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 25–26, 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 market power in U.S. equity securities lending and examine its origins and consequences. We develop a dynamic model of securities lending and estimate it on the cross-section of U.S. equities, showing that the dominant custodian-intermediated market structure emerges as a response to short sellers' information-leakage concerns. Short sellers...
Government guarantees generate a multiplier effect: one dollar of tax-funded guarantees expands lending by more than one dollar. This multiplier is stronger under information-insensitive debt, as guarantees suppress costly private information production, relaxing borrowing constraints for all firms rather than merely redistributing resources. However, implicit guarantees create fragility—negative shocks to...
We revisit the relationship between firm competition and real efficiency in a novel setting with informational feedback from financial markets. While intensified competition can decrease market concentration in production, it reduces the value of proprietary information (on, e.g., market prospects) for speculators and discourages information production and price discovery in...
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. “Filing for Bankruptcy Early Can Keep a Firm Alive Longer” 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. “The Hidden Logic of Letting Firms Fail” focuses on the fire-sale externality among banks and how reorganization affects others. Whether one should encourage liquidation or, alternatively, discourage it—as illustrated by the eviction moratorium that arose during COVID-19—depends 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.
“Leader-Follower Dynamics in Shareholder Activism” examines situations in which there is “wolf pack activism,” 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, “Too Much, Too Soon, for Too Long: Why Competition Alone Cannot Fix CEO Pay” 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 executive’s 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 → Indiana), Alexander Ober (Rice), Elu...