Financial Markets Articles, Research, & Case Studies on Financial Markets– HBS Working Knowledge financial markets articles
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Financial Markets Articles, Research, & Case Studies on Financial Markets– HBS Working Knowledge financial markets articles
How information is generated by market participants, shared, and incorporated into prices is one of the key questions for understanding how financial markets operate. This study finds that intermediaries play a large role in the acquisition and dissemination of private information, which they extract from order flow and, more generally, from interaction with clients.
The researcher studies firms’ use of disclosure to build investor confidence when they operate in a market where the institutions that support the supply of credible information are weak. The most comprehensive information windows that firms provide to the markets—in the form of their mandated annual and quarterly filings—have changed dramatically over time, becoming significantly longer and more complex. When firms break from their routine phrasing and content, this action contains rich information for future firm stock returns and outcomes. Investors’ biases and market outcomes affect each other in a two-way feedback loop. This study develops a model of a credit market feedback loop, finding that when investors become more bullish this can predict positive returns in the short run, even if expected returns become more negative at longer horizons. There is a connection between public sentiment about a company and how the market rewards its corporate social performance, according to George Serafeim. Is your company undervalued? Open for comment; 0 Comments. Despite the rise of alternative trading platforms, high-touch broker trading remains prominent in institutional equity markets. The authors analyze how fees, research, quality of execution, and information can help explain how execution decisions and preferences vary across investors. Since 1990, new stock exchanges geared toward fast-growing, entrepreneurial companies have proliferated around the world. This analysis shows that exchanges in countries with better shareholder protection allowed younger and less profitable companies to raise more capital. These markets alone cannot boost entrepreneurial activity but need enabling institutions. This study examines how reserve accumulation affects governments’ decisions to default. The analysis assumes that countries can accumulate reserves and borrow internationally using their own currency. Results suggest that the optimal level of international reserves is fairly large because their cost is mitigated by valuation-smoothing gains. The model matches some features of Brazil’s economic fluctuations. Since late 2008, central banks have been conducting monetary policy through two primary instruments: quantitative easing , in which they buy long-term government bonds and other long-term securities, and “forward guidance,” in which they guide market expectations about the path of future short rates. This paper analyzes the effects of forward guidance on both short rates and QE. Results show that forward guidance on QE tends to impact longer maturities than forward guidance on short rates, even when expectations about bond purchases by the central bank concern a shorter horizon than expectations about future short rates. This paper sheds new light on connections between financial markets and the macroeconomy. It shows that investors’ appetite for risk—revealed by common movements in the pricing of volatile securities—helps determine economic outcomes and real interest rates. Without the burden of student loan debt, people seek higher-paying careers, stabilize their finances, and contribute to the economy, says Marco Di Maggio. Open for comment; 0 Comments. It is clear that risk-taking by financial institutions is one of the main causes of financial crises and severe recessions. Yet we know relatively little about what gives rise to such risk-taking in the first place. This paper presents evidence that a focus on short-term stock prices induces publicly-traded banks to increase risk relative to privately-held banks. The findings provide support for the view that compensation schemes should require management to hold stock for longer periods to mitigate their incentives to pump up short-term earnings and the short-term stock price. Financial Markets Articles, Research, & Case Studies on Financial Markets– HBS Working Knowledge financial markets articles
Financial Markets Articles, Research, & Case Studies on Financial Markets– HBS Working Knowledge financial markets articles
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Subscribe on iTunes 07 Sep 2021 Cold Call Podcast How to Lead through a Merger: US Airways and American Airlines In February 2013, financial markets articles US Airways announced that it would merge with American Airlines to create the world’s largest airline. During the acquisition integration process, CEO Doug Parker had to determine how best to combine the two airlines’ core systems, operating processes, and leadership teams, as well as the appropriate scope and speed of strategic changes. Parker knew that his choices would send important signals to employees, customers, and competitors. Harvard Business School senior lecturer David Fubini discusses how Parker approached those decisions in the case, Merging American Airlines and US Airways.  Open for comment; 0 Comments. New research by Marco Di Maggio reveals stockbroker behavior that is probably illegal, definitely underregulated, and arguably influential in the day-to-day operations of the stock market. Open for comment; 0 Comments. The depth of the global financial crisis is becoming clearer day by day, says HBS professor Jim Heskett. Respondents to this month's column offered creative solutions, and by and large resisted the temptation to venture into the realm of ideology. Closed for comment; 0 Comments. In quarterly earnings calls with investors and analysts, some retail managers may underplay how their companies are actually performing, according to recent research by Kenneth Froot and colleagues. Open for comment; 0 Comments. This study by Kenneth A. Froot and colleagues show that managers’ departures from the Timely Disclosure Hypothesis—the notion that managers release through available announcement channels all of their then-current private information—may be sensitive to post-quarter private information managers have obtained. Managers may act through their stock trading to benefit from these departures. Recent empirical research in finance and economics has revived the idea that investor sentiment drives credit booms and busts. To explore the drivers of sentiment in credit markets, the authors model the two-way feedback between credit market sentiment and credit market outcomes. In their model the propagation of credit cycles is driven by the interplay between expectations and the refinancing nature of credit markets. Individuals face an increasingly complex menu of financial product choices. The shift from defined benefit to defined contribution pension plans, and the growing importance of private retirement accounts, require individuals to choose the amount they save, as well as the mix of assets in which they invest. Yet, participation in financial markets is far from universal in the United States. Moreover, researchers have only a limited understanding of what factors cause participation. Cole and Shastry use a very large dataset new to the literature in order to study the important determinants of financial market participation. They find that higher levels of education and cognitive ability cause increased participation—however, financial literacy education does not. Key concepts include: The relationship between education and savings is difficult to measure, because both are affected by many factors . This paper documents an important causal relationship between education and financial market participation. A set of financial literacy education programs, mandated by state governments, did not have an effect on individual savings decisions. It is imperative to conduct rigorous evaluations of financial literacy education programs to measure their efficacy. Closed for comment; 0 Comments. How does the equity market respond to the adoption of mandatory nonfinancial disclosure? Research by George Serafeim and colleagues. Filter Results : Arrow Down Arrow Up Popular Browse All Articles About Us Newsletter Sign-Up RSS Popular Browse All Articles About Us Newsletter Sign-Up RSS Financial Markets → New research on financial markets from Harvard Business School faculty on issues including the extent to which investor sentiment drives credit booms and busts, why retail executives underplay current performance to investors, and the effects of education, cognitive ability, and financial literacy on financial market participation. Page 1 of 21 Results → 29 Jun 2020 Working Paper Summaries Measuring the Perceived Liquidity of the Corporate Bond Market by Sergey Chernenko and Adi Sunderam The liquidity of corporate bond markets is crucial to their functioning. is stock market good for students