22 results on '"Stefano Rossi"'
Search Results
2. Credit Market Driven Acquisitions
- Author
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Huseyin Gulen, Candace Jens, and Stefano Rossi
- Subjects
History ,Polymers and Plastics ,Business and International Management ,Industrial and Manufacturing Engineering - Published
- 2022
3. Sol-Gel Derived Yellow Yin0.9fe0.1o3-Zno Pigments Showing Near Infra Red (Nir) Reflectance and Photocatalytic Activity
- Author
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Andrea Rosati, Michele Fedel, Francesco Parrino, Marcello Picollo, and Stefano Rossi
- Subjects
History ,Polymers and Plastics ,Business and International Management ,Industrial and Manufacturing Engineering - Published
- 2022
4. Should Shareholders Have a Say on Acquisitions?
- Author
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Stefano Rossi, Marco Becht, and Andrea Polo
- Subjects
Listing Rules ,Say on pay ,Shareholder voting ,Shareholder ,business.industry ,Corporate governance ,Significant difference ,Subject (philosophy) ,Accounting ,business - Abstract
Shareholders of U.S. corporations have lost billions of dollars in acquisitions they never approved. In the United Kingdom the listing rules give shareholders a binding say when targets are large relative to acquirers. A transatlantic comparison suggests that if U.S. shareholders had a say on acquisitions, they would incur fewer losses. There is a significant difference in the difference in performance between deals subject to a vote in the United Kingdom but not in the United States and deals with no mandatory vote in either country. The United States has given shareholders a mandatory say on pay; shareholders might also wish to have a binding say on corporate acquisitions.
- Published
- 2021
5. The Role of Lockups in Stock Mergers
- Author
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Yi Liu, Zhong Chen, and Stefano Rossi
- Subjects
History ,Polymers and Plastics ,Financial economics ,Mergers and acquisitions ,Business ,Business and International Management ,Industrial and Manufacturing Engineering ,Frequent use ,Stock (geology) ,Valuation (finance) - Abstract
We document the frequent use of stock lockup agreements in mergers and acquisitions (MA ex-ante, lockups adoption likelihood increases with acquirers’ valuation. Lockups also come with higher deal completion likelihood; shorter merger negotiations; higher long-term operating performance. We conclude the market interprets lockups as a signal of strong fundamentals, particularly when acquirers’ valuations are high.
- Published
- 2021
6. Insurance Companies and the Propagation of Idiosyncratic Shocks to the Real Economy: Natural Disasters and Public vs Private Hospitals’ Investment
- Author
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Yubo Liu, Stefano Rossi, and Hayong Yun
- Subjects
Reinsurance ,History ,Primary market ,Polymers and Plastics ,Bond ,Monetary economics ,Investment (macroeconomics) ,Industrial and Manufacturing Engineering ,High unemployment ,Market liquidity ,Business ,Business and International Management ,Real economy ,Natural disaster - Abstract
We study the role of insurance companies in propagating liquidity shocks to the real economy. We use natural disasters as our instrument to identify exogenous shifts in capital-market liquidity, and study whether capital-market liquidity affects regional-level fiscal conditions and output. Aggregate disaster-driven bonds sales of disaster-unaffected municipal bonds by exposed insurers cause low GDP growth and high unemployment. In micro data, natural disasters trigger large, unexpected redemptions of property-insurance contracts, causing: fire sales of municipal bonds; increased borrowing costs in primary markets; decreased muni issuance; lower investment in muni-reliant sectors. Therefore, insurance companies do propagate liquidity shocks to the real economy.
- Published
- 2020
7. Credit Cycles, Expectations, and Corporate Investment
- Author
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Huseyin Gulen, Mihai Ion, and Stefano Rossi
- Subjects
Index (economics) ,Ex-ante ,media_common.quotation_subject ,Debt ,Irrational number ,Economics ,Bond market ,Monetary economics ,Pessimism ,Explanatory power ,Investment (macroeconomics) ,media_common - Abstract
We provide a systematic empirical assessment of the Minsky (1977) hypothesis that business fluctuations are due to irrational swings in expectations. We build an aggregate index of irrational expectations using predictable firm level forecast errors and use it to provide three sets of results. First, we show that such an index of irrational expectations drives aggregate credit cycles. Next, we build an aggregate index of predictable credit cycles as the portion of credit cycles predicted by irrational expectations, and we show that such index drives cycles in firm-level debt issuance and investment. Finally, we show that after increases (re., decreases) in credit market sentiment firm-level financing and investment cycles are more pronounced for firms with ex ante more optimistic (re., pessimistic) expectations. Financial constraints do not have additional explanatory power for firm-level cycles in the cross section once irrational expectations are considered. We rationalize these results within a parsimonious dynamic Q-theory model with risky debt in which both corporate managers and credit investors hold diagnostic expectations.
