Thanh Ngo

This paper examines how climate policy uncertainty (CPU) relates to firms’ debt maturity choices. Using 6,665 U.S. firms from 1990 to 2017, we find that higher CPU is associated with a lower proportion of short-term debt, indicating that firms extend debt maturity in response to climate-related uncertainty. This evidence supports a commitment-based mechanism in which firms lock in long-term financing to mitigate future refinancing risk under persistent regulatory uncertainty Cross-sectional analyses show that the maturity-lengthening effect is weaker among firms with limited innovation capacity and tighter financial constraints, but stronger among rated firms, firms experiencing credit rating downgrades, and firms led by high-ability managers. Overall, the findings highlight that climate policy uncertainty has distinct and economically meaningful implications for corporate financing decisions.

We study how corporate debt maturity relates to firms’ strategic alliance decisions. Using a sample of 15,679 U.S. public firms and 13,248 alliance announcements from 1990 to 2023, we document that firms with more short-term debt are more likely to form alliances. This association is stronger among financially constrained firms, consistent with refinancing pressure increasing the attractiveness of alliances when financing flexibility is limited. Conversely, the association is weaker among firms with higher audit fees and stronger corporate cultures, suggesting that short-term debt plays a smaller role in alliance decisions when alternative governance mechanisms are stronger. We also find that alliances formed by firms relying more heavily on short-term debt generate higher announcement returns. Overall, our findings suggest that debt maturity shapes firms’ external growth strategies by encouraging the use of strategic alliances under constrained financing flexibility while providing governance benefits that enhance alliance value.

Using the COVID-19 pandemic as a natural experiment, we examine if vertical integration (VI) helps firms weather a severe market-wide supply chain shock. Drawing on text-based vertical integration scores and a sample of 2,939 unique U.S. public firms over the 2017–2023 period, we employ the difference-in-differences panel regression method and find that high-VI firms exhibit significantly greater operational resilience during the pandemic, suffering smaller declines in return on assets than their low-VI counterparts. We identify inventory turnover as the primary channel through which vertical integration improves firm performance during the crisis. We further document that shareholders reward the crisis-time value of vertical integration, with high-VI firms buffering COVID-induced losses in Tobin’s Q and stock returns better. Our findings suggest that vertical integration functions as an organizational insurance mechanism, imposing costs in normal times but delivering substantial protection during systemic supply chain disruptions and thus have implications for antitrust policies.

This study evaluates the role of the motivated institutional investor in enhancing firm performance through improvements in operational efficiency, a necessary precursor to better operating results, stock returns, and firm value, using a sample of real estate investment trusts (REITs). Our results suggest that the mere presence of institutional owners is unrelated to firm‐level operational efficiency, whereas a large concentration of motivated institutional owners significantly improves efficiency. This result is more substantial for larger, highly leveraged firms and is robust to tests for endogeneity, self‐selection, and reverse causality. We also find that increased motivated institutional ownership leads to significant efficiency gains, while reductions have no impact on efficiency. Our findings indicate that motivated institutional owners improve managerial discipline through operating cost‐control. We advance the literature by acknowledging the different roles and types of institutional investors in the market, highlighting the impact of specific types on firm operations, performance, and returns. We link motivated investors to efficiency gains as a channel to higher firm value.

The stock market’s reaction to the 2024 U.S. presidential election presented an exogenous shock to expected regulatory integration. We use this shock to assess the distribution of expected benefits of that integration. We document that firms with greater exposure to regulatory separation, defined and quantified as exposure to multiple regulatory agencies, experienced higher abnormal returns during the election window as the stock market anticipated the benefits of the incoming Trump administration’s regulatory integration push to disproportionately accrue to those firms. Critically, the anticipated benefits of regulatory integration, and therefore estimated costs of regulatory separation, concentrate among underperforming firms and those with below-median market power. Regulatory theory of Laffont and Martimort (1999) suggests that separation reduces regulatory collusion and capture and therefore helps regulation act as a check on firms with the most resources to exploit market failures. Our findings contradict this view and suggest compliance costs as the true burden of regulatory separation.

