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We propose a direct measure of abnormal institutional investor attention (AIA) using news searching and news reading activity for specific stocks on Bloomberg terminals. AIA is highly correlated with institutional trading measures and related to, but different from, other investor attention proxies. Contrasting AIA with retail attention measured by Google search activity, we find that institutional attention responds more quickly to major news events, leads retail attention, and facilitates permanent price adjustment. The well-documented price drifts following both earnings announcements and analyst recommendation changes are driven by announcements to which institutional investors fail to pay sufficient attention.

This paper documents \"runs\" on asset-backed commercial paper (ABCP) programs in 2007. We find that one-third of programs experienced a run within weeks of the onset of the ABCP crisis and that runs, as well as yields and maturities for new issues, were related to program-level and macro-financial risks. These findings are consistent with the asymmetric information framework used to explain banking panics, have implications for commercial paper investors' degree of risk intolerance, and inform empirical predictions of recent papers on dynamic coordination failures.

China is witnessing a growing trend towards financialization by the state. Drawing on the concept of state-led financialization, this study is the first to explore how the government-guided investment fund (GGIF) has evolved and spread throughout the country. The promotion policies and practices of the central government have laid the key foundation for the development of GGIFs, while local governments have quickly adopted this new financial tool, resulting in its widespread take up. State-owned enterprises are heavily involved in the operation of GGIFs, indicating that this market-oriented tool has largely failed to attract capital from the private sector. This study shows that state-led financialization in China has strengthened rather than weakened the influence of the state in the economy, which is not the case in most Western economies. However, the limitations and risks of the GGIF are also related to the dominant role of the state in GGIF operations.

In 2005, the Chinese government deployed a new financial instrument to accelerate technological catch-up: government guidance funds (GGFs). These are funds established by central and local governments partnering with private venture capital to invest in state-selected priority sectors. GGFs promise to significantly broaden capital access for high-tech ventures that normally struggle to secure funding. The aggregate numbers are impressive: by 2021, there were more than 1,800 GGFs, with an estimated target capital size of US$1.52 trillion. In practice, however, there are notable gaps between policy ambition and outcomes. Our analysis finds that realized capital fell significantly short of targets, particularly in non-coastal regions, and only 26 per cent of GGFs had met their target capital size by 2021. Several factors account for this policy implementation gap: the lack of quality private-sector partners and ventures, leadership turnover and the inherent difficulties in evaluating the performance of GGFs.

Examining a shock to the salience of the sustainability of the U.S. mutual fund market, we present causal evidence that investors marketwide value sustainability: being categorized as low sustainability resulted in net outflows of more than $12 billion while being categorized as high sustainability led to net inflows of more than $24 billion. Experimental evidence suggests that sustainability is viewed as positively predicting future performance, but we do not find evidence that high-sustainability funds outperform low-sustainability funds. The evidence is consistent with positive affect influencing expectations of sustainable fund performance and nonpecuniary motives influencing investment decisions.

We analyze the information content of a digital footprint—that is, information that users leave online simply by accessing or registering on a Web site—for predicting consumer default. We show that even simple, easily accessible variables from a digital footprint match the information content of credit bureau scores. A digital footprint complements rather than substitutes for credit bureau information and affects access to credit and reduces default rates. We discuss the implications for financial intermediaries’ business models, access to credit for the unbanked, and the behavior of consumers, firms, and regulators in the digital sphere.

The concept of risk is fundamental in various scientific fields, including physics, biology and engineering, and is crucial for the study of complex systems, especially financial markets. In our research, we introduce a novel risk model that has a natural transactional–financial interpretation. In our approach, the risk of holding a financial instrument is related to the measure of the possibility of its loss. In this context, a financial instrument is riskier the more opportunities there are to dispose of it, i.e., to sell it. We present a model of risk understood in this way, introducing, in particular, the concept of financial time and a financial frame of reference, which allows for associating risk with the subjective perception of the observer. The presented approach does not rely on statistical assumptions and is based on the transactional interpretation of models. To measure risk, we propose using the Radon transform. The financial concept of risk is closely related to the concepts of uncertainty, entropy, information, and error in physics. Therefore, the well-established algorithmic aspects of the computed tomography method can be effectively applied to the broader field of uncertainty analysis, which is one of the foundational elements of experimental physics.

Commercial paper is a short-term debt instrument issued by large corporations. The commercial paper market has long been viewed as a bastion of high liquidity and low risk. But twice during the financial crisis of 2007–2009, the commercial paper market nearly dried up and ceased being perceived as a safe haven. Major interventions by the Federal Reserve, including large outright purchases of commercial paper, were eventually used to support both issuers of and investors in commercial paper. We will offer an analysis of the commercial paper market during the financial crisis. First, we describe the institutional background of the commercial paper market. Second, we analyze the supply and demand sides of the market. Third, we examine the most important developments during the crisis of 2007–2009. Last, we discuss three explanations of the decline in the commercial paper market: substitution to alternative sources of financing by commercial paper issuers, adverse selection, and institutional constraints among money market funds.

