{"title":"Islamic bonds ratings and the price of risk","authors":"Shee-Yee Khoo , Paul-Olivier Klein","doi":"10.1016/j.jcorpfin.2025.102807","DOIUrl":"10.1016/j.jcorpfin.2025.102807","url":null,"abstract":"<div><div>While Islamic bonds are playing an increasingly important role for companies in emerging markets, the pricing of their risk by investors remains unexplored. We examine the impact of credit ratings on the yield-at-issuance of Islamic bonds and compare it to that of conventional bonds. Analysing 1560 Islamic bonds issued in emerging markets between 1997 and 2018 and comparing them to 837 comparable conventional bonds, we find that Islamic bonds offer lower yields than conventional bonds for a given rating, even after controlling for differences between the two populations. This suggests that investors are pricing in less credit risk in Islamic bonds. We explore several explanations for this phenomenon. We find that periods of relatively lower supply in the Islamic bond market contribute to the under-pricing of risk for a given rating. Religious preferences likely drive the segmentation of the two markets in terms of risk pricing.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102807"},"PeriodicalIF":7.2,"publicationDate":"2025-05-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143917523","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Huixiang Zeng , Wenjia Lu , Jian Zhou , Dongmin Kong , Xu Cheng , Luqi Huang
{"title":"Collective empathy could leap through time: War heritage and corporate green innovation","authors":"Huixiang Zeng , Wenjia Lu , Jian Zhou , Dongmin Kong , Xu Cheng , Luqi Huang","doi":"10.1016/j.jcorpfin.2025.102808","DOIUrl":"10.1016/j.jcorpfin.2025.102808","url":null,"abstract":"<div><div>The study investigates the impact of collective empathy on corporate green innovation from the perspective of war heritage. Drawing on stakeholder theory and empathy theory, we argue that collective empathy fosters corporate green innovation by generating public emotional empathy toward local descendants of war victims and enhance cognitive empathy within firms regarding the environmental needs of local communities. Analyzing data from Chinese-listed firms in heavily polluting industries between 2010 and 2019, we find that collective empathy significantly encourages green innovation efforts. Mechanism analyses indicate that collective emotional and cognitive empathy serve as key pathways in this relationship. Furthermore, state-owned ownership and formal institutions reinforce and complement the positive effect of collective empathy on corporate green innovation.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102808"},"PeriodicalIF":7.2,"publicationDate":"2025-05-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143922823","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Stayin' alive: Debt complexity as a bankruptcy-delaying mechanism","authors":"Jens Forssbæck , Håkan Jankensgård , Reda Moursli","doi":"10.1016/j.jcorpfin.2025.102804","DOIUrl":"10.1016/j.jcorpfin.2025.102804","url":null,"abstract":"<div><div>A complex and multi-layered liability structure with potentially overlapping claims on underlying collateral reduces expected recovery rates for creditors, which increases their incentives to keep otherwise insolvent firms afloat. Financially distressed firms may therefore seek to strategically “toxify” their capital structure to stave off future bankruptcy. In this article, we find evidence indicating that firms generate more debt complexity as they enter financial distress. Consistent with the idea that it operates as a bankruptcy-delaying mechanism, complexity reduces the probability of bankruptcy for any given level of financial distress.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102804"},"PeriodicalIF":7.2,"publicationDate":"2025-05-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143917531","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Executive incentives under common ownership","authors":"Thomas Schneider","doi":"10.1016/j.jcorpfin.2025.102806","DOIUrl":"10.1016/j.jcorpfin.2025.102806","url":null,"abstract":"<div><div>Relative performance evaluation (RPE) increases competition and limits pay-for-luck by rewarding executives for outperforming rivals. This study tests whether institutional investors reduce RPE use when they own stakes in competing firms. Contrary to this, the Big Three asset managers – BlackRock, Vanguard, and State Street – demonstrate strong preferences for RPE, reflected in portfolio firms' RPE adoptions, say-on-pay vote support, and peer group selections. No evidence suggests that common ownership by these or other institutional investors reduces RPE, as confidence bounds and point estimates are near zero. Overall, the rising prevalence of RPE challenges concerns about anticompetitive effects from common ownership.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102806"},"PeriodicalIF":7.2,"publicationDate":"2025-04-29","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143903456","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Manthos D. Delis , Emilios Galariotis , Maria Iosifidi , Steven Ongena
{"title":"Corporate taxes and entrepreneurs' income: A credit channel","authors":"Manthos D. Delis , Emilios Galariotis , Maria Iosifidi , Steven Ongena","doi":"10.1016/j.jcorpfin.2025.102805","DOIUrl":"10.1016/j.jcorpfin.2025.102805","url":null,"abstract":"<div><div>Corporate taxation can have redistributive effects on income and wealth. We hypothesize and empirically establish such an effect working via bank credit. We use a unique sample of small majority-owned firms that apply for credit, where only some firms (treated) experience a corporate tax cut. We show that after the decrease in corporate tax rates, the treated poorer business owners get easier access to credit. However, this policy also considerably increases loan amounts and decreases loan spreads for the treated richer. Ultimately, reducing the corporate tax rate predominantly increases the future income and wealth of richer business owners.