This article examines at‐the‐market (ATM) equity programs as an additional source of financial flexibility. We find that firms with higher market‐to‐book ratios and greater institutional ownership are more likely to announce an ATM program. Firms using ATM programs are also more likely to issue shares when they have exhausted other viable financing alternatives, have timely investment opportunities and when market conditions are favorable. Finally, we document a significant negative announcement effect around the establishment of an ATM program, though the magnitude of this effect is significantly less negative than that of a comparable SEO.
Kenan Institute Distinguished Fellow John Haltiwanger of the University of Maryland talks about why the Hollywood story of rising from the mailroom to the boardroom is less likely to happen now.
As U.S. and Chinese delegations prepare to meet May 9 and 10, experts weigh in on the ongoing U.S.-China trade talks and ramifications for businesses, governments and consumers around the globe.
Kenan Institute Distinguished Fellow David Deming of Harvard talks about his research focusing on the potential for effective teamwork involving humans and AI.
Climatologists project that global temperatures may rise by up to four degrees Celsius over the next century. This projection raises a natural question: “Can we assess the impact that this temperature increase will have on the U.S. economy?” UNC Kenan-Flagler Business School Professor of Finance Ric Colacito discusses his co-authored paper “Temperature and Growth: A Panel Analysis of the United States.”
Scott Kupor, managing partner with venture capital firm Andreesen Horowitz and author of "Secrets of Sandhill Road: Venture Capital and How to Get It," discusses the industry’s obligation to embrace inclusiveness and increase diversity.
As we return to a new normal post-pandemic, organizational and individual work arrangements will have to be designed to take into account that employees will range from not wanting to give up their autonomy of working from home to those who will want to come rushing back to the physical office. However, a large swath of the workforce will be somewhere in the middle. They would like to mix and match the benefits of working remotely and the advantages of coming to physical offices.
How do an organization's task requirements affect the ways in which it reacts to competitors’ strategic investments? This study uses a novel measure of task requirements (Case Mix Index), to test the competitive and spillover effects of prior adoption on a focal organization's timing of adoption, while accounting for the underlying demand-side drivers of adoption.
As federal, state and local governments struggle to reopen the economy as the COVID-19 pandemic surges onward, efforts to ensure people’s health and safety are seemingly at odds with attempts to spur economic activity. In this Kenan Insight, we explore how a data-driven approach to reopening North Carolina (and the U.S. as a whole) can help preserve both lives and livelihoods.
A video retrospect of the Center for Sustainable Enterprise’s 20-year history of helping empower business leaders to mutually advance shareholder value, environmental stewardship and economic development and growth. CSE is an affiliated center of the Kenan Institute of Private Enterprise at UNC Kenan-Flagler Business School.
For hospitals, a corollary to the popular adage “what gets measured gets managed” could be “measure more accurately to manage costs better.” That seems to be true even in industries like healthcare, where corporations and the government have been struggling for years to control hydra-like costs. UNC Kenan-Flagler Business School accounting professor Eva Labro and Lorien Stice-Lawrence (PhD ’17) found one way to significantly cut hospital costs is to upgrade accounting systems in their forthcoming paper in Management Science.
The increasingly open flow of goods and services has fundamentally altered the world economy and global power balances. It is also reshaping the American political system and our economic geography, providing clear and lasting benefits for some and negative impacts for others. This conference convenes thought leaders from the business community, government and academia to explore the core questions of the impact of international trade on society, the changing nature of work and economic productivity.
The 11th Annual ARCS Research Conference will be hosted by the Center for Sustainable Enterprise at the UNC Kenan-Flagler Business School and Kenan Institute of Private Enterprise.
Financial intermediaries often provide guarantees that resemble out-of-the-money put options, exposing them to tail risk. We present a model in the context of the U.S. life insurance industry in which variable annuity (VA) guarantees and associated hedging operate within the regulatory capital framework to create incentives for insurers to overweight high-risk and illiquid bonds (“reach-for-yield”).
Since 1965, average idiosyncratic risk (IR) has never been lower than in recent years. In contrast to the high IR in the late 1990s that has drawn considerable attention in the literature, average market-model IR is 44% lower in 2013-2017 than in 1996-2000. Macroeconomic variables help explain why IR is lower, but using only macroeconomic variables leads to large prediction errors compared to using only firm-level variables. As a result of the dramatic change in the number and composition of listed firms since the late 1990s, listed firms are larger and older. Larger and older firms have lower idiosyncratic risk. Models that use firm char-acteristics to predict firm-level idiosyncratic risk estimated over 1963-2012 can largely or completely ex-plain why IR is low over 2013-2017. The same changes that bring about historically low IR lead to unusu-ally high market-model R-squareds.
We show that in the years following a large broad-based employee stock option (BBSO) grant, employee turnover falls at the granting firm. We find evidence consistent with a causal relation by exploiting unexpected changes in the value of unvested options. A large fraction of the reduction in turnover appears to be temporary with turnover increasing in the third year following the year of the adoption of the BBSO plan. The increase three years post-grant is equal in magnitude to the cumulative decrease in turnover over the three prior years, suggesting that long-vesting BBSO plans delay, instead of prevent, turnover.
A research paper co-authored by Kenan Institute Director Greg Brown is cited in a recent Bloomberg View post by columnist Matt Levine. The post, “Are Banks Worthless?,” looks at passive investing, the performance of banks’ investment products, and other current financial topics. Brown’s paper, co-authored with Söhnke Bartram and René Stultz, explores the reasons for historically low idiosyncratic risk in recent years.
Since 2001, the number of one-quarter-ahead financial items forecasted by analysts and disseminated via FactSet and I/B/E/S data feeds has risen from 5 to 170+. We show that the income statement, cash flow statement, balance sheet, ratio/other, and KPI forecast surprises related to this dissemination are strongly associated with increases in the information content of earnings announcements.
We consider a manufacturer serving a retailer that sells its product to customers over two periods. Each firm determines its unit price. The retailer orders the product from the manufacturer prior to the beginning of the selling periods.