- Published
- 2019
8. The Information Content of Dividends: Safer Profits, Not Higher Profits
- Author
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Roni Michaely, Stefano Rossi, and Michael Weber
- Published
- 2017
9. What Drives Financial Reform? Economics and Politics of the State-Level Adoption of Municipal Bankruptcy Laws
- Author
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Hayong Yun and Stefano Rossi
- Subjects
Finance ,History ,Polymers and Plastics ,business.industry ,media_common.quotation_subject ,Bond ,Private sector ,Industrial and Manufacturing Engineering ,Municipal bond ,Spillover effect ,Bankruptcy ,Law ,Voting ,Economics ,Revenue ,Business and International Management ,business ,Labor union ,media_common - Abstract
We investigate economic and political theories of financial reform to analyze state-level adoption of municipal bankruptcy laws (Chapter 9). Using a dynamic Cox hazard model, we find that interest group factors related to the relative strength of potential losers (labor unions) and winners (bond investors), courts’ efficiency, and trust in non-opportunistic behavior by local government explain the timing of Chapter 9 adoptions between 1980 and 2012. Similar factors also explain congressional voting on municipal bankruptcy law. After Chapter 9 adoption, municipal bond spreads decrease and firms experience higher revenues, profits, and investments, particularly in states in which more bond proceeds are used by the private sector. Our findings support political and economic theories of financial reform, and highlight a novel spillover channel from the public to the private sector.
- Published
- 2015
10. Does Mandatory Shareholder Voting Prevent Bad Acquisitions?
- Author
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Marco Becht, Andrea Polo, and Stefano Rossi
- Subjects
Identification (information) ,Empirical research ,Shareholder ,business.industry ,Voting ,media_common.quotation_subject ,Corporate governance ,Liberian dollar ,Regression discontinuity design ,Accounting ,Business ,Voting trust ,media_common - Abstract
Shareholder voting on corporate acquisitions is controversial. In most countries acquisition decisions are delegated to boards and shareholder approval is discretionary, which makes existing empirical studies inconclusive. We study the U.K. setting where shareholder approval is imposed exogenously via a threshold test that provides strong identification. U.K. shareholders gain 8 cents per dollar at announcement with mandatory voting, or $13.6 billion over 1992-2010 in aggregate; without voting U.K. shareholders lost $3 billion. Multidimensional regression discontinuity analysis supports a causal interpretation. The evidence suggests that mandatory voting imposes a binding constraint on acquirer CEOs.
- Published
- 2014
11. Banks, Government Bonds, and Default: What Do the Data Say?
- Author
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Stefano Rossi, Nicola Gennaioli, and Alberto Martin
- Subjects
Bond ,Sovereign default ,Financial market ,Government bond ,Bond market ,Financial system ,Default ,Business ,Financial repression ,Bond market index - Abstract
We analyze holdings of public bonds by over 20,000 banks in 191 countries, and the role of these bonds in 20 sovereign defaults over 1998-2012. Banks hold many public bonds (on average 9% of their assets), particularly in less financially-developed countries. During sovereign defaults, banks increase their exposure to public bonds, especially large banks and when expected bond returns are high. At the bank level, bondholdings correlate negatively with subsequent lending during sovereign defaults. This correlation is mostly due to bonds acquired in pre-default years. These findings shed light on alternative theories of the sovereign default-banking crisis nexus.
- Published
- 2013
12. Sovereign Default, Domestic Banks, and Financial Institutions
- Author
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Stefano Rossi, Alberto Martin, and Nicola Gennaioli
- Subjects
Finance ,Government ,Sovereignty ,business.industry ,Sovereign default ,Bond ,Economics ,Balance sheet ,Financial system ,Default ,Conventional wisdom ,business ,Credit risk - Abstract
We present a model of sovereign debt in which, contrary to conventional wisdom, government defaults are costly because they destroy the balance sheets of domestic banks. In our model, better financial institutions allow banks to be more leveraged, thereby making them more vulnerable to sovereign defaults. Our predictions: government defaults should lead to declines in private credit, and these declines should be larger in countries where financial institutions are more developed and banks hold more government bonds. In these same countries, government defaults should be less likely. Using a large panel of countries, we find evidence consistent with these predictions.
