Questions in Finance

Should You Hire a Financial Advisor?

Should You Hire a Financial Advisor?
In this episode, hosts Kate Holland and Veljko Fotak weight the costs and benefits of hiring a financial advisor. How much do advisors really cost? Do advisors lead to higher returns? How common is fraud? What are the mistakes people make in selecting advisors—and what mistakes do advisors make themselves? The conversation touches upon those questions and much more and, as always, the discussion is rooted in the latest academic research!
 
Timeline:
00:00 Should You Hire a Financial Advisor?
04:02 Welcome to Questions in Finance
04:39 Retirement Got Complicated
14:28 RIAs, CFPs, CFAs, and More Alphabet Soups
21:37 No, They Underperform
32:54 Yes, Advisors Get Investors from Cash to Stocks
42:34 No, there is Too Much Fraud
44:52 Yes, They Reduce Anxiety
51:10 Yes, They Provide a Variety of Services
55:58 No, Advice is not Customized
01:07:21 So, Who Should Get an Advisor? 
 
Bibliography:
Bergstresser, Daniel, John MR Chalmers, and Peter Tufano. "Assessing the costs and benefits of brokers in the mutual fund industry." The Review of Financial Studies 22, no. 10 (2008): 4129-4156.
Bhattacharya, Utpal, Andreas Hackethal, Simon Kaesler, Benjamin Loos, and Steffen Meyer. "Is unbiased financial advice to retail investors sufficient? Answers from a large field study." The Review of Financial Studies 25, no. 4 (2012): 975-1032.
Cici, Gjergji, Alexander Kempf, and Christoph Sorhage. "Do financial advisors provide tangible benefits for investors? Evidence from tax-motivated mutual fund flows." Review of Finance 21, no. 2 (2017): 637-665.
Egan, Mark, Shan Ge, and Johnny Tang. "Conflicting interests and the effect of fiduciary duty: Evidence from variable annuities." The Review of Financial Studies 35, no. 12 (2022): 5334-5386.
Egan, Mark, Gregor Matvos, and Amit Seru. "The market for financial adviser misconduct." Journal of Political Economy 127, no. 1 (2019): 233-295.
Foerster, Stephen, Juhani T. Linnainmaa, Brian T. Melzer, and Alessandro Previtero. "Retail financial advice: does one size fit all?." The Journal of Finance 72, no. 4 (2017): 1441-1482.
Gaudecker, Hans‐Martin Von. "How does household portfolio diversification vary with financial literacy and financial advice?." The Journal of Finance 70, no. 2 (2015): 489-507.
Gennaioli, Nicola, Andrei Shleifer, and Robert Vishny. "Money doctors." The Journal of Finance 70, no. 1 (2015): 91-114.
Guercio, Diane Del, and Jonathan Reuter. "Mutual fund performance and the incentive to generate alpha." The Journal of Finance 69, no. 4 (2014): 1673-1704.
Linnainmaa, Juhani T., Brian T. Melzer, and Alessandro Previtero. "The misguided beliefs of financial advisors." The Journal of Finance 76, no. 2 (2021): 587-621.
Stoughton, Neal M., Youchang Wu, and Josef Zechner. "Intermediated investment management." The Journal of Finance 66, no. 3 (2011): 947-980. 
 
Soundtrack:
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

What Ten Geopolitical Trends Are Shaping Tomorrow’s Markets? With William Megginson

What Ten Geopolitical Trends Are Shaping Tomorrow’s Markets? With William Megginson
What do financial economists make of the current geopolitical landscape? Hosts Kate Holland and Veljko Fotak, along with today's guest Bill Megginson, talk about the current state of geopolitics. They discuss tariffs, climate change politics, the internal political dynamics of China, Canada, and Russia, as well as newly emerging peace in the Middle East. And more, spanning the rearmament of the West, the increasing role of state ownership, the burgeoning space economy, and the projected impact of AI on global finance. Concluding with demographic trends and their potential to reshape the global economic landscape, this episode provides an overview of the most pressing geopolitical trends investors should be aware of.
 