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102805"},"PeriodicalIF":7.2,"publicationDate":"2025-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143891347","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Intercity mentioning: Stock posts, city network, and firms","authors":"Dayong Dong , Danling Jiang , Yuelin Peng , Longmin Shen , Hongquan Zhu","doi":"10.1016/j.jcorpfin.2025.102803","DOIUrl":"10.1016/j.jcorpfin.2025.102803","url":null,"abstract":"<div><div>We analyze online stock posts to identify dynamic intercity investment preferences among Chinese investors. By inferring city connections using recent posts on local stocks mentioning other cities, we find that firms in highly connected cities exhibit higher stock valuations, greater turnover, higher idiosyncratic volatility, improved liquidity, and reduced crash risk. The network effects are more pronounced among less visible firms and induce intercity return comovement. Better stock performances in connected cities predict subsequent local stock return reversals as well as elevated intercity retail block trading. Our findings suggest that city connectivity, revealed through social media content, influences firm outcomes, investor behavior, and market efficiency.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102803"},"PeriodicalIF":7.2,"publicationDate":"2025-04-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143902224","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"News-driven peer co-movement in crypto markets","authors":"G. Schwenkler , H. Zheng","doi":"10.1016/j.jcorpfin.2025.102772","DOIUrl":"10.1016/j.jcorpfin.2025.102772","url":null,"abstract":"<div><div>This paper develops a novel methodology to identify peer linkages among cryptocurrencies using natural language processing applied to financial news. We document a distinct pattern of conditional co-movement among peer assets: when a cryptocurrency experiences a large idiosyncratic shock, its peers — identified through news co-mentions — exhibit abnormal returns of the opposite sign. This mis-pricing persists for several weeks and enables profitable trading strategies. Our findings suggest that investor overreaction to news drives these dynamics, highlighting the role of financial media in shaping prices. The proposed methodology extends beyond crypto, offering a generalizable approach to studying peer effects and news-driven pricing distortions.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102772"},"PeriodicalIF":7.2,"publicationDate":"2025-04-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143911673","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Soft going-concern capital buffer? CoCo non-calls and revealed bank distress","authors":"Kaihua Deng , Qilong Fu , Dongxia Huang","doi":"10.1016/j.jcorpfin.2025.102802","DOIUrl":"10.1016/j.jcorpfin.2025.102802","url":null,"abstract":"<div><div>We document a significant widening of trading spreads for contingent convertible capital securities after banks announce non-redemption. The effect is more pronounced in less capitalized and less profitable banks, and spills over to CoCos issued by other banks in the same city, especially when the non-redemption announcements are short-noticed. Non-redemption has further led to higher issuance costs and a substantial drop in new CoCo issues. Troubled banks have shifted towards cutting payouts, paring down risky assets, booking less non-performing loans and decreasing loan loss provisions to repair their risk-based capital ratios, while equity-to-asset remains below the pre-event levels afterwards. Moreover, using loan-level data for listed firms, we find a persistent decline in bank lending to smaller and non-state borrowers following non-calls. These makeshift adjustments are further reflected in a lower <em>Z</em>-score. By contrast, senior debtholders and depositors retain the protection and are largely intact.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102802"},"PeriodicalIF":7.2,"publicationDate":"2025-04-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143868984","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Md Shahedur R. Chowdhury , Mohsen Aram , Siamak Javadi , Ali Nejadmalayeri
{"title":"Geopolitical risk and corporate capital structure","authors":"Md Shahedur R. Chowdhury , Mohsen Aram , Siamak Javadi , Ali Nejadmalayeri","doi":"10.1016/j.jcorpfin.2025.102796","DOIUrl":"10.1016/j.jcorpfin.2025.102796","url":null,"abstract":"<div><div>Using a news-based index of geopolitical risk (GPR) and over 62 years of data, we find that GPR has a long-lasting negative impact on leverage. Our result is robust to different model specifications, different proxies for leverage, a battery of robustness tests, and survives after addressing endogeneity concerns. Further, we provide evidence that the effect is channeled through declining shifts in both the demand and supply of credit. Cross-sectional tests indicate that the effect is stronger for firms with higher existing leverage, those with more irreversible investment, and those whose stock returns are more sensitive to GPR. Overall, our analysis indicates that GPR is more important than other macro-level determinants of capital structure such as inflation, GDP growth, interest rate variables and other widely used measures of uncertainty.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102796"},"PeriodicalIF":7.2,"publicationDate":"2025-04-17","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143898494","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Yangfa Chen , Ji Jiang , Jie Liu , Xiao Liu , Weili Wu
{"title":"Registration system reform, information environment, and market manipulation","authors":"Yangfa Chen , Ji Jiang , Jie Liu , Xiao Liu , Weili Wu","doi":"10.1016/j.jcorpfin.2025.102797","DOIUrl":"10.1016/j.jcorpfin.2025.102797","url":null,"abstract":"<div><div>In 2019, Chinese stock market regulators launched a comprehensive reform of the IPO regulatory system, transitioning from the approval system to the registration system. Using this reform as a quasi-natural experiment, we investigate the impact of IPO systems on market manipulation. We find that the registration system reform significantly inhibits market manipulation by improving the quality of firms' information supply and reducing stock information asymmetry. In addition, our results indicate that the inhibitory effect of the registration system reform on market manipulation is more pronounced for firms with higher information exposure, greater information complexity, and a greater proportion of investors with better ability to interpret information. Further analyses show that the registration system reform also lowers trading values around manipulation events, and inhibits other types of trade-based manipulation and misconduct. This study sheds light on the crucial role of information transparency in financial markets' effectiveness and investor protection.</div></div>","PeriodicalId":15525,"journal":{"name":"Journal of Corporate Finance","volume":"93 ","pages":"Article 102797"},"PeriodicalIF":7.2,"publicationDate":"2025-04-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"143847296","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":1,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}