Summer Term 2023

• June 1, 2023 / 12 noon 1:00 pm / D3.0.225
  Karin Thorburn (NHH Norwegian School of Economics)
   

• April 12, 2023 / 12 noon 1:00 pm / D3.0.225
  Andras Danis / Paul Voss (Central European University)
  "Decoupling Voting and Cash Flow Rights", by Andras Danis, Andre Speit and Paul Voss
  
  Abstract:  The equity lending and option markets allow investors to decouple cash flow claims and voting rights of shares. Empirical studies show that the implied prices of voting rights differ substantially across these two markets. This paper provides a theoretical explanation for this puzzling finding: The price differential arises because the equity lending market allows activist investors to exploit coordination failures among shareholders more than the option market. Still, we show that activist investors may buy voting rights in both markets, despite endogenously lower prices in the equity lending market. Our results apply to any financial instrument used for decoupling.
   

• March 23, 2023 / 1:00 - 2:00 pm / D3.0.225
  Sebastian Doerr (BIS (Bank of International Settlements))
  “Privacy regulation and fintech lending” with L. Gambacorta, L. Guiso and M. Sanchez del Villar
  
  Abstract: This paper studies how the California Consumer Privacy Act (CCPA), a privacy law that grants users control their data and assuages concerns over sharing it, affects lending markets. To guide our empirical analysis we build a model with banks and a fintech that use data to screen applicants. The fintech has a superior screening technology, but applicants dislike sharing their data with it. The model predicts that privacy regulation makes applicants more willing to share their data, so loan applications with the fintech increase. More data allow for better screening and enable the fintech to offer lower interest rates. We empirically show that the introduction of the CCPA increases mortgage applications with fintechs relative to banks in California. Consistent with applicants’ greater willingness to share data, fintechs make greater use of non-traditional data to improve screening. In turn, they deny more applications and offer more favourable rates.
   

• March 16, 2023 / 1:00 - 2:00 pm / D3.0.225
  Stefano Carattini (Andrew Young School of Policy Studies, Georgia State University)

  “Climate policy uncertainty and firms’ and investors’ behavior”  

  Abstract: Climate change mitigation requires transitioning from a high- to a low-carbon economy. Over the last three decades, this transition has been far from linear, with periods of progress and setbacks. While climate policies have been the object of careful policy evaluation, firms and investors may need to react more often to climate policy uncertainty than actual climate policy. We develop a new index of climate policy uncertainty, covering the United States with monthly-level variation between 1990 and 2019. We analyze the relationship between climate policy uncertainty and firm-level outcomes such as stock returns, share price volatility, investment in research and development as well as patenting, capital expenditures, and employment for all publicly listed firms in the country. We find that climate policy uncertainty tends to considerably affect these outcomes, and often more so than existing indices of economic policy uncertainty. The direction of the uncertainty matters as well, as measured by sub-indices capturing whether the uncertainty reflects potential acceleration or deceleration in climate policymaking.