Timeline:
00:00 Welcome to Questions in Finance
00:37 Introductions
10:17 Trend One. A New Tariff Regime
15:48 Trend Two. Climate Politics
21:02 Trend Three. Political Change in Canada, Russia, China, Israel
42:00 Trend Four. Peace in the Middle East!
50:06 Trend Five. Re-armament of the West
58:35 Trend Six. Europe's Ghosts
01:00:57 Trend Seven. The Re-emergence of State Capitalism
01:05:41 Trend Eight. The Space Economy
01:11:57 Trend Nine. AI is Taking Over the World
01:23:54 Trend Ten. Demographics Destiny?
01:31:34 Kate's Fear, Airborne Viruses and Pandemics
01:35:17 The Short Version...
  
 
Soundtrack:
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.
 

How Does Policy Uncertainty Affect Investments?

How Does Policy Uncertainty Affect Investments?
In this episode, university professors Kate Holland and Veljko Fotak explore academic research on the impact of policy uncertainty on investment decisions, markets, and firms. The episode underscores that high levels of policy uncertainty tend to depress corporate investment, hiring, and economic growth, as firms delay major expenditures. The conversation spans equity markets and higher risk premia, as well as 'flight to safety' effects in bond markets and the crucial question: Why are markets seemingly not reacting to the high levels of uncertainty in the summer of 2025?
 
Timeline:
00:00 How Does Policy Uncertainty Affect Investments?
06:01 Welcome to Questions in Finance
06:39 Defining and Measuring Policy Uncertainty
07:45 Economic Policy Uncertainty Index (EPU)
11:53 Historical Context and Validation of the EPU
16:47 Corporate Reactions to Policy Uncertainty
24:08 Impact on Mergers and Acquisitions
26:14 Research and Development During Uncertainty
30:14 Policy Uncertainty and Equity Markets
38:00 What is NOT Happening in 2025
47:42 Uncertainty and Bond Markets
49:39 Flight to Safety Mechanism
58:10 Political Uncertainty and Option Markets
59:06 Summary and Final Thoughts
 
Bibliography:
Atanassov, Julian, Brandon Julio, and Tiecheng Leng. "The bright side of political uncertainty: The case of R&D." The Review of Financial Studies 37, no. 10 (2024): 2937-2970.
Azzimonti, Marina. "Partisan conflict and private investment." Journal of Monetary Economics 93 (2018): 114-131.
Baker, Scott R., Nicholas Bloom, and Steven J. Davis. "Measuring economic policy uncertainty." The Quarterly Journal of Economics 131, no. 4 (2016): 1593-1636.
Bianconi, Marcelo, Federico Esposito, and Marco Sammon. "Trade policy uncertainty and stock returns." Journal of International Money and Finance 119 (2021): 102492.
Bonaime, Alice, Huseyin Gulen, and Mihai Ion. "Does policy uncertainty affect mergers and acquisitions?." Journal of Financial Economics 129, no. 3 (2018): 531-558.
Boutchkova, Maria, Hitesh Doshi, Art Durnev, and Alexander Molchanov. "Precarious politics and return volatility." The Review of Financial Studies 25, no. 4 (2012): 1111-1154.
Brogaard, Jonathan, and Andrew Detzel. "The asset-pricing implications of government economic policy uncertainty." Management science 61, no. 1 (2015): 3-18.
Gulen, Huseyin, and Mihai Ion. "Policy uncertainty and corporate investment." The Review of Financial Studies 29, no. 3 (2016): 523-564.
Hassan, Tarek A., Stephan Hollander, Laurence Van Lent, and Ahmed Tahoun. "Firm-level political risk: Measurement and effects." The quarterly journal of economics 134, no. 4 (2019): 2135-2202.
Julio, Brandon, and Youngsuk Yook. "Political uncertainty and corporate investment cycles." The Journal of Finance 67, no. 1 (2012): 45-83.
Kelly, Bryan, Ľuboš Pástor, and Pietro Veronesi. "The price of political uncertainty: Theory and evidence from the option market." The Journal of Finance 71, no. 5 (2016): 2417-2480.
Leippold, Markus, and Felix Matthys. "Economic policy uncertainty and the yield curve." Review of Finance 26, no. 4 (2022): 751-797.
Nguyen, Nam H., and Hieu V. Phan. "Policy uncertainty and mergers and acquisitions." Journal of Financial and Quantitative Analysis 52, no. 2 (2017): 613-644.
Pastor, Lubos, and Pietro Veronesi. "Uncertainty about government policy and stock prices." The Journal of Finance 67, no. 4 (2012): 1219-1264.
Pástor, Ľuboš, and Pietro Veronesi. "Political uncertainty and risk premia." Journal of Financial Economics 110, no. 3 (2013): 520-545.
Wang, Junbo, Chunchi Wu, Xiaoguang Yang, and Ye Zhou. "Policy uncertainty and corporate bond issuance costs." Review of Quantitative Finance and Accounting (2025): 1-42.
 