- Published
- 2012
13. Good Monitoring, Bad Monitoring
- Author
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Yaniv Grinstein and Stefano Rossi
- Subjects
Fiduciary ,Scrutiny ,business.industry ,Corporate governance ,Economic sector ,Common law ,Enterprise value ,Economics ,Event study ,Accounting ,business ,Supreme court - Abstract
Are courts effective monitors of corporate decisions? In a controversial landmark case, the Delaware Supreme Court held directors personally liable for breaching their fiduciary duties, signaling a sharp increase in Delaware’s scrutiny over corporate decisions. In our event study, low-growth Delaware firms outperformed matched non-Delaware firms by 1% in the three day event window. In contrast, high-growth Delaware firms under-performed by 1%. Contrary to previous literature, we conclude that court decisions can have large, significant and heterogeneous effects on firm value, and that rules insulating directors from court scrutiny benefit the fastest growing sectors of the economy.
- Published
- 2012
14. Rational Price-Contingent Trading and Asset Price Dynamics
- Author
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Stefano Rossi and Katrin Tinn
- Subjects
Microeconomics ,Rational expectations ,Contrarian ,Economics ,Rational agent ,Systematic trading ,Divergence (statistics) ,Private information retrieval ,Variety (cybernetics) ,Odds - Abstract
Systematic trading contingent on observed prices by agents uninformed about fundamentals has long been considered at odds with efficient markets populated by rational agents. In this paper we show that price-contingent trading is the equilibrium strategy of rational agents in efficient markets in which there is uncertainty about whether a large trader is informed. In this environment, knowing his own type and past trades (or lack of them) will be enough for a large trader to retrieve some private information about the fundamental indirectly even if he does not observe fundamental information directly. Such trader pursues price-contingent trading which remains profitable in a (semi-strong) efficient market. Our results generalize to a large variety of distributional assumptions. We then provide conditions under which price-contingent trading is positive-feedback or contrarian. On average both positive-feedback and contrarian trading help prices converge faster to fundamentals, although they can occasionally trigger divergence.
- Published
- 2010
15. Institutions, Public Debt and Foreign Finance
- Author
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Nicola Gennaioli, Stefano Rossi, and Alberto Martin
- Subjects
Finance ,Financial capital ,business.industry ,Indirect finance ,Financial integration ,Financial ratio ,Default ,Financial system ,Internal debt ,External debt ,business ,Capital market - Abstract
We study the role of domestic financial institutions in sustaining capital flows to the private and public sector of a country whose government can default on its debt. As in recent public debt crises, in our model public defaults weaken banks� balance sheets, disrupting domestic financial markets. This effect leads to a novel complementarity between private capital inflows and public borrowing, where the former sustain the latter by boosting the government�s cost of default. Our key message is that, by shaping the direction of private capital flows, financial institutions determine whether financial integration improves or reduces government discipline. We explore the implications of this complementarity for financial liberalization and debt-financed bailouts of banks. We present some evidence consistent with complementarity.
- Published
- 2009
16. Contractual Resolutions of Financial Distress
- Author
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Nicola Gennaioli and Stefano Rossi
- Subjects
Collateral ,Creditor ,Debt ,media_common.quotation_subject ,Control (management) ,Financial distress ,Business ,Investor protection ,Debt financing ,Monetary economics ,Floating charge ,media_common - Abstract
In a financial contracting model we study the optimal debt structure to resolve financial distress. We show that a debt structure where two distinct debt classes co-exist - one class fully concentrated and with control rights upon default, the other dispersed and without control rights - removes the controlling creditor's liquidation bias when investor protection is strong. These results rationalize the use and the performance of floating charge financing, debt financing where the controlling creditor takes the entire business as collateral, in countries with strong investor protection. More broadly, our theory predicts that the efficiency of contractual resolutions of financial distress should increase with investor protection.
- Published
- 2009
17. Judicial Discretion in Corporate Bankruptcy
- Author
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Nicola Gennaioli and Stefano Rossi
- Subjects
Finance ,Incentive ,Race to the bottom ,Bankruptcy ,business.industry ,Comparative statics ,Judicial discretion ,Creditor ,Forum shopping ,business ,Law and economics ,Supply and demand - Abstract
We study a demand and supply model of judicial discretion in corporate bankruptcy. On the supply side, we assume that bankruptcy courts may be biased for debtors or creditors, and subject to career concerns. On the demand side, we assume that debtors (and creditors) can engage in forum shopping at some cost. A key finding is that stronger creditor protection in reorganization improves judicial incentives to resolve financial distress efficiently, preventing a "race to the bottom" towards inefficient uses of judicial discretion. The comparative statics of our model shed light on a wealth of evidence on U.S. bankruptcy and yield novel predictions on how bankruptcy codes should affect firm-level outcomes.
