Annual Conference

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Senior Fellows/Fellows, Capital Market Development: China and Asia

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May 2013

Fire-sales and Information Advantage: When Bank-Affiliation Helps

Massimo MASSA, Lei ZHANG
We study how information flows within international financial conglomerates and how such a flow reduces the transmission of liquidity crisis due to fire-sales. We focus on the role of international institutional investors affiliated with banks during the 2008-2009 global financial crisis. We argue t...
Keywords: fire-sales, crisis, bank-affiliation, foreign ownership, liquidity
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Annual Conference

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Senior Fellows/Fellows, Capital Market Development: China and Asia

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May 2013

Getting Better: Learning to Invest in an Emerging Stock Market

Tarun RAMADORAI, John Y. CAMPBELL, Benjamin RANISH
This paper reports evidence that individual investors in Indian equities hold better performing portfolios as they become more experienced in the equity market. Experienced investors tilt their portfolios profi…tably towards value stocks and stocks with low turnover, but these tilts do not fully ex...
Keywords: Emerging stock market, equity market, value stocks
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Annual Conference

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Capital Market Development: China and Asia

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May 2013

Growing the Asset Management Franchise: Evidence from Hedge Fund Firms

William FUNG, David HSIEH, Narayan NAIK, Melvyn TEO
We investigate the growth strategies of hedge fund firms. We find that firms with successful first funds are able to launch follow-on funds that charge higher performance fees, set more onerous redemption terms, and attract greater inflows. Motivated by the aforementioned spillover effects, first fu...
Keywords: hedge funds, first funds, follow-on funds, spillover, Agency problems
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Annual Conference

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International Macroeconomics, Money & Banking, Senior Fellows/Fellows

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May 2013

Identifying the Valuation Effects and Agency Costs of Corporate Diversification

Luc LAEVEN, Ross LEVINE, Martin R. GOETZ
This paper assesses the impact of the geographic diversification of bank holding company (BHC) assets across the United States on their market valuations. Using two new identification strategies based on the dynamic process of interstate bank deregulation, we find that exogenous increases in geograp...
Keywords: Corporate diversification, Agency problems, Economies of scope, Corporate insiders, Corporate valuation
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Annual Conference

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Corporate Finance

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May 2013

Informed Trading & Expected Returns

James CHOI, Jin LI, Hongjun YAN
Does information asymmetry affect the cross-section of expected stock returns? Using institutional ownership data from the Shanghai Stock Exchange, we show that institutions have a strong information advantage over individual investors. We then show that the aggressiveness of institutional trading i...
Keywords: Informed Trading, Stock Returns, Information asymmetry
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