Soundtrack:
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.
 

Can You Invest Like Warren Buffett?

Can You Invest Like Warren Buffett?
 
In this episode of 'Questions in Finance,' hosts Kate Holland and Veljko Fotak chat about the life and investment philosophy of Warren Buffett, exploring his journey from a young investor to the sixth richest man in the world. The discussion covers his unique approach to investing, the four pillars of his success, and the lessons learned from both his hits and misses in the investment world. Kate and Veljko also reflect on what makes Buffett special and whether his investment strategies can be replicated.
 
Timeline:
 
00:00 Can You Invest Like Warren Buffett?
03:13 Welcome To Questions in Finance
09:32 The Four Pillars: Buffett's Main Investments
14:24 Public vs. Private Holdings: A Financial Overview
21:00 Buffett's Investment Hits and Misses
27:53 Buffett's Political and Financial Maneuvering
30:55 The Williams Energy Rescue
37:40 Cash Reserves and Market Outlook
46:14 Characteristics of Buffett, a Successful Investor
52:12 Journalists' Take on Buffett
54:04 What Makes Warren Buffett Special?
01:00:17 Warren Buffett's Quotes
01:06:42 Let's Summarize Our Warren Buffett Discussion
01:11:27 Buffett is Passing on the Reins to Greg Abel
 
 
Soundtrack:
 
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

Should Space Be Privatized? With William Megginson

Should Space Be Privatized? With William Megginson
In this episode of 'Questions in Finance,' Kate and Veljko explore the space economy with Bill Megginson, Professor and Price Chair in Finance at the University of Oklahoma. They discuss the history, financing, and future prospects of space exploration, focusing on the pivotal roles played by private enterprises like SpaceX and government entities such as NASA. The conversation highlights the dramatic reduction in launch costs, the rise of satellite technology, and the competition between the US and China. They delve into the financing challenges of space ventures, the impact of venture capital, and the broader economic implications, touching on topics from military applications to the pursuit of knowledge and technological spinoffs. The episode concludes with insights into the future roles of commercial and government sectors in space activities.
 
Timeline:
00:00 16 Psyche and Quadrillions of Dollars
07:44 Spaceflight Economics
10:19 Today's Guest, Bill Megginson
11:03 Should the Spaceflight Economy be Privatized?
15:02 Dogs. And Cats.
16:17 Basics and Stats of the Space Economy
21:23 A Bit of History
27:17 Costs and Benefits
35:06 Private-sector Efficiency, SpaceX
45:08 From the Outer Space Treaty to Artemis
49:13 The Race to Mars
53:58 Space Force!
59:44 Venture Capital in Space
01:10:55 Space Mining, Technology Transfer
01:19:16 Space Jobs
01:34:00 The Geopolitics of Space
01:41:26 Summarizing
 
Bibliography:
Megginson, William L. "The Financial Economics of Spaceflight." Available at SSRN 4901992 (2024).
Weinzierl, Matthew. "Space, the final economic frontier." Journal of Economic Perspectives 32, no. 2 (2018): 173-192.
 
Other Sources:
Bureau of Economic Analysis data on the Space Economy: https://www.bea.gov/data/special-topics/space-economy
 
Soundtrack:
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

Who Paid for the 2018 Trade Tariffs?

Who Paid for the 2018 Trade Tariffs?
In this episode of 'Questions in Finance,' Professors Kate Holland and Veljko Fotak discuss the academic research on the impact of the 2018 US trade tariffs. The conversation revolves around who ultimately paid for these tariffs—US consumers and importers—and the nuanced effects on retail prices. The discussion covers the impact of retaliatory tariffs on US exporters, before focusing on the winners—select US producers and the government, raising more revenue. The episode also explores the political implications, revealing how tariffs were strategically used to gain votes in battleground states and the broader economic consequences, including substantial redistribution of wealth and small net losses for the aggregate US economy. The episode concludes with a mapping of lessons from the past to the trade war emerging in 2025.
 
