We find that capital investment and net debt issuance of large firms are, on average, more sensitive to industry business cycles than those of small firms, in stark contrast to the effect of size on investment sensitivity to macroeconomic cycles. We theoretically examine the role of firm size on firms’ responses to industry shocks. Consistent with our theoretical predictions, we find that large firms exhibit greater sensitivity to industry cycles than small firms in their investment and net debt issuance only in industries with low cyclical variability of markups and production growth, high fixed cost intensity, high market-to-book, and high markups.

A novel arbitrage-free model of nominal U.S. Treasuries that decomposes yields into frictionless expected rates, frictionless term premiums, and liquidity premiums produces four key results from Jan. 1987 to Aug. 2023. First, liquidity loadings are larger than for the slope and higher-order principal components. Second, the countercyclicality of required nominal Treasury returns owes to liquidity, if anything, not frictionless term premiums. Third, Federal Reserve large-scale asset purchases generally work through expected rates and frictionless term premiums, not liquidity premiums. Fourth, given similar estimates using TIPS, inflation expectations are less moored around the Federal Reserve’s price objectives than other models say.

This rejoinder responds to a commentary (Horak et al., 2023) on our article ‘De-Linking from Western Epistemologies: Using Guanxi-Type Relationships to Attract and Retain Hotel Guests in the Middle East' (2022). We thank the authors for engaging with our work and are grateful to the editor for the chance to respond. Firstly, we do not accept the central assertion that we imposed the Chinese concept of guanxi on a Middle Eastern context. Some aspects of guanxi extend beyond China, and we consider it part of our role as researchers to explore universal behavioral aspects that transcend specific cultural settings. While we described guanxi to introduce the variables, we drew a clear distinction between guanxi itself and guanxi-type relationships, and provided on page 859 an explicit statement about what we meant by the term ‘guanxi-type relationships’, i.e. the networks of interpersonal ties found in the Middle East. While this distinction could have been more clearly emphasized in places, we consider that the article as a whole made it abundantly clear.

Although studies pay increasing attention to how organizational citizenship behavior (OCB) affects work–family conflict, most research ignores the boundary conditions and underlying mechanisms of this relationship. Drawing on goal interdependence theory and conservation of resources theory, this research sees two types of goal interdependence as important boundary conditions of how helping behavior affects work–family conflict. We use a combination of quantitative and qualitative methods to test our theoretical model. Specifically, using two-wave survey data collected from 386 employees and 90 supervisors in a manufacturing company, our quantitative study shows that the interaction of helping behavior with cooperative goal interdependence is positively associated with work–goal progress, whereas its interaction with competitive goal interdependence is negatively associated with work–goal progress. In turn, work–goal progress is negatively associated with work–family conflict. The results further reveal that the indirect effect of helping behavior on work–family conflict via work–goal progress is positive and significant only when the level of competitive (cooperative) goal interdependence is high (low). We use 196 employees from the same organization to conduct our qualitative study, the results of which further substantiate and extend the findings from our quantitative study. Finally, we discuss the theoretical and practical implications of our findings.

We propose a novel measure of the market return tail risk premium based on minimum-distance state price densities recovered from high-frequency data. The tail risk premium extracted from intra-day S&P 500 returns predicts the market equity and variance risk premiums and expected excess returns on a cross section of characteristics-sorted portfolios. Additionally, we describe the differential role of the quantity of tail risk, and of the tail premium, in shaping the future distribution of index returns. Our results are robust to controlling for established measures of variance and tail risk, and of risk premiums, in the predictive models.

The onset of COVID-19 was characterized by voluminous, negative news. Higher narrativity news topics (measured by textual proximity to articles describing the 1987 stock market crash and textual distance from Federal Reserve communications) were systematically associated with contemporaneous market responses, which were larger on high volatility days (hypersensitivity), and with markets–news feedback. Hypersensitive news topic-market pairs were associated with next-day reversals. A test using the news–markets relationship identifies a mid-March 2020 structural break, which was knowable by the end of April. Post break, markets and news became considerably less coupled, and hypersensitivity and reversals abated.

We find firm cyclicality decreases by 40% after the inception of credit default swap (CDS) trading. The effect stems from CDS firms’ less aggressive asset growth in good times and is stronger for firms facing a more severe empty creditor problem. Important identification issues are addressed. The result cannot be explained with debt overhang, bank lending cyclicality, or the cyclicality of firms’ business fundamentals. It holds for the cyclicality of various corporate outcomes (inventories, cash, and employment). Importantly, CDS trading impedes unhealthy growth and enhances profitability and firm value. Our finding indicates an important positive real effect of financial innovation.

Firms falling short of earnings expectations are more likely to cite stakeholder-focused objectives in their public communications following earnings announcements. This behavior is consistent with managers preferring to be evaluated by subjective stakeholder-based performance criteria when falling short on objective shareholder-based measures. This increased use of stakeholder language is most evident among firms narrowly missing earnings estimates and appears unrelated to a firm’s actual environmental, social, and governance (ESG)-related activity. Stakeholder language appears to influence the evaluation of CEOs; turnover–performance sensitivity is lower for managers citing stakeholder value. Collectively, our findings are consistent with concerns that stakeholder objectives reduce managerial accountability for poor performance.

I develop a model revealing the interplay between a stock’s liquidity and the policies and value of the issuing firm. The model shows that bid-ask spreads increase not only the firm’s cost of capital but also the opportunity cost of cash, then lowering cash reserves, increasing liquidation risk, and reducing firm value. These outcomes are stronger when internalized by liquidity providers, simultaneously leading to a wider bid-ask spread. A two-way relation between the firm and the liquidity of its stock arises, implying that shocks arising within the firm or in the stock market have more complex implications than previously understood.