The Endowment Effect and Seller Behavior: Evidence from the Real Estate Market
Ching-Hsiang Chao, Chuang-Chang Chang, Li-Wei Yu, and Hadi Hussain

An endowment effect arises when people demand more to give up a good than they would pay to acquire it. Using a unique dataset that provides complete histories of actual transactions in the real estate market, this study documents a seller-buyer valuation gap consistent with an endowment effect among real estate owners, regardless of gender or experience. Further comparisons using various homeowners’ purpose and transaction characteristics reveal that whereas homeowners of owner-occupied properties exhibit a smaller valuation gap, those faced with higher liquidity exhibit a significantly larger valuation gap. These patterns are consistent with endowment-related behavior, although listing prices may also reflect strategic considerations.
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Information accessibility and analyst optimism: Evidence from China
Dongmin Kong, Yifan Jin, and Shasha Liu

We identify information accessibility as a determinant of analyst optimism. Using the sudden exit of Google’s search services in China, we find that reduced information accessibility significantly increases optimism bias among analysts covering affected export-oriented firms. Analysts with alternative data sources or stronger verification skills show less bias. The shock amplifies reliance on corporate disclosures, especially for firms with positive tone or earnings management. Institutional ownership and media scrutiny mitigate the effect, while buy-side pressure exacerbates it. We additionally document downstream effects on price efficiency and labor markets. Overall, these findings illuminate a key driver of analyst optimism.
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Household portfolio allocation and stock market beliefs: Evidence from Japanese households
Raslan Alzuabi and Daniel Gray

We analyze data from the Keio Household Panel Survey (KHPS) to investigate how individuals’ beliefs about financial markets influence current and planned asset holdings. Our results reveal statistically and economically significant relations between specific beliefs and both present asset allocations and accumulation. These relations remain robust when we employ an instrumental variable approach with historical beliefs to address potential endogeneity. Furthermore, we examine how current beliefs shape long-term financial planning, highlighting their importance in influencing future asset allocation decisions. Overall, our findings suggest that correcting misconceptions and shaping financial market beliefs may offer a pathway to improving household financial well-being.
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Political connections and regulatory efficiency: Evidence from the anti-corruption campaign in China
Jiapin Deng

Exploiting China’s anti-corruption campaign launched in 2012 as an exogenous shock, I find that the reduction in firms’ political connections significantly promotes regulatory efficiency in addressing corporate violations. Further evidence shows that the effect of reduced political connections on regulatory efficiency is more pronounced in cities with a higher intensity of anti-corruption investigations and among the cases without the participation of local regulators. This study reveals the regulatory injustice between firms with political connections and those without, suggesting that the removal of firms’ connections with their regulators can reduce the frictions resulting from the delay of information release.
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Are CSR incidents truly bad news?
Chen Chen, John A. Doukas, and Rongyao Gloria Zhang

We revisit whether disclosures of negative Corporate Social Responsibility (CSR) incidents adversely affect firms’ stock prices. While univariate tests reveal significant negative abnormal returns around incident announcements, the effect disappears once firm characteristics, industry, and time-fixed effects are controlled for. We find no robust evidence that CSR incidents or firms’ Environmental, Social, and Governance (ESG) commitments influence stock price reactions on the event day or across broader windows. These results suggest that previously documented negative market responses may be attributable to endogeneity. Our baseline results are consistent with informed trading behavior: short-sellers do not increase activity in incident-related stocks relative to either non-incident firms or ESG-aligned portfolios.
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When bubbles align: Synchronization and systemic risk in US real estate
Haitham A. Al-Zoubi, and Aktham I. Maghyereh

In this article, we examine the emergence and synchronization of housing bubbles across US states, emphasizing regional disparities and their underlying financial drivers. Using data spanning the Volcker disinflation, savings and loan crisis, and COVID-19 pandemic, we detect bubble phases and identify their macrofinancial determinants. Persistent speculative episodes in states such as California and Florida are linked to credit expansion and investor sentiment, whereas other periods remain relatively stable. Applying recursive right-tailed unit root tests, Adaptive LASSO, multinomial logit models, and gradient boosting methods, we identify interest rates, credit growth, and sentiment indicators as the dominant predictors of bubble formation and collapse. The results reveal systemic patterns of synchronization in regional housing cycles and offer policy-relevant tools for macroprudential monitoring, early-warning detection, and targeted intervention.
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Common ownership and executive pay duration
Douglas O. Cook, Xudong Fu, and Tian Tang