Timeline:
00:00 Who Paid for the 2018 Trade Tariffs?
00:52 Welcome to Questions in Finance
01:31 The Three Papers
05:24 A Bit of Recent History
12:36 So... Who Pays?
16:03 Currency Adjustments
18:06 Retaliatory Tariffs
24:35 Import Prices Vs. Retail Prices
32:09 Quantifying the Impact of Tariffs
45:30 Summary of the Main Findings
49:31 The Political Effects
57:19 Future Episodes
58:01 Mapping What We Learned onto the Present
01:05:32 Concluding Remarks
 
Bibliography:
Amiti, Mary, Stephen J. Redding, and David E. Weinstein. "The impact of the 2018 tariffs on prices and welfare." Journal of Economic Perspectives 33, no. 4 (2019): 187-210.
Cavallo, Alberto, Gita Gopinath, Brent Neiman, and Jenny Tang. "Tariff pass-through at the border and at the store: Evidence from us trade policy." American Economic Review: Insights 3, no. 1 (2021): 19-34.
Fajgelbaum, Pablo D., Pinelopi K. Goldberg, Patrick J. Kennedy, and Amit K. Khandelwal. "The return to protectionism." The Quarterly Journal of Economics 135, no. 1 (2020): 1-55.
Feng, Chaonan, Liyan Han, and Lei Li. "Who pays for the tariffs and why? A tale of two countries." (2023). SSRN Working Paper: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4477985
 
Soundtrack:
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

Is a U.S. Sovereign Wealth Fund a Good Idea? With William Megginson

Is a U.S. Sovereign Wealth Fund a Good Idea?
In this episode of 'Questions in Finance,' hosts Kate Holland and Veljko Fotak are joined by guest expert William Megginson, Professor and Price Chair in Finance at the University of Oklahoma, to discuss the concept of Sovereign Wealth Funds (SWFs). The conversation centers around a recent proposal for the creation of an American Sovereign Wealth Fund, initiated by an executive order from Donald J. Trump. Bill Megginson provides an in-depth exploration of what SWFs are, why countries establish them, and the various types that exist. The episode also debates whether a U.S. SWF is a good idea, considering both potential benefits and significant drawbacks. The discussion includes historical performance of SWFs, potential political interference, and alternative ways the U.S. could use its resources for economic and strategic purposes.
 
 
Timeline:
00:00 Is a U.S. Sovereign Wealth Fund a Good Idea?
01:36 Welcome to Questions in Finance
02:14 Introducing Today's Guest, Bill Megginson
08:03 A U.S. SWF? 3 out of 10!
09:08 SWF Definition and Purpose
22:11 SWFs, Strategic Funds, Stabilization Funds
27:22 SWF Underperformance
29:37 Political Distortions and Intergenerational Wealth
40:38 Industrial Policy
45:31 A U.S. SWF? How?
58:31 Issuing Bonds to Fund a SWF?
01:05:43 Government-Owned Venture Capital
01:15:46 Autocrats, Democrats, and SWFs
01:16:52 Space Economics!
01:18:29 Summary
 
Bibliography:
Bortolotti, Bernardo, Veljko Fotak, and William L. Megginson. "The Sovereign Wealth Fund discount: Evidence from public equity investments." The Review of Financial Studies 28, no. 11 (2015): 2993-3035.
Holland, Kateryna. "Government investment in publicly traded firms." Journal of Corporate Finance 56 (2019): 319-342.
Megginson, William L., Xin Yue Zhou, and Robert L. Gholson. "The case against a U.S. Sovereign Wealth Fund." Financial Review 60, no. 1 (2025): 5-12.
 
 
Other Sources:
Stephen Jen in the Financial Times, February 17, 2025, "Don’t dismiss Donald Trump’s idea of a Maga SWF"
https://www.ft.com/content/de289862-d5eb-4376-9c4a-d6e08b6b324b
 
White House SWF Order:
https://www.whitehouse.gov/presidential-actions/2025/02/a-plan-for-establishing-a-united-states-sovereign-wealth-fund/
 
 
Soundtrack:
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

Should Investors Care About Corporate Culture?

Should Investors Care About Corporate Culture?
 
