Insider trading may alleviate financing constraints by conveying value-relevant information to the market (the information effect) or may exacerbate financing constraints by impairing market liquidity and distorting insiders? incentives to disclose value-relevant information (the confidence effect).
We examine the significance of these two contrasting effects by investigating the link between insider trading and financing constraints as measured by the investment-cash flow sensitivity. We find that, overall insider trading exacerbates financing constraints; however the information effect dominates the confidence effect for insider purchases. Only trades by executive directors are significantly related to financing constraints.
This article argues that there is a fundamental mismatch between the nature of finance and current approaches to financial regulation. Today’s financial system is a dynamic and complex ecosystem. For these and other reasons, policy makers and...Read more
We argue that CEOs have diﬀerent attitudes toward the ﬁrm’s stakeholders and that these diﬀerences in attitudes aﬀect the ﬁrm’s decision making. We hypothesize that these diﬀerences stem from diﬀerences in political ideology: Liberal CEOs, as...Read more
We use a unique dataset to examine the link between ESG disclosure and quality through a cross-country comparison of disclosure requirements and stewardship codes. We find a strong relationship between the extent of ESG disclosure and the quality...Read more
The last decade has challenged the paradigm of the hedge fund industry as a unique performer. We identify three main factors that have affected the operation of hedge funds: competition from mutual funds, the market environment, and tighter...Read more