Climate Change Concerns and Information Spillovers from Socially-connected Friends
Maximilian Mayer
IWH Discussion Papers,
Nr. 2,
2023
Abstract
This paper studies the role of social connections in shaping individuals’ concerns about climate change. I combine granular climate data, region-level social network data and survey responses for 24 European countries in order to document large information spillovers. Individuals become more concerned about climate change when their geographically distant friends living in sociallyconnected regions have experienced large increases in temperatures since 1990. Exploring the heterogeneity of the spillover effects, I uncover that the learning via social networks plays a central role. Further, results illustrate the important role of social values and economic preferences for understanding how information spillovers affect individual concerns.
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The Geography of Information: Evidence from the Public Debt Market
Bill Francis, Iftekhar Hasan, Maya Waisman
Journal of Economic Geography,
Nr. 1,
2023
Abstract
nWe investigate the link between the spatial concentration of firms in large, central metropolitans (i.e. urban agglomeration) and the cost of public corporate debt. Looking at bond issues over the period 1985–2014, we find that bonds issued by companies headquartered in urban agglomerates have lower at-issue yield spreads than bonds issued by firms based in remote, sparsely populated areas. Measures of the count of institutional bondholders in a firm’s vicinity confirm that the spatial cross-sectional variation in bond spreads is driven by the proximity of metropolitan firms to large concentrations of institutional investors. Our results are robust to controls for firm productivity and governance, analyst following, and exogenous shocks to institutional investor attention. The effect of headquarters location on bond spreads is especially pronounced for more difficult to value, speculative-grade bonds, bonds issued by smaller, less visible firms and bonds issued without protective covenants. Overall, we provide evidence that the geographical distribution of firms and investors generates a corresponding distribution of value-relevant, firm-level information that affects its cost of capital.
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Ein neues Instrument für die Prognose der Wirtschaftsaktivität in Deutschland: der PRIMA-Indikator
Katja Heinisch, Axel Lindner
Wirtschaft im Wandel,
Nr. 4,
2022
Abstract
Umfragen zur Einschätzung der wirtschaftlichen Lage sind wichtige Instrumente für die Erstellung von Konjunkturprognosen. Denn ein großer Teil des Wissens über den Zustand einer Wirtschaft liegt nicht gebündelt vor, sondern verteilt sich auf eine Vielzahl von Unternehmen und Haushalten. Allerdings werden die Antworten auf Umfragen auch von öffentlich verfügbaren Informationen beeinflusst, welche Prognostiker besser kennen und beurteilen können als private Haushalte. Im Folgenden wird ein Verfahren vorgeschlagen, mit dessen Hilfe die Einflüsse öffentlicher Informationen aus den privaten Umfrageergebnissen herausgefiltert werden können. Die Ergebnisse zeigen, dass Prognosen der deutschen Konjunktur mit Hilfe eines so erstellten Frühindikators verbessert werden können.
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Where to Go? High-skilled Individuals’ Regional Preferences
Sabrina Jeworrek, Matthias Brachert
IWH Discussion Papers,
Nr. 27,
2022
Abstract
We conduct a discrete choice experiment to investigate how the location of a firm in a rural or urban region affects job attractiveness and contributes to the spatial sorting of university students and graduates. We characterize the attractiveness of a location based on several dimensions (social life, public infrastructure, connectivity) and combine this information with an urban or rural attribution. We also vary job design as well as contractual characteristics of the job. We find that job offers from companies in rural areas are generally considered less attractive. This is true regardless of the attractiveness of the region. The negative perception is particularly pronounced among persons with urban origin and singles. These persons rate job offers from rural regions significantly worse. In contrast, high-skilled individuals who originate from rural areas as well as individuals with partners and kids have no specific preference for jobs in urban or rural areas.
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10.11.2022 • 27/2022
Deutsche Industrie kann Gasverbrauch um ein Viertel senken ohne große Umsatzeinbußen
Eine kleine Minderheit von Produkten verursacht bei ihrer Herstellung einen Großteil des Gasverbrauchs der Industrie. Viele könnten relativ leicht durch Importe ersetzt werden, zeigt eine Analyse des Leibniz-Instituts für Wirtschaftsforschung Halle (IWH) für das Jahresgutachten der Wirtschaftsweisen. Ein Industriezweig ist besonders betroffen.