In this episode, hosts Kate Holland and Veljko Fotak delve into the significance of corporate culture and its impact on firm performance and investor portfolios. They discuss the struggle to measure corporate culture, using examples like Steve Jobs at Apple where storytelling helped create an innovative environment. The conversation extends to whether cultural aspects of respect, integrity, teamwork, innovation, and quality influence profitability. They explore research linking corporate culture with stock returns, fraud prevention, and adaptability. The discussion also covers the influence of societal culture on corporate behavior and how factors like regulatory changes and leadership shifts affect corporate culture. They conclude by suggesting that investors should be cautious of firms showing reduced innovation, high-risk cultures, or inconsistent communication of their corporate values.
 
Timeline:
 
00:00 Culture, Stories, and Shared Beliefs
06:37 Welcome to Questions in Finance
07:15 Defining Corporate Culture
12:32 Corporate Culture and Intangible Assets
23:44 Country-level Cultural Traits and Corporate Culture
31:36 Changing Corporate Culture
36:37 Strategic Communication of Cultural Values
46:07 Corporate Culture and Firm Performance
51:27 Fraudulent Firms and Market Penalties
59:32 Risk Culture in Banks
01:02:43 Parking Tickets
01:11:16 Measuring Corporate Culture
01:14:31 Culture Examples: Skechers, Nike, Kodak, Xerox, Sony and More...
01:27:03 Summary & Goodbye!
 
 
Bibliography:
Acemoglu, Daron, and Matthew O. Jackson. "History, expectations, and leadership in the evolution of social norms." The Review of Economic Studies 82, no. 2 (2015): 423-456.
Biggerstaff, Lee, David C. Cicero, and Andy Puckett. "Suspect CEOs, unethical culture, and corporate misbehavior." Journal of Financial Economics 117, no. 1 (2015): 98-121.
Braguinsky, Serguey, and Sergey Mityakov. "Foreign corporations and the culture of transparency: Evidence from Russian administrative data."  Journal of Financial Economics 117 (2015): 139-164.
Chamberlain, Andrew. "Does company culture pay off? Analyzing stock performance of 'Best Places to Work' companies." Glassdoor Research Report (2015).
Crémer, Jacques. "Corporate culture and shared knowledge." Industrial and Corporate Change 2, no. 3 (1993): 351-386.
Edmans, Alex. "Does the stock market fully value intangibles? Employee satisfaction and equity prices." Journal of Financial Economics 101, no. 3 (2011): 621-640.
Lev, Baruch, and Feng Gu. The end of accounting and the path forward for investors and managers. John Wiley & Sons, 2016.
Fahlenbrach, Rüdiger, Robert Prilmeier, and René M. Stulz. "Why does fast loan growth predict poor performance for banks?." The Review of Financial Studies 31, no. 3 (2018): 1014-1063.
Fotak, Veljko, Feng Jack Jiang, Haekwon Lee, and Erik Lie. "Trust and debt contracting: Evidence from the backdating scandal." Journal of Financial and Quantitative Analysis 58, no. 2 (2023): 615-646.
Fisman, Raymond, and Edward Miguel. " Corruption, norms, and legal enforcement: Evidence from diplomatic parking tickets," Journal of Political Economy 115, no. 6, (2007): 1020-1048
Graham, John R., Jillian Grennan, Campbell R. Harvey, and Shivaram Rajgopal. "Corporate culture: Evidence from the field." Journal of Financial Economics 146, no. 2 (2022): 552-593.
Green, T. Clifton, Ruoyan Huang, Quan Wen, and Dexin Zhou. "Crowdsourced employer reviews and stock returns." Journal of Financial Economics 134, no. 1 (2019): 236-251.
Grennan, Jillian. "Communicating culture consistently: Evidence from banks." Available at SSRN 3350645 (2022).
Grullon, Gustavo, George Kanatas, and James Weston. "Religion and corporate (mis) behavior." Available at SSRN 1472118 (2009).
Guiso, Luigi, Paola Sapienza, and Luigi Zingales. "The value of corporate culture." Journal of Financial Economics 117, no. 1 (2015): 60-76.
Hilary, Gilles, and Kai Wai Hui. "Does religion matter in corporate decision making in America?." Journal of Financial Economics 93, no. 3 (2009): 455-473.
Hofstede, Geert. "Dimensionalizing cultures: The Hofstede model in context." Online Readings in Psychology and Culture 2, no. 1 (2011): 8.
Holland, Kateryna, and Esther Im. "Corporate culture messaging and national politics." Available at SSRN 4810373 (2024).
Jiang, Feng, Kose John, C. Wei Li, and Yiming Qian. "Earthly reward to the religious: religiosity and the costs of public and private debt." Journal of Financial and Quantitative Analysis 53, no. 5 (2018): 2131-2160.
Karolyi, G. Andrew, and Alvaro G. Taboada. "Regulatory arbitrage and cross‐border bank acquisitions." The Journal of Finance 70, no. 6 (2015): 2395-2450.
Li, Kai, Mai Feng, Rui Shen, and Xinyan Yan. "Measuring corporate culture using machine learning." The Review of Financial Studies 34, (2021): 3265-3315.
Lins, Karl V., Lukas Roth, Henri Servaes, and Ane Tamayo. "Sexism, culture, and firm value: evidence from the Harvey Weinstein scandal and the# MeToo movement." Journal of Accounting Research 62, no. 5 (2024): 1989-2035.
Mironov, Maxim. "Should one hire a corrupt CEO in a corrupt country?" Journal of Financial Economics 117 (2015): 29-42.
Symitsi, Efthymia, Panagiotis Stamolampros, and George Daskalakis. "Employees’ online reviews and equity prices." Economics Letters 162 (2018): 53-55.
 