- Published
- 2009
18. Optimal Resolutions of Financial Distress by Contract
- Author
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Nicola Gennaioli and Stefano Rossi
- Subjects
Creditor ,Bankruptcy ,media_common.quotation_subject ,Debt ,Control (management) ,Financial system ,Financial distress ,Investor protection ,Business ,Function (engineering) ,Floating charge ,media_common - Abstract
In a financial contracting model, we characterize which debt structures can optimally resolve financial distress as a function of investor protection against tunneling. If investor protection is strong, the first best can be implemented under a debt structure consisting of two classes of debt: one that gives control upon default to a large creditor and induces him to internalize the upside of efficient reorganization, and a second, fully dispersed debt class without control rights. If instead investor protection is low, the second best can be implemented by dispersing control rights among creditors lending under standard “straight debt” contracts. Floating charge financing successfully combines the features of our optimal debt structure in countries with strong investor protection and no restrictions to private contracting on bankruptcy.
- Published
- 2008
19. Returns to Shareholder Activism: Evidence from a Clinical Study of the Hermes U.K. Focus Fund
- Author
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Stefano Rossi, Colin Mayer, Julian R. Franks, and Marco Becht
- Subjects
Finance ,Shareholder ,Manager of managers fund ,business.industry ,Fund administration ,Sovereign wealth fund ,Open-end fund ,Economics ,Target date fund ,Accounting ,business ,Investment fund ,Investment management - Abstract
This article reports a unique analysis of private engagements by an activist fund. It is based on data made available to us by Hermes, the fund manager owned by the British Telecom Pension Scheme, on engagements with management in companies targeted by its U.K. Focus Fund (HUKFF). In contrast with most previous studies of activism, we report that the fund executes shareholder activism predominantly through private interventions that would be unobservable in studies purely relying on public information. The fund substantially outperforms benchmarks and we estimate that abnormal returns are largely associated with engagements rather than stock picking. We categorize the engagements and measure their impact on the returns of target companies and the fund. We find that Hermes frequently seeks and achieves significant changes in the company's strategy including refocusing on the core business and returning cash to shareholders, and changes in the executive management including the replacement of the CEO or chairman.
- Published
- 2008
20. Ownership: Evolution and Regulation
- Author
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Colin Mayer, Julian R. Franks, and Stefano Rossi
- Subjects
Finance ,Shareholder ,business.industry ,Economics ,Statistical dispersion ,Investor protection ,Price discrimination ,Monetary economics ,business ,Accredited investor ,Formal system ,Equity financing - Abstract
This paper is the first study of long-run evolution of investor protection, equity financing and corporate ownership in the U.K. over the 20th century. Formal investor protection only emerged in the second half of the century. We assess its influence on ownership by comparing cross-sections of firms at different times in the century and the evolution of firms incorporating at different stages of the century. Investor protection had little impact on dispersion of ownership: even in the absence of investor protection, there was a high rate of dispersion of ownership, primarily associated with mergers. Ownership dispersion in the UK relied more on informal relations of trust than on formal systems of regulation. Preliminary evidence for this comes from the geographical proximity of shareholders to their boards of directors, the absence of price discrimination in takeovers and retention of directors of target boards in merged firms.
- Published
- 2006
21. Patents, Capital Structure and the Demand for Corporate Securities
- Author
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Stefano Rossi
- Subjects
Private equity fund ,Corporate finance ,Equity risk ,Private equity ,Capital structure ,business.industry ,Equity (finance) ,Financial system ,Private equity firm ,business ,Equity capital markets - Abstract
I assess empirically the implications of patent grants for corporate financing, investment and stock returns. I show that industry patents are associated with more firm-level equity issues and reduced leverage. Firms in industries with more patents issue more equity at a given point in time. Within industries, however, equity issuers are not patent recipients themselves. Remarkably, such equity issuers do not increase investments, dividends, or acquisitions. Rather, they hold the proceeds of equity issues in cash reserves. Finally, patent recipients earn high positive abnormal returns. These findings cast doubt on traditional views of patents as signals of investment opportunities or reductions of information asymmetry. The evidence is instead consistent with the view that patents are a catalyst for investor sentiment.
- Published
- 2005
22. Cross-Country Determinants of Mergers and Acquisitions
- Author
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Stefano Rossi and Paolo F. Volpin
- Subjects
Cross country ,Shareholder ,business.industry ,Corporate governance ,Mergers and acquisitions ,Accounting ,Business ,Investor protection ,Monetary economics - Abstract
We study the determinants of mergers and acquisitions around the world by focusing on differences in laws and regulation across countries. We find that the volume of M&A activity is significantly larger in countries with better accounting standards and stronger shareholder protection. The probability of an all-cash bid decreases with the level of shareholder protection in the acquirer country. In cross-border deals targets are typically from countries with poorer investor protection than acquirers, suggesting that cross-border transactions play a governance role by improving the degree of investor protection within target firms.
- Published
- 2003
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