The increasing prevalence of institutional cross-holdings corresponds with the importance of common ownership in today’s concentrated financial markets. This study investigates the influence of common ownership on executive pay duration. We find that common owners use long-duration pay as a mechanism to mitigate managerial myopia, which is the tendency to prioritize short-term gains over long-term value. Using a host of identification strategies, including indexer/non-indexer splits, blockholder fixed effects, and a quasi-natural experiment involving financial institution mergers, we show that endogenous factors are not likely to drive our conclusions or inferences. The relation between common ownership and pay duration is stronger in firms with characteristics conducive to myopia, such as high liquidity, information asymmetry, and strong non-compete agreement enforceability. Our results suggest that common owners use longer incentive horizons to align managerial actions with long-term firm performance, reducing stock price crash risk and enhancing sustainable value creation.
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CEO inside debt compensation and the asset sale decision
Aigbe Akhigbe, Eric Brisker, Duong T. Pham, and Ann Marie Whyte

We find that CEOs with relatively high inside debt compensation are more likely to engage in non-core asset sales. Firms selling non-core assets show higher post-sale free cash flow, suggesting that inside debt encourages focus-increasing, cash-generating transactions. The positive relation between inside debt and asset sales is only evident among firms with low liquidity and high risk, as well as among CEOs with longer career horizons and lower levels of incentive-based compensation, consistent with liquidity enhancement and risk aversion driving asset-sale decisions. Our findings highlight the role of inside debt in aligning the interests of executives and the firm’s debtholders.
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Policy uncertainty and tail risk in energy futures: The role of maturity and storage capacity constraints
Alexandre Scarcioffolo, Isarin Durongkadej, and Xiaoli L. Etienne

We examine how categorical economic policy uncertainty (EPU) is linked to extreme downside risk in U.S. energy futures markets across contract maturities. Using data from 1994 to 2024, we document maturity-dependent spillovers between EPU indices and Value-at-Risk (VaR) for crude oil and natural gas. Crude oil VaR exhibits increasing connectedness with maturity, while natural gas shows a flatter pattern. The composition of policy-driven spillovers also varies across maturities and time. Storage capacity constraints, which may hinder carry arbitrage, intensify spillovers to longer-term contracts, especially in the oil market. This highlights the role of physical market friction in policy risk transmission.
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Environmental protection fee-to-tax and enterprise innovation path selection: Incremental innovation or breakthrough innovation?
Junyi Xiang, Dongmin Kong, and Deming Zhuo

Based on China’s unique environmental protection fee-to-tax policy, this article investigates the profound impact of changes in environmental regulations on enterprise innovation path selection. By employing the Difference-in-Differences (DID) method and a comprehensive dataset of Chinese enterprises, we find that the implementation of this policy significantly promotes incremental innovation. Further research reveals that the policy exerts its influence by increasing enterprise financing constraints. Additionally, the policy demonstrates a persistent, long-term impact, influencing both innovation efficiency and the development of artificial intelligence–related innovation. Overall, these findings fill the research gap in understanding the relationship between environmental policies and enterprise innovation path selection.
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Strategic technology talent acquisition and firm value: A cross-industry examination
Feng Dong, John A. Doukas, and Rongyao Gloria Zhang

Technology-driven transformation compels firms to invest in both physical and human capital, particularly information technology (IT) talent. Using LinkUp job posting data, we examine how IT talent acquisition signals strategic intent and affects firm value. We find that IT hiring improves operational efficiency through automation in low-tech sectors and fosters innovation in high-tech sectors. These mechanisms reveal distinct pathways through which technology talent shapes firm dynamics. Moreover, IT hiring influences financial performance, risk management, organizational culture, and strategic decisions. Our results offer new insights into how strategic IT talent acquisition drives value creation and informs managerial and policy choices.
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Country culture and shadow banking
Krishnan Dandapani, Edward Lawrence, and Wenjun Xue

We explore the impact of country culture of individualism and uncertainty avoidance on the development of shadow banking throughout the world. We find that countries with high individualism and low uncertainty avoidance have higher shadow banking activities. Our results are robust to alternative and time-varying culture measures, alternative measures for shadow banking, different model specifications and endogeneity concerns. In addition, level of democracy in a country has a significantly positive moderating role in determining the relation between individualism and shadow banking.
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