We empirically investigate the role of country governance in the privatization of 113 government-owned banks from 1996 to 2007 across 39 countries. First, privatized banks tend to outperform non-privatized banks after the privatization, which is called the privatization effect. Second, we find...

This paper studies whether banks charge higher or lower interest rates on loans to firms with overconfident CEOs. It establishes a theoretical model to show the relationship between the loan rate and overconfidence of the borrowing firm's CEO. It also conducts empirical analyses to test the...

This paper studies whether banks charge higher or lower interest rates on loans to firms with overconfident CEOs. It establishes a theoretical model to show the relationship between the loan rate and overconfidence of the borrowing firm's CEO. It also conducts empirical analyses to test the...

Using a difference-in-differences approach, we show that relaxation of short-sale constraints helps to filter out low-quality borrowers from the bank loan market. Treated firms that can still borrow from banks enjoy a lower loan spread, compared with control firms without this sorting mechanism....

Post-issue stock underperformance is driven, at least in part, by the contemporary decline in idiosyncratic risk (proxied by idiosyncratic volatility) exposure for seasoned equity offerings (SEO) firms. As young firms dominate the SEO market, they generally face higher uncertainty of mean...

This paper investigates how bank CEO risk-taking incentives influence bank lending decisions. Consistent with the existing CEO incentive literature, we find that CEOs with higher risk-taking incentives (vega) tend to relax their lending standards in bank loan contracts to pursue higher...

This study investigates the effect of similarity in risk attitudes between lenders and borrowers on loan contracting. We find that when banks and lenders have similar risk attitudes they are more likely to sign loan contracts. Moreover, such contracts are associated with lower spreads, longer...

Over a period that includes the 1998 Russian crisis and 2007-2009 financial crisis, banks with overconfident chief executive officers (CEOs) were more likely to weaken lending standards and increase leverage than other banks in advance of a crisis, making them more vulnerable to the shock of the...

This paper examines whether labor unions affect the bank performance during recently financial crisis. The empirical evidence from 228 largest banks around the globe indicate that the buy-and-hold returns of unionized banks are higher and the default probabilities are lower during the crisis...

We show that firms with a skillful management team tend to disclose more accounting information than other comparable firms. We explore several channels to explain this finding. First, we find that investors treat the disclosure of skillful management team as more credible. In particular,...