of U.S.-listed companies from 2001 to 2018, our sample comprises 14,872 firm-year observations representing 2412 firms. We find that firms with higher financial statement comparability rely more on public debt financing than on bank debt. This finding remains robust after conducting a series of endogeneity tests and robustness analyses. In the cross-sectional heterogeneity analyses, we observe that our documented relationship between comparability and public debt financing is more conspicuous for firms facing greater information asymmetries and higher financing constraints. Overall, our study suggests that financial statement comparability has important implications for corporate debt choice.
