Alok Kumar

This paper examines whether the racial and ethnic composition of borrowing firms influences the pricing and structure of syndicated bank loans. Using workforce data from Revelio Labs, we find that firms with higher shares of Black and Hispanic senior employees face higher loan spreads after controlling for credit risk, firm characteristics, and loan terms, while finding no evidence of worse post-loan performance. A one standard deviation increase in senior minority representation is associated with a 5.6 basis point increase in spreads, with stronger effects among firms with limited external financing or closer proximity to lenders. We also find higher upfront fees, higher undrawn spreads, and more concentrated syndicate structures, consistent with adjustments in both pricing and monitoring. The effects weaken when borrowers pair with more diverse lead lenders. Exploiting the 2014–2016 oil price collapse as an exogenous shock to banks’ lending capacity, we show that the relation strengthens among lenders with greater pre-shock exposure to the oil and gas sector.

We examine how political partisanship affects corporate environmental policies and firm performance. Publicly traded U.S. firms generate more toxic pollution when their CEOs are politically aligned with the president. The effect is amplified by greater political exposure and attenuated by stronger external monitoring. CEO-president political alignment influences the environmental policies of firms through heightened managerial optimism and relaxed regulatory constraints. Politically aligned firms reallocate resources away from environmental mitigation efforts toward expansion and innovation, where both the quantity and quality of innovation increase. Consequently, those firms have higher operating efficiency, higher market valuations, and higher future returns.

Using gender to identify analyst groups, we examine whether in-group bias affects the behavior of sell-side equity analysts and the information dissemination process. We find that analysts hold more optimistic and less accurate earnings expectations for firms with same-gender CEOs, where in-group bias is stronger among men. Greater exposure to out-of-group individuals weakens in-group bias, and the bias is also weaker among analysts located in U.S. states with greater gender equality. Group definitions based on race/ethnicity and name similarity yield similar results. These findings are robust and unlikely to reflect selective information access or various selection effects. This paper was accepted by Eric So, accounting. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.01467 .

We examine the relation between temperature changes and firm performance using a novel time-varying measure of firm-level temperature sensitivity. We find that firms with higher temperature sensitivity have lower future profitability and riskier corporate policies. These firms are also overpriced and earn lower average future returns as market participants are slow to correct the mispricing. Nonlocal institutional investors allocate higher portfolio weights to firms with high temperature sensitivity, and sell-side equity analyst forecasts are less accurate for these firms. Together, these results suggest that financial markets underreact to information about firm-level temperature sensitivity, and this generates predictable patterns in returns. A trading strategy that exploits this mispricing generates an annualized risk-adjusted return of more than 4% during the 1968–2020 period. This paper was accepted by Bo Becker, finance. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.00972 .

A significant portion of U.S. households enters and exits investment accounts. Empirically, income and wealth changes are related to these transitions, with income changes not affecting the retired. A life cycle model with participation costs cannot match the observed ownership dynamics, but an extension with stock market crash better fits the average participation rate and ownership transitions of the middle-aged and retired. This extended model does not match the ownership dynamics of the young, which are better captured by a model with elevated income risk. Overall, these findings indicate that ownership transitions respond to wealth shocks across the life cycle, both in our model and the data. This paper was accepted by Victoria Ivashina, finance. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2023.00290 .