Iftekhar Hasan

We document a new determinant of stock returns’ sensitivity to the global financial cycle: political ties with the US. Using United Nations voting to measure alignment, we find that emerging-economy returns co-move more with global financial conditions when US ties are stronger. The association is specific to the US, not other major powers; holds at annual and weekly frequencies; and survives allowing structural exposures to the US — trade and investment linkages, US investor holdings, dollar liabilities — to interact with the cycle. Evidence from cross-border holdings, news coverage, sentiment, and growth forecasts points to information and market-perception channels beyond measured integration.

A foundational question in financial economics is whether the stability of lending relationships—not merely their existence—is itself a determinant of corporate behavior. Because both firms and banks self-select into and out of relationships based on characteristics correlated with firm risk, isolating this causal link is empirically difficult. We address this challenge using bank mergers as an exogenous disruption to relationship stability, one that originates from decisions made at the bank level and is plausibly unrelated to individual borrowers’ own risk profiles. Using data on bank-firm lending relationships, bank mergers, and firm risk across 39 countries from 1994 to 2021, we find that when a firm’s relationship bank is acquired, the firm reduces its risk-taking, anticipating credit uncertainty and the need for alternative financing. This effect is concentrated among U.S. borrowers. The effect is stronger among financially constrained borrowers with a stronger relationship with the lender, and it is more pronounced when the acquiring bank is domestic. Post-merger, affected firms reduce leverage as a risk-mitigation mechanism, and their loans become less sensitive to risk in subsequent pricing, reflecting preemptive risk management. While prior work shows that bank mergers sever lending relationships and reshape the credit and pricing outcomes borrowers face, our results show that firms themselves endogenously reoptimize their risk-taking in response to this disruption—a borrower-side channel that, within the U.S. institutional setting, we can most reliably identify and document.

This study combines institutional theory with the logic of mixed gambles to examine how disproportionate voting rights of majority shareholders influence corporate tax behavior in the institutional context of China. We find support for our theoretical prediction that disproportionate voting rights create greater incentive for tax avoidance in China. Moreover, we leverage the heterogeneity in institutional strength across China to explicitly examine the role of institutions in shaping the relationship between disproportionate voting rights and tax avoidance. Our study extends agency research on minority shareholder expropriation by showing that when disproportionate voting rights co-exist with institutional voids, greater costs are imposed on minority shareholders and on society in the form of lower tax revenue for social investment. Practically, our findings can help inform the regulatory debates about the societal consequences of corporate structuring mechanisms (dual class shares and pyramid ownership) that enable disproportionate voting rights and give dominant shareholders outsized control over corporate resources. Our results also advance knowledge regarding the consequences of weaker institutional environments for minority shareholders and society more broadly.

Using data covering the near-universe of U.S. mortgage applications, we show that racial hate crimes are linked to significantly lower local mortgage demand. The decline is specific to racial hate crimes, and no comparable pattern arises for general crime or non-hate offenses. Decomposing exposure into incidents against a borrower’s own group and against other groups, we find that both minority and White applicants apply less, minority applicants mainly after incidents against their own group (targeted threat) and White applicants after incidents against other groups (generalized fear). We also employ a difference-in-differences design around the 2020 surge in hate crime, and the results point in the same direction. Counties with more racial hate crimes show higher psychological distress, lower visible consumption, and weaker home sales and house-price growth, while rents show no comparable change, consistent with effects concentrated in owner-occupied housing.

Using data covering the near-universe of U.S. mortgage applications, we show that racial hate crimes are linked to significantly lower local mortgage demand. The decline is specific to racial hate crimes, and no comparable pattern arises for general crime or non-hate offenses. Decomposing exposure into incidents against a borrower’s own group and against other groups, we find that both minority and White applicants apply less, minority applicants mainly after incidents against their own group (targeted threat) and White applicants after incidents against other groups (generalized fear). We also employ a difference-in-differences design around the 2020 surge in hate crime, and the results point in the same direction. Counties with more racial hate crimes show higher psychological distress, lower visible consumption, and weaker home sales and house-price growth, while rents show no comparable change, consistent with effects concentrated in owner-occupied housing.

We examine whether employee‐based assessments of CEO quality convey value‐relevant information to debt markets. Using over half a million Glassdoor employee reviews from 2012 to 2018, matched to corporate bond issuance data for US firms, we study the relation between employee approval of CEOs and firms’ credit ratings and borrowing costs. We find that higher CEO approval predicts higher bond credit ratings and significantly lower at‐issue yield spreads, with the strongest formal cross‐sectional evidence among speculative‐grade issuers and directionally consistent evidence among smaller and highly leveraged issuers. The bond‐spread relation remains significant after controlling for firm and bond characteristics, firm fixed effects, and overall employee satisfaction, and we provide complementary evidence using orthogonalized CEO approval, instrumental variables, and change regressions. We further show that CEO approval mitigates increases in debt financing costs during the COVID‐19 crisis. Overall, our findings indicate that employee assessments of top executives provide incremental, priced information about firm risk that is incorporated into credit market outcomes.

Small and medium-sized enterprises account for a large share of employment and income inequality, yet little evidence exists on how owner characteristics shape internal wage structures. Using a unique and representative sample of small European firms in which owners are the primary decision-makers reporting information to a bank, we examine the relation between owner gender and the within-firm pay gap between owners and employees. We find that female-owned firms exhibit significantly lower pay gaps than comparable male-owned firms. This difference reflects both lower owner compensation and higher average employee compensation in female-owned firms. We identify access to credit and owner skill specialization as key mechanisms driving this relationship, with gender differences largely disappearing in innovative firms with substantial R&D activity. Moreover, inverse proxies for business ethics, such as poor financial reporting quality, are associated with a stronger positive relationship between male ownership and the pay gap.

Using a difference-in-differences approach, we find that adverse firms’ social incidents significantly increase their abnormal CDS spreads, with substantial heterogeneity across incident types, firms, and institutional environments. Labor-related incidents generate larger and more immediate effects than community-related incidents, suggesting that credit markets distinguish between internally disruptive employee-related risks and externally legitimacy-based community risks. Labor incidents have stronger effects in consumer-facing industries, competitive markets, and countries with stricter employment protections, while community incidents occur in countries with weaker institutions and greater information opacity. Labor incidents also lead to weaker financial fundamentals and lower social ratings. Institutional investors help mitigate social-risk shocks.

California Senate Bill No. 826 (SB 826) was the first binding gender quota for corporate boards in the United States. Using a difference-in-differences-in-differences design that exploits firms' differential exposure to the law, we examine its effects on corporate strategy and the representation of women in management. We find that the law was binding and led affected firms to reorient their strategy toward longer horizons, with increased investment in research and development, intangibles, organizational capital, and environmental performance, and a corporate culture more aligned with long-term values. These shifts come with the cost of lower short-term profitability. Beyond board composition, we provide evidence that the law has also increased the presence of women in other managerial positions within affected corporations and has had spillover effects on other states through firms’ internal networks of establishments. These findings suggest that the law's effects extend beyond board composition and beyond California's borders.