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Research Collection Lee Kong Chian School Of Business

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Full-Text Articles in Finance and Financial Management

How Commonality Persists? (Through Investors' Sentiment And Attention), Chyng Wen Tee, Raja Velu, Zhaoque Zhou Dec 2023

How Commonality Persists? (Through Investors' Sentiment And Attention), Chyng Wen Tee, Raja Velu, Zhaoque Zhou

Research Collection Lee Kong Chian School Of Business

Studies on commonality generally attribute the variation in asset returns to the variation in order flows. In this research study, we show that order flows do not predict asset returns, rather their relationship have been static over time. Thus we model both returns and the order flows as endogenous variables, and use investors' sentiment and attention as exogenous factors via a reduced-rank regression. We provide empirical evidence to demonstrate that cross-sectional commonality in attention (sentiment) is linearly (nonlinearly) associated with both returns and order flows at the intraday level, while the sentiment and attention measures themselvesexhibit a nonlinear mutual relationship, …

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In Search Of Cryptocurrency Failure, Donglian Ma, Jun Tu, Zhaobo Zhu Dec 2023

In Search Of Cryptocurrency Failure, Donglian Ma, Jun Tu, Zhaobo Zhu

Research Collection Lee Kong Chian School Of Business

This paper explores the determinants of cryptocurrency failure and the pricing of crypto failure risk. We document different significant market- and characteristic-based predictors for coin and token failures. The introduction of Bitcoin futures and the outbreak of COVID19 affect the importance of many predictors. Investors require extra return for bearing high failure risk of crypto assets. The return difference across high and low failure risk crypto assets is not explained by the market, size and momentum factors in the cryptocurrency market. Finally, investors benefit from diversifying into high failure risk crypto assets that is little correlated with the stock market.

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Mitigating Industry Contagion Effects From Financial Reporting Fraud: A Competitive Dynamics Perspective Of Non-Errant Rival Firms Exploiting Product-Market Opportunities, Eugene Kang, Nongnapat Thosuwanchot, David Gomulya Nov 2023

Mitigating Industry Contagion Effects From Financial Reporting Fraud: A Competitive Dynamics Perspective Of Non-Errant Rival Firms Exploiting Product-Market Opportunities, Eugene Kang, Nongnapat Thosuwanchot, David Gomulya

Research Collection Lee Kong Chian School Of Business

Existing studies show that financial reporting frauds by errant firms cause declines in stock market valuations for non-errant rival firms (i.e. industry contagion effects). We posit that contagion effects may be mitigated by investors’ expectations of non-errant rivals exploiting product-market opportunities at the expense of errant firms. We apply the competitive dynamics literature to argue that non-errant rivals experience lower contagion effects when they have more available slack to engage in competitive actions. This effect is expected to strengthen when rival firms have previously deployed more resources for research and development and advertising investments or have higher prior market share …

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Tail Risk Hedging: The Search For Cheap Options, Poh Ling Neo, Chyng Wen Tee Nov 2023

Tail Risk Hedging: The Search For Cheap Options, Poh Ling Neo, Chyng Wen Tee

Research Collection Lee Kong Chian School Of Business

The authors find that a simple heuristic of sorting liquid equity options by dollar price to construct a portfolio of cheap put options leads to a surprisingly robust hedge for tail risk – the superior performance holds even when compared against more advanced empirical strategies. Further investigation reveals the asymmetry in market correlation under different market conditions as the mechanism of this robust hedging performance. The cheap options selected by the heuristic comprises of stocks with diverse firm characteristics. The correlation spike accompanying tail risk events leads to the majority of these put options moving into-the-money (ITM), thus compensating the …

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Time To Regulate Influencers Who Tell You Where To Put Your Money, Patricia Lui Nov 2023

Time To Regulate Influencers Who Tell You Where To Put Your Money, Patricia Lui

Research Collection Lee Kong Chian School Of Business

Financial scandals elsewhere have shown that ‘finfluencers’ do not always act in good faith and can mislead their followers.

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Money Changers Have Their Own Fintech Disruption To Grapple With, Aurobindo Ghosh Nov 2023

Money Changers Have Their Own Fintech Disruption To Grapple With, Aurobindo Ghosh

Research Collection Lee Kong Chian School Of Business

In a commentary, SMU Assistant Professor of Finance (Education) and Director of the Citi Foundation-SMU Financial Literacy Programme for Young Adults Aurobindo Ghosh discussed the outlook for money changers in a world of multi-currency apps. He however noted money changers still have a role to play, and shared his views on how money changers can respond to technological disruption.