We examine the impact of religiosity on credit union member benefits and document a positive association between local religiosity and member benefits. Members of credit unions in more religious counties enjoy lower interest rates on loans, higher interest rates on deposits, and consequently lower interest spreads. The effect varies by credit union types, and results suggest a stronger association between religiosity and member benefits for credit unions with a narrower field of membership. Further analysis indicates local religiosity is associated with improved operating performance, lower non-interest expenses, and higher quality earning assets, but increased liquidity risk. The results are robust to various model specifications, subsamples, and economic conditions.

Purpose: This study aims to examine the impact of the U.S. opioid crisis on credit union performance and risk. Design/methodology/approach: We test how county-level opioid death rate affects local credit union performance and risk. Potential endogeneity issues are addressed using two-stage least squares regression, propensity score matching and entropy balancing techniques. Our findings are checked by various regression specifications and sample constructions. We also conduct a causal mediation analysis to identify the potential channels of our findings. Findings: We find that credit unions in counties with higher opioid death rates are associated with lower profitability. This causal association is confirmed with multiple techniques and robust to various checks. Moreover, the opioid crisis reduces credit union profitability by reducing asset growth, loan growth, deposit growth and interest income and by increasing operating expenses and nonperforming loans. Further, the negative effect of opioid abuse is more pronounced for state-chartered, community and industry credit unions. Our findings, along with existing literature, suggest that the opioid crisis negatively affects the performance of financial institutions by increasing their credit risk. Originality/value: Our study is the first to examine the impact of the U.S. opioid crisis on credit unions.

We utilize a sample of 44,344 firm-years (1990–2019) to examine the association between operational hedging and stock price crash risk. We examine the association between operational hedging and crash risk. Our operational hedge measure (OPERHEDGE), based on Kogan et al. (2023), indicates a rise in revenue leads to a nearly proportional increase in the cost of goods sold. We address endogeneity concerns through multiple methods and alternative measurements and find consistently negative and significant coefficients for OPERHEDGE. Robustness checks using alternative crash risk measures, time horizons and subsamples confirm the negative association between operational hedging and crash risk. Regression results support variable costs acting as a natural hedge against revenue fluctuations, leading to lower future crash risk for firms with stronger operational hedging. Notably, the negative relationship is stronger for firms experiencing declining earnings and with higher accruals management. The ability of an operational hedge to mitigate stock price crash risk remains an open question and is the focus of our research. The findings have important implications for corporate risk management, highlighting that operational decisions can play a crucial role in mitigating crash risk.

This paper empirically tests the competing hypotheses regarding the influence of local religion on managerial income smoothing decisions. On the one hand, managers of firms in more religious regions may be more inclined to engage in income smoothing, as it helps reduce uncertainty and perceived risk of the firm. Conversely, managers may be less likely to engage in income smoothing because it often involves earnings manipulation, which goes against the principles of most religions. We employ four established measures of income smoothing and obtain data on local religiosity from the Association of Religion Data Archives modified by Bacon et al. (2018). We perform univariate and multivariate empirical tests on US public firms from 1993 to 2018. We find robust evidence that firms headquartered in more religious counties have a higher level of income smoothing. Further analysis shows that income smoothing significantly enhances the informativeness of earnings in higher religious areas. Managers also resort to greater income smoothing when their firms face heightened volatility or risk. Our findings suggest that managers are more likely to use income smoothing to reduce uncertainty and the perceived risks associated with the firm. Our study supports the growing awareness that social norms, such as religion, play an important role in financial decision-making. We acknowledge that the data on local religion comes with limitations related to coverage and accuracy, primarily stemming from the inherent nature of self-report surveys. For investors and analysts, the awareness that managers in firms influenced by higher religiosity tend to engage in income smoothing can aid in evaluating earnings information and making more informed investment decisions. We examine the influence of religious norms in counties where firms are headquartered on managers’ attitudes toward income smoothing within a single-country context. Our analysis focuses on two characteristics of religion and develops two distinct hypotheses. First, the ethical values promulgated by religion may deter managers from engaging in opportunistically motivated income smoothing aimed at concealing earnings volatility. Alternatively, the risk aversion originating from religious beliefs may encourage managers to adopt more income-smoothing practices. Our findings support the latter perspective.