Research projects 2018

1. Political influence, firm performance and survival

We study the financial performance of politically influential firms such as profitability and financial investments relative to non-influential firms. Moreover, we study if influential firms had a higher probability of being liquidated than non-influential firms and the likelihood of the subsequent plant utilization by a new firm was higher for the politically influential liquidated firms.

2. Exogenous Information Shock and Dividend Payout Policies: Evidence from IFRS Adoption

We study changes in firms’ dividend policies in response to improved information environment between investors and firms, enabled by IFRS adoption. We document that the relation between information asymmetry reduction and dividend payout policy is not monotonic, and in fact depends on firm’s underlying growth opportunities.

3. The Fisher equation reconsidered

According to Alvarez et al. (2001) “Interest rates and inflation," there exists systematic evidence that increases in average rates of money growth are associated with equal increases in average inflation rates and in interest rates; which conforms to the quantity theory or, alternatively, the Fisher equation. And this is a puzzle, as there is a consensus that inflation can be reduced by increasing short term interest rates. We develop an argument to resolve this theoretical conundrum.

4. Strategic Trading around Anticipated Shocks

We study the price/quantity effects of anticipated supply or demand shocks in a model of strategic trading, where imperfectly competitive traders share risk with price-takers. When there are at least two traders, anticipated shocks lead to the V-shaped pattern observed empirically: prices drift away from fundamentals before the shock, and slowly revert afterwards.