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Consumers’ Reaction To Corporate Esg Performance: Evidence From Store Visits, Frank Weikai Li, Frank Weikai Li, Roni Michaely Oct 2023

Consumers’ Reaction To Corporate Esg Performance: Evidence From Store Visits, Frank Weikai Li, Frank Weikai Li, Roni Michaely

Research Collection Lee Kong Chian School Of Business

Using micro-level data on consumer shopping behavior, this paper investigates end-consumers’ attitudes toward firms’ ESG behavior, and as importantly, the ability of consumers to affect firms’ policy concerning sustainability issues. We find that consumers care about firms’ approach toward ESG, and consumers’ behavior can impact firms’ attitudes. Using ESG incidents as a proxy, we find that the reduction in store visits is more pronounced for ESG-conscious consumers, such as those living in democratic counties, and counties with a higher fraction of educated and younger residents. Online shopping interest data yields similar results. Using abnormally hot temperature as a shock to …

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Digital Wealth Management And Consumption: Micro Evidence From Individual Investments, Qian Gong, Mingyuan Ban, Yunjun Yu, Luying Wang, Yan Yuan Oct 2023

Digital Wealth Management And Consumption: Micro Evidence From Individual Investments, Qian Gong, Mingyuan Ban, Yunjun Yu, Luying Wang, Yan Yuan

Research Collection Lee Kong Chian School Of Business

With the rapid advancement of digital finance in China, accessing wealth management services through digital platforms has become considerably convenient. However, the potential impact of digital platform investments on residents' consumption remains a relatively unexplored question. This study addresses this gap by leveraging a unique dataset obtained from one of China's largest fintech companies, encompassing individual-level data on consumption and investment. Our findings indicate that engaging in digital platform investments can indeed stimulate residents' consumption. Importantly, participation in digital platform investment has an inclusive effect, with a more pronounced marginal impact on consumption among low-income residents and in-dividuals residing in …

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Does The Federal Reserve Obtain Competitive And Appropriate Prices In Monetary Policy Implementation?, Yu An, Zhaogang Song Oct 2023

Does The Federal Reserve Obtain Competitive And Appropriate Prices In Monetary Policy Implementation?, Yu An, Zhaogang Song

Research Collection Lee Kong Chian School Of Business

Many of the Federal Reserve’s (the Fed’s) monetary policy operations involve trading with primary dealers. We find that, for agency MBS, dealers charge 2.5 cents (per $100 face value) higher selling to the Fed than to non-Fed customers. Controlling for the same dealer, same security, and same trading time, this discriminatory pricing likely arises from dealers’ market power rather than inventory costs. Further, matching trade size reduces the price differential by more than half, implying that dealers’ market power greatly relates to the Fed’s purchases in large amounts, whereas the Fed’s limited breadth of counterparty choice also plays some role.

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Editorial: Digital Finance And Sustainability: Impacts, Challenges, And Policy Priorities, John Beirne, David G. Fernandez Oct 2023

Editorial: Digital Finance And Sustainability: Impacts, Challenges, And Policy Priorities, John Beirne, David G. Fernandez

Research Collection Lee Kong Chian School Of Business

Digitalization helps to transform economies through supporting inclusive growth and enhancing economy-wide productivity, with the important role of digital finance being a key component of this [1]. This can also underpin progress on reaching targets set for achieving the Sustainable Development Goals (SDGs). More recently, initiatives on sustainable digital finance and green fintech have been at the core of a new strand of research on the nexus between digital finance and environmental sustainability (e.g., [2]). In addition, the promotion of a sound and efficient digital payment system, both nationally and globally, is an important mechanism for reducing inequality (e.g., [3]. …

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Does The Consolidated Feed Matter?, Shihao Yu Oct 2023

Does The Consolidated Feed Matter?, Shihao Yu

Research Collection Lee Kong Chian School Of Business

In this paper we examine the role of the consolidated feeds in the current U.S. equities market by studying exogenous events which affect their speed and availability respectively. We find that faster consolidated feeds have an adverse, albeit mild, impact on market liquidity, possibly as a result of more non-high-frequency algorithmic trading activities from informed institutional traders. Moreover, when the consolidated feeds become corrupted or unavailable due to technical glitches, market liquidity significantly worsens. Our findings suggest that the consolidated feeds remain a crucial component of today’s market data infrastructure.