Online Sources:
Sull, Donald, Charles Sull, and Andrew Chamberlain. "Measuring Culture in Leading Companies"
https://sloanreview.mit.edu/projects/measuring-culture-in-leading-companies/#chapter-5
 
Soundtrack:
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

Do Pension Bailouts Create Moral Hazard? With Michael Dambra

Do Pension Bailouts Create Moral Hazard? With Michael Dambra
 
In this episode of 'Questions in Finance,' host Veljko Fotak dives into the complex world of moral hazard and pension bailouts with guest Michael Dambra, the Kenneth Colwell Chair of Accounting and Law at the University at Buffalo. They discuss the concept of moral hazard, its historical context, and its implications in modern economics, particularly focusing on recent pension bailouts under the American Rescue Plan (ARP). The conversation sheds light on how bailout expectations can alter financial behavior and risk-taking in the pension fund sector. Mike and Veljko discuss potential alternatives, but also political implications: why this plan was such an ineffective vote-buying scheme, and why taxpayers are the big losers.
 
 
Timeline:
 
00:00 Minus Kate, plus Mike
01:16 Understanding Moral Hazard
02:56 Historical Context of Moral Hazard
06:41 Welcome to Questions in Finance!
07:22 Mike Dambra's Background and Research
08:43 The Crisis in Pension Funding
18:18 The American Rescue Plan and the Butch Lewis Act
24:26 Research Design and Findings
35:01 Which Funds Get Bailouts?
38:30 Behavior of Plans Receiving Bailouts
41:06 Assessment and Alternatives
43:15 Comparing Pension and Banking Sectors
47:37 More on Alternatives
49:11 Bailouts, Politics, and Spin
51:36 Winners and Losers of the Bailout
54:42 Political Bias in Research
01:00:54 Who Cares?
01:05:41 Can Bailouts Impose Discipline?
01:08:58 How about a National Pension System?
01:09:49 Defined Benefits vs. Defined Contributions
01:11:11 Final Thoughts and Future Plans
 
 
Bibliography:
 
Arrow, Kenneth J. "Uncertainty and the welfare economics of medical care." American Economic Review 53, no. 5 (1963): 941-973.
 
Dambra, Michael, Phillip J. Quinn, and John Wertz. "Economic consequences of pension bailouts: Evidence from the American Rescue Plan." Available at SSRN 4406502 (2023).
 
Novy‐Marx, Robert, and Joshua Rauh. "Public pension promises: How big are they and what are they worth?." The Journal of Finance 66, no. 4 (2011): 1211-1249.
 
 
Online Sources:
 
Department of Labor Report Links:
http://www.dol.gov/newsroom/releases/ebsa/ebsa2024
 
 
 
Soundtrack:
 
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.

Is Short Selling Evil?

Is Short Selling Evil?
 
