Upcoming FTG Events
25
Sep
35th Meeting at Carnegie Mellon University (Fall 2026)
From: September 25, 2026 - To: September 26, 2026
Carnegie Mellon University
The 35th FTG Member Meeting will take place at Carnegie Mellon University on September 25â26, 2026. The local...
10
Dec
3rd Asian FTG Conference
From: December 10, 2026 - To: December 11, 2026
Hong Kong University
The 3rd Annual Finance Theory Group Winter Conference will be held at The University of Hong Kong on...
07
May
36th Meeting at UT Dallas (Spring 2027)
Featured Papers
We document that M\&A withdrawals are more sensitive to acquirersâ announcement returns when the deal is all-cash, suggesting an intriguing interaction between payment methods and market feedback. Motivated by this evidence, we develop a model where managers negotiate over payment methods and learn about deal synergies from post-announcement prices. Our...
This model concerns itself with how banks hedge their business risk, as composed of cash-flow risk and discount rate risk. In equilibrium, the two risks are intertwined as they are linked via the optimal hedging strategy. Ultimately, the bank stabilizes the marginal value of cash to trade off discount and...
Using a general equilibrium model in which brown (polluting) and green (clean-energy) firms compete and seek financing from banks, non-banks, or the capital market, we examine the effects of higher capital requirements on brown bank loans designed to discourage such lending. Higherquality brown firms leave banks for the market and...
Finance Theory Insights
Finance Theory Insights
Issue 10 (September 2026)
Benefits of Coordination and Consequences of Coordination Failures
One of the central themes in corporate finance concerns the benefits of coordination and the consequences of coordination failures. Such trade-offs influence many important aspects of corporate decision-making, such as the failure of firms, incentives to engage in activism, and the compensation of senior executives. A key channel through which they operate is the underlying contractual setting confronting firms.
For example, two of the papers in this issue address trade-offs involving the failure of firms. âFiling for Bankruptcy Early Can Keep a Firm Alive Longerâ highlights the incentive for creditors to run and how automatic stay provisions after a bankruptcy filing, as well as clawback provisions, influence decisions prior to bankruptcy. The automatic stay increases the post-bankruptcy payoff to discourage running prior to bankruptcy, while clawback provisions also weaken the incentive to run. Hence, bankruptcy rules can affect the timing of bankruptcy. âThe Hidden Logic of Letting Firms Failâ focuses on the fire-sale externality among banks and how reorganization affects others. Whether one should encourage liquidation or, alternatively, discourage itâas illustrated by the eviction moratorium that arose during COVID-19âdepends upon the health of the banks. There can be competing externalities in a crisis due to differences in bank collateral constraints. Under some conditions, liquidation should be subsidized, while under others it should be taxed.
âLeader-Follower Dynamics in Shareholder Activismâ examines situations in which there is âwolf pack activism,â in which blockholders coordinate actions tacitly. A larger stake held by one activist can incentivize other holders to accumulate additional shares, even without explicit coordination. Finally, âToo Much, Too Soon, for Too Long: Why Competition Alone Cannot Fix CEO Payâ examines how the market for executive compensation can systematically produce overcompensation due to spillovers related to punishment in the marketplace. This suggests a rationale for noncompete clauses that restrict an executiveâs outside option.
News
September 1, 2026
10th Issue of FT Insights
We are pleased to announce that the 10th Issue of FT Insights is now available. This issue explores...
May 9, 2026
2026 Best JMP Prize Winners
We are pleased to announce the recipients of the 2026 FTG Best Theory Job Market Paper Prize.Winner: Hanjoon...
April 14, 2026
2026 New Members
The FTG is pleased to welcome our new members:Alex Maciocco (UC Irvine â Indiana), Alexander Ober (Rice), Elu...