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Is Carbon Risk Priced In The Cross-Section Of Corporate Bond Returns?, Tinghua Duan, Frank Weikai Li, Quan Wen Sep 2023

Is Carbon Risk Priced In The Cross-Section Of Corporate Bond Returns?, Tinghua Duan, Frank Weikai Li, Quan Wen

Research Collection Lee Kong Chian School Of Business

This paper examines the pricing of a firm's carbon risk, measured by its carbon emissions intensity, in the cross-section of corporate bond returns. Contrary to the "carbon risk premium" hypothesis, we find bonds of firms with higher carbon emissions intensity earn significantly lower returns. This effect cannot be explained by a comprehensive list of bond characteristics and exposure to known risk factors. Investigating sources of the low carbon premium, we find the underperformance of bonds issued by carbon-intensive firms cannot be fully explained by divestment from institutional investors. Instead, our evidence is most consistent with investor underreaction to carbon risk, …

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Does Abstract Thinking Facilitate Information Processing? Evidence From Financial Analysts, Frank Weikai Li, Rong Wang, Yang Yu, Gloria Yang Yu Sep 2023

Does Abstract Thinking Facilitate Information Processing? Evidence From Financial Analysts, Frank Weikai Li, Rong Wang, Yang Yu, Gloria Yang Yu

Research Collection Lee Kong Chian School Of Business

We study whether abstract thinking – an essential cognitive trait established by psychological and neuroscientific studies – facilitates analysts’ information processing. Exploiting analysts’ questions during earnings calls, we construct an Abstract Thinking Index (ATI) that measures their tendency to involve abstract words, logical reasoning, broader topics, and future outlooks. We find that abstract thinking improves analysts’ forecast accuracy and recommendation informativeness. Consistent with abstract thinking featuring identifying central characteristics and comprehending intangible things, ATI has stronger effects for firms with fundamentals co-moving more with peers and less tangible information. Additional analyses suggest that ATI captures analysts’ cognitive traits rather than …

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Shrinking Factor Dimension: A Reduced-Rank Approach, Ai He, Dashan Huang, Jiaen Li, Guofu Zhou Sep 2023

Shrinking Factor Dimension: A Reduced-Rank Approach, Ai He, Dashan Huang, Jiaen Li, Guofu Zhou

Research Collection Lee Kong Chian School Of Business

We propose a reduced-rank approach (RRA) to reduce a large number of factors to a few parsimonious ones. In contrast to PCA and PLS, the RRA factors are designed to explain the cross section of stock returns, not to maximize factor variations or factor covariances with returns. Out of 70 factor proxies, we find that five RRA factors outperform the Fama-French (2015) five factors for pricing target portfolios, but performs similarly for pricing individual stocks. Our results suggest that existing factor proxies do not provide enough new information at the stock level beyond the Fama-French (2015) five factors.

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Option Market Maker Hedging And Stock Market Liquidity, James O′Donovan, Gloria Yang Yu, Jinyuan Zhang Sep 2023

Option Market Maker Hedging And Stock Market Liquidity, James O′Donovan, Gloria Yang Yu, Jinyuan Zhang

Research Collection Lee Kong Chian School Of Business

This paper demonstrates that option market maker hedging impacts the liquidity of underlying stocks. Options contracts have zero net supply, and option market makers engage in delta hedging to manage the risk of their net imbalances, unlike option end-users. Consequently, when option market makers hold a net short (long) position, their dynamic hedging demands liquidity from (or supplies liquidity to) the underlying stock, leading to market destabilization (or stabilization). Leveraging proprietary option exchange data that categorizes option trading by trader type, we document this effect and show that it is stronger for stocks where liquidity supply is expected to be …

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What Drives The Value Of Financial Analysts’ Advice? The Role Of Earnings And Growth Forecasts, Ohad Kadan, Leonardo Madureira, Rong Wang, Tzachi Zach Sep 2023

What Drives The Value Of Financial Analysts’ Advice? The Role Of Earnings And Growth Forecasts, Ohad Kadan, Leonardo Madureira, Rong Wang, Tzachi Zach