In this episode, Kate and Veljko delve into the contentious topic of short selling. The discussion begins with an explanation of viatical settlements and transitions into an in-depth exploration of short selling—its mechanisms, benefits, and ethical implications. The hosts examine the historical and legal controversies surrounding it and present empirical research highlighting its role in market efficiency and managerial discipline. They also touch on notable anecdotes, including the GameStop saga and the Vatican’s criticism of financial markets, and ultimately aim to dispel common misconceptions about short selling by emphasizing its overall positive impact on financial markets.
 
00:00 Viatical Settlements
09:42 Welcome to Questions in Finance!
10:20 Defining Short Selling
14:29 Put Options Vs. Short Sales
15:53 Risk Exposure
17:07 Negative Information, Prices, and the Case of GameStop
32:11 Wirecard
39:14 The Pope and the Chairman Walk Into a Bar...
48:32 Pricing Efficiency, Bubbles
59:13 Short Sales and Corporate Governance
01:15:42 Empty Voting
01:19:29 Summarizing, Wrapping Up
 
 
Bibliography:
 
Bargeron, Leonce, and Alice Bonaime. "Why do firms disagree with short sellers? Managerial myopia versus private information." Journal of Financial and Quantitative Analysis 55, no. 8 (2020): 2431-2465
 
Battalio, Robert, and Paul Schultz. "Options and the bubble." The Journal of Finance 61, no. 5 (2006): 2071-2102.
 
Beber, Alessandro, and Marco Pagano. "Short‐selling bans around the world: Evidence from the 2007–09 crisis." The Journal of Finance 68, no. 1 (2013): 343-381.
 
Boehmer, Ekkehart, and Juan Wu. "Short selling and the price discovery process." The Review of Financial Studies 26, no. 2 (2013): 287-322.
 
Bris, Arturo, William N. Goetzmann, and Ning Zhu. "Efficiency and the bear: Short sales and markets around the world." The Journal of Finance 62, no. 3 (2007): 1029-1079.
 
Brogaard, Jonathan, Terrence Hendershott, and Ryan Riordan. "High frequency trading and the 2008 short-sale ban." Journal of Financial Economics 124, no. 1 (2017): 22-42.
Brunnermeier, Markus K., and Martin Oehmke. "Predatory short selling." Review of Finance 18, no. 6 (2014): 2153-2195.
 
Chen, Yi-Wen, Sheng-Syan Chen, and Robin K. Chou. "Short-sale constraints and options trading: Evidence from Reg SHO." Journal of Financial and Quantitative Analysis 55, no. 5 (2020): 1555-1579.
 
Curtis, Asher, and Neil L. Fargher. "Does short selling amplify price declines or align stocks with their fundamental values?." Management Science 60, no. 9 (2014): 2324-2340.
 
Fang, Vivian W., Allen H. Huang, and Jonathan M. Karpoff. "Short selling and earnings management: A controlled experiment." The Journal of Finance 71, no. 3 (2016): 1251-1294.
 
Fotak, Veljko, Vikas Raman, and Pradeep K. Yadav. "Fails-to-deliver, short selling, and market quality." Journal of Financial Economics 114, no. 3 (2014): 493-516.
 
Haruvy, Ernan, and Charles N. Noussair. "The effect of short selling on bubbles and crashes in experimental spot asset markets." The Journal of Finance 61, no. 3 (2006): 1119-1157.
 
Hu, Henry TC, and Bernard Black. "The new vote buying: Empty voting and hidden (morphable) ownership." S. Cal. L. Rev. 79 (2005): 811.
 
Massa, Massimo, Bohui Zhang, and Hong Zhang. "The invisible hand of short selling: Does short selling discipline earnings management?." The Review of Financial Studies 28, no. 6 (2015): 1701-1736.
 
Rapach, David E., Matthew C. Ringgenberg, and Guofu Zhou. "Short interest and aggregate stock returns." Journal of Financial Economics 121, no. 1 (2016): 46-65.
 
Scheinkman, Jose A., and Wei Xiong. "Overconfidence and speculative bubbles." Journal of Political Economy 111, no. 6 (2003): 1183-1220.
 
 
Media:
CFTC Letter: https://www.cftc.gov/PressRoom/PressReleases/7761-18
 
Soundtrack:
The soundtrack is based on "Walk on a Funky Street" by MondayHopes. Thanks for the music and keep up the good work! Use is under the Pixabay Content License.