Hybrid financial instruments contain features of both liabilities and equity. Standard setters continue to struggle with \"getting the classification right\" for these complex instruments. In this paper, we experimentally test whether the features of hybrid instruments affect the credit-related judgments of experienced finance professionals, even when the hybrid instruments are already classified as liabilities or equity. Our results suggest that getting the classification right is not of primary importance for these experienced users, as they largely rely on the underlying features of the instrument to make their judgments. A second experiment shows that experienced users' reliance on features generalizes to several features that often characterize hybrid instruments. However, we also find that experienced users vary in their beliefs about which individual features are most important in distinguishing between liabilities and equity. Together, our results highlight the importance of effective disclosure of hybrid instruments' features.

Abstract This study aims to evaluate the relationship between the issuance of hybrid financial instruments by insurance firms and various potential determinants. Specifically, it investigates how factors such as asset size, cost of capital, duration gaps, effective tax rates, and liquidity and solvency ratios influence the propensity of insurers to issue hybrid bonds. Empirical research often overlooks financial firms such as insurance companies when examining hybrid securities, making it difficult to assess their motivations and decision-making processes. Our study aims to fill this gap. In November 2023, the International Accounting Standards Board (IASB) published the Exposure Draft Financial Instruments with Characteristics of Equity - Proposed Amendments to IAS 32 Financial Instruments. The board awaited comments and proposals on the text until the end of March 2024. Therefore, an in-depth study of its relationship with hybrid securities is timely. Our study aims to add new elements to the discussion on the capital structure of companies. The proposed amendment to IAS 32 will certainly influence companies' decisions regarding their capital structure. We applied a logit regression model using the panel data methodology to a dataset of 207 active insurers operating in 25 different countries (public companies). We constructed a database of several publicly traded international insurance companies located in different countries to assess their differences in terms of propensity to issue hybrid financial instruments. Our study reveals that the likelihood of issuing hybrid bonds increases for larger insurance firms with higher costs of capital and leverage, particularly in jurisdictions with significant duration gaps. These findings support the financial health/pecking order theory and contribute valuable insights to both the academic literature and industry practice. By examining the determinants of the issuance of hybrid financial instruments, this research provides a nuanced understanding of the decision-making processes within the insurance sector and fills a notable gap in empirical studies. Resumo Este estudo tem como objetivo avaliar a relação entre a emissão de instrumentos financeiros híbridos por empresas de seguros e vários potenciais determinantes. Especificamente, investigar de que modo fatores como tamanho do ativo, custo de capital, lacunas de duração, taxas de imposto efetivas e índices de liquidez e solvência influenciam a propensão das seguradoras a emitir títulos híbridos. A pesquisa empírica muitas vezes ignora empresas financeiras, como companhias de seguros, ao examinar títulos híbridos, tornando difícil avaliar suas motivações e processos de tomada de decisão. Nosso estudo visa preencher essa lacuna. Em novembro de 2023, o Conselho de Normas Internacionais de Contabilidade (IASB) publicou o Rascunho de Exposição Instrumentos Financeiros com Características de Patrimônio - Emendas Propostas ao IAS 32 Instrumentos Financeiros. O conselho aguardou comentários e propostas sobre o texto até o final de março de 2024. Portanto, um estudo aprofundado de sua relação com instrumentos híbridos é oportuno. Nosso estudo tem como objetivo adicionar novos elementos à discussão sobre a estrutura de capital das empresas. A proposta de emenda à IAS 32 certamente influenciará as decisões das empresas em relação à sua estrutura de capital. Aplicou-se um modelo de regressão logit utilizando a metodologia de dados em painel a um conjunto de dados de 207 seguradoras ativas operando em 25 países diferentes (empresas de capital aberto). Construímos um banco de dados de várias seguradoras internacionais de capital aberto localizadas em diferentes países para avaliar suas diferenças em termos de propensão a emitir instrumentos financeiros híbridos. Nosso estudo revela que a probabilidade de emissão de títulos híbridos aumenta para empresas de seguros maiores com custos de capital e alavancagem mais altos, particularmente em jurisdições com lacunas de duração significativas. Essas descobertas apoiam a teoria da saúde financeira/ordem de precedência e contribuem com valiosas percepções tanto para a literatura acadêmica quanto para a prática da indústria. Ao examinar os determinantes da emissão de instrumentos financeiros híbridos, esta pesquisa fornece uma compreensão sutil dos processos de tomada de decisão dentro do setor de seguros e preenche uma lacuna notável em estudos empíricos.