Steffen Müller
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Hedge Fund Activism and Internal Control Weaknesses
David Folsom, Iftekhar Hasan, Yinjie (Victor) Shen, Fuzhao Zhou
China Accounting and Finance Review,
Nr. 4,
2022
Abstract
Purpose: The aim of the paper is to investigate the associations between hedge fund activism and corporate internal control weaknesses.
Design/methodology/approach: In this paper, the authors identify hedge fund activism events using 13D filings and news search. After matching with internal control related information from Audit Analytics, the authors utilize ordinary least square (OLS) and propensity score matching (PSM) to analyze the data.
Findings: The authors find that after hedge fund activism, target firms report additional internal control weaknesses, and these identified internal control weaknesses are remediated in subsequent years, leading to better financial-reporting quality.
Originality/value: The findings indicate that both managers and activists have incentives to develop a stronger internal control environment after targeting.
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Measuring Market Expectations
Christiane Baumeister
Handbook of Economic Expectations,
November
2022
Abstract
Asset prices are a valuable source of information about financial market participants' expectations about key macroeconomic variables. However, the presence of time-varying risk premia requires an adjustment of market prices to obtain the market's rational assessment of future price and policy developments. This paper reviews empirical approaches for recovering market-based expectations. It starts by laying out the two canonical modeling frameworks that form the backbone for estimating risk premia and highlights the proliferation of risk pricing factors that result in a wide range of different asset-price-based expectation measures. It then describes a key methodological innovation to evaluate the empirical plausibility of risk premium estimates and to identify the most accurate market-based expectation measure. The usefulness of this general approach is illustrated for price expectations in the global oil market. Then, the paper provides an overview of the body of empirical evidence for monetary policy and inflation expectations with a special emphasis on market-specific characteristics that complicate the quest for the best possible market-based expectation measure. Finally, it discusses a number of economic applications where market expectations play a key role for evaluating economic models, guiding policy analysis, and deriving shock measures.
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The Effect of Firm Subsidies on Credit Markets
Aleksandr Kazakov, Michael Koetter, Mirko Titze, Lena Tonzer
IWH Discussion Papers,
Nr. 24,
2022
Abstract
We use project-level information for the largest regional economic development program in German history to study how government subsidies to firms affect credit markets. We identify credit market responses by considering both, bank lending and firm borrowing during 1998-2019. We find that subsidies lead to larger lending volumes without crowding out credit to non-subsidized firms. Banks that are more exposed to subsidized firms exhibit moderately higher credit risk though. Firm subsidies support lending especially when credit constraints are elevated during the years of the financial crisis.
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Capital Markets Union: Database of Directives and Regulations
Moritz Emlein, Eleonora Sfrappini, Lena Tonzer, Cristina Zgherea
IWH Technical Reports,
Nr. 2,
2022
Abstract
In 2015, the European Commission adopted the Capital Markets Union (CMU) action plan. The plan aims to deepen financial integration and harmonize international standards for investments within the European Union (EU) and it outlines several actions to be implemented in order to address twelve key priority areas. We assemble a database of the legislative acts that implement the CMU. The dataset includes a list of directives and regulations at the EU level with information on publication, entry into force, and transposition dates as well as brief descriptions. This information might be useful in empirical analyses assessing the effectiveness of components of the CMU.
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The Value of Firm Networks: A Natural Experiment on Board Connections
Ester Faia, Maximilian Mayer, Vincenzo Pezone
SAFE Working Papers,
Nr. 269,
2022
Abstract
We present causal evidence on the effect of boardroom networks on firm value and compensation policies. We exploit a ban on interlocking directorates of Italian financial and insurance companies as exogenous variation and show that firms that lose centrality in the network experience negative abnormal returns around the announcement date. The key driver of our results is the role of boardroom connections in reducing asymmetric information. The complementarities with the input-output and cross-ownership networks are consistent with this channel. Using hand-collected data, we also show that network centrality has a positive effect on directors’ compensation, providing evidence of rent sharing.
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