Research Collection Lee Kong Chian School Of Business

We offer a parsimonious index at the individual analyst level to measure the extent to which an analyst relies on earnings and long-term growth forecasts in producing her advice. Using this index, we evaluate the contribution of earnings and growth forecasts to the investment value of analysts’ stock recommendations. We find that the fraction of analysts’ advice attributed to forecasts varies considerably across analysts and sectors. The investment value of recommendations is higher for analysts who rely less on their forecasts and more on other sources of information when forming investment advice. Investors recognize the superiority of recommendations from analysts …

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The Information In Asset Fire Sales, Sheng Huang, Matthew C. Ringgenberg, Zhe Zhang Sep 2023

The Information In Asset Fire Sales, Sheng Huang, Matthew C. Ringgenberg, Zhe Zhang

Research Collection Lee Kong Chian School Of Business

Asset prices remain depressed for years following mutual fund fire sales, but little is known about the causes of these price drops. We show that asymmetric information generates price pressure during fire sales. We separate trades into expected trades, which assume fund managers scale down their portfolio, and discretionary trades. We find that discretionary trades contain fundamental information, whereas expected trades do not. Moreover, other traders cannot distinguish between discretionary and expected trades. Our findings help explain the magnitude and persistence of fire sale discounts: fund managers choose which assets to sell, and information asymmetries make it difficult for arbitrageurs …

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From Hype To Reality: A Critical Analysis Of Blockchain-Based Regenerative Finance, Simon J.D. Schillebeeckx, Marco Schletz Sep 2023

From Hype To Reality: A Critical Analysis Of Blockchain-Based Regenerative Finance, Simon J.D. Schillebeeckx, Marco Schletz

Research Collection Lee Kong Chian School Of Business

The authors dive deep into the field of ReFi, a concept that enhances financial practices through decentralization and focuses on environmental and societal systems. The authors highlight several key problems of the space and point out that genuinely disruptive ReFi models are still in their infancy. The good news is that ReFi’s potentials are manifold and exciting. In the not-too-distant future, we might see financial applications backed by blockchain that can enhance data credibility, exchangeability, and transparency to redefine how corporations create and apportion environmental value.

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Bayesian Optimization With Switching Cost: Regret Analysis And Lookahead Variants, Peng Liu, Haowei Wang, Wei Qiyu Aug 2023

Bayesian Optimization With Switching Cost: Regret Analysis And Lookahead Variants, Peng Liu, Haowei Wang, Wei Qiyu

Research Collection Lee Kong Chian School Of Business

Bayesian Optimization (BO) has recently received increasing attention due to its efficiency in optimizing expensive-to-evaluate functions. For some practical problems, it is essential to consider the path-dependent switching cost between consecutive sampling locations given a total traveling budget. For example, when using a drone to locate cracks in a building wall or search for lost survivors in the wild, the search path needs to be efficiently planned given the limited battery power of the drone. Tackling such problems requires a careful cost-benefit analysis of candidate locations and balancing exploration and exploitation. In this work, we formulate such a problem as …

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Blockchain And Regenerative Finance: Charting A Path Toward Regeneration, Marco Schletz, Axel Constant, Angel Hsu, Simon J.D. Schillebeeckx, Roman Beck, Martin Wainstein Jul 2023

Blockchain And Regenerative Finance: Charting A Path Toward Regeneration, Marco Schletz, Axel Constant, Angel Hsu, Simon J.D. Schillebeeckx, Roman Beck, Martin Wainstein

Research Collection Lee Kong Chian School Of Business

The Regenerative Finance (ReFi) movement aims to fundamentally transform the governance of global common pool resources (CPRs), such as the atmosphere, which are being degraded despite international efforts. The ReFi movement seeks to achieve this by utilizing digital monitoring, reporting, and verification (D-MRV); tokenization of assets; and decentralized governance approaches. However, there is currently a lack of a clear path forward to create and implement models that actually drive the “Re-” in ReFi beyond perpetuating the existing extractive economics and toward actual regeneration. In addition, ReFi suffers from growing pains, lacking a common interoperability framework and definition for determining what …

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Seeking Better Sharpe Ratio Via Bayesian Optimization, Peng Liu Jul 2023

Seeking Better Sharpe Ratio Via Bayesian Optimization, Peng Liu

Research Collection Lee Kong Chian School Of Business

Developing an excellent quantitative trading strategy to obtain a high Sharpe ratio requires optimizing several parameters at the same time. Example parameters include the window length of a moving average sequence, the choice of trading instruments, and the thresholds used to generate trading signals. Simultaneously optimizing all these parameters to seek a high Sharpe ratio is a daunting and time-consuming task, partly because of the unknown mechanism determining the Sharpe ratio. This article proposes using Bayesian optimization to systematically search for the optimal parameter configuration that leads to a high Sharpe ratio. The author shows that the proposed intelligent search …

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Insider Trading And Corporate Spinoffs, Charlie Charoenwong, Kuan Yong David Ding, Jing Pan Jul 2023

Insider Trading And Corporate Spinoffs, Charlie Charoenwong, Kuan Yong David Ding, Jing Pan

Research Collection Lee Kong Chian School Of Business

This paper studies insider trading to examine undervaluation as a motive behind corporate spinoffs. We show an unmistakable increase (decrease) in the number of insider purchases (sales) and net purchases (sales) in the four quarters prior to a spinoff announcement. In addition, relative to a benchmark period, insider selling is significantly lower, and their net purchases significantly higher, in the three quarters prior to a spinoff announcement compared to other periods. We find that announcement period excess returns for abnormal net insider purchases are significantly higher than excess returns for abnormal net insider sales. Moreover, only firms with abnormal net …

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Growing Up Under Mao And Deng: On The Ideological Determinants Of Corporate Policies, Hao Liang, Rong Wang, Haikun Zhu Jun 2023

Growing Up Under Mao And Deng: On The Ideological Determinants Of Corporate Policies, Hao Liang, Rong Wang, Haikun Zhu

Research Collection Lee Kong Chian School Of Business

Historically, economic activities have been organized around certain ideologies. We investigate the impact of politicians’ ideology on corporate policies by exploring a unique setting of ideological change—China from Mao to Deng around the 1978 economic reform—in a regression discontinuity framework. We find that the age discontinuity of politicians around 18 years old in 1978, who had already joined the Chinese Communist Party (CCP) or joined soon thereafter and later became municipal paramount leaders, has had a lasting effect on contemporary firm- and city-level policies. In particular, firms in cities with mayors that joined the CCP under the ideological regime of …

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Policy Uncertainty Reduces Green Investment, Mengyu Wang, Jeffrey Wurgler, Hong Zhang Jun 2023

Policy Uncertainty Reduces Green Investment, Mengyu Wang, Jeffrey Wurgler, Hong Zhang

Research Collection Lee Kong Chian School Of Business

Government subsidies are often used to stimulate environment-friendly investment. We find that Chinese firms reduce green investment as the uncertainty of subsidies rises. This effect is identified from weather-driven fluctuations in air pollution that lead to fluctuations in subsidy allocations: Firms in cities where weather-driven subsidy uncertainty is high engage in less green R&D investment, patent applications, and research staff. Industries that are heavy emitters and those focused on environmental technologies are more affected. The results suggest that policy uncertainty may originate not only from political and macroeconomic shocks but from behavioral mechanisms that link policy to salient recent conditions.

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Hfts And Dealer Banks: Liquidity And Price Discovery In Fx Trading, Wenqian Huang, Peter O'Neill, Angelo Ranaldo, Shihao Yu Jun 2023

Hfts And Dealer Banks: Liquidity And Price Discovery In Fx Trading, Wenqian Huang, Peter O'Neill, Angelo Ranaldo, Shihao Yu

Research Collection Lee Kong Chian School Of Business

In this paper, we characterise the liquidity provision and price discovery roles of dealers and HFTs in the FX spot market during the sample period between 2012 and 2015. We find that they have different responses to adverse market conditions: HFT liquidity provision is less sensitive to spikes in market-wide volatility, while dealer bank liquidity is more robust ahead of scheduled macroeconomic news announcements when adverse selection risk is high. In periods of extreme levels of volatility, such as the `Swiss De-peg' event in our sample, HFTs appear to withdraw almost all liquidity while dealers remain. In normal times, we …

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Asset-Rich And Cash-Poor: Which Older Adults Value Reverse Mortgages?, Joelle H. Fong, Olivia S. Mitchell, Benedict S. K. Koh May 2023

Asset-Rich And Cash-Poor: Which Older Adults Value Reverse Mortgages?, Joelle H. Fong, Olivia S. Mitchell, Benedict S. K. Koh

Research Collection Lee Kong Chian School Of Business

Home equity represents a substantial share of retirement wealth for many older persons, particularly in Asia where national housing policies have encouraged home-ownership. This paper explored the potential for reverse mortgages to help 'asset-rich and cash-poor' older Singaporeans unlock their home equity while ageing in place. The empirical analysis was based on a nationally representative survey of home-owners age 50+ in the 2018 Singapore Life Panel (N = 6,258). Our analyses showed that the average older home-owner holds some 60 per cent of total net wealth in housing equity, suggestive of high demand potential for reverse mortgage products. Nevertheless, actual …

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Liquidity Constraints, Consumption, And Debt Repayment: Evidence From Macroprudential Policy In Turkey, Sumit Agarwal, Muris Hadzic, Changcheng Song, Yildirim Yildiray Apr 2023

Liquidity Constraints, Consumption, And Debt Repayment: Evidence From Macroprudential Policy In Turkey, Sumit Agarwal, Muris Hadzic, Changcheng Song, Yildirim Yildiray

Research Collection Lee Kong Chian School Of Business

Using account-level credit card data from a large Turkish bank, we study the impact of a unique credit card policy that increases minimum payment on consumption and debt repayment. We show that the policy reduces credit card spending and debt, boosts existing debt repayment, and reduces credit card delinquency. The credit card debt of affected consumers falls on average by 50% two years into the policy’s implementation. An increase in minimum payment has a stronger effect than does a decrease of a similar magnitude. We build a benchmark life cycle model with soft liquidity constraint to explain the reduction in …

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Exchange-Traded Funds And Real Investment, Constantinos Antoniou, Frank Weikai Li, Xuewen Liu, Avanidhar Subrahmanyam, Chengzhu Sun Mar 2023

Exchange-Traded Funds And Real Investment, Constantinos Antoniou, Frank Weikai Li, Xuewen Liu, Avanidhar Subrahmanyam, Chengzhu Sun

Research Collection Lee Kong Chian School Of Business

We investigate the link between exchange-traded funds and real investment. Cross-sectionally, higher ETF ownership is associated with an increased sensitivity of real investment to Tobin's q and a heightened ability of stock returns to forecast future earnings. Inclusion of stocks in industry ETFs enhances investment-q sensitivity and implies greater incorporation of earnings information into prices prior to public releases. Greater nonmarket ETF ownership leads to increased (reduced) reliance of real investment on own (peers') stock prices. Overall, the evidence is consistent with ETFs positively affecting real investment efficiency via greater flows of information.

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Loan Spreads And Credit Cycles: The Role Of Lenders' Personal Economic Experiences, Daniel Carvalho, Janet Gao, Pengfei Ma Mar 2023

Loan Spreads And Credit Cycles: The Role Of Lenders' Personal Economic Experiences, Daniel Carvalho, Janet Gao, Pengfei Ma

Research Collection Lee Kong Chian School Of Business

We provide evidence that changes in lender optimism can lead to excessive fluctuations in credit spreads across the credit cycle. Using data on the real estate properties of loan officers originating large corporate loans, we find that credit spreads overreact to sophisticated lenders' recent local economic experiences, captured by local housing price growth. These effects are only present when borrowers own real estate assets and during times of greater uncertainty about real estate values, i.e., boom-and-bust cycles in housing prices. Our analysis suggests that recent personal experiences shape sophisticated lenders' beliefs about real estate values, which affect their pricing decisions.

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Strategic Financial Management Part Iii: Debt Maturity And Priority And Corporate Liquidity, Fangjian Fu, Clifford W. Smith Mar 2023

Strategic Financial Management Part Iii: Debt Maturity And Priority And Corporate Liquidity, Fangjian Fu, Clifford W. Smith

Research Collection Lee Kong Chian School Of Business

This is the third in our series ofJACFarticles that explores thecorporate motives for and consequences of seasoned equity offer-ings (SEOs) by U.S. public companies over the past 50 years. Likeits two predecessors, this article begins by examining each of thethree standard theories (or “models”) of corporate capital structureand financing policy that continue to receive serious considerationin academic discussions: (1) the Tradeoff Model;(2)thePeckingOrder Model, and (3) theMarket Timing Model.Aswealsobeganby noting in our two previous articles, each of these three modelshas implications that do not fit comfortably with the findings ofour analysis of over 8500 SEOs by U.S. companies between 